EXHIBIT 1.1
▇▇▇▇▇▇▇▇▇▇ REALTY INVESTORS
$200,000,000
Medium-Term Notes, Series A
DISTRIBUTION AGREEMENT
----------------------
August 10, 1998
▇▇▇▇▇▇▇, Sachs & Co. ▇▇▇▇▇▇ Brothers Inc.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Three World Financial Center,
New York, New York 10004 ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
BancAmerica ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, 18th Floor ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇ Incorporated
BT Alex. ▇▇▇▇▇ Incorporated World Financial Center
▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ North Tower, 10th Floor
Baltimore, Maryland 21202 ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Chase Securities Inc. ▇.▇. ▇▇▇▇▇▇ Securities Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ NationsBanc ▇▇▇▇▇▇▇▇▇▇
Securities Corporation Securities, LLC
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
▇▇▇▇▇▇▇▇▇▇ Realty Investors, a Texas real estate investment trust (the
"Company"), proposes to issue and sell from time to time its Medium-Term Notes,
Series A (the "Securities") in an aggregate amount of up to $200,000,000, and
agrees with each of you (individually, an "Agent", and collectively, the
"Agents") as set forth in this Agreement.
Subject to the terms and conditions stated herein and to the reservation by
the Company of the right to sell the Securities directly on its own behalf, the
Company hereby (i) appoints each Agent as an agent of the Company for the
purpose of soliciting and receiving offers to purchase the Securities from the
Company pursuant to Section 2(a) hereof and (ii) agrees that, except as
otherwise contemplated hereby, whenever it determines to sell the Securities
directly to any Agent as principal, it will enter into a separate agreement
(each a "Terms Agreement") which, unless otherwise agreed, shall, to the extent
applicable, include those terms specified in Annex I hereto and be agreed upon
orally, with written confirmation prepared by such Agent and mailed to the
Company, relating to such sale in accordance with Section 2(b) hereof.
The Securities may be issued either as senior debt securities ("Senior
Securities") or as subordinated debt securities ("Subordinated Securities").
The Senior Securities will rank equally with all other unsecured and
unsubordinated indebtedness of the Company, while the Subordinated Securities
will be subordinated to all existing and future senior debt of the Company. The
Senior Securities will be issued under an indenture, dated as of May 1, 1995
(the "Senior Indenture"), between the Company and Chase Bank of Texas, National
Association (formerly known as Texas Commerce Bank National Association), as
Trustee. The Subordinated Securities will be issued under an indenture, dated
as of May 1, 1995 (the "Subordinated Indenture"), between the Company and Chase
Bank of Texas, National Association (formerly known as Texas Commerce Bank
National Association), as Trustee. The term "Trustee" as used herein shall
refer to Chase Bank of Texas, National Association in its capacity as Trustee
for the Senior Securities or the Subordinated Securities, as appropriate. The
Senior Indenture and the Subordinated Indenture sometimes are referred to herein
collectively as the "Indentures", and individually as the "Indenture". The
Securities shall have the maturity ranges, interest rates, if any, redemption
provisions and other terms set forth in the Prospectus referred to below as it
may be amended or supplemented from time to time. The Securities will be
issued, and the terms and rights thereof established, from time to time by the
Company in accordance with the Indentures.
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1. The Company represents and warrants to, and agrees with, each Agent that:
(a) (i) A registration statement on Form S-3 (File No. 333-51843) in respect
of $341,000,000 aggregate amount of debt securities, preferred shares, common
shares and securities warrants of the Company, including the Securities, and
(ii) a registration statement on Form S-3 (File No. 333-12179) in respect of
$226,500,000 aggregate amount of debt securities, preferred shares, common
shares, and securities warrants of the Company, including the Securities, each
as amended, have been filed with the Securities and Exchange Commission (the
"Commission"); such registration statements and any post-effective amendments
thereto, each in the form heretofore delivered or to be delivered to such Agent,
excluding exhibits to such registration statement, but including all documents
incorporated by reference into the prospectuses included therein, have been
declared effective by the Commission in such form; no other document with
respect to such registration statements or document incorporated by reference
therein heretofore has been filed or transmitted for filing with the Commission
(other than the prospectuses filed pursuant to Rule 424(b) of the rules and
regulations of the Commission under the Securities Act of 1933, as amended (the
"Securities Act"), each in the form heretofore delivered to the Agents); and no
stop order suspending the effectiveness of such registration statements has been
issued and no proceeding for that purpose has been initiated or threatened by
the Commission (any preliminary prospectus included in such registration
statements or filed with the Commission pursuant to Rule 424(a) of the rules and
regulations of the Commission under the Securities Act, hereinafter being
referred to as a "Preliminary Prospectus"; the various parts of such
registration statements, including all exhibits thereto and the documents
incorporated by reference into the prospectuses contained in the registration
statements at the time such part of the registration statements became effective
but excluding Form T-1, each as amended at the time such part of the
registration statements became effective, hereinafter being referred to
collectively as the "Registration Statement"; the prospectus (including, if
applicable, any prospectus supplement) relating to the Securities, in the form
in which it most recently has been filed, or transmitted for filing, with the
Commission on or prior to the date of this Agreement, hereinafter being referred
to as the "Prospectus"; any reference herein to any Preliminary Prospectus or
the Prospectus shall be deemed to refer to and include the documents
incorporated by reference therein pursuant to the applicable form under the
Securities Act, as of the date of such Preliminary Prospectus or Prospectus, as
the case may be; any reference to any amendment or supplement to any Preliminary
Prospectus or the Prospectus, including any supplement to the Prospectus that
sets forth only the terms of a particular issue of the Securities (a "Pricing
Supplement"), shall be deemed to refer to and include any documents filed after
the date of such Preliminary Prospectus or Prospectus, as the case may be, under
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and
incorporated therein by reference; any reference to any amendment to the
Registration Statement shall be deemed to refer to and include any annual report
of the Company filed pursuant to Section 13(a) or 15(d) of the Exchange Act
after the effective date of the Registration Statement that is incorporated by
reference into the Registration Statement; and any reference to the Prospectus
as amended or supplemented shall be deemed to refer to and include the
Prospectus as amended or
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supplemented (including by the applicable Pricing Supplement filed in accordance
with Section 4(a) hereof) in relation to the Securities sold pursuant to this
Agreement, in the form filed with the Commission pursuant to Rule 424(b) under
the Securities Act and in accordance with Section 4(a) hereof, including any
documents incorporated by reference therein as of the date of such filing);
(b) The documents incorporated by reference into the Prospectus, when they
became effective or were filed with the Commission, as the case may be,
conformed in all material respects to the requirements of the Securities Act or
the Exchange Act, as applicable, and the 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 not misleading; and any further
documents so filed and incorporated by reference into the Prospectus, or any
further amendment or supplement thereto, when such documents become effective or
are filed with the Commission, as the case may be, will conform in all material
respects to the requirements of the Securities Act or the Exchange Act, as
applicable, and the 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
not misleading; provided, however, that this representation and warranty shall
not apply to any statements or omissions made in reliance upon and in conformity
with information furnished in writing to the Company by any Agent expressly for
use in the Prospectus as amended or supplemented to relate to a particular
issuance of the Securities;
(c) The Registration Statement and the Prospectus conform, and any further
amendments or supplements to the Registration Statement or to the Prospectus
will conform, in all material respects to the requirements of the Securities Act
and the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"), and
the rules and regulations of the Commission thereunder and do not and will not,
as of the applicable effective date as to the Registration Statement and any
amendment thereto and as of the applicable filing date as to the Prospectus and
any amendment or supplement thereto, contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein not misleading; provided, however, that this
representation and warranty shall not apply to any statements or omissions made
in reliance upon and in conformity with information furnished in writing to the
Company by any Agent expressly for use in the Prospectus as amended or
supplemented to relate to a particular issuance of the Securities;
(d) The Company is a real estate investment trust duly formed, validly existing
and in good standing under the laws of the State of Texas, with the power and
authority (corporate and other) to own its properties and to conduct its
business as described in the Prospectus; and the Company is duly qualified to
transact business and is in good standing in each other jurisdiction in which it
owns or leases properties, or conducts any business, so as to require such
qualification, or is subject to no material liability or disability by reason of
the failure to be so qualified in any such jurisdiction, and holds all
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authorizations, approvals, orders, licenses, certificates and permits from all
governmental authorities which are material to the conduct of its business;
(e) Each subsidiary of the Company has been duly incorporated (or, with respect
to ▇▇▇▇▇▇▇▇▇▇ Properties Trust, has been duly formed as a real estate investment
trust) and is validly existing as a corporation or trust in good standing under
the laws of the jurisdiction of its incorporation or formation, has the power
and authority (corporate and other) to own, lease and operate its properties and
to conduct its business as described in the Prospectus and is duly qualified as
a foreign corporation or trust to transact business and is in good standing in
each jurisdiction in which such qualification is required, whether by reason of
the ownership or leasing of property or the conduct of business, except where
the failure to so qualify would not have a material adverse effect or a
prospective material adverse effect on the condition, financial or otherwise, or
the earnings or business affairs of the Company and its subsidiaries considered
as one enterprise; all of the issued and outstanding capital stock of each such
subsidiary has been duly authorized and validly issued, is fully paid and non-
assessable and is owned by the Company, directly or through subsidiaries (except
for ▇▇▇▇▇▇▇▇▇▇ Properties Trust, of which the Company owns approximately 77% of
the outstanding capital shares), free and clear of any security interest,
mortgage, pledge, lien, encumbrance, claim or equity;
(f) Neither the Company nor any of its subsidiaries has sustained since the
date of the latest audited financial statements included in or incorporated by
reference into the Prospectus, as amended or supplemented, any material loss or
interference with its business from fire, explosion, flood or other calamity, or
from any labor dispute or court or governmental action, order or decree,
otherwise than as set forth in or contemplated by the Prospectus; and, since the
respective dates as of which information is given in the Registration Statement
and in the Prospectus, there has not been any change in the capital stock or any
increase in the consolidated long-term debt of the Company and its subsidiaries
or any decrease in consolidated net current assets or net assets or any material
adverse change, or any development involving a prospective material adverse
change, in or affecting the general affairs, management, financial position,
shareholders' equity or results of operations of the Company and its
subsidiaries, otherwise than as set forth in or contemplated by the Prospectus;
(g) The Company has an authorized capitalization as set forth in the
Prospectus, and all of the issued shares of capital stock of the Company have
been duly and validly authorized and issued and are fully paid and non-
assessable;
(h) The Securities have been duly authorized, and, when issued and delivered
pursuant to this Agreement and any Terms Agreement, will have been duly
executed, authenticated, issued and delivered and will constitute valid and
legally binding obligations of the Company entitled to the benefits provided by
the Indentures, which will be substantially in the forms filed as exhibits to
the Registration Statement; each Indenture has been duly authorized and duly
qualified under the Trust Indenture Act and constitutes a valid and legally
binding instrument, enforceable in accordance with its respective terms,
subject,
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as to enforcement, to bankruptcy, insolvency, reorganization and other laws of
general applicability relating to or affecting creditors' rights and general
equitable principles; and each Indenture conforms, and the Securities of any
particular issuance of the Securities will conform, to the descriptions thereof
contained in the Prospectus as amended or supplemented to relate to such
issuance of the Securities;
(i) The issuance and sale of the Securities, the compliance by the Company with
all of the provisions of the Securities, the Indentures, this Agreement and any
Terms Agreement, and the consummation of the transactions contemplated hereby
and thereby will not conflict with, or result in a breach or violation of, any
of the terms or provisions of, or constitute a default under, any indenture,
mortgage, deed of trust, loan agreement or other agreement or 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 Restated Declaration of Trust, as
amended, or the By-Laws of the Company or any statute or any 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;
and no consent, approval, authorization, order, registration or qualification of
or with any court or governmental agency or body is required for the
solicitation of offers to purchase the Securities, the issuance and sale of the
Securities or the consummation by the Company of the other transactions
contemplated by this Agreement, any Terms Agreement or the Indentures, except
such as have been, or will have been prior to the Commencement Date (as defined
in Section 3 hereof), obtained under the Securities Act or the Trust Indenture
Act and such consents, approvals, authorizations, registrations or
qualifications as may be required under state securities or Blue Sky laws in
connection with the solicitation by such Agent of offers to purchase the
Securities from the Company and with purchases of the Securities by such Agent
as principal, as the case may be, in each case in the manner contemplated
hereby;
(j) Other than as set forth in the Prospectus, there are no legal or
governmental proceedings pending to which the Company or any of its subsidiaries
is a party or to which any property of the Company or any of its subsidiaries is
subject, which, if determined adversely to the Company or any of its
subsidiaries would individually or in the aggregate have a material adverse
effect on the current or future consolidated financial position, shareholders'
equity or results of operations of the Company and its subsidiaries, and, to the
best of the Company's knowledge, no such proceedings are threatened or
contemplated by governmental authorities or threatened by others;
(k) Immediately after any sale of the Securities by the Company hereunder or
under any Terms Agreement, the aggregate amount of the Securities which shall
have been issued and sold by the Company hereunder or under any Terms Agreement
and of any debt securities of the Company (other than the Securities) that shall
have been issued and sold pursuant to the Registration Statement will not exceed
the amount of debt securities registered under the Registration Statement;
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(l) The financial statements set forth in or incorporated by reference into the
Registration Statement present fairly the financial position and the results of
operations of the Company and its subsidiaries at the indicated dates and for
the indicated periods. Except as otherwise stated in the Registration Statement,
such financial statements have been prepared in accordance with generally
accepted accounting principles, applied on a consistent basis; and the
supporting schedules included in the Registration Statement present fairly the
information required to be stated therein;
(m) The Company and its subsidiaries have good and indefeasible title in fee
simple to all real property and interests in real property owned by them and
good and indefeasible title to all personal property owned by them, in each case
free and clear of all liens, encumbrances and defects, except as are described
in the Prospectus and except for properties subject to a pledge under the
Amended and Restated Loan Agreement of $200,000,000 between the Company and
Chase Bank of Texas, National Association and under senior notes due 2015 in the
aggregate principal amount of $ 30,000,000 issued under a Note Purchase
Agreement, dated April 1, 1994, between the Company and the Variable Annuity
Life Insurance Company and American General Life Insurance Company as amended,
and except for property owned in the joint ventures set forth in Annex IV hereto
or such as do not materially affect the value of such property and interests in
the aggregate and do not interfere with the use made and proposed to be made of
such property and interests by the Company and its subsidiaries taken as a
whole; in the case of real property and interests in real property, the Company
and its subsidiaries have obtained satisfactory confirmation (consisting of
policies of title insurance or binders therefor or opinions of counsel based
upon the examination of abstracts) confirming, except as is otherwise described
in the Prospectus, (a) that the Company and its subsidiaries have the foregoing
title to such real property and interests in real property; provided, however,
that in those cases in which such information is not current, the Company and
its subsidiaries do not have notice of any material claim of any sort which has
been asserted by anyone adverse to the Company's or its subsidiaries foregoing
title to such real property and interests in real property, and (b) that the
instruments securing the indebtedness of third parties to the Company or its
subsidiaries create valid liens upon the real properties described in such
instruments enjoying the priorities intended, subject only to exceptions to
title which have no materially adverse effect on the value of such real
properties and interests; and any real property and buildings held under lease
by the Company or its subsidiaries or leased by the Company or its subsidiaries
to a third party are held or leased by them under valid, binding and enforceable
leases conforming to the description thereof set forth in the Prospectus, with
such exceptions as are not material and do not interfere with the use made and
proposed to be made of such property and buildings by the Company or its
subsidiaries or such third party;
(n) The Company has filed all Federal, state and foreign income tax returns
which have been required to be filed on or before the due date (taking into
account all extensions of time to file) and has paid or provided for all taxes
indicated by said returns and all assessments received by it to the extent that
taxes have become due;
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(o) Since January 1, 1985, the Company's form of organization, share ownership
and method of operation have satisfied, and the Company intends to continue to
satisfy, for the calendar year 1998 and subsequent taxable periods, the
requirements of the Internal Revenue Code of 1986, as amended (the "Code"), as
applicable for qualification of the Company as a "real estate investment trust";
the Company's management believes that the nature and value of the Company's
assets and the anticipated income of the Company for the taxable year ending
December 31, 1998 will enable the Company to qualify as a real estate investment
trust for that taxable year (subject to the continuing qualification of the
Company's share ownership and the Company's filing of its Federal income tax
return for that taxable year and electing to be treated as a real estate
investment trust);
(p) The Company is not and, after giving effect to the offering and sale of the
Securities will not be, an "investment company" or an entity "controlled" by an
"investment company", as such terms are defined in the Investment Company Act of
1940, as amended (the "Investment Company Act");
(q) Neither the Company nor any of its affiliates does business with the
government of Cuba or with any person or affiliate located in Cuba within the
meaning of Section 517.075, Florida Statutes;
(r) Deloitte & Touche LLP, who have certified certain financial statements of
the Company and its subsidiaries, are independent public accountants as required
by the Securities Act and the rules and regulations of the Commission
thereunder;
(s) Other than as disclosed in the Registration Statement, nothing has come to
the attention of the Company which would lead the Company to believe that the
presence of hazardous substances, hazardous materials, toxic substances or waste
materials ("Hazardous Materials"), when considered in the aggregate, would
materially adversely affect the financial condition of the Company. In
connection with the construction on or operation and use of the properties owned
or leased by the Company or any of its subsidiaries, the Company represents that
it has no knowledge of any material failure by the Company or any of its
subsidiaries to comply with all applicable Federal, state and local
environmental laws, regulations, ordinances and administrative and judicial
orders relating to the generation, recycling, reuse, sale, storage, handling,
transport and disposal of any Hazardous Materials; and
(t) The statements set forth in the Prospectus under the captions "Description
of Debt Securities" and "Description of Notes", insofar as they purport to
constitute a summary of the terms of the Securities, and under the captions
"United States Taxation", "Description of Common Shares", "Description of
Preferred Shares", "Description of Securities Warrants", "Plan of Distribution"
and "Supplemental Plan of Distribution", insofar as they purport to describe the
provisions of the laws and documents referred to therein, are accurate, complete
and fair.
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2. (a) On the basis of the representations and warranties herein
contained, and subject to the terms and conditions herein set forth, each of the
Agents hereby agrees, severally and not jointly, as agent of the Company, to use
its reasonable efforts to solicit and receive offers to purchase the Securities
from the Company upon the terms and conditions set forth in the Prospectus as
amended or supplemented from time to time. So long as this Agreement shall
remain in effect with respect to any Agent, the Company shall not, without the
consent of such Agent, solicit or accept offers to purchase, or sell, any debt
securities with a maturity at the time of original issuance of 9 months or more
except pursuant to this Agreement, any Terms Agreement, or except pursuant to a
private placement not constituting a public offering under the Securities Act,
or except in connection with a firm commitment underwriting pursuant to an
underwriting agreement that does not provide for a continuous offering of
medium-term debt securities. However, the Company reserves the right to sell,
and may solicit and accept offers to purchase, the Securities directly on its
own behalf, and, in the case of any such sale not resulting from a solicitation
made by any Agent, no commission will be payable with respect to such sale.
Notwithstanding anything to the contrary contained herein, the Company may
authorize any other person, partnership or corporation (an "Additional Agent")
to act as its agent to solicit offers for the purchase of all or part of the
Securities and/or accept offers to purchase the Securities from any such
Additional Agent, provided that any such Additional Agent shall have entered
into an agreement with the Company upon the same terms and conditions as set
forth in this Agreement (including, but not limited to, the commission schedule
set forth in Section 2(a) hereof). These provisions shall not limit Section 4(f)
hereof or any similar provision included in any Terms Agreement.
Procedural details relating to the issuance and delivery of the Securities,
the solicitation of offers to purchase the Securities and the payment in each
case therefor shall be as set forth in the administrative procedure attached
hereto as Annex II as it may be amended from time to time by written agreement
between the Agents and the Company (the "Administrative Procedure"). The
provisions of the Administrative Procedure shall apply to all transactions
contemplated hereunder other than those made pursuant to a Terms Agreement.
Each Agent and the Company agree to perform the respective duties and
obligations specifically provided to be performed by each of them in the
Administrative Procedure. The Company will furnish to the Trustee a copy of the
Administrative Procedure as from time to time in effect.
The Company reserves the right, in its sole discretion, to instruct the
Agents to suspend at any time, for any period of time or permanently, the
solicitation of offers to purchase the Securities. As soon as practicable, but
in any event not later than one business day in New York City, after receipt of
notice from the Company, the Agents will suspend solicitation of offers to
purchase Securities from the Company until such time as the Company has advised
the Agents that such solicitation may be resumed. During such period, the
Company shall not be required to comply with the provisions of Sections 4(h),
4(i), 4(j) and 4(k). Upon advising the Agents that such solicitation may be
resumed, however, the Company simultaneously shall provide the documents
required to be delivered by Sections 4(h), 4(i), 4(j) and 4(k), and the Agents
shall have no obligation to solicit offers to purchase the Securities until such
documents have been received by the Agents. In addition, any failure by the
Company to comply with its obligations hereunder, including without limitation
its obligations to deliver the documents required by
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Sections 4(h), 4(i), 4(j) and 4(k), automatically shall terminate the Agents'
obligations hereunder, including without limitation its obligations to solicit
offers to purchase the Securities hereunder as agent or to purchase the
Securities hereunder as principal.
The Company agrees to pay to each Agent a commission, at the time of
settlement of any sale of a Security by the Company as a result of a
solicitation made by such Agent, in an amount equal to the following applicable
percentage of the principal amount of such Security sold:
COMMISSION
(AS A PERCENTAGE OF THE
AGGREGATE PRINCIPAL AMOUNT
RANGE OF MATURITIES OF THE SECURITIES SOLD)
------------------- -----------------------
From 9 months to less than 1 year................................ .125%
From 1 year to less than 18 months............................... .150%
From 18 months to less than 2 years.............................. .200%
From 2 years to less than 3 years................................ .250%
From 3 years to less than 4 years................................ .350%
From 4 years to less than 5 years................................ .450%
From 5 years to less than 6 years................................ .500%
From 6 years to less than 7 years................................ .550%
From 7 years to less than 10 years............................... .600%
From 10 years to less than 15 years.............................. .625%
From 15 years to less than 20 years.............................. .675%
From 20 years to 30 years........................................ .750%
More than 30 years............................................... to be negotiated
=============================================================================================
(b) Each sale of the Securities to any Agent as principal shall be made in
accordance with the terms of this Agreement and a Terms Agreement (which, unless
otherwise agreed, shall be agreed upon orally, with written confirmation
prepared by such Agent and mailed to the Company) which will provide for the
sale of such Securities to, and the purchase thereof by, such Agent. A Terms
Agreement also may specify certain provisions relating to the reoffering of such
Securities by such Agent. The commitment of any Agent to purchase the Securities
as principal, whether pursuant to any Terms Agreement or otherwise, shall be
deemed to have been made on the basis of the representations and warranties of
the Company herein contained and shall be subject to the terms and conditions
herein set forth; each Terms Agreement shall specify the principal amount of the
Securities to be purchased by any Agent pursuant thereto, the price to be paid
to the Company for such Securities, any provisions relating to rights of, and
default by, underwriters acting together with such Agent in the reoffering of
the Securities and the time and date and place of delivery of and payment for
such Securities; and such Terms Agreement also shall specify any requirements
for opinions of counsel, accountants' letters and officers' certificates
pursuant to Section 4 hereof. Any Agent may engage the services of any other
broker or dealer in connection with the resale of the Securities purchased by
such Agent as
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principal and may allow any portion of the discount received in connection with
such purchases from the Company to such brokers and dealers.
For each sale of the Securities to an Agent as principal that is not made
pursuant to Terms Agreement, the procedural details relating to the issuance and
delivery of such Securities and payment therefor shall be as set forth in the
Administrative Procedure. For each such sale of the Securities to an Agent as
principal that is not made pursuant to a Terms Agreement, the Company agrees to
pay to such Agent a commission (or grant an equivalent discount) as provided in
Section 2(a) hereof and in accordance with the schedule set forth therein.
Each time and date of delivery of and payment for the Securities to be
purchased by an Agent as principal, whether set forth in a Terms Agreement or in
accordance with the Administrative Procedure, is referred to herein as a "Time
of Delivery".
(c) Each Agent agrees, with respect to any Security denominated in a
currency other than U.S. dollars, as agent, directly or indirectly, not to
solicit offers to purchase, and as principal under any Terms Agreement or
otherwise, directly or indirectly, not to offer, sell or deliver, such Security
in, or to residents of, the country issuing such currency, except as permitted
by applicable law.
3. The documents required to be delivered pursuant to Section 6 hereof on
the Commencement Date (as defined below) shall be delivered to the Agents at the
offices of ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co., ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, at
11:00 a.m., New York City time, on the date of this Agreement, which date and
time of such delivery may be postponed by agreement between the Agents and the
Company but in no event shall be later than the day prior to the date on which
solicitation of offers to purchase Securities is commenced or on which any Terms
Agreement is executed (such time and date being referred to herein as the
"Commencement Date").
4. The Company covenants and agrees with each Agent:
(a) (i) To make no amendment or supplement to the Registration Statement
or to the Prospectus (A) prior to the Commencement Date which shall be
disapproved by any Agent promptly after reasonable notice thereof or (B) after
the date of any Terms Agreement or other agreement by an Agent to purchase the
Securities as principal and prior to the related Time of Delivery which shall be
disapproved by any Agent party to such Terms Agreement or so purchasing as
principal promptly after reasonable notice thereof; (ii) to prepare, with
respect to any Securities to be sold through or to such Agent pursuant to this
Agreement, a Pricing Supplement with respect to such Securities in a form
previously approved by such Agent and to file such Pricing Supplement pursuant
to Rule 424(b)(3) under the Securities Act not later than the close of business
of the Commission on the fifth business day after the date on which such Pricing
Supplement first is used; (iii) to make no amendment or supplement to the
Registration Statement or to the Prospectus, other than any Pricing Supplement,
at any time prior to having afforded each Agent a reasonable opportunity to
review and comment thereon; (iv) to file promptly all reports and any definitive
proxy or information statements required to be filed by
11
the Company with the Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of
the Exchange Act for so long as the delivery of a prospectus is required in
connection with the offering or sale of the Securities, and during such same
period to advise such Agent, promptly after the Company receives notice thereof,
of the time when any amendment to the Registration Statement has been filed or
has become effective or any supplement to the Prospectus or any amended
Prospectus (other than any Pricing Supplement that relates to the Securities not
purchased through or by such Agent) has been filed with the Commission, of the
issuance by the Commission of any stop order or of any order preventing or
suspending the use of any prospectus relating to the Securities, of the
suspension of the qualification of the Securities for offering or sale in any
jurisdiction, of the initiation or threatening of any proceeding for any such
purpose, or of any request by the Commission for the amendment or supplement of
the Registration Statement or the Prospectus or for additional information; and
(v) in the event of the issuance of any such stop order or of any such order
preventing or suspending the use of any such prospectus or suspending any such
qualification, to use promptly every reasonable effort to obtain its withdrawal;
(b) Promptly from time to time to take such action as such Agent
reasonably may request to qualify the Securities for offering and sale under the
securities laws of such jurisdictions as such Agent may request and to comply
with such laws so as to permit the continuance of sales and dealings therein for
as long as may be necessary to complete the distribution or sale of the
Securities; provided, however, that in connection therewith the Company shall
not be required to qualify as a foreign corporation or to file a general consent
to service of process in any jurisdiction;
(c) To furnish such Agent with copies of the Registration Statement and
each amendment thereto, with copies of the Prospectus as each time amended or
supplemented, other than any Pricing Supplement (except as provided in the
Administrative Procedure), in the form in which it is filed with the Commission
pursuant to Rule 424 under the Securities Act, and with copies of the documents
incorporated by reference therein, all in such quantities as such Agent
reasonably may request from time to time; and, if the delivery of a prospectus
is required at any time in connection with the offering or sale of the
Securities (including the Securities purchased from the Company by such Agent as
principal) and if at such time any event shall have occurred 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 a material fact necessary in order
to make the statements therein, in the light of the circumstances under which
they were made when such Prospectus is delivered, not misleading, or, if for any
other reason it shall be necessary during such same period to amend or
supplement the Prospectus or to file under the Exchange Act any document
incorporated by reference into the Prospectus in order to comply with the
Securities Act, the Exchange Act or the Trust Indenture Act, to notify such
Agent and request such Agent, in its capacity as agent of the Company, to
suspend solicitation of offers to purchase Securities from the Company (and, if
so notified, such Agent shall cease such solicitations as soon as practicable,
but in any event not later than one business day later); and if the Company
shall decide to amend or supplement the Registration Statement or the Prospectus
as then amended or supplemented, to so advise such Agent promptly by telephone
(with confirmation in writing) and to prepare and cause to be filed promptly
with the Commission an amendment or supplement to
12
the Registration Statement or to the Prospectus as then amended or supplemented
that will correct such statement or omission or effect such compliance;
provided, however, that if during such same period such Agent continues to own
the Securities purchased from the Company by such Agent as principal or such
Agent is otherwise required to deliver a prospectus in respect of transactions
in the Securities, the Company promptly shall prepare and file with the
Commission such an amendment or supplement;
(d) To make generally available to its securityholders as soon as
practicable, but in any event not later than eighteen months after the effective
date of the Registration Statement (as defined in Rule 158(c) under the
Securities Act), an earnings statement of the Company and its subsidiaries
(which need not be audited) complying with Section 11(a) of the Securities Act
and the rules and regulations of the Commission thereunder (including, at the
option of the Company, Rule 158);
(e) So long as any Securities are outstanding, to furnish to such Agent
copies of all reports or other communications (financial or other) furnished to
its shareholders, and deliver to such Agent (i) 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 on which any class of securities
of the Company is listed; and (ii) such additional information concerning the
business and financial condition of the Company as such Agent from time to time
reasonably may request (such financial statements to be on a consolidated basis
to the extent the accounts of the Company and its subsidiaries are consolidated
in reports furnished to its shareholders generally or to the Commission);
(f) That, from the date of any Terms Agreement with such Agent or other
agreement by the Agent to purchase the Securities as principal and continuing to
and including the earlier of (i) the termination of the trading restrictions for
the Securities purchased thereunder, as notified to the Company by such Agent
and (ii) the related Time of Delivery, not to offer, sell, contract to sell or
otherwise dispose of any debt securities of the Company which both mature more
than 9 months after such Time of Delivery and are substantially similar to the
Securities, without the prior written consent of such Agent;
(g) That each acceptance by the Company of an offer to purchase the
Securities hereunder (including any purchase by such Agent as principal not
pursuant to a Terms Agreement), and each execution and delivery by the Company
of a Terms Agreement with such Agent, shall be deemed to be an affirmation to
such Agent that the representations and warranties of the Company contained in
or made pursuant to this Agreement are true and correct as of the date of such
acceptance or of such Terms Agreement, as the case may be, as though made at and
as of such date, and an undertaking that such representations and warranties
will be true and correct as of the settlement date for the Securities relating
to such acceptance or as of the Time of Delivery relating to such sale, as the
case may be, as though made at and as of such date (except that such
representations and warranties shall be deemed to relate to the Registration
Statement and to the Prospectus as amended and supplemented relating to such
Securities);
13
(h) That reasonably in advance of each time that the Registration
Statement or the Prospectus shall be amended or supplemented (other than by a
Pricing Supplement) and each time that a document filed under the Securities Act
or the Exchange Act is incorporated by reference into the Prospectus, and each
time that the Company sells the Securities to such Agent as principal pursuant
to a Terms Agreement and such Terms Agreement specifies the delivery of an
opinion or opinions by ▇▇▇▇▇ & Wood llp, counsel to the Agents, or other counsel
for the Agents, as a condition to the purchase of the Securities pursuant to
such Terms Agreement, the Company shall furnish to such counsel such papers and
information as they reasonably may request to enable them to furnish to such
Agent the opinion or opinions referred to in Section 6(b) hereof;
(i) That each time that the Registration Statement or the Prospectus shall
be amended or supplemented (other than by a Pricing Supplement), each time that
a document filed under the Securities Act or the Exchange Act is incorporated by
reference into the Prospectus and each time that the Company sells the
Securities to such Agent as principal pursuant to a Terms Agreement and such
Terms Agreement specifies the delivery of an opinion under this Section 4(i) as
a condition to the purchase of the Securities pursuant to such Terms Agreement,
the Company shall furnish or cause to be furnished forthwith to such Agent a
written opinion of Liddell, Sapp, Zivley, Hill & ▇▇▇▇▇▇, L.L.P., counsel for the
Company, or other counsel for the Company satisfactory to such Agent, dated the
date of such amendment, supplement, incorporation or Time of Delivery relating
to such sale, as the case may be, in form satisfactory to such Agent, to the
effect that such Agent may rely on the opinion of such counsel referred to in
Section 6(c) hereof which last was furnished to such Agent to the same extent as
though it were dated the date of such letter authorizing reliance (except that
the statements in such last opinion shall be deemed to relate to the
Registration Statement and to the Prospectus as amended and supplemented to such
date) or, in lieu of such opinion, an opinion of the same tenor as the opinion
of such counsel referred to in Section 6(c) hereof but modified to relate to the
Registration Statement and to the Prospectus as amended and supplemented to such
date;
(j) That each time that the Registration Statement or the Prospectus shall
be amended or supplemented and each time that a document filed under the
Securities Act or the Exchange Act is incorporated by reference into the
Prospectus, in either case to set forth financial information included in or
derived from the Company's consolidated financial statements or accounting
records, and each time that the Company sells the Securities to such Agent as
principal pursuant to a Terms Agreement and such Terms Agreement specifies the
delivery of a letter under this Section 4(j) as a condition to the purchase of
the Securities pursuant to such Terms Agreement, the Company shall cause the
independent certified public accountants who have certified the financial
statements of the Company and its subsidiaries included in or incorporated by
reference into the Registration Statement forthwith to furnish to such Agent a
letter, dated the date of such amendment, supplement, incorporation or Time of
Delivery relating to such sale, as the case may be, in form satisfactory to such
Agent, of the same tenor as the letter referred to in Section 6(d) hereof but
modified to relate to the Registration Statement and to the Prospectus as
amended or supplemented to the date of such letter, with such changes as may be
necessary to reflect changes in the financial statements and other information
derived from the accounting records of the Company, to the extent such financial
statements and other information
14
are available as of a date not more than five business days prior to the date of
such letter; provided, however, that with respect to any financial information
or other matter, such letter may reconfirm as true and correct at such date as
though made at and as of such date, rather than repeat, statements with respect
to such financial information or other matter made in the letter referred to in
Section 6(d) hereof which last was furnished to such Agent;
(k) That each time that the Registration Statement or the Prospectus shall
be amended or supplemented (other than by a Pricing Supplement), each time that
a document filed under the Securities Act or the Exchange Act is incorporated by
reference into the Prospectus, and each time that the Company sells the
Securities to such Agent as principal and the applicable Terms Agreement
specifies the delivery of a certificate under this Section 4(k) as a condition
to the purchase of the Securities pursuant to such Terms Agreement, the Company
shall furnish or cause to be furnished forthwith to such Agent a certificate,
dated the date of such supplement, amendment, incorporation or Time of Delivery
relating to such sale, as the case may be, in such form and executed by such
officers of the Company as shall be satisfactory to such Agent, to the effect
that the statements contained in the certificate referred to in Section 6(i)
hereof which last was furnished to such Agent are true and correct at such date
as though made at and as of such date (except that such statements shall be
deemed to relate to the Registration Statement and to the Prospectus as amended
and supplemented to such date) or, in lieu of such certificate, certificates of
the same tenor as the certificates referred to in said Section 6(i) but modified
to relate to the Registration Statement and to the Prospectus as amended and
supplemented to such date; and
(l) To offer to any person who has agreed to purchase the Securities as
the result of an offer to purchase solicited by such Agent the right to refuse
to purchase and pay for such Securities if, on the related settlement date fixed
pursuant to the Administrative Procedure, any condition set forth in Section
6(a), 6(e), 6(f), 6(g) or 6(h) hereof shall not have been satisfied (it being
understood that the judgment of such person with respect to the impracticability
or inadvisability of such purchase of the Securities shall be substituted, for
purposes of this Section 4(l), for the respective judgments of an Agent with
respect to certain matters referred to in such Sections 6(e) and 6(g), and that
such Agent shall have no duty or obligation whatsoever to exercise the judgment
permitted under such Sections 6(e) and 6(g) on behalf of any such person).
5. The Company covenants and agrees with each Agent that the Company will
pay or cause to be paid the following: (i) the fees, disbursements and expenses
of the Company's counsel and accountants in connection with the registration of
the Securities under the Securities Act and all other expenses in connection
with the preparation, printing and filing of the Registration Statement, any
Preliminary Prospectus, the Prospectus and any Pricing Supplements and all other
amendments and supplements thereto and the mailing and delivering of copies
thereof to such Agent; (ii) the fees, disbursements and expenses of counsel for
the Agents in connection with the establishment of the program contemplated
hereby, any opinions to be rendered by such counsel hereunder and under any
Terms Agreement and the transactions contemplated hereunder and under any Terms
Agreement; (iii) the cost of printing, producing or reproducing this Agreement,
any Terms Agreement, the Indentures, any blue sky and legal investment surveys,
closing documents (including any compilations thereof) and any other
15
documents in connection with the offering, purchase, sale and delivery of the
Securities; (iv) all expenses in connection with the qualification of the
Securities for offering and sale under state securities laws as provided in
Section 4(b) hereof, including the fees and disbursements of counsel for the
Agents in connection with such qualification and in connection with the blue sky
and legal investment surveys; (v) any fees charged by securities rating services
for rating the Securities; (vi) any filing fees incident to, and the fees and
disbursements of counsel for the Agents in connection with, any required review
by the National Association of Securities Dealers, Inc. of the terms of the sale
of the Securities; (vii) the cost of preparing the Securities; (viii) the fees
and expenses of the Trustee and any agent of the Trustee and any transfer or
paying agent of the Company and the fees and disbursements of counsel for the
Trustee or such agent in connection with the Indentures and the Securities; (ix)
any advertising expenses connected with the solicitation of offers to purchase
and the sale of the Securities so long as such advertising expenses have been
approved by the Company; and (x) all other costs and expenses incident to the
performance of its obligations hereunder which are not otherwise specifically
provided for in this Section. Except as provided in Sections 7 and 8 hereof,
each Agent shall pay all other expenses it incurs.
6. The obligation of any Agent, as agent of the Company, at any time (each
a "Solicitation Time") to solicit offers to purchase the Securities and the
obligation of any Agent to purchase the Securities as principal, pursuant to any
Terms Agreement or otherwise, in each case shall be subject, in such Agent's
discretion, to the condition that all representations and warranties and other
statements of the Company herein (and, in the case of an obligation of an Agent
under a Terms Agreement, in or incorporated by reference into such Terms
Agreement) are true and correct at and as of the Commencement Date and any
applicable date referred to in Section 4(k) hereof that is prior to such
Solicitation Time or Time of Delivery, as the case may be, and at and as of such
Solicitation Time or Time of Delivery, as the case may be, the condition that
prior to such Solicitation Time or Time of Delivery, as the case may be, the
Company shall have performed all of its obligations hereunder theretofore to be
performed, and the following additional conditions:
(a) (i) With respect to any Securities sold at or prior to such
Solicitation Time or Time of Delivery, as the case may be, the Prospectus
as amended or supplemented (including the Pricing Supplement) with respect
to such Securities shall have been filed with the Commission pursuant to
Rule 424(b) under the Securities Act within the applicable time period
prescribed for such filing by the rules and regulations under the
Securities Act and in accordance with Section 4(a) hereof; (ii) no stop
order suspending the effectiveness of the Registration Statement shall have
been issued and no proceeding for that purpose shall have been initiated or
threatened by the Commission; and (iii) all requests for additional
information on the part of the Commission shall have been complied with to
the reasonable satisfaction of such Agent;
(b) ▇▇▇▇▇ & Wood LLP, counsel to the Agents, shall have furnished to such
Agent (i) such opinion or opinions, dated the Commencement Date, with
respect to the matters covered in paragraphs (i), (ii), (vii), (viii),
(ix), (xii) (other than "United States Taxation", as to which such counsel
need express no opinion) and (xvi) of subsection (c) below, as
16
well as such other related matters as such Agent reasonably may request,
and (ii) if and to the extent requested by such Agent, with respect to each
applicable date referred to in Section 4(h) hereof that is on or prior to
such Solicitation Time or Time of Delivery, as the case may be, an opinion
or opinions, dated such applicable date, to the effect that such Agent may
rely on the opinion or opinions which last were furnished to such Agent
pursuant to this Section 6(b) to the same extent as though it or they were
dated the date of such letter authorizing reliance (except that the
statements in such last opinion or opinions shall be deemed to relate to
the Registration Statement and to the Prospectus as amended and
supplemented to such date) or, in any case, in lieu of such an opinion or
opinions, an opinion or opinions of the same tenor as the opinion or
opinions referred to in clause (i) but modified to relate to the
Registration Statement and to the Prospectus as amended and supplemented to
such date; and in each case such counsel shall have received such papers
and information as they may reasonably request to enable them to pass upon
such matters;
(c) Liddell, Sapp, Zivley, Hill & ▇▇▇▇▇▇, L.L.P., counsel for the Company,
or other counsel for the Company satisfactory to such Agent, shall have
furnished to such Agent their written opinion or opinions, each dated the
Commencement Date and each applicable date referred to in Section 4(i)
hereof that is on or prior to such Solicitation Time or Time of Delivery,
as the case may be, in form and substance satisfactory to such Agent, to
the effect that:
(i) The Company is a real estate investment trust duly formed and
validly existing under the laws of the State of Texas and is entitled to
the benefits of the Texas Real Estate Investment Trust Act;
(ii) The Company has the power and authority (corporate and other) to
own its properties and to conduct its business as described in the
Prospectus as amended or supplemented;
(iii) The Company is duly qualified to transact business and is in
good standing in each jurisdiction in which it owns or leases properties,
or conducts any business, so as to require such qualification or is subject
to no material liability, or disability by reason of the failure to be so
qualified in any such jurisdiction;
(iv) Each subsidiary of the Company has been duly incorporated (or,
with respect to ▇▇▇▇▇▇▇▇▇▇ Properties Trust, has been duly formed as a real
estate investment trust) and is validly existing as a corporation or trust
in good standing under the laws of the jurisdiction of its incorporation or
formation, has the power and authority (corporate and other) to own, lease
and operate its properties and to conduct its business as described in the
Prospectus and, to the best of such counsel's knowledge and information, is
duly qualified as a foreign corporation or trust to transact business and
is in good standing in each jurisdiction in which such qualification is
required, whether by reason of the ownership or leasing of property or the
conduct of business, except where the failure to so qualify would not have
a material adverse effect or a prospective material adverse
17
effect on the condition, financial or otherwise, or the earnings or
business affairs of the Company and its subsidiaries considered as one
enterprise; all of the issued and outstanding capital stock of each such
subsidiary has been duly authorized and validly issued, is fully paid and
non-assessable and is owned by the Company, directly or through
subsidiaries (except for ▇▇▇▇▇▇▇▇▇▇ Properties Trust, of which the Company
owns approximately 77% of the outstanding capital shares), free and clear
of any security interest, mortgage, pledge, lien, encumbrance, claim or
equity;
(v) The Company has an authorized capitalization as set forth in
the Prospectus as amended or supplemented, and all of the issued shares of
capital stock of the Company have been duly and validly authorized and
issued and are fully paid and non-assessable;
(vi) To the best of such counsel's knowledge and other than as set
forth in the Prospectus, there are no legal or governmental proceedings
pending to which the Company or any of its subsidiaries is a party or to
which any property of the Company or any of its subsidiaries is subject,
which, if determined adversely to the Company or any of its subsidiaries,
would individually or in the aggregate have a material adverse effect on
the current or future consolidated financial position, shareholders' equity
or results of operations of the Company and its subsidiaries; and to the
best of such counsel's knowledge, no such proceedings are threatened or
contemplated by governmental authorities or threatened by others;
(vii) This Agreement and any applicable Terms Agreement have been
duly authorized, executed and delivered by the Company;
(viii) The Securities have been duly authorized and, when duly
executed, authenticated, issued and delivered by the Company, will
constitute valid and legally binding obligations of the Company entitled to
the benefits provided by the Indentures; and each Indenture conforms and
the Securities will conform to the descriptions thereof in the Prospectus
as amended or supplemented;
(ix) Each Indenture has been duly authorized, executed and delivered
by the parties thereto and constitutes a valid and legally binding
instrument, enforceable in accordance with its respective terms, subject,
as to enforcement, to bankruptcy, insolvency, reorganization and other laws
of general applicability relating to or affecting creditors' rights and
general equitable principles; and each Indenture has been duly qualified
under the Trust Indenture Act;
(x) The issuance and sale of the Securities, the compliance by the
Company with all of the provisions of the Securities, the Indentures, this
Agreement and any applicable Terms Agreement and the consummation of the
transactions hereby and thereby contemplated will not conflict with or
result in a breach or violation of any of the terms or provisions of, or
constitute a default under, any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument known to such counsel to which
18
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 Restated
Declaration of Trust, as amended, of the Company or the By-laws of the
Company or any statute or any order, rule or regulation known to such
counsel of any court or governmental agency or body having jurisdiction
over the Company or any of its subsidiaries or any of their respective
properties;
(xi) No consent, approval, authorization, order, registration or
qualification of or with any court or governmental agency or body is
required for the solicitation of offers to purchase the Securities, the
issuance and sale of the Securities or the consummation by the Company of
the other transactions contemplated by this Agreement, any applicable Terms
Agreement, or the Indentures, except such as have been obtained under the
Securities Act and the Trust Indenture Act and such consents, approvals,
authorizations, registrations or qualifications as may be required under
state securities or blue sky laws in connection with the solicitation by
the Agents of offers to purchase the Securities from the Company and with
purchases of the Securities by an Agent as principal, as the case may be,
in each case in the manner contemplated hereby;
(xii) The information set forth in the Prospectus, under the captions
"United States Taxation", "Description of Debt Securities", "Description of
Notes", "Description of Common Shares", "Description of Preferred Shares"
and "Description of Securities Warrants" to the extent such information
constitutes matters of law, summaries of legal matters, documents or
proceedings, or legal conclusions, has been reviewed by them and is
correct;
(xiii) Based upon a review of such documents, certificates and records
as such counsel has deemed necessary to express its opinion, upon its
discussions with management of the Company, independent accountants for the
Company and with certain shareholders of the Company and based upon the
facts set forth in the Registration Statement, certain assumptions and
certain representations made to it by the Company's management and by
certain of its shareholders, such counsel is of the view that, as of the
date of its opinion the Company's form of organization and its share
ownership is such as to enable the Company to meet the requirements of the
Code for qualifications as a real estate investment trust thereunder and
that its income, assets and method of operations have allowed it to qualify
as a real estate investment trust for its taxable year ended December 31,
1995 and all years thereafter, and its currently contemplated future
assets, income and method of operations should put it in a position to
qualify to be treated as a real estate investment trust for the current
calendar year;
(xiv) The Company is not and, after giving effect to the offering and
sale of the Securities, will not be an "investment company" or an entity
"controlled" by an "investment company", as such terms are defined in the
Investment Company Act;
19
(xv) The documents incorporated by reference in the Prospectus
(other than the financial statements and related schedules therein, as to
which such counsel need express no opinion), when they became effective or
were filed with the Commission, as the case may be, complied as to form in
all material respects with the requirements of the Securities Act or the
Exchange Act, as applicable, and the rules and regulations of the
Commission thereunder; and they have no reason to believe that any of such
documents, when they became effective or were so filed, as the case may be,
contained, in the case of a registration statement which became effective
under the Securities Act, 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, and, in the case of other documents
which were filed under the Securities Act or the Exchange Act with the
Commission, an untrue statement of a material fact or omitted to state a
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made when such documents
were so filed, not misleading; and
(xvi) The Registration Statement and the Prospectus as amended and
supplemented and any further amendments and supplements thereto made by the
Company prior to the date of such opinion (other than the financial
statements and related schedules therein, as to which such counsel need
express no opinion) comply as to form in all material respects with the
requirements of the Securities Act and the Trust Indenture Act and the
rules and regulations thereunder; and although they do not assume any
responsibility for the accuracy, completeness or fairness of the statements
contained in the Registration Statement or in the Prospectus, except for
those referred to in the opinion in subsection (xii) of this Section 6(c),
they have no reason to believe that, as of its effective date, the
Registration Statement or any further amendment or supplement thereto made
by the Company prior to the date of such opinion (other than the financial
statements and related schedules therein, as to which such counsel need
express no opinion) 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, as of the date of
such opinion, the Prospectus as amended or supplemented or any further
amendment or supplement thereto made by the Company prior to the date of
such opinion (other than the financial statements and related schedules
therein, as to which such counsel need express no opinion) contained an
untrue statement of a material fact or omitted to state a material fact
necessary to make the statements therein, in light of the circumstances in
which they were made, not misleading; and they do not know of any amendment
to the Registration Statement required to be filed or any contracts or
other documents of a character required to be filed as an exhibit to the
Registration Statement or required to be incorporated by reference into the
Prospectus as amended or supplemented or required to be described in the
Registration Statement or the Prospectus as amended or supplemented which
are not filed or incorporated by reference or described as required;
(d) Not later than 10:00 a.m., New York City time, on the Commencement Date
and on each applicable date referred to in Section 4(j) hereof that is on
or prior to such Solicitation Time or Time of Delivery, as the case may be,
the independent certified
20
public accountants who have certified the financial statements of the
Company and its subsidiaries included in or incorporated by reference into
the Registration Statement shall have furnished to such Agent a letter,
dated the Commencement Date or such applicable date, as the case may be, in
form and substance satisfactory to such Agent, to the effect set forth in
Annex III hereto;
(e) (i) Neither the Company nor any of its subsidiaries shall have
sustained since the date of the latest audited financial statements
included in or incorporated by reference into the Prospectus as amended or
supplemented prior to the date of the acceptance of the offer to purchase
the Securities to be delivered at the relevant Time of Delivery any loss or
interference with its business from fire, explosion, flood or other
calamity, or from any labor dispute or court or governmental action, order
or decree, otherwise than as set forth in or contemplated by the Prospectus
as amended or supplemented prior to the date of the acceptance of the offer
to purchase the Securities to be delivered at the relevant Time of
Delivery; and (ii) since the respective dates as of which information is
given in the Prospectus as amended or supplemented prior to the date of the
acceptance of the offer to purchase to the Securities to be delivered at
the relevant Time of Delivery there shall not have been any change in the
capital stock or any increase in the consolidated long-term debt of the
Company and its subsidiaries or any decrease in consolidated net current
assets or net assets or any change, or any development involving a
prospective change, in or affecting the general affairs, management,
financial position, shareholders' equity or results of operations of the
Company and its subsidiaries, otherwise than as set forth in or
contemplated by the Prospectus as amended or supplemented, the effect of
which, in any such case described in clause (i) or (ii), is in the judgment
of such Agent so material and adverse as to make it impracticable or
inadvisable to proceed with the solicitation by such Agent of offers to
purchase the Securities from the Company or the purchase by such Agent of
the Securities from the Company as principal, as the case may be, on the
terms and in the manner contemplated by the Prospectus as amended or
supplemented;
(f) On or after the date hereof (i) no downgrading shall have occurred in
the rating accorded the Company's debt securities by any "nationally
recognized statistical rating organization", as that term is defined by the
Commission for purposes of Rule 436(g)(2) under the Securities Act, and
(ii) no such organization shall have publicly announced that it has under
surveillance or review, with possible negative implications, its rating of
any of the Company's debt securities;
(g) On or after the date hereof there shall not have occurred any of the
following: (i) a suspension or material limitation in trading in securities
generally on the New York Stock Exchange; (ii) a suspension or material
limitation in trading in the Company's securities on the New York Stock
Exchange; (iii) a general moratorium on commercial banking activities in
New York declared by either Federal or New York State authorities; or (iv)
the outbreak or escalation of hostilities involving the United States or
the declaration by the United States of a national emergency or war, if the
effect of any such event specified in this clause (iv) in the judgment of
such Agent makes it impracticable or inadvisable to proceed with the
solicitation of offers to purchase the Securities or the purchase of the
21
Securities from the Company as principal pursuant to the applicable
Terms Agreement or otherwise, as the case may be, on the terms and in
the manner contemplated in the Prospectus;
(h) With respect to any Security denominated in a currency other than
the U.S. dollar, more than one currency or a composite currency or any
Security the principal or interest of which is indexed to such currency,
currencies or composite currency, there shall not have occurred any of
the following: (i) a suspension or material limitation in foreign
exchange trading in such currency, currencies or composite currency by a
major international bank; (ii) a general moratorium on commercial
banking activities in the country or countries issuing such currency,
currencies or composite currency; (iii) the outbreak or escalation of
hostilities involving, the occurrence of any material adverse change in
the existing financial, political or economic conditions of, or the
declaration of war or a national emergency by, the country or countries
issuing such currency, currencies or composite currency; or (iv) the
imposition or proposal of exchange controls by any governmental
authority in the country or countries issuing such currency, currencies
or composite currency; and
(i) The Company shall have furnished or caused to be furnished to such
Agent certificates of officers of the Company dated the Commencement
Date and each applicable date referred to in Section 4(k) hereof that is
on or prior to such Solicitation Time or Time of Delivery, as the case
may be, in such form and executed by such officers of the Company as
shall be satisfactory to such Agent, as to the accuracy of the
representations and warranties of the Company herein at and as of the
Commencement Date or such applicable date, as the case may be, as to the
performance by the Company of all of its obligations hereunder to be
performed at or prior to the Commencement Date or such applicable date,
as the case may be, as to the matters set forth in subsections (a) and
(e) of this Section 6, and as to such other matters as such Agent
reasonably may request.
7. (a) The Company will indemnify and hold harmless each Agent against
any losses, claims, damages or liabilities, joint or several, to which such
Agent may become subject, under the Securities Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon an untrue statement or alleged untrue statement of a
material fact contained in any Preliminary Prospectus, any preliminary
prospectus supplement, the Registration Statement, the Prospectus as amended or
supplemented and any other prospectus relating to the Securities, or any
amendment or supplement thereto, 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 such Agent for any legal or other expenses reasonably incurred by it
in connection with investigating or defending any such action or claim as such
expenses are incurred; provided, however, that the Company shall 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
or omission or alleged omission made in any Preliminary Prospectus, any
preliminary prospectus supplement, the Registration Statement, the Prospectus as
amended or supplemented
22
and any other prospectus relating to the Securities, or any such amendment or
supplement, in reliance upon and in conformity with written information
furnished to the Company by such Agent expressly for use therein.
(b) Each Agent will indemnify and hold harmless the Company against any
losses, claims, damages or liabilities to which the Company may become subject,
under the Securities Act or otherwise, insofar as such losses, claims, damages
or liabilities (or actions in respect thereof) arise out of or are based upon an
untrue statement or alleged untrue statement of a material fact contained in any
Preliminary Prospectus, any preliminary prospectus supplement, the Registration
Statement, the Prospectus as amended or supplemented and any other prospectus
relating to the Securities, or any amendment or supplement thereto, 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, 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 any Preliminary Prospectus, any preliminary prospectus
supplement, the Registration Statement, the Prospectus as amended or
supplemented and any other prospectus relating to the Securities, or any such
amendment or supplement, in reliance upon and in conformity with written
information furnished to the Company by such Agent expressly for use therein;
and will reimburse the Company for any legal or other expenses reasonably
incurred by the Company in connection with investigating or defending any such
action or claim as such expenses are incurred.
(c) Promptly after the receipt by an indemnified party under subsection
(a) or (b) above of notice of the commencement of any action, such indemnified
party, if a claim in respect thereof is to be made against the indemnifying
party under such subsection, shall notify the indemnifying party in writing of
the commencement thereof; but the omission so to notify the indemnifying party
shall not relieve it from any liability which it may have to any indemnified
party otherwise than under such subsection. In case any such action shall be
brought against any indemnified party and it shall notify the indemnifying party
of the commencement thereof, the indemnifying party shall be entitled to
participate therein and, to the extent that it shall wish, jointly with any
other indemnifying party similarly notified, to assume the defense thereof, 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 shall not be
liable to such indemnified party under such subsection for any legal expenses of
other counsel or any other expenses, in each case subsequently incurred by such
indemnified party, in connection with the defense thereof other than reasonable
costs of investigation. In no event shall the indemnifying parties be liable for
fees and expenses of more than one counsel (in addition to any local counsel)
separate from their own counsel for all indemnified parties in connection with
any one action or separate but similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances. No
indemnifying party shall, without the written consent of the indemnified party,
effect the settlement or compromise of, or consent to the entry of any judgment
with respect to, any pending or threatened action or claim in respect of which
indemnification or contribution may be sought hereunder (whether or not the
indemnified party is an actual or potential party to such action or claim)
unless such settlement,
23
compromise or judgment (i) includes an unconditional release of the indemnified
party from all liability arising out of such action or claim and (ii) does not
include a statement as to or an admission of fault, culpability or a failure to
act, by or on behalf of any indemnified party.
(d) If the indemnification provided for in this Section 7 is unavailable
to or insufficient to hold harmless an indemnified party under subsection (a) or
(b) above in respect of any losses, claims, damages or liabilities (or actions
in respect thereof) referred to therein, then each indemnifying party shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages or liabilities (or actions in respect thereof)
in such proportion as is appropriate to reflect the relative benefits received
by the Company on the one hand and each Agent on the other from the offering of
the Securities to which such loss, claim, damage or liability (or action in
respect thereof) relates. If, however, the allocation provided by the
immediately preceding sentence is not permitted by applicable law or if the
indemnified party failed to give the notice required under subsection (c) above,
then each indemnifying party shall contribute to such amount paid or payable by
such indemnified party in such proportion as is appropriate to reflect not only
such relative benefits but also the relative fault of the Company on the one
hand and each Agent on the other in connection with the statements or omissions
which resulted in such losses, claims, damages or liabilities (or actions in
respect thereof), as well as any other relevant equitable considerations. The
relative benefits received by the Company on the one hand and each Agent on the
other shall be deemed to be in the same proportion as the total net proceeds
from the sale of the Securities (before deducting expenses) received by the
Company bear to the total commissions or discounts received by such Agent in
respect thereof. 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 required to be
stated in the Registration Statement or necessary in order to make the
statements therein not misleading relates to information supplied by the Company
on the one hand or by any Agent on the other and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Company and each Agent agree that it would not be
just and equitable if contribution pursuant to this subsection (d) were
determined by per capita allocation (even if all Agents were treated as one
entity for such purpose) or by any other method of allocation which does not
take account of the equitable considerations referred to above in this
subsection (d). The amount paid or payable by an indemnified party as a result
of the losses, claims, damages or liabilities (or actions in respect thereof)
referred to above in 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 such action or claim. Notwithstanding the
provisions of this subsection (d), an Agent shall not be required to contribute
any amount in excess of the amount by which the total public offering price at
which the Securities purchased by or through it were sold exceeds the amount of
any damages which such Agent 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 Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. The obligations of each
of the Agents under this subsection (d) to contribute are several in proportion
to the respective purchases made by or through it to which such loss, claim,
damage or liability (or action in respect thereof) relates and are not joint.
24
(e) The obligations of the Company under this Section 7 shall be in
addition to any liability which the Company otherwise may have and shall extend,
upon the same terms and conditions, to each person, if any, who controls any
Agent within the meaning of the Securities Act; and the obligations of each
Agent under this Section 7 shall be in addition to any liability which such
Agent may otherwise have and shall extend, upon the same terms and conditions,
to each officer and director of the Company and to each person, if any, who
controls the Company within the meaning of the Securities Act.
8. Each Agent, in soliciting offers to purchase the Securities from the
Company and in performing the other obligations of such Agent hereunder (other
than in respect of any purchase by an Agent as principal, pursuant to a Terms
Agreement or otherwise), is acting solely as agent for the Company and not as
principal. Each Agent will make reasonable efforts to assist the Company in
obtaining the performance by each purchaser whose offer to purchase the
Securities from the Company was solicited by such Agent and has been accepted by
the Company, but such Agent shall not have any liability to the Company in the
event such purchase is not consummated for any reason. If the Company shall
default on its obligation to deliver the Securities to a purchaser whose offer
it has accepted, the Company shall (i) hold each Agent harmless against any
loss, claim or damage arising from or as a result of such default by the Company
and (ii) notwithstanding such default, pay to the Agent that solicited such
offer any commission to which it would be entitled in connection with such sale.
9. The respective indemnities, agreements, representations, warranties
and other statements by any Agent and the Company set forth in or made pursuant
to this Agreement shall remain in full force and effect regardless of any
investigation (or any statement as to the results thereof) made by or on behalf
of any Agent or any controlling person of any Agent, or the Company, or any
officer or trust manager or any controlling person of the Company, and shall
survive each delivery of and payment for any of the Securities.
10. The provisions of this Agreement relating to the solicitation of
offers to purchase the Securities from the Company may be suspended or
terminated at any time by the Company as to any Agent or by any Agent as to such
Agent upon the giving of written notice of such suspension or termination to
such Agent or the Company, as the case may be. In the event of such suspension
or termination with respect to any Agent, (x) this Agreement shall remain in
full force and effect with respect to any Agent as to which such suspension or
termination has not occurred, (y) this Agreement shall remain in full force and
effect with respect to the rights and obligations of any party which previously
have accrued or which relate to the Securities which already are issued, agreed
to be issued or the subject of a pending offer at the time of such suspension or
termination and (z) in any event, this Agreement shall remain in full force and
effect insofar as the fourth paragraph of Section 2(a), and Sections 4(d), 4(e),
5, 7, 8 and 9 hereof are concerned.
11. Except as otherwise specifically provided herein or in the
Administrative Procedure, all statements, requests, notices and advices
hereunder shall be in writing, or by telephone if promptly confirmed in writing,
and if to (i) ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co. shall be sufficient in all respects when
delivered or sent by facsimile transmission or registered mail to ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇,
▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Facsimile Transmission No. (▇▇▇) ▇▇▇-▇▇▇▇, Attention:
Credit Department, (ii) BancAmerica ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ shall be sufficient in
all respects when delivered or sent by facsimile transmission or registered mail
to ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Facsimile
Transmission No. (▇▇▇) ▇▇▇-▇▇▇▇, Attention MTN Product Manager, (iii)BT Alex.
▇▇▇▇▇ Incorporated shall be sufficient in all respects when delivered or sent by
facsimile transmission or registered mail to ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Facsimile Transmission No. (▇▇▇) ▇▇▇-▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇, Principal, (iv) Chase Securities Inc. shall be sufficient in all
respects when delivered or sent by facsimile transmission or registered mail to
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Facsimile Transmission No.
(▇▇▇) ▇▇▇-▇▇▇▇, Attention: Medium-Term Note Desk, (v) ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇ Securities Corporation shall be sufficient in all respects when
delivered or sent by facsimile transmission or registered mail to ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Facsimile Transmission No. (212)
892-4298, Attention: ▇▇▇▇ ▇▇▇▇▇, Senior Vice President, (vi) ▇▇▇▇▇▇ Brothers
Inc. shall be sufficient in all respects when delivered or sent by facsimile
transmission or registered mail to Three World ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Facsimile Transmission No. (▇▇▇) ▇▇▇-▇▇▇▇, Attention:
Medium-Term Note Department, (vii) ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., ▇▇▇▇▇▇▇ Lynch, Pierce,
▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated shall be sufficient in all respects when delivered
or sent by facsimile transmission or registered mail to World Financial Center,
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Facsimile Transmission
No. (▇▇▇) ▇▇▇-▇▇▇▇, Attention: MTN Product Management, (viii) ▇.▇. ▇▇▇▇▇▇
Securities Inc. shall be sufficient in all respects when delivered or sent by
facsimile transmission or registered mail to ▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Facsimile Transmission No. (▇▇▇) ▇▇▇-▇▇▇▇, Attention:
Transaction Execution Group, (ix) NationsBanc ▇▇▇▇▇▇▇▇▇▇ Securities, LLC shall
be sufficient in all respects when delivered or sent by facsimile transmission
or registered mail to ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Facsimile Transmission No. (▇▇▇) ▇▇▇-▇▇▇▇, Attention: MTN
Product Management, or (x) the Company shall be sufficient in all respects when
delivered or sent by facsimile transmission or registered mail to ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, Facsimile Transmission No. (▇▇▇) ▇▇▇-▇▇▇▇,
Attention: M. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Vice President and Secretary.
12. This Agreement and any Terms Agreement shall be binding upon, and
inure solely to the benefit of, each Agent and the Company, and to the extent
provided in Sections 7, 8 and 9 hereof, the officers and trust managers of the
Company and any person who controls any Agent or the Company, and their
respective personal representatives, successors and assigns, and no other person
shall acquire or have any right under or by virtue of this Agreement or any
Terms Agreement. No purchaser of any of the Securities through or from any Agent
hereunder shall be deemed a successor or assign by reason merely of such
purchase.
13. THIS AGREEMENT AND ANY TERMS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
14. This Agreement and any Terms Agreement may be executed by any one or
more of the parties hereto and thereto in any number of counterparts, each of
which shall be an original, but all of such respective counterparts shall
together constitute one and the same instrument.
26
If the foregoing is in accordance with your understanding of this
Agreement, please sign and return to us 12 counterparts hereof, whereupon this
letter and the acceptance by you thereof shall constitute a binding agreement
between the Company and you in accordance with its terms.
Very truly yours,
▇▇▇▇▇▇▇▇▇▇ REALTY INVESTORS
By:
------------------------------
Name:
Title:
Accepted in New York, New York
as of the date hereof:
------------------------------
(▇▇▇▇▇▇▇, ▇▇▇▇▇ & CO.)
BANCAMERICA ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇. ▇▇▇▇▇ INCORPORATED
By: By:
------------------------------ -----------------------------
Name: Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Title: Principal
CHASE SECURITIES INC. ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
SECURITIES CORPORATION
By: By:
------------------------------ -----------------------------
Name: Name: ▇▇▇▇ ▇▇▇▇▇
Title: Title: Senior Vice President
▇▇▇▇▇▇ BROTHERS INC. ▇▇▇▇▇▇▇ LYNCH, PIERCE, ▇▇▇▇▇▇
& ▇▇▇▇▇ INCORPORATED
By: By:
------------------------------ -----------------------------
Name: Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Title: Authorized Signatory
▇.▇. ▇▇▇▇▇▇ SECURITIES INC. NATIONSBANC ▇▇▇▇▇▇▇▇▇▇
SECURITIES, LLC
By: By:
------------------------------ -----------------------------
Name: Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Title: Director
I-1
ANNEX I
-------
▇▇▇▇▇▇▇▇▇▇ REALTY INVESTORS
Medium-Term Notes, Series A
TERMS AGREEMENT
---------------
_______, 1998
▇▇▇▇▇▇▇, Sachs & Co. ▇▇▇▇▇▇ Brothers Inc.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Three World Financial Center, 12th Floor
New York, New York 10004 ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
BancAmerica ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, 18th Floor ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Incorporated
World Financial Center
BT Alex. ▇▇▇▇▇ Incorporated North Tower, 10th Floor
▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇.▇. ▇▇▇▇▇▇ Securities Inc.
Chase Securities Inc. ▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
NationsBanc ▇▇▇▇▇▇▇▇▇▇ Securities, LLC
▇▇▇▇▇▇▇▇▇, Lufkin & ▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
Securities Corporation ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
▇▇▇▇▇▇▇▇▇▇ Realty Investors, a Texas real estate investment trust (the
"Company"), proposes, subject to the terms and conditions stated herein and in
the Distribution Agreement, dated August 10, 1998 (the "Distribution
Agreement"), between the Company on the one hand and ▇▇▇▇▇▇▇, Sachs & Co.,
BancAmerica ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇. ▇▇▇▇▇ Incorporated, Chase Securities
Inc., ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ Securities Corporation, ▇▇▇▇▇▇ Brothers Inc.,
▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated, ▇.▇.
▇▇▇▇▇▇ Securities Inc. and NationsBanc ▇▇▇▇▇▇▇▇▇▇ Securities, LLC (together, the
"Agents") on the other, to issue and sell to the Agents the securities specified
in the Schedule hereto (the "Purchased Securities"). Each of the provisions of
the Distribution Agreement not specifically related to the solicitation by the
Agents, as agents of the Company, of offers to purchase the
I-2
Securities is incorporated herein by reference in its entirety, and shall be
deemed to be part of this Terms Agreement to the same extent as if such
provision had been set forth in full herein. Nothing contained herein or in the
Distribution Agreement shall make any party hereto an agent of the Company or
make such party subject to the provisions therein relating to the solicitation
of offers to purchase securities from the Company, solely by virtue of its
execution of this Terms Agreement. Each of the representations and warranties
set forth therein shall be deemed to have been made at and as of the date of
this Terms Agreement, except that each representation and warranty in Section 1
of the Distribution Agreement which makes reference to the Prospectus shall be
deemed to be a representation and warranty as of the date of the Distribution
Agreement in relation to the Prospectus (as therein defined), and also a
representation and warranty as of the date of this Terms Agreement in relation
to the Prospectus as amended and supplemented to relate to the Purchased
Securities.
An amendment to the Registration Statement, or a supplement to the
Prospectus, as the case may be, relating to the Purchased Securities, in the
form heretofore delivered to you is now proposed to be filed with the
Commission.
Subject to the terms and conditions set forth herein and in the
Distribution Agreement incorporated herein by reference, the Company agrees to
issue and sell to the Agents, and the Agents agree to purchase from the Company
the Purchased Securities, at the time and place, in the principal amount and at
the purchase price set forth in the Schedule hereto.
I-2
If the foregoing is in accordance with your understanding, please sign and
return to us a counterpart hereof, and upon acceptance hereof by you this letter
and such acceptance hereof, including those provisions of the Distribution
Agreement incorporated herein by reference, shall constitute a binding agreement
between you and the Company.
▇▇▇▇▇▇▇▇▇▇ REALTY INVESTORS
By:
------------------------------
Name:
Title:
Accepted:
-------------------
(▇▇▇▇▇▇▇, ▇▇▇▇▇ & CO.)
BANCAMERICA ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ SECURITIES INC.
By: By:
-------------------------- ------------------------
Name: Name:
Title Title:
BT ALEX. ▇▇▇▇▇ INCORPORATED ▇▇▇▇▇▇ BROTHERS INC.
By: By:
-------------------------- ------------------------
Name: Name:
Title Title:
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ ▇.▇. ▇▇▇▇▇▇ SECURITIES INC.
SECURITIES CORPORATION
By: By:
-------------------------- ------------------------
Name: Name:
Title Title:
▇▇▇▇▇▇▇ LYNCH, PIERCE, ▇▇▇▇▇▇ NATIONSBANC ▇▇▇▇▇▇▇▇▇▇
& ▇▇▇▇▇ INCORPORATED SECURITIES, LLC
By: By:
-------------------------- ------------------------
Name: Name:
Title Title:
I-3
SCHEDULE TO ANNEX I
-------------------
Title of Purchased Securities:
__ % Medium-Term [Senior] [Subordinated] Notes, Series A
Aggregate Principal Amount:
$____________
Price to the Public:
$____________
Purchase Price by ▇▇▇▇▇▇▇, Sachs & Co., BancAmerica ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇.
▇▇▇▇▇ Incorporated, Chase Securities Inc., ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
Securities Corporation, ▇▇▇▇▇▇ Brothers Inc., ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., ▇▇▇▇▇▇▇
Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated, ▇.▇. ▇▇▇▇▇▇ Securities Inc., or
NationsBanc ▇▇▇▇▇▇▇▇▇▇ Securities, LLC:
___% of the principal amount of the Purchased Securities, plus accrued
interest from _______________ to ___________ and accrued amortization, if any,
from ___________ to __________
Method of, and Specified Funds for, Payment of Purchase Price:
[By certified or official bank check or checks, payable to the order of the
Company, in [New York Clearing House or similar next-day] [Fed Funds or similar
immediately available] funds]
[By wire transfer to a bank account specified by the Company in [New York
Clearing House or similar next-day] [Fed Funds or similar immediately available]
funds]
[Senior] [Subordinated] Indenture:
Indenture, dated as of May 1, 1995, between the Company and Chase Bank of
Texas National Association (formerly known as Texas Commerce Bank National
Association), as Trustee
Time of Delivery:
Closing Location for Delivery of Securities:
I-4
Maturity:
Interest Rate:
_____%
Interest Payment Dates:
Documents to be Delivered:
The following documents referred to in the Distribution Agreement shall be
delivered as a condition to the Closing:
(1) The opinion or opinions of counsel to the Agents referred to in
Section 4(h).
(2) The opinion of counsel to the Company referred to in Section 4(i).
(3) The accountants' letter referred to in Section 4(j).
(4) The officers' certificate referred to in Section 4(k).
Other Provisions (including Syndicate Provisions, if applicable):
I-5
ANNEX II
--------
▇▇▇▇▇▇▇▇▇▇ REALTY INVESTORS
ADMINISTRATIVE PROCEDURE
------------------------
This Administrative Procedure relates to the Securities defined in the
Distribution Agreement, dated August 10, 1998 (the "Distribution Agreement"),
between ▇▇▇▇▇▇▇▇▇▇ Realty Investors (the "Company") and ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co.,
BancAmerica ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇. ▇▇▇▇▇ Incorporated, Chase Securities
Inc., ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ Securities Corporation, ▇▇▇▇▇▇ Brothers Inc.,
▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated, ▇.▇.
▇▇▇▇▇▇ Securities Inc., and NationsBanc ▇▇▇▇▇▇▇▇▇▇ Securities, LLC (together,
the "Agents"), to which this Administrative Procedure is attached as Annex II.
Defined terms used herein but not defined herein shall have the respective
meanings given such terms in the Distribution Agreement, the Prospectus as
amended or supplemented or the Indentures.
The procedures to be followed with respect to the settlement of sales of
the Securities directly by the Company to purchasers solicited by an Agent, as
agent, are set forth below. The terms and settlement details related to a
purchase of the Securities by an Agent, as principal, from the Company will be
set forth in a Terms Agreement pursuant to the Distribution Agreement, unless
the Company and such Agent otherwise agree as provided in Section 2(b) of the
Distribution Agreement, in which case the procedures to be followed in respect
of the settlement of such sale will be as set forth below. An Agent, in
relation to a purchase of a Security by a purchaser solicited by such Agent, is
referred to herein as the "Selling Agent" and, in relation to a purchase of a
Security by such Agent as principal other than pursuant to a Terms Agreement, is
referred to herein as the "Purchasing Agent".
The Company will advise each Agent in writing of those persons with whom
such Agent is to communicate regarding offers to purchase the Securities and the
related settlement details.
Each Security will be issued only in fully registered form and will be
represented by either a global security (a "Global Security") delivered to the
Trustee, as agent for The Depository Trust Company (the "Depositary") and
recorded in the book-entry system maintained by the Depositary (a "Book-Entry
Security") or a certificate issued in definitive form (a "Certificated
Security") delivered to a person designated by an Agent, as set forth in the
applicable Pricing Supplement. An owner of a Book-Entry Security will not be
entitled to receive a certificate representing such Security, except as provided
in the Indentures.
Certificated Securities will be issued in accordance with the
Administrative Procedure set forth in Part I hereof, and Book-Entry Securities
will be issued in accordance with the Administrative Procedure set forth in Part
II hereof.
II-1
PART I: ADMINISTRATIVE PROCEDURE FOR CERTIFICATED SECURITIES
-------------------------------------------------------------
Posting Rates by the Company:
The Company and the Agents will discuss from time to time the rates of
interest per annum to be borne by and the maturity of Certificated Securities
that may be sold as a result of the solicitation of offers by an Agent. The
Company may establish a fixed set of interest rates and maturities for an
offering period ("posting"). If the Company decides to change already posted
rates, it promptly will advise the Agents to suspend solicitation of offers
until the new posted rates have been established with the Agents.
Acceptance of Offers by the Company:
Each Agent promptly will advise the Company by telephone or other
appropriate means of all reasonable offers to purchase Certificated Securities,
other than those rejected by such Agent. Each Agent, in its discretion
reasonably exercised, may reject any offer received by it in whole or in part.
Each Agent also may make offers to the Company to purchase Certificated
Securities as a Purchasing Agent. The Company will have the sole right to
accept offers to purchase Certificated Securities and may reject any such offer
in whole or in part.
The Company promptly will notify the Selling Agent or the Purchasing Agent,
as the case may be, of its acceptance or rejection of an offer to purchase
Certificated Securities. If the Company accepts an offer to purchase
Certificated Securities, it will confirm such acceptance in writing to the
Selling Agent or the Purchasing Agent, as the case may be, and the Trustee.
Communication of Sale Information to the Company
by the Selling Agent:
After the acceptance of an offer by the Company, the Selling Agent or the
Purchasing Agent, as the case may be, will communicate the following details of
the terms of such offer (the "Sale Information") to the Company by telephone
(confirmed in writing) or by facsimile transmission or other acceptable written
means:
(1) Principal amount of Certificated Securities to be purchased;
(2) If a Fixed Rate Certificated Security, the Interest Rate and the
initial Interest Payment Date;
(3) Maturity Date;
(4) Specified Currency and, if the Specified Currency is other than U.S.
Dollars, the applicable Exchange Rate for such Specified Currency;
(5) Index Currency, the Base Rate and the Exchange Rate Determination
Date, if applicable;
II-2
(6) Issue Price;
(7) Selling Agent's commission or Purchasing Agent's discount, as the
case may be;
(8) Net proceeds to the Company;
(9) Settlement Date;
(10) If a redeemable Certificated Security, such of the following as are
applicable:
(i) Redemption Commencement Date,
(ii) Initial Redemption Price (% of par), and
(iii) Amount ( % of par) that the Redemption Price shall decline
(but not below par) on each anniversary of the Redemption
Commencement Date;
(11) If a Floating Rate Certificated Security, such of the following as
are applicable:
(i) Interest Rate Basis,
(ii) Index Maturity,
(iii) Spread and/or Spread Multiplier,
(iv) Maximum Rate,
(v) Minimum Rate,
(vi) Initial Interest Rate,
(vii) Interest Reset Dates,
(viii) Calculation Dates,
(ix) Interest Determination Dates,
(x) Interest Payment Dates,
(xi) Regular Record Dates, and
(xii) Calculation Agent;
(12) Name, address and taxpayer identification number of the registered
owner(s);
(13) Denomination of certificates to be delivered at settlement; and
(14) Book-Entry Security or Certificated Security.
II-3
Preparation of a Pricing Supplement by the Company:
If the Company accepts an offer to purchase a Certificated Security, it
will prepare a Pricing Supplement. The Company will supply at least one copy of
such Pricing Supplement to the Selling Agent or the Purchasing Agent, as the
case may be, not later than 11:00 a.m., New York City time, on the business day
following the date of acceptance of such offer, or if the Company and the
purchaser agree to settle on the date of such acceptance, not later than noon,
New York City time, on such date, by facsimile or overnight express to the
following applicable address: (i) if to ▇▇▇▇▇▇▇, Sachs & Co., to ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Facsimile Transmission No. (212)
902-0658, Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, (ii) if BancAmerica ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇,
to ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Facsimile
Transmission No. (▇▇▇) ▇▇▇-▇▇▇▇, Attention: MTN Product Manager, (iii) if to BT
Alex. ▇▇▇▇▇ Incorporated, to ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇, Facsimile Transmission No. (▇▇▇) ▇▇▇-▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
(iv) if to Chase Securities Inc., to ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇ ▇▇▇▇▇, Facsimile Transmission No. (▇▇▇) ▇▇▇-▇▇▇▇, Attention: Medium-Term
Note Desk, (v) if to ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ Securities Corporation, to ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Facsimile Transmission No.
(▇▇▇) ▇▇▇-▇▇▇▇, Attention: ▇▇▇▇ ▇▇▇▇▇, (vi) if to ▇▇▇▇▇▇ Brothers Inc., c/o ADP
Prospectus Services, ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Facsimile
No. (▇▇▇) ▇▇▇-▇▇▇▇, Attention: ▇▇▇▇▇▇▇ ▇▇▇▇, (vii) if to ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co.,
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated, to Tritech Services, ▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, Facsimile Transmission No. (908)
885-2774, Attention: Prospectus Operations/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, with a copy to
▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated, World
Financial Center, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇,
Facsimile Transmission No. (▇▇▇) ▇▇▇-▇▇▇▇, Attention: MTN Product Management,
(viii) if to ▇.▇. ▇▇▇▇▇▇ Securities Inc., to ▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Facsimile Transmission No. (▇▇▇) ▇▇▇-▇▇▇▇, Attention: MTN
Desk, and (ix) if to NationsBanc ▇▇▇▇▇▇▇▇▇▇ Securities, LLC, to ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Facsimile Transmission No.
(▇▇▇) ▇▇▇-▇▇▇▇, Attention: MTN Product Management. The Company will arrange to
have ten Pricing Supplements filed with the Commission not later than the close
of business of the Commission on the fifth business day following the date on
which such Pricing Supplement first is used.
Delivery of a Confirmation and the Prospectus to a Purchaser
by the Selling Agent:
The Selling Agent will deliver to the purchaser of a Certificated Security
a written confirmation of the sale and delivery and payment instructions. In
addition, the Selling Agent will deliver to such purchaser or its agent the
Prospectus as amended or supplemented (including the Pricing Supplement) in
relation to such Certificated Security prior to or together with the earlier of
the delivery to such purchaser or its agent of (a) the confirmation of the sale
or (b) the Certificated Security.
II-4
Date of Settlement:
All offers solicited by the Selling Agent or made by the Purchasing Agent
and accepted by the Company will be settled on a date (the "Settlement Date")
which is the third business day after the date of acceptance of such offer,
unless the Company and the purchaser agree to settle (a) on any other business
day after the acceptance of such offer or (b) with respect to an offer accepted
by the Company prior to 10:00 a.m., New York City time, on the date of such
acceptance.
Instruction from the Company to the Trustee for Preparation
of Certificated Securities:
After receiving the Sale Information from the Selling Agent or the
Purchasing Agent, as the case may be, the Company will communicate such Sale
Information to the Trustee by telephone (confirmed in writing) or by facsimile
transmission or other acceptable written means.
The Company will instruct the Trustee by facsimile transmission or other
acceptable written means to authenticate and deliver the Certificated Securities
no later than 2:15 p.m., New York City time, on the Settlement Date. Such
instruction will be given by the Company prior to 3:00 p.m., New York City time,
on the business day prior to the Settlement Date unless the Settlement Date is
the date of acceptance by the Company of the offer to purchase Certificated
Securities, in which case such instruction will be given by the Company by 11:00
a.m., New York City time.
Preparation and Delivery of Certificated Securities by the Trustee and Receipt
of Payment Therefor:
The Trustee will prepare each Certificated Security and appropriate
receipts that will serve as the documentary control of the transaction.
In the case of a sale of Certificated Securities to a purchaser solicited
by an Agent, the Trustee, by 2:15 p.m., New York City time on the Settlement
Date, will deliver the Certificated Securities to the Selling Agent for the
benefit of the purchaser of such Certificated Securities against delivery by the
Selling Agent of a receipt therefor. On the Settlement Date, the Selling Agent
will deliver payment for such Certificated Securities in immediately available
funds to the Company in an amount equal to the issue price of the Certificated
Securities less the Selling Agent's commission; provided that the Selling Agent
reserves the right to withhold payment for which it has not received funds from
the purchaser. The Company shall not use any proceeds advanced by a Selling
Agent to acquire Securities.
In the case of a sale of Certificated Securities to the Purchasing Agent,
the Trustee, by 2:15 p.m., New York City time on the Settlement Date, will
deliver the Certificated Securities to the Purchasing Agent against delivery of
payment for such Certificated Securities in immediately available funds to the
Company in an amount equal to the issue price of the Certificated Securities
less the Purchasing Agent's discount.
II-5
In either case, delivery of Certificated Securities shall be made as
follows: (i) if to ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co., to ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Facsimile Transmission No. (▇▇▇) ▇▇▇-▇▇▇▇, Attention:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, (ii) if to The Bank of New York, One Wall Street, 3rd Floor,
Window ▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Fascimile Transmission No.(▇▇▇) ▇▇▇-▇▇▇▇,
Attnetion: ▇▇▇ ▇▇▇▇▇▇▇▇▇, (iii) if to BT Alex. ▇▇▇▇▇ Incorporated, to ▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Facsimile Transmission No. (410)
783-3033, Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, (iv) if to Chase Securities Inc., to ▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Facsimile Transmission No.
(▇▇▇) ▇▇▇-▇▇▇▇, Attention: Window 17 and 18, (v) if to ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇ Securities Corporation, to The Chase Manhattan Bank, 4 New York Plaza,
Ground Floor, New York, New York 10004, Facsimile Transmission No. (212) 623-
7453, Attention: Outsourcing Department for the Account of ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇ Securities Corporation, (vi) if to ▇▇▇▇▇▇ Brothers Inc., to Chemical
Bank, 4 New York Plaza, Ground Floor, Receive Window, FAO ▇▇▇▇▇▇ Brothers, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Facsimile Transmission No. (▇▇▇) ▇▇▇-▇▇▇▇, Attention:
▇▇▇▇▇▇▇▇ ▇▇▇▇, (vii) if to ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ &
▇▇▇▇▇ Incorporated, to ▇▇▇▇▇▇▇ ▇▇▇▇▇ Money Markets Clearance, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇.▇.▇.▇. Window, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Facsimile
Transmission: (▇▇▇) ▇▇▇-▇▇▇▇, Attention: ▇▇ ▇▇▇▇▇▇▇▇, (viii) if to ▇.▇. ▇▇▇▇▇▇
Securities Inc., to ▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
Facsimile Transmission No. (▇▇▇) ▇▇▇-▇▇▇▇, Attention: MTN Desk, and (ix) if to
NationsBanc ▇▇▇▇▇▇▇▇▇▇ Securities, LLC, to The Bank of New York, One ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, Dealers Clearance, ▇▇▇▇▇▇ ▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
Facsimile Transmission No. (▇▇▇) ▇▇▇-▇▇▇▇, Attention: ▇▇▇ ▇▇▇▇▇▇.
Failure of a Purchaser to Pay the Selling Agent:
If a purchaser (other than the Purchasing Agent) fails to make payment to
the Selling Agent for a Certificated Security, the Selling Agent promptly will
notify the Trustee and the Company thereof by telephone (confirmed in writing)
or by facsimile transmission or other acceptable written means. The Selling
Agent immediately will return the Certificated Security to the Trustee.
Immediately upon the receipt of such Certificated Security by the Trustee, the
Company will return to the Selling Agent an amount equal to the amount
previously paid to the Company in respect of such Certificated Security. The
Company will reimburse the Selling Agent on an equitable basis for its loss of
the use of funds during the period when they were credited to the account of the
Company.
The Trustee will cancel the Certificated Security in respect of which the
failure occurred, make appropriate entries in its records and, unless otherwise
instructed by the Company, destroy the Certificated Security.
PART II: ADMINISTRATIVE PROCEDURE FOR BOOK-ENTRY SECURITIES
------------------------------------------------------------
In connection with the qualification of the Book-Entry Securities for
eligibility in the book-entry system maintained by the Depositary, the Trustee
will perform the custodial, document control and administrative functions
described below, in accordance with its respective obligations under a Letter of
Representation from the Company and the Trustee to the
II-6
Depositary, dated the date hereof, and a Medium-Term Note Certificate Agreement
between the Trustee and the Depositary, dated as of December 2, 1988 (the
"Certificate Agreement"), and its obligations as a participant in the
Depositary, including the Depositary's Same-Day Funds Settlement System
("SDFS").
Posting Rates by the Company:
The Company and the Agents will discuss from time to time the rates of
interest per annum to be borne by and the maturity of Book-Entry Securities that
may be sold as a result of the solicitation of offers by an Agent. The Company
may establish a fixed set of interest rates and maturities for an offering
period ("posting"). If the Company decides to change already posted rates, it
promptly will advise the Agents to suspend solicitation of offers until the new
posted rates have been established with the Agents.
Acceptance of Offers by the Company:
Each Agent promptly will advise the Company by telephone or other
appropriate means of all reasonable offers to purchase the Securities, other
than those rejected by such Agent. Each Agent, in its discretion reasonably
exercised, may reject any offer received by it in whole or in part. Each Agent
also may make offers to the Company to purchase Book-Entry Securities as the
Purchasing Agent. The Company will have the sole right to accept offers to
purchase Book-Entry Securities and may reject any such offer in whole or in
part.
The Company promptly will notify the Selling Agent or the Purchasing Agent,
as the case may be, of its acceptance or rejection of an offer to purchase Book-
Entry Securities. If the Company accepts an offer to purchase Book-Entry
Securities, it will confirm such acceptance in writing to the Selling Agent or
the Purchasing Agent, as the case may be, and the Trustee.
Communication of the Sale Information to the Company
by the Selling Agent and Settlement Procedures:
A. After the acceptance of an offer by the Company, the Selling Agent or
the Purchasing Agent, as the case may be, will communicate promptly, but in no
event later than the time set forth under "Settlement Procedure Timetable"
below, the following details of the terms of such offer (the "Sale Information")
to the Company by telephone (confirmed in writing) or by facsimile transmission
or other acceptable written means:
(1) Principal amount of Book-Entry Securities to be purchased;
(2) If a Fixed Rate Book-Entry Security, the Interest Rate and the
initial Interest Payment Date;
(3) Maturity Date;
(4) Specified Currency and, if the Specified Currency is other than
U.S. Dollars, the applicable Exchange Rate for such Specified Currency (it
being understood
II-7
that currently the Depositary accepts deposits of Global Securities
denominated in U.S. Dollars only);
(5) Index Currency, the Base Rate and the Exchange Rate Determination
Date, if applicable;
(6) Issue Price;
(7) Selling Agent's commission or Purchasing Agent's discount or
commission, as the case may be;
(8) Net Proceeds to the Company;
(9) Settlement Date;
(10) If a redeemable Book-Entry Security, such of the following as are
applicable:
(i) Redemption Commencement Date,
(ii) Initial Redemption Price (% of par), and
(iii) Amount (% of par) that the Redemption Price shall decline
(but not below par) on each anniversary of the Redemption
Commencement Date.
(11) If a Floating Rate Book-Entry Security, such of the following as
are applicable:
(i) Interest Rate Basis,
(ii) Index Maturity,
(iii) Spread and/or Spread Multiplier,
(iv) Maximum Rate,
(v) Minimum Rate,
(vi) Initial Interest Rate,
(vii) Interest Reset Dates,
(viii) Calculation Dates,
(ix) Interest Determination Dates,
(x) Interest Payment Dates,
(xi) Regular Record Dates, and
(xii) Calculation Agent;
(12) Name, address and taxpayer identification number of the registered
owner(s);
(13) Denomination of certificates to be delivered at settlement; and
(14) Book-Entry Security or Certificated Security.
II-8
B. After receiving the Sale Information from the Selling Agent or the
Purchasing Agent, as the case may be, the Company will communicate the Sale
Information to the Trustee by facsimile transmission or other acceptable written
means. The Trustee will assign a CUSIP number to the Global Security from a
list of CUSIP numbers previously delivered to the Trustee by the Company
representing such Book-Entry Security and then advise the Company and the
Selling Agent or the Purchasing Agent, as the case may be, of such CUSIP number.
C. The Trustee will enter a pending deposit message through the
Depositary's Participant Terminal System, providing the following settlement
information to the Depositary, and the Depositary shall forward such information
to such Agent and to Standard & Poor's Ratings Group:
(1) The applicable Sale Information;
(2) CUSIP number of the Global Security representing such Book-Entry
Security;
(3) Whether such Global Security will represent any other Book-Entry
Security (to the extent known at such time);
(4) Number of the participant account maintained by the Depositary on
behalf of the Selling Agent or the Purchasing Agent, as the case
may be;
(5) The interest payment period;
(6) Initial Interest Payment Date for such Book-Entry Security, number
of days by which such date succeeds the record date for the
Depositary's purposes (which, in the case of Floating Rate
Securities which reset weekly shall be the date five calendar days
immediately preceding the applicable Interest Payment Date and in
the case of all other Book-Entry Securities shall be the Regular
Record Date, as defined in the Security) and, if calculable at
that time, the amount of interest payable on such Interest Payment
Date;
D. The Trustee will complete and authenticate the Global Security
previously delivered by the Company representing such Book-Entry Security.
E. The Depositary will credit such Book-Entry Security to the Trustee's
participant account at the Depositary.
F. The Trustee will enter an SDFS deliver order through the Depositary's
Participant Terminal System instructing the Depositary to (i) debit such Book-
Entry Security to the Trustee's participant account and credit such Book-Entry
Security to such Agent's participant account and (ii) debit such Agent's
settlement account and credit the Trustee's settlement account for an amount
equal to the price of such Book-Entry Security less such Agent's commission.
The entry of such a deliver order shall constitute a representation and warranty
by
II-9
the Trustee to the Depositary that (a) the Global Security representing such
Book-Entry Security has been issued and authenticated and (b) the Trustee is
holding such Global Security pursuant to the Certificate Agreement.
G. Such Agent will enter an SDFS deliver order through the Depositary's
Participant Terminal System instructing the Depositary (i) to debit such
Book-Entry Security to such Agent's participant account and credit such
Book-Entry Security to the participant accounts of the participants with respect
to such Book-Entry Security and (ii) to debit the settlement accounts of such
participants and credit the settlement account of such Agent for an amount equal
to the price of such Book-Entry Security.
H. Transfers of funds in accordance with SDFS deliver orders described in
Settlement Procedures "F" and "G" will be settled in accordance with SDFS
operating procedures in effect on the settlement date.
I. Upon confirmation of receipt of funds, the Trustee will transfer to the
account of the Company maintained at The Chase Manhattan Bank, New York, New
York, or such other account as the Company previously may have specified to the
Trustee, in funds available for immediate use in the amount transferred to the
Trustee in accordance with Settlement Procedure "F".
J. Upon request, the Trustee will send to the Company a statement setting
forth the principal amount of Book-Entry Securities outstanding as of that date
under the Indentures.
K. Such Agent will confirm the purchase of such Book-Entry Security to the
purchaser either by transmitting to the participants with respect to such
Book-Entry Security a confirmation order or orders through the Depositary's
institutional delivery system or by mailing a written confirmation to such
purchaser.
L. The Depositary, at any time, upon request of the Company or the
Trustee, promptly will furnish to the Company or to the Trustee a list of the
names and addresses of the participants for whom the Depositary has credited
Book-Entry Securities.
Preparation of a Pricing Supplement by the Company:
If the Company accepts an offer to purchase a Book-Entry Security, it will
prepare a Pricing Supplement reflecting the terms of such Book-Entry Security
and arrange to have delivered to the Selling Agent or the Purchasing Agent, as
the case may be, at least one copy of such Pricing Supplement, not later than
11:00 a.m., New York City time, on the business day following the receipt of the
Sale Information, or if the Company and the purchaser agree to settle on the
business day following the date of acceptance, not later than noon, New York
City time, on such date, by facsimile or overnight express to the following
applicable address: (i) if to ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co., to ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Facsimile Transmission No. (▇▇▇) ▇▇▇-▇▇▇▇, Attention:
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, (ii) if to BancAmerica ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, to ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, Facsimile Transmission No. (312) 974-
8936, Attention: MTN Product Manager, (iii) if to BT Alex. ▇▇▇▇▇
II-10
Incorporated, to ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Facsimile
Transmission No. (▇▇▇) ▇▇▇-▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, (iv) if to Chase
Securities Inc., to ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
Facsimile Transmission No. (▇▇▇) ▇▇▇-▇▇▇▇, Attention: Medium-Term Note Desk, (v)
if to ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ Securities Corporation, to ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Facsimile Transmission No. (▇▇▇) ▇▇▇-▇▇▇▇,
Attention: ▇▇▇▇ ▇▇▇▇▇, (vi) if to ▇▇▇▇▇▇ Brothers Inc., c/o ADP Prospectus
Services, ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Facsimile No. (516)
249-7942, Attention: ▇▇▇▇▇▇▇ ▇▇▇▇, (vii) if to ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., ▇▇▇▇▇▇▇
Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated, to Tritech Services, ▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, Facsimile Transmission No. (▇▇▇) ▇▇▇-▇▇▇▇,
Attention: Prospectus Operations/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, with a copy to ▇▇▇▇▇▇▇ ▇▇▇▇▇
& Co., ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated, World Financial
Center, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Facsimile
Transmission No. (▇▇▇) ▇▇▇-▇▇▇▇, Attention: MTN Product Management, (viii) if to
▇.▇. ▇▇▇▇▇▇ Securities Inc., to ▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇, Facsimile Transmission No. (▇▇▇) ▇▇▇-▇▇▇▇, Attention: MTN Desk, and (ix)
if to NationsBanc ▇▇▇▇▇▇▇▇▇▇ Securities, LLC, to ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Facsimile Transmission No. (704) 388-
9939, Attention: MTN Product Management. The Company will arrange to have ten
Pricing Supplements filed with the Commission not later than the close of
business of the Commission on the fifth business day following the date on which
such Pricing Supplement first is used.
Delivery of a Confirmation and the Prospectus to a Purchaser
by the Selling Agent:
The Selling Agent will deliver to the purchaser of a Book-Entry Security a
written confirmation of the sale and delivery and payment instructions. In
addition, the Selling Agent will deliver to such purchaser or its agent the
Prospectus as amended or supplemented (including the Pricing Supplement) in
relation to such Book-Entry Security prior to or together with the earlier of
the delivery to such purchaser or its agent of (a) the confirmation of sale or
(b) the Book-Entry Security.
Date of Settlement:
The receipt by the Company of immediately available funds in payment for a
Book-Entry Security and the authentication and issuance of the Global Security
representing such Book-Entry Security shall constitute "settlement" with respect
to such Book-Entry Security. All orders accepted by the Company will be settled
on the third business day pursuant to the timetable for settlement set forth
below unless the Company and the purchaser agree to settle on another day which
shall be no earlier than the next business day.
II-11
Settlement Procedure Timetable:
For orders of Book-Entry Securities solicited by an Agent, as agent, and
accepted by the Company for settlement on the first business day after the sale
date, Settlement Procedures "A" through "I" set forth above shall be completed
as soon as possible but not later than the respective times (New York City time)
set forth below:
Settlement
Procedure Time
--------- ----
A 5:00 p.m. on the business day following the
acceptance of an offer by the Company
or 10:00 a.m. on the business day
prior to the settlement date,
whichever is earlier
B 12:00 noon on the sale date
C 2:00 p.m. on the sale date
D 9:00 a.m. on the settlement date
E 10:00 a.m. on the settlement date
F-G 2:00 p.m. on the settlement date
H 4:45 p.m. on the settlement date
I 5:00 p.m. on the settlement date
If a sale is to be settled more than one business day after the sale date,
Settlement Procedures "B" and "C" shall be completed as soon as practicable but
not later than 2:00 p.m. on the first business day after the sale date. If the
initial interest rate for a Floating Rate Book-Entry Security has not been
determined at the time that Settlement Procedure "A" is completed, Settlement
Procedures "B" and "C" shall be completed as soon as such rate has been
determined but no later than 2:00 p.m. on the second business day before the
settlement date. Settlement Procedure "H" is subject to extension in accordance
with any extension of FedWire closing deadlines and in the other events
specified in the SDFS operating procedures in effect on the settlement date.
If settlement of a Book-Entry Security is rescheduled or cancelled, the
Trustee, upon obtaining knowledge thereof, will deliver to the Depositary,
through the Depositary's Participation Terminal System a cancellation message to
such effect by no later than 2:00 p.m. on the business day immediately preceding
the scheduled settlement date.
Failure to Settle:
If the Trustee fails to enter an SDFS deliver order with respect to a Book-
Entry Security pursuant to Settlement Procedure "F", the Trustee may deliver to
the Depositary, through the Depositary's Participant Terminal System, as soon as
practicable a withdrawal message instructing the Depositary to debit such Book-
Entry Security to the Trustee's participant account,
II-12
provided that the Trustee's participant account contains a principal amount of
the Global Security representing such Book-Entry Security that is at least equal
to the principal amount to be debited. If a withdrawal message is processed with
respect to all the Book-Entry Securities represented by a Global Security, the
Trustee will ▇▇▇▇ such Global Security "cancelled", make appropriate entries in
the Trustee's records and send such cancelled Global Security to the Company.
The CUSIP number assigned to such Global Security, in accordance with CUSIP
Service Bureau procedures, shall be cancelled and not immediately reassigned. If
a withdrawal message is processed with respect to one or more, but not all, of
the Book-Entry Securities represented by a Global Security, the Trustee will
exchange such Global Security for two Global Securities, one of which shall
represent such Book-Entry Security or Securities and shall be cancelled
immediately after issuance and the other of which shall represent the remaining
Book-Entry Securities previously represented by the surrendered Global Security
and shall bear the CUSIP number of the surrendered Global Security.
If the purchase price for any Book-Entry Security is not timely paid to the
participants with respect to such Book-Entry Security by the beneficial
purchaser thereof (or a person, including an indirect participant in the
Depositary, acting on behalf of such purchaser), such participants and, in turn,
the Agent for such Book-Entry Security may enter deliver orders through the
Depositary's Participant Terminal System debiting such Book-Entry Security to
such participant's account and crediting such Book-Entry Security to such
Agent's account and then debiting such Book-Entry Security to such Agent's
participant account and crediting such Book-Entry Security to the Trustee's
participant account and shall notify the Company and the Trustee thereof.
Thereafter, the Trustee will (i) immediately notify the Company of such order
and the Company shall transfer to such Agent funds available for immediate use
in an amount equal to the price of such Book-Entry Security which was credited
to the account of the Company maintained at the Trustee in accordance with
Settlement Procedure 1, and (ii) deliver the withdrawal message and take the
related actions described in the preceding paragraph. If such failure shall
have occurred for any reason other than default by the applicable Agent to
perform its obligations hereunder or under the Distribution Agreement, the
company will reimburse such Agent on an equitable basis for the loss of its use
of funds during the period when the funds were credited to the account of the
Company.
Notwithstanding the foregoing, upon any failure to settle with respect to a
Book-Entry Security, the Depositary may take any actions in accordance with its
SDFS operating procedures then in effect. In the event of a failure to settle
with respect to one or more, but not all, of the Book-Entry Securities to have
been represented by a Global Security, the Trustee will provide, in accordance
with Settlement Procedure "D" for the authentication and issuance of a Global
Security representing the other Book-Entry Securities to have been represented
by such Global Security and will make appropriate entries in its records. The
Company, from time to time, will furnish the Trustee with a sufficient quantity
of Securities.
II-13
ANNEX III
---------
ACCOUNTANTS' LETTER
-------------------
Pursuant to Section 4(j) and Section 6(d), as the case may be, of the
Distribution Agreement, the Company's independent certified public accountants
shall furnish letters to the effect that:
(i) They are independent certified public accountants with respect
to the Company and its subsidiaries within the meaning of the Securities
Act and the applicable published rules and regulations thereunder;
(ii) In their opinion, the financial statements and any supplementary
financial information and schedules (and, if applicable, financial
forecasts and/or pro forma financial information) examined by them and
included in or incorporated by reference in the Registration Statement or
in the Prospectus comply as to form in all material respects with the
applicable accounting requirements of the Securities Act or the Exchange
Act, as applicable, and the related published rules and regulations
thereunder; and, if applicable, they have made a review in accordance with
standards established by the American Institute of Certified Public
Accountants of the consolidated interim financial statements, selected
financial data, pro forma financial information and/or condensed financial
statements derived from audited financial statements of the Company for the
periods specified in such letter, as indicated in their reports thereon,
copies of which have been furnished separately to the Agents;
(iii) They have made a review in accordance with standards
established by the American Institute of Certified Public Accountants of
the unaudited condensed consolidated statements of income, consolidated
balance sheets and consolidated statements of cash flows included in the
Prospectus and/or included in the Company's quarterly report on Form 10-Q
incorporated by reference into the Prospectus as indicated in their reports
thereon copies of which have been furnished separately to the Agents; and
on the basis of specified procedures including inquiries of officials of
the Company who have responsibility for financial and accounting matters
regarding whether the unaudited condensed consolidated financial statements
referred to in paragraph (vi)(A)(i) below comply as to form in all material
respects with the applicable accounting requirements of the Securities Act
and the Exchange Act and the related published rules and regulations,
nothing came to their attention that caused them to believe that the
unaudited condensed consolidated financial statements do not comply as to
form in all material respects with the applicable accounting requirements
of the Securities Act and the Exchange Act and the related published rules
and regulations;
(iv) The unaudited selected financial information with respect to the
consolidated results of operations and the financial position of the
Company for the five most recent fiscal years included in the Prospectus
and included in or incorporated by reference in Item 6 of the Company's
Annual Report on Form 10-K for the most recent
III-1
fiscal year agrees with the corresponding amounts (after restatement where
applicable) in the audited consolidated financial statements for the five
such fiscal years which were included in or incorporated by reference in
the Company's Annual Reports on Form 10-K for such fiscal years;
(v) They have compared the information in the Prospectus under
selected captions with the disclosure requirements of Regulation S-K under
the Securities Act and the Exchange Act and, on the basis of limited
procedures specified in such letter, nothing came to their attention as a
result of the foregoing procedures that caused them to believe that this
information does not conform in all material respects with the disclosure
requirements of Items 301, 302, 402 and 503(d), respectively, of Regulation
S-K;
(vi) On the basis of limited procedures, not constituting an
examination in accordance with generally accepted auditing standards,
consisting of a reading of the unaudited financial statements and other
information referred to below, a reading of the latest available interim
financial statements of the Company and its subsidiaries, inspection of the
minute books of the Company and its subsidiaries since the date of the
latest audited financial statements included in or incorporated by
reference in the Prospectus, inquiries of officials of the Company and its
subsidiaries responsible for financial and accounting matters, and such
other inquiries and procedures as may be specified in such letter, nothing
came to their attention that caused them to believe that:
(A) (i) the unaudited condensed consolidated statements of
income, consolidated balance sheets and consolidated statements of
cash flows included in the Prospectus and/or incorporated by reference
in the Company's Quarterly Reports on Form 10-Q incorporated by
reference in the Prospectus do not comply as to form in all material
respects with the applicable accounting requirements of the Exchange
Act as it applies to Form 10-Q and the related published rules and
regulations thereunder or (ii) any material modifications should be
made to the unaudited condensed consolidated statements of income,
consolidated balance sheets and consolidated statements of cash flows
included in the Prospectus or included in the Company's Quarterly
Reports on Form 10-Q incorporated by reference in the Prospectus for
them to be in conformity with generally accepted accounting
principles;
(B) any other unaudited income statement data and balance sheet
items included in the Prospectus do not agree with the corresponding
items in the unaudited consolidated financial statements from which
such data and items were derived, and any such unaudited data and
items were not determined on a basis substantially consistent with the
basis for the corresponding amounts in the audited consolidated
financial statements included in or incorporated by reference in the
Company's Annual Report on Form 10-K for the most recent fiscal year;
(C) the unaudited financial statements which were not included
in the Prospectus but from which were derived the unaudited condensed
financial
III-2
statements referred to in clause (A) and any unaudited income
statement data and balance sheet items included in the Prospectus and
referred to in clause (B) were not determined on a basis substantially
consistent with the basis for the audited financial statements
included or incorporated by reference in the Company's Annual Report
on Form 10-K for the most recent fiscal year;
(D) any unaudited pro forma consolidated condensed financial
statements included in or incorporated by reference in the Prospectus
do not comply as to form in all material respects with the applicable
accounting requirements of the Securities Act and the published rules
and regulations thereunder or the pro forma adjustments have not been
properly applied to the historical amounts in the compilation of those
statements;
(E) as of a specified date not more than five days prior to the
date of such letter, there have been any changes in the consolidated
capital stock (other than issuances of capital stock upon exercise of
options and stock appreciation rights, upon earnouts of performance
shares and upon conversions of convertible securities, in each case
which were outstanding on the date of the latest balance sheet
included in or incorporated by reference in the Prospectus) or any
increase in the consolidated long-term debt of the Company and its
subsidiaries, or any decreases in consolidated net current assets or
net assets or other items specified by the Agents, or any increases in
any items specified by the Agents, in each case as compared with
amounts shown in the latest balance sheet included in or incorporated
by reference in the Prospectus, except in each case for changes,
increases or decreases which the Prospectus discloses have occurred or
may occur or which are described in such letter; and
(F) for the period from the date of the latest financial
statements included in or incorporated by reference in the Prospectus
to the specified date referred to in clause (E) there were any
decreases in consolidated net revenues or operating profit or the
total or per share amounts of consolidated net income or other items
specified by the Agents, or any increases in any items specified by
the Agents, in each case as compared with the comparable period of the
preceding year and with any other period of corresponding length
specified by the Agents, except in each case for increases or
decreases which the Prospectus discloses have occurred or may occur or
which are described in such letter; and
(vii) in addition to the examination referred to in their report(s)
included in or incorporated by reference in the Prospectus and the limited
procedures, inspection of minute books, inquiries and other procedures
referred to in paragraphs (iii) and (iv) above, they have carried out
certain specified procedures, not constituting an examination in accordance
with generally accepted auditing standards, with respect to certain
amounts, percentages and financial information specified by the Agents
which are derived from the general accounting records of the Company and
its subsidiaries, which appear in the Prospectus (excluding documents
incorporated by reference), or in Part II
III-3
of, or in exhibits and schedules to, the Registration Statement specified
by the Agents or in documents incorporated by reference in the Prospectus
specified by the Agents, and have compared certain of such amounts,
percentages and financial information with the accounting records of the
Company and its subsidiaries and have found them to be in agreement.
All references in this Annex III to the Prospectus shall be deemed to refer
to the prospectus (including the documents incorporated by reference therein) as
defined in the Distribution Agreement as of the Commencement Date referred to in
Section 6(d) thereof and to the prospectus as amended or supplemented (including
the documents incorporated by reference therein) as of the date of the
amendment, supplement, incorporation or the Time of Delivery relating to the
Terms Agreement requiring the delivery of such letter under Section 4(j)
thereof.
III-4
ANNEX IV
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Alabama-Shepherd Shopping Center
▇▇▇▇▇▇▇▇ Center Joint Venture
Eastex Venture
East Town, Lake ▇▇▇▇▇▇▇ Co.
GJR/▇▇▇▇▇▇▇▇▇▇ Little York Venture
GJR/▇▇▇▇▇▇▇▇▇▇ River Pointe Venture
Jacinto City, Ltd.
Lincoln Place Limited Partnership
Lisbon Street Shopping Trust
Main/O.S.T., Ltd.
Market at Town Center Sugarland
▇▇▇▇▇▇▇ West Shopping Center, L.P.
Northwest Hollister Venture
▇▇▇▇▇▇ Boulevard Venture
▇▇▇▇▇▇▇▇▇, Ltd.
▇▇▇▇▇▇▇ Center, Ltd.
South Loop-Long-Wayside Company
South Padre Drive ▇.▇.
▇▇▇▇▇▇▇▇▇▇/Finger Venture
WRI/▇▇▇▇▇▇ Venture
WRI/▇▇▇▇▇▇▇▇▇ Venture
WRI/Interpak Venture
WRI/Palans Venture
IV-1