Exhibit 10.38
613,750 Shares
▇▇▇▇▇▇▇▇ PROPERTIES TRUST
PURCHASE AGREEMENT
Common Shares of Beneficial Interest
TABLE OF CONTENTS
Page
PURCHASE AGREEMENT.............................................................................................1
SECTION 1. Representations and Warranties.................................................................2
SECTION 2. Sale and Delivery to the Initial Purchaser; Closing............................................8
(a) Securities.....................................................................................8
(b) Delivery of the Securities and Payment Therefor................................................9
(c) Denominations; Registration....................................................................9
SECTION 3. Covenants of the Transaction Entities..........................................................9
(a) Delivery of Offering Circulars.................................................................9
(b) Notice and Effect of Material Events...........................................................9
(c) Amendment to Offering Circular and Supplements................................................10
(d) Blue Sky Qualifications.......................................................................10
(e) REIT Qualification............................................................................10
(f) Use of Proceeds...............................................................................10
(g) Exchange Act Filings..........................................................................10
(h) Listing.......................................................................................10
(i) Registration Rights Agreement.................................................................10
(j) Due Diligence.................................................................................10
(k) Integration...................................................................................10
(l) Investment Company Act........................................................................11
SECTION 4. Payment of Expenses...........................................................................11
SECTION 5. Conditions of Initial Purchaser's Obligations.................................................11
(a) Opinion of Counsel for Company................................................................11
(b) Opinion of Counsel for Initial Purchaser......................................................11
(c) Accountant's Comfort Letter...................................................................11
(d) Bring-down Comfort Letter.....................................................................12
(e) Officers Certificates.........................................................................12
(f) Material Change in Position of Transaction Entities...........................................12
(g) General Material Changes......................................................................12
(h) Performance of Obligations....................................................................13
(i) Registration Rights Agreement.................................................................13
(j) Offering Circular.............................................................................13
(k) Additional Documents..........................................................................13
SECTION 6. Indemnification and Contribution..............................................................13
- i -
TABLE OF CONTENTS
(continued)
(a) Indemnification of Initial Purchaser..........................................................13
(b) Indemnification of Company, Directors and Officers............................................14
(c) Actions Against Parties; Notification.........................................................14
(d) Contribution..................................................................................15
(e) Information Furnished.........................................................................16
SECTION 7. Termination...................................................................................16
SECTION 8. Reimbursement of Initial Purchaser's Expenses.................................................16
SECTION 9. Notices, etc..................................................................................16
SECTION 10. Persons Entitled to Benefit of Agreement......................................................16
SECTION 11. Survival......................................................................................17
SECTION 12. Definition of the Terms "Business Day" and "Subsidiary".......................................17
SECTION 13. Governing Law.................................................................................17
SECTION 14. Counterparts..................................................................................17
SECTION 15. Headings......................................................................................17
SCHEDULE 1 Selling Restrictions..........................................................................19
SCHEDULE 2 Common Share Certificate Legend...............................................................20
SCHEDULE 3 Capitalization of the Company.................................................................21
Exhibit A Registration Rights Agreement.................................................................22
Exhibit B Form of Company Counsel Opinion...............................................................23
Exhibit C Form of Company Maryland Counsel Opinion........................................................
- ii -
▇▇▇▇▇▇▇▇ PROPERTIES TRUST
(a Maryland real estate investment trust)
Common Shares
PURCHASE AGREEMENT
February 25, 2002
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ INC.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
▇▇▇▇▇▇▇▇ Properties Trust, a Maryland real estate investment trust (the
"Company"), ▇▇▇▇▇▇▇▇ Properties Acquisition Partners, L.P., a Delaware limited
partnership (the "Operating Partnership") and ▇▇▇▇▇▇▇▇ Properties I, Inc., a
Delaware corporation (the "General Partner," and together with the Company and
the Operating Partnership, the "Transaction Entities") confirm their agreement
with ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Inc. ("▇▇▇▇▇▇▇ ▇▇▇▇▇ Barney" or the "Initial
Purchaser"), with respect to the issue and sale by the Company and the purchase
by the Initial Purchaser, of 613,750 shares (the "Firm Shares") of its common
shares of beneficial interest, par value $0.01 per share (the "Common Shares").
In addition, the Company hereby grants the Initial Purchaser the option to
purchase from the Company up to an additional 92,063 Common Shares (the "Option
Shares") in the manner provided herein. The Initial Purchaser is acting as
sponsor and depositor and is therefore considered an affiliate of the Trust. As
used herein, "Securities" shall mean the Firm Shares and the Option Shares
purchased hereby.
The Company understands that the Initial Purchaser intends to deposit the
Securities (as defined below) with the trustee of The Equity Focus Trusts-REIT
Portfolio Series, 2002-A (the "Trust"), a registered unit investment trust under
the Investment Company Act of 1940, as amended, in exchange for units in the
Trust.
The Securities will be offered and sold to the Initial Purchaser without
being registered under the Securities Act of 1933, as amended (the "Securities
Act"), in reliance upon one or more exemptions therefrom, or in transactions not
subject thereto. In connection with such issuance, the Company has prepared a
confidential offering circular dated February 25, 2002 (as amended or
supplemented, including any exhibits thereto, the "Offering Circular");
provided, however, that the Offering Circular shall be deemed to include all
-------- -------
documents incorporated by reference therein (all of such incorporated documents
were filed by the Company with the Securities and Exchange Commission (the
"Commission") under the Securities Exchange Act of 1934, as amended (the
"Exchange Act")), prior to the date hereof.
The Initial Purchaser and the Trust will be entitled to the benefits of a
Registration Rights Agreement, to be dated as of the Firm Closing Time (as
defined herein) and to be substantially in the form attached hereto as Exhibit A
(the "Registration Rights Agreement"), pursuant to which the Company will file a
registration statement on an appropriate registration form under the Securities
Act with the Commission covering the resale by the Trust of the Securities to be
delivered in connection with the transactions contemplated herein.
The Initial Purchaser hereby confirms it is a "qualified institutional
buyer" as defined in Rule 144A of the Securities Act. The Initial Purchaser
hereby confirms that it is an "Accredited Investor" as
such term is defined in Regulation D under the Securities Act and has such
knowledge and experience in financial and business matters so as to be capable
of evaluating the merits and risks of its investment in the Securities, and the
Initial Purchaser is capable of bearing the economic risks of such investment.
The Initial Purchaser, subject to the completeness and accuracy of the
representations and warranties contained herein, has been provided, to its
satisfaction, the opportunity to ask questions concerning the terms and
conditions of the offering and sale of the Securities and have had all such
questions answered to their respective satisfaction and have been supplied all
additional information deemed necessary by them to verify the accuracy of the
information furnished to them.
All references in this Agreement to financial statements and schedules and
other information which is "contained," "included" or "stated" (or other
references of like import) in the Offering Circular shall be deemed to mean and
include all such financial statements and schedules and other information which
is incorporated by reference in the Offering Circular; and all references in
this Agreement to amendments or supplements to the Offering Circular shall be
deemed to mean and include the filing of any document under the Exchange Act
which is incorporated by reference in the Offering Circular. Capitalized terms
used but not otherwise defined shall have the meanings given to those terms in
the Offering Circular.
SECTION 1. Representations and Warranties. The Transaction Entities
------------------------------
represent and warrant, jointly and severally, to the Initial Purchaser, as of
the date hereof and as of each Closing Time (as defined below) (in each case, a
"Representation Date"), as follows:
(a) Neither the Company nor any of its affiliates, as such term is defined
in Rule 501(b) under the Securities Act (each, an "Affiliate"), has, directly or
indirectly, solicited any offer to buy, sold or offered to sell or otherwise
negotiated in respect of, in the United States or to any United States citizen
or resident, any security which is or would be integrated with the sale of the
Securities in a manner that would require the Securities to be registered under
the Securities Act.
(b) The Offering Circular does not, and at each Closing Time will not,
include an untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided that this
--------
representation, warranty and agreement shall not apply to statements in or
omissions from the Offering Circular made in reliance upon and in conformity
with information relating to the Initial Purchaser furnished to the Company in
writing by the Initial Purchaser expressly for use in the Offering Circular.
(c) The documents incorporated by reference in the Offering Circular, at
the time each was filed with the Commission, complied in all material respects
with the Exchange Act and the rules and regulations thereunder, and none of such
documents, at such dates, contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading.
(d) The Company has been duly formed and is validly existing as a real
estate investment trust in good standing under the laws of the State of
Maryland, is duly qualified to do business and is in good standing in each
jurisdiction in which its ownership or lease of property or the conduct of its
business requires such qualification (except where the failure to be so
qualified would not have a material adverse effect on the earnings, assets or
business affairs of the Company and its subsidiaries considered as a single
enterprise), and has all power and authority necessary to own or hold its real
properties owned, directly or indirectly, by the Company or the Operating
Partnership (the "Properties"), to conduct the business in which it is engaged
and to enter into and perform its obligations under this Agreement. None of the
subsidiaries of the Company (other than the Operating Partnership, the General
Partner, and ▇▇▇▇▇▇▇▇ Properties Real Estate Fund I, L.P., a Delaware limited
partnership ("PPREF") (collectively, the
2
"Significant Subsidiaries")) is a "significant subsidiary," as such term is
defined in Rule 405 of the Securities Act.
(e) The Company has an authorized capitalization as set forth on Schedule 3
hereto, and all of the issued and outstanding shares of beneficial interest of
the Company have been duly authorized and validly issued, are fully paid and
non-assessable and conform in all material respects to the description thereof
disclosed in the Offering Circular. Except as disclosed in the Offering
Circular, no shares of beneficial interest of the Company are reserved for any
purpose, and except as disclosed in the Offering Circular and except for the
equity interests in the Operating Partnership ("Units"), there are no
outstanding securities convertible into or exchangeable for any shares of
beneficial interest of the Company, and no outstanding options, rights
(preemptive or otherwise) or warrants to purchase or subscribe for shares of
beneficial interest or any other securities of the Company.
(f) The Operating Partnership has been duly formed and is validly existing
as a limited partnership under the laws of the State of Delaware, is duly
qualified to do business as a foreign limited partnership in each jurisdiction
in which its ownership or lease of property or the conduct of its business
requires such qualification (except where the failure to be so qualified would
not have a material adverse effect on the earnings, assets or business affairs
of the Company and its subsidiaries considered as a single enterprise), and has
all partnership power and authority necessary to own or hold its properties, to
conduct the business in which it is engaged and to enter into and perform its
obligations under this Agreement. The General Partner is the sole general
partner of the Operating Partnership. The Third Amended and Restated Agreement
of Limited Partnership of the Operating Partnership, as amended to date (the
"Operating Partnership Agreement"), is in full force and effect, and the
aggregate percentage interests of the Company, the General Partner and the
limited partners in the Operating Partnership are as disclosed in the Offering
Circular.
(g) The General Partner has been duly formed and is validly existing as a
corporation in good standing under the laws of the State of Delaware, is duly
qualified to do business and is in good standing in each jurisdiction in which
its ownership or lease of property or the conduct of its business requires such
qualification (except where the failure to be so qualified would not have a
material adverse effect on the earnings, assets or business affairs of the
Company and its subsidiaries considered as a single enterprise), and has all
corporate power and authority necessary to own or hold its properties, to
conduct the business in which it is engaged and to enter into and perform its
obligations under this Agreement. All of the issued and outstanding capital
stock of the General Partner has been duly authorized and validly issued and is
fully paid and non-assessable, is owned by the Company free and clear of any
security interest, mortgage, pledge, lien, encumbrance, claim, restriction or
equities and has been offered and sold in compliance with all applicable laws
(including, without limitation, federal or state securities laws). No shares of
capital stock of the General Partner are reserved for any purpose, and there are
no outstanding securities convertible into or exchangeable for any capital stock
of the General Partner, and no outstanding options, rights (preemptive or
otherwise) or warrants to purchase or to subscribe for shares of such capital
stock or any other securities of the General Partner.
(h) PPREF has been duly organized and is validly existing as a limited
partnership under the laws of the State of Delaware, is duly qualified to do
business as a foreign limited partnership in each jurisdiction in which its
ownership or lease of property or the conduct of its business requires such
qualification (except where the failure to be so qualified would not have a
material adverse effect on the earnings, assets or business affairs of the
Company and its subsidiaries considered as a single enterprise), and has all
partnership power and authority necessary to own or hold its properties and to
conduct the business in which it is engaged. Except as disclosed in the Offering
Circular, all of the partnership interests of PPREF are owned directly or
indirectly by the Company and the Operating Partnership, free and clear of any
security interest, mortgage, pledge, lien, encumbrance, claim, restriction or
equities.
3
(i) The Securities have been duly authorized and, when issued and delivered
against payment therefor as provided herein, will be validly issued, fully paid
and non-assessable. Upon payment of the purchase price and delivery of the
Securities in accordance herewith, the Initial Purchaser will receive good,
valid and marketable title to the Securities, free and clear of all security
interests, mortgages, pledges, liens, encumbrances, claims, restrictions and
equities other than the restrictions contained in this Agreement, the
Registration Rights Agreement or otherwise disclosed in the Offering Circular.
The terms of the Securities conform in all material respects to all statements
and descriptions related thereto disclosed in the Offering Circular. The form of
the certificates to be used to evidence the Securities will at each Closing Time
comply with all applicable legal requirements. The issuance of the Securities is
not subject to any preemptive or other similar rights.
(j) (A) This Agreement has been duly and validly authorized, executed and
delivered by each of the Transaction Entities; (B) the Registration Rights
Agreement, when executed and delivered at the Firm Closing Time will be duly and
validly authorized, executed and delivered by, and, assuming the due
authorization, execution and delivery by the Initial Purchaser, will be a valid
and binding agreement of the Company, enforceable against the Company in
accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization or other similar laws
affecting creditor's rights generally and by general equitable principles
(regardless of whether enforceability is considered in a proceeding in equity or
at law) and (C) the Operating Partnership Agreement has been duly and validly
authorized, executed and delivered by, and is a valid and binding agreement of
the parties thereto, enforceable against such parties in accordance with its
terms, except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization or other similar laws affecting creditor's rights
generally and by general equitable principles (regardless of whether
enforceability is considered in a proceeding in equity or at law).
(k) The execution, delivery and performance of this Agreement by each of
the Transaction Entities, and of the Registration Rights Agreement by the
Company, 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 any of
the Transaction Entities is a party or by which any of the Transaction Entities
is bound or to which any of the Properties or other assets of any of the
Transaction Entities is subject, nor will such actions result in (1) any
violation of the provisions of the charter, by-laws, certificate of limited
partnership or agreement of limited partnership of any of the Transaction
Entities, or (2) any material statute or any material order, rule or regulation
of any court or governmental agency or body having jurisdiction over any of the
Transaction Entities or any of their properties or assets; and except for such
consents, approvals, authorizations, registrations or qualifications as have
already been obtained as may be required under the Exchange Act, the listing
requirements of the New York Stock Exchange, and applicable state securities
laws in connection with the purchase and distribution of the Securities by the
Initial Purchaser, no consent, approval, authorization or order of, or filing or
registration with, any such court or governmental agency or body is required for
the execution, delivery and performance of this Agreement by the Transaction
Entities, or of the Registration Rights Agreement by the Company, and the
consummation of the transactions contemplated hereby and thereby.
(l) Other than the Registration Rights Agreement, the Operating Partnership
Agreement, the registration rights agreement, dated as of June 25, 1998, by and
between the Company and Belair Capital Fund LLC, the registration rights
agreement, dated as of March 14, 2001, by and between ▇▇▇▇▇▇▇▇ Properties
Acquisition Partners, L.P. and Brandywine Operating Partnership, L.P. and as
described in the Offering Circular, there are no contracts, agreements or
understandings between the Company and any person granting such person the right
to require the Company to file a registration statement under the Securities Act
with respect to any securities of the Company owned or to be owned by such
person or to
4
require the Company to include such securities in the securities to be
registered pursuant to the Registration Rights Agreement.
(m) None of the Transaction Entities nor any of the Properties has
sustained, since the date of the latest audited financial statements disclosed
in the Offering Circular, any material loss or interference with its business
from fire, explosion, flood or other calamity, whether or not covered by
insurance, or from any labor dispute or court or governmental action, order or
decree, other than as set forth or contemplated in the Offering Circular; and,
since such date, there has not been any change in the capital stock or long-term
debt of any of the Transaction Entities or any material adverse change in or
affecting any of the Properties or the general affairs, management, financial
position, stockholders' equity or results of operations of any of the
Transaction Entities, other than as set forth or contemplated in the Offering
Circular.
(n) The financial statements (including the related notes and supporting
schedules) incorporated by reference in the Offering Circular present fairly in
all material respects the financial condition and results of operations of the
entities purported to be shown thereby, at the dates and for the periods
indicated, and have been prepared in conformity with generally accepted
accounting principles applied on a consistent basis throughout the periods
involved, except as otherwise noted therein.
(o) PricewaterhouseCoopers L.L.P., who have certified certain financial
statements of the Company, whose reports are disclosed in the Offering Circular
and who have delivered the initial letter referred to in Section 5(d) hereof,
are independent public accountants as required by the Securities Act.
(p) Each of the Company and the Operating Partnership has obtained title
insurance insuring (i) good and marketable title to the Properties owned by them
(other than the Properties located in Texas) and (ii) good and indefeasible
title to the Properties owned by them in Texas, in each case free and clear of
all liens, encumbrances, claims, security interests and defects, subject only to
customary easements and encumbrances and other exceptions to title which do not
materially impair the operation, development or use thereof for the purposes
intended therefor as contemplated by the Offering Circular, on each of such
Properties.
(q) Except as disclosed in the Offering Circular and on Schedule 1(q)
attached hereto: (A) to the knowledge of the Transaction Entities, the
operations of the Company, the Operating Partnership, the General Partner,
▇▇▇▇▇▇▇▇ Properties Limited, Inc. and ▇▇▇▇▇▇▇▇ Properties Management, L.P. (each
a "Manager"), and the Properties are in compliance with all Environmental Laws
(as defined below) and all requirements of applicable permits, licenses,
approvals and other authorizations issued pursuant to Environmental Laws except
where noncompliance would not have a material adverse effect on the earnings,
assets or business affairs of the Company and its subsidiaries considered as a
single enterprise; (B) to the knowledge of the Transaction Entities, none of the
Transaction Entities or any Property has caused or suffered any Release (as
defined below) of any Hazardous Substance (as defined below) into the
Environment (as defined below) on, in, under or from any Property that could
result in the incurrence of liabilities under, or any violations of, any
Environmental Law, except as would not have a material adverse effect on the
earnings, assets or business affairs of the Company and its subsidiaries
considered as a single enterprise; (C) none of the Transaction Entities have
received any written notice of a claim under or pursuant to any Environmental
Law or under common law pertaining to Hazardous Substances on, in, under or
originating from any Property except where noncompliance would not have a
material adverse effect on the earnings, assets or business affairs of the
Company and its subsidiaries considered as a single enterprise; (D) none of the
Transaction Entities has actual knowledge of any written notice from any
Governmental Authority (as defined below) claiming any violation of any
Environmental Law or a determination to undertake and/or request the
investigation, remediation, clean-up or removal of any Hazardous Substance
released into the Environment on, in, under or from any Property; and (E) no
5
Property is included or, to the knowledge of the Transaction Entities, proposed
for inclusion on the National Priorities List issued pursuant to CERCLA (as
defined below) by the United States Environmental Protection Agency (the "EPA")
or on the Comprehensive Environmental Response, Compensation, and Liability
Information System database maintained by the EPA, and none of the Transaction
Entities has actual knowledge that any Property has otherwise been identified in
a published writing by the EPA as a potential CERCLA removal, remedial or
response site or, to the knowledge of the Transaction Entities, is included on
any similar list of potentially contaminated sites pursuant to any other
Environmental Law.
(r) As used herein, "Hazardous Substance" shall include any hazardous
substance, hazardous waste, toxic substance, pollutant or hazardous material,
including, without limitation, oil, petroleum or any petroleum-derived substance
or waste, asbestos or asbestos-containing materials, PCBs, pesticides,
explosives, radioactive materials, dioxins, urea formaldehyde insulation or any
constituent of any such substance, pollutant or waste which is subject to
regulation under any Environmental Law (including, without limitation, materials
listed in the EPA's List of Hazardous Substances and Reportable Quantities, 40
C.F.R. Part 302); "Environment" shall mean any surface water, drinking water,
ground water, land surface, subsurface strata, river sediment, buildings,
structures, and ambient, workplace and indoor and outdoor air; "Environmental
Law" shall mean the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended (42 U.S.C. Section. 9601 et seq.) ("CERCLA"),
the Resource Conservation and Recovery Act of 1976, as amended (42 U.S.C.
Section. 6901, et seq.), the Clean Air Act, as amended (42 U.S.C. Section. 7401,
et seq.), the Clean Water Act, as amended (33 U.S.C. Section. 1251, et seq.),
the Toxic Substances Control Act, as amended (15 U.S.C. Section. 2601, et seq.),
the Occupational Safety and Health Act of 1970, as amended (29 U.S.C. Section.
651, et seq.), the Hazardous Materials Transportation Act, as amended (49 U.S.C.
Section. 1801, et seq.), and all other federal, state and local laws,
ordinances, regulations, rules and orders relating to the protection of the
Environment or of human health from environmental effects to the extent the
Company, the Operating Partnership, the General Partner, and the Properties are
legally obligated to comply with such laws, ordinances, regulations, rules and
orders; "Governmental Authority" shall mean any federal, state or local
governmental office, agency or authority having the duty or authority to
promulgate, implement or enforce any Environmental Law; "Release" shall mean any
spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting,
escaping, leaching, dumping, emanating or disposing of any Hazardous Substance
into the Environment, including, without limitation, the abandonment or discard
of barrels, containers, tanks (including, without limitation, underground
storage tanks) or other receptacles containing or previously containing any
Hazardous Substance.
(s) Each Transaction Entity and their subsidiaries carries, or is covered
by, insurance in such amounts and covering such risks as is adequate for the
conduct of its business and the value of its assets and properties and as is
customary for companies engaged in similar businesses in similar industries.
(t) Each Transaction Entity owns or possesses, or can acquire on reasonable
terms, adequate rights to use all material patents, patent applications,
trademarks, service marks, trade names, trademark registrations, service ▇▇▇▇
registrations, copyrights and licenses necessary for the conduct of its business
and has no reason to believe that the conduct of its business will conflict
with, and has not received any notice of any claim of conflict with, any such
rights of others (except where such conflict would not, individually or in the
aggregate, have a material adverse effect on the earnings, assets or business
affairs of the Company and its subsidiaries considered as a single enterprise).
(u) Except as described in the Offering Circular, there are no legal or
governmental proceedings pending to which any Transaction Entity or Significant
Subsidiary is a party or of which any property or assets of any Transaction
Entity or Significant Subsidiary is the subject which, if determined adversely
to such Transaction Entity or Significant Subsidiary, would reasonably be
expected to have a
6
material adverse effect on the consolidated financial position, shareholders'
equity, results of operations or business of the Company and its subsidiaries
considered as a single enterprise; and to the best knowledge of the Transaction
Entities, no such proceedings are threatened or contemplated by governmental
authorities or threatened by others.
(v) Other than contracts to be filed in the Company's Annual Report on Form
10-K for the period ended December 31, 2001 and disclosed to the Initial
Purchaser, there are no contracts or other documents which are required to be
filed by the Exchange Act or by the rules and regulations thereunder which have
not been so filed by the Company.
(w) No labor disturbance by the employees of any Transaction Entity exists
or, to the knowledge of the Transaction Entities, is imminent which might be
expected to have a material adverse effect on the consolidated financial
position, stockholders' equity, results of operations or business of the Company
and its subsidiaries considered as a single enterprise.
(x) Each Transaction Entity is in compliance in all material respects with
all presently applicable provisions of the Employee Retirement Income Security
Act of 1974, as amended, including the regulations and published interpretations
thereunder ("ERISA"); no "reportable event" (as defined in ERISA) has occurred
with respect to any "pension plan" (as defined in ERISA) for which any
Transaction Entity would have any liability; no Transaction Entity has incurred
or expects to incur liability under (i) Title IV of ERISA with respect to
termination of, or withdrawal from, any "pension plan" or (ii) sections 412 or
4971 of the Internal Revenue Code of 1986, as amended (the "Code"); and each
"pension plan" for which any Transaction Entity would have any liability that is
intended to be qualified under Section 401(a) of the Code is so qualified in all
material respects and nothing has occurred, whether by action or by failure to
act, which would cause the loss of such qualification.
(y) Each Transaction Entity has filed all federal, state and local income
and franchise tax returns required to be filed through the date hereof and has
paid all taxes due thereon {and all other material taxes otherwise due and
payable), and no tax deficiency has been determined adversely to any Transaction
Entity which has had (nor does any Transaction Entity have any knowledge of any
tax deficiency which, if determined adversely to it might have) a material
adverse effect on the financial position, stockholders' equity, results of
operations or business of the Company and its subsidiaries considered as a
single enterprise.
(z) At all times since October 22, 1996, the Company, the Operating
Partnership, the General Partner, and the Managers have been organized and
operated in conformity with the requirements for qualification and taxation of
the Company as a real estate investment trust under the Code and the proposed
method of operation of the Company, the Operating Partnership, the General
Partner and the Managers will enable the Company to continue to meet the
requirements for qualification and taxation as a real estate investment trust
under the Code.
(aa) Since the date as of which information is given in the Offering
Circular through the date hereof, and except as may otherwise be disclosed in
the Offering Circular, no Transaction Entity has (i) issued or granted any
securities, except for the issuance of securities under employee benefit plans
and the issuance of Common Shares pursuant to the dividend reinvestment
component of the Company's Dividend Reinvestment and Share Purchase Plan or upon
the exchange of Units pursuant to the Operating Partnership Agreement, (ii)
incurred any material liability or obligation, direct or contingent, other than
liabilities and obligations which were incurred in the ordinary course of
business, (iii) entered into any material transaction not in the ordinary course
of business or (iv) declared or paid any dividend on its capital stock (other
than regular quarterly dividends) and dividends declared and paid in accordance
with the terms of any series of preferred shares or units of the Company or the
Operating Partnership.
7
(bb) Each Transaction Entity and their subsidiaries (i) makes and keeps
accurate books and records and (ii) maintains internal accounting controls which
provide reasonable assurance that (A) transactions are executed in accordance
with management's authorization, (B) transactions are recorded as necessary to
permit preparation of its financial statements and to maintain accountability
for its assets, (C) access to its assets is permitted only in accordance with
management's authorization and (D) the reported accountability for its assets is
compared with existing assets at reasonable intervals.
(cc) Neither the Company nor any Significant Subsidiary (i) is in violation
of its charter, by-laws, certificate of limited partnership, agreement of
limited partnership or other similar organizational document, (ii) is in default
in any respect, and no event has occurred which, with notice or lapse of time or
both, would constitute such a default, in the due performance or observance of
any term, covenant or condition contained in any indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument to which it is a party or
by which it is bound or to which any of the Properties or any of its other
properties or assets is subject or (iii) is in violation in any respect of any
law, ordinance, governmental rule, regulation or court decree to which it or the
Properties or any of its other properties or assets may be subject or has failed
to obtain any license, permit, certificate, franchise or other governmental
authorization or permit necessary to the ownership of the Properties or any of
its other properties or assets or to the conduct of its business which such
violation or default, in the case of violations and defaults described in
clauses (ii) and (iii), would have a material adverse effect on the earnings,
assets or business affairs of the Company and its subsidiaries considered as a
single enterprise.
(dd) No Transaction Entity, nor any director, trustee, officer, agent,
employee or other person associated with or acting on behalf of any Transaction
Entity, has used any corporate funds for any unlawful contribution, gift,
entertainment or other unlawful expense relating to political activity; made any
direct or indirect unlawful payment to any foreign or domestic government
official or employee from corporate funds; violated or is in violation of any
provision of the Foreign Corrupt Practices Act of 1977; or made any bribe,
rebate, payoff, influence payment, kickback or other unlawful payment.
(ee) No Transaction Entity is an "investment company" within the meaning of
such term under the Investment Company Act of 1940 and the rules and regulations
of the Commission thereunder.
(ff) Other than this Agreement and as set forth in the Offering Circular
under the heading "Plan of Distribution," there are no contracts, agreements or
understandings between any Transaction Entity and any person that would give
rise to a valid claim against any Transaction Entity or the Initial Purchaser
for a brokerage commission, finder's fee or other like payment with respect to
the consummation of the transactions contemplated by this Agreement.
(gg) None of the Transaction Entities or their affiliates or any person
acting on any of their behalf (other than the Initial Purchaser, as to whom the
Transaction Entities make no representation) has engaged or will engage, in
connection with the offering of the Securities, in any form of general
solicitation or general advertising within the meaning of Rule 502(c) under the
Securities Act or in any manner involving a public offering, within the meaning
of Section 4(2) of the Securities Act, or under circumstances that would require
the registration of the Securities under the Securities Act or securities laws
of any of the states in the United States.
(hh) Subject to compliance by the Initial Purchaser with the terms and
conditions and the accuracy of the Initial Purchaser's representations and
warranties set forth herein, it is not necessary, in connection with the offer,
sale and delivery of the Securities to the Initial Purchaser and the deposit of
the Securities with the trustee by the Initial Purchaser in exchange for units
in the Trust in the manner contemplated by this Agreement and the Offering
Circular, to register the Securities under the Securities Act.
8
SECTION 2. Sale and Delivery to the Initial Purchaser; Closing.
---------------------------------------------------
(a) Securities.
(1) On the basis of the representations and warranties herein
contained and subject to the terms and conditions herein set forth, the
Company agrees to sell to the Initial Purchaser, and the Initial Purchaser
agrees to purchase from the Company, at a purchase price of $26.94 per
Common Share (which represents a 4.97% discount to the $28.35 closing price
of the Common Shares on the date hereof), the Firm Shares.
(2) In addition, on the basis of the representations and warranties
herein contained and subject to the terms and conditions herein set forth,
the Company hereby grants to the Initial Purchaser the option to purchase,
and the Initial Purchaser shall have the right to purchase from the
Company, all or any portion of the Option Shares at the same purchase price
per share to be paid by the Initial Purchaser to the Company for the Firm
Shares. This option may be exercised by the Initial Purchaser at any time
(but not more than once) on or before the thirtieth day following the date
hereof, by written notice to the Company. Such notice shall set forth the
aggregate number of Option Shares as to which the option is being exercised
and the date and time when the Option Shares are to be delivered (such date
and time being herein referred to as the "Option Closing Time"); provided,
however, that the Option Closing Time shall not be later than the tenth
business day after the date on which the option shall have been exercised.
(3) The Initial Purchaser represents, warrants and agrees that it, the
Trust (as hereinafter defined) and each of their respective Affiliates, has
complied and will comply with the terms set out in Schedule 1. The Initial
Purchaser acknowledges that it has been given the opportunity to ask
questions of, and receive answers from, the Company and its business and
prospects and concerning the Securities, and has been given the opportunity
to obtain such additional information necessary to verify the accuracy of
the information contained in the Offering Circular or which was otherwise
provided. The Company understands that the Initial Purchaser intends to
deposit the Securities with the trustee of the Trust in exchange for units
in the Trust.
(b) Delivery of the Securities and Payment Therefor.
(1) Payment of the purchase price for, and delivery of, the Firm
Shares shall be made at the office of ▇▇▇▇▇▇▇▇ Chance ▇▇▇▇▇▇ & ▇▇▇▇▇ LLP,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇-▇▇▇▇, or at such other place as
shall be agreed upon by the Initial Purchaser and the Company, at 10:00
A.M. (Eastern time) on the third business day after the date hereof, or
such other time not later than ten business days after such date as shall
be agreed upon by the Initial Purchaser and the Company (such time and date
of payment and delivery being herein called "Firm Closing Time," and
together with the Option Closing Time, the "Closing Time.").
(2) Payment of the purchase price for, and delivery of, the Option
Shares shall be made at the Option Closing Time in substantially the same
manner as the Firm Shares.
(3) Payment shall be made to the Company by wire transfer of
immediately available funds to a bank account designated by the Company,
against delivery to the Initial Purchaser of the Securities to be purchased
by it.
(4) The certificates for the Securities shall contain the legends set
forth on Schedule 2 in addition to standard legends including legends
describing restrictions on transfer for the
9
purpose of the maintenance of real estate investment trust status under the
Code; provided that replacement certificates not bearing a legend referring
to the absence of registration under the Securities Act shall be delivered
upon a request by the holder thereof following the earlier of the date on
which (i) such Securities have been registered under the Securities Act and
resold pursuant thereto or (ii) such legend is, in the opinion of counsel
to the Company, no longer required.
(c) Denominations; Registration. Certificates for the Securities shall be
in such denominations and registered in such names as the Initial Purchaser may
request in writing at least two full business days prior to each Closing Time.
SECTION 3. Covenants of the Transaction Entities.
-------------------------------------
The Transaction Entities covenant with the Initial Purchaser as follows:
(a) Delivery of Offering Circulars. The Company will deliver to the Initial
Purchaser, without charge, as many copies of the Offering Circular and any
amendment or supplement thereto, as the Initial Purchaser may reasonably
request. The Company consents to the delivery of the Offering Circular and any
amendment or supplement thereto by the Initial Purchaser to the Trust, in
connection with the deposit of the Securities with the trustee in exchange for
units in the Trust, as contemplated herein.
(b) Notice and Effect of Material Events. The Company will promptly notify
the Initial Purchaser, and confirm such notice in writing, of (x) any filing
made by the Company of information relating to the offering of the Securities
with any securities exchange or any other regulatory body in the United States
or any other jurisdiction for six months from the date of this Agreement, and
(y) prior to the completion of the deposit of the Securities by the Initial
Purchaser as evidenced by a notice in writing from the Initial Purchaser to the
Company, any material changes in or affecting the condition, financial or
otherwise, or the earnings, business affairs or business prospects of the
Transaction Entities and their subsidiaries which (i) make any statement in the
Offering Circular false or misleading or (ii) are not disclosed in the Offering
Circular. In such event or if during such time any event shall occur as a result
of which it is necessary, in the reasonable opinion of any of the Company, its
counsel, the Initial Purchaser or counsel for the Initial Purchaser, to amend or
supplement the Offering Circular in order that the Offering Circular not include
any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein not misleading in the light of
the circumstances then existing, the Company will forthwith amend or supplement
the Offering Circular by preparing and furnishing to the Initial Purchaser an
amendment or amendments of, or a supplement or supplements to, the Offering
Circular (in form and substance satisfactory in the reasonable opinion of
counsel for the Initial Purchaser) so that, as so amended or supplemented, the
Offering Circular will not include an untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements therein,
in the light of the circumstances existing at the time it is delivered to the
Trust, not misleading.
(c) Amendment to Offering Circular and Supplements. The Company will advise
the Initial Purchaser promptly of any proposal to amend or supplement the
Offering Circular and will not effect such amendment or supplement without the
consent of the Initial Purchaser. Neither the consent of the Initial Purchaser,
nor the Initial Purchaser's delivery of any such amendment or supplement, shall
constitute a waiver of any of the conditions set forth in Section 5 hereof.
(d) Blue Sky Qualifications. The Company will use its best efforts, in
cooperation with the Initial Purchaser, to qualify the Securities for offering
and sale under the applicable securities laws of such states and other
jurisdictions (domestic or foreign) as the Initial Purchaser may designate and
to maintain such qualifications in effect for a period of not less than one year
from the date of this
10
Agreement; provided, however, that the Company shall not be obligated to file
-------- -------
any general consent to service of process or to qualify or register as a foreign
partnership or as a dealer in securities in any jurisdiction in which it is not
so qualified or registered, or provide any undertaking or make any change in its
charter or by-laws that the Board of Trustees of the Company reasonably
determines to be contrary to the best interests of the Company and its
stockholders or to subject itself to taxation in respect of doing business in
any jurisdiction in which it is not otherwise so subject. In each jurisdiction
in which the Securities have been so qualified or registered, the Company will
file such statements and reports as may be required by the laws of such
jurisdiction to continue such qualification in effect for a period of not less
than one year from the date of this Agreement.
(e) REIT Qualification. The Company will use its best efforts to continue
to meet the requirements to qualify as a "real estate investment trust" under
the Code.
(f) Use of Proceeds. The Company will use the net proceeds received by it
from the sale of the Securities in the manner specified in the Offering Circular
under "Use of Proceeds."
(g) Exchange Act Filings. During a period of two years from the latest
Closing Time, the Company will make available to the Initial Purchaser, (i)
promptly upon their becoming available, copies of all current, quarterly and
yearly reports of the Company on Form 10-Q, Form 10-K, Form 8-K or proxy
statement mailed to its stockholders.
(h) Listing. The Company will use its best efforts to effect, subject to
official notice of issuance, and maintain the listing of the Securities, at or
prior to the Firm Closing Time, on the New York Stock Exchange.
(i) Registration Rights Agreement. The Company will comply with all of the
terms and conditions of the Registration Rights Agreement.
(j) Due Diligence. In connection with the original distribution of the
Securities, the Company agrees that, prior to any offer or resale of Securities
by the Initial Purchaser, the Initial Purchaser and counsel for the Initial
Purchaser shall have the right to make reasonable inquiries into the business of
the Company and its subsidiaries.
(k) Integration. The Company agrees that it will not and will cause its
Affiliates not to solicit any offer to buy or make any offer or sale of, or
otherwise negotiate in respect of, securities of the Company of any class if, as
a result of the doctrine of "integration" referred to in Rule 502 under the
Securities Act, such offer or sale would render invalid (for the purpose of (i)
the sale of the Securities by the Company to the Initial Purchaser or (ii) the
resale of the Securities by the Initial Purchaser to the Trust as described
herein) the exemption from the registration requirements of the Securities Act
provided by Section 4(2) thereof or by Rule 144A thereunder or otherwise.
(l) Investment Company Act. The Transaction Entities agree to take such
steps as shall be necessary to ensure that none of the Transaction Entities
shall become an "investment company" within the meaning of such term under the
Investment Company Act of 1940 and the rules and regulations of the Commission
thereunder.
SECTION 4. Payment of Expenses. The Company will pay all expenses incident
-------------------
to the performance of its obligations under this Agreement, the Registration
Rights Agreement, including (i) the preparation and delivery to the Initial
Purchaser of this Agreement, the Registration Rights Agreement and such other
documents as may be required in connection with the offering, purchase, sale and
delivery of the Securities, (ii) the preparation, issuance and delivery of the
certificates for the Securities to the
11
Initial Purchaser, (iii) the fees and disbursements of the Company's counsel,
accountants and other advisors or agents (including transfer agents and
registrars), (iv) the qualification of the Securities under state securities in
accordance with the provisions of Section 3(d) hereof, including filing fees and
the reasonable fees and disbursements of counsel for the Initial Purchaser in
connection therewith and in connection with any Blue Sky survey, (v) the fees
---------------
and expenses incurred with respect to the listing of the Securities, if
applicable, and (vi) the printing and delivery to the Initial Purchaser of
copies of the Offering Circular and any amendments or supplements thereto. All
other selling expenses incurred in connection with the sale of the Securities by
a holder of registration rights under the Registration Rights Agreement shall be
borne by such holder. The Company shall have no obligation to pay and shall, not
pay any underwriting fees, discounts, commissions or transfer taxes in
connection with the offer and sale of the Securities by such holder, and each of
the Company, the Initial Purchaser and any such holder shall pay the expenses of
its own counsel.
SECTION 5. Conditions of Initial Purchaser's Obligations.
---------------------------------------------
The obligations of the Initial Purchaser are subject to the accuracy of the
representations and warranties of the Transaction Entities contained in Section
1 hereof or in certificates of any officer or authorized representative of the
Transaction Entities delivered pursuant to the provisions hereof, to the
performance by the Transaction Entities of their covenants and other obligations
hereunder, and to the following further conditions:
(a) Opinion of Counsel for Company. At each Closing Time, the Initial
Purchaser shall have received the favorable opinion, dated as of each Closing
Time, of (i) Akin, Gump, Strauss, ▇▇▇▇▇ & ▇▇▇▇, L.L.P., counsel for the Company,
substantially in the form of Exhibit B in form and substance satisfactory to
counsel for the Initial Purchaser and (ii) Ballard, Spahr, ▇▇▇▇▇▇▇ & Ingersoll,
LLP, special Maryland counsel for the Company, substantially in the form of
Exhibit C, in form and substance reasonably satisfactory to the Initial
Purchaser.
(b) Opinion of Counsel for Initial Purchaser. At each Closing Time, the
Initial Purchaser shall have received the favorable opinion, dated as of each
Closing Time, of ▇▇▇▇▇▇▇▇ Chance ▇▇▇▇▇▇ & ▇▇▇▇▇ LLP, counsel for the Initial
Purchaser, substantially in the form of Exhibit D, in form and substance
satisfactory to the Initial Purchaser.
(c) Accountant's Comfort Letter. At the time of the execution of this
Agreement, the Initial Purchaser shall have received from PricewaterhouseCoopers
LLP a letter, dated such date, in form and substance satisfactory to the Initial
Purchaser and counsel to the Initial Purchaser, containing statements and
information of the type ordinarily included in accountants' "comfort letters" as
set forth in the AICPA's Statement on Auditing Standards 72 to underwriters with
respect to the financial statements and certain financial information contained
in or incorporated by reference in the Offering Circular.
(d) Bring-down Comfort Letter. At each Closing Time, the Initial Purchaser
shall have received from PricewaterhouseCoopers LLP a letter, dated as of each
Closing Time, to the effect that they reaffirm the statements made in the letter
furnished pursuant to subsection (e) of this Section 5, except that the
specified date referred to shall be a date not more than three business days
prior to such Closing Time.
(e) Officers Certificates. Each Transaction Entity shall have furnished to
the Initial Purchaser a certificate, dated each Closing Time, of its Chairman of
the Board of Trustees, its President or a Vice President and its Chief Financial
Officer stating that:
12
(i) The representations, warranties and agreements of the Transaction
Entities in Section 1 are true and correct as of such Closing Time; the
Transaction Entities complied with all of their agreements contained
herein; and the conditions set forth in Sections 5(h) have been fulfilled;
and
(ii) They have carefully examined the Offering Circular and, in their
opinion, the Offering Circular did not include an untrue statement of a
material fact or omit to state a material fact necessary in order to make
the statements therein, in the light of the circumstances under which they
were made, not misleading.
(f) Material Change in Position of Transaction Entities. (i) None of the
Transaction Entities or any Property shall have sustained, since the date of the
latest audited financial statements disclosed in the Offering Circular, any loss
or interference with its business from fire, explosion, flood or other calamity,
whether or not covered by insurance, or from any labor dispute or court or
governmental action, order or decree, otherwise than as set forth or
contemplated in the Offering Circular or (ii) since such date there shall not
have been any change in the capital stock or long-term debt of any Transaction
Entity or any change, or any development involving a prospective change, in or
affecting any Property or the general affairs, management, financial position,
stockholders' equity or results of operations of any Transaction Entity,
otherwise than as disclosed in the Offering Circular, the effect of which, in
any such case described in clause (i) or (ii), is, in the judgment of the
Initial Purchaser, so material and adverse as to make it impracticable or
inadvisable (a) to commence or continue the offering of the units in the Trust
to the public, or (b) to enforce contracts for the sale of Units in the Trust.
(g) General Material Changes. Subsequent to the execution and delivery of
this Agreement there shall not have occurred any of the following: (i) trading
in securities generally on the New York Stock Exchange or the American Stock
Exchange or in the over-the-counter market, or trading in any securities of the
Company on any exchange or in the over-the-counter market, shall have been
suspended or minimum prices shall have been established on any such exchange or
such market by the Commission, by such exchange or by any other regulatory body
or governmental authority having jurisdiction, (ii) a banking moratorium shall
have been declared by Federal or state authorities or a material disruption in
commercial banking or securities settlement or clearance services in the United
States, (iii) the United States shall have become engaged in hostilities, there
shall have been an escalation in hostilities involving the United States or
there shall have been a declaration of a national emergency or war by the United
States or (iv) there shall have occurred such a national or international
calamity or crisis or material adverse change in general economic, political or
financial conditions (or the effect of international conditions on the financial
markets in the United States shall be such) as to make it, in the judgment of
the Initial Purchaser, impracticable or inadvisable (a) to commence or continue
the offering of the units in the Trust to the public, or (b) to enforce
contracts for the sale of Units in the Trust.
(h) Performance of Obligations. The Transaction Entities shall not have
failed at or prior to each Closing Time to have performed or complied with any
of their agreements herein contained and required to be performed or complied
with by them hereunder at or prior to each Closing Time.
(i) Registration Rights Agreement. At the Firm Closing Time, the Company
shall have executed and delivered the Registration Rights Agreement,
substantially in the form attached hereto as Exhibit A.
(j) Offering Circular. The Offering Circular (and any amendments or
supplements thereto) shall have been printed and copies distributed to the
Initial Purchaser as promptly as practicable on or following the date of this
Agreement or at such other date and time as to which the Initial Purchaser may
agree; and no order pursuant to applicable law suspending the sale of the
Securities in any jurisdiction
13
shall have been issued and no proceeding for that purpose shall have been
commenced or shall be pending or threatened.
(k) Additional Documents. At each Closing Time, counsel for the Initial
Purchaser shall have been furnished with such further certificates and documents
as it may reasonably require for the purpose of enabling it to pass upon the
issuance and sale of the Securities as herein contemplated, or in order to
evidence the accuracy of any of the representations or warranties, or the
fulfillment of any of the conditions, herein contained; and all proceedings
taken by the Company in connection with the issuance and sale of the Securities
as herein contemplated shall be satisfactory in form and substance to the
Initial Purchaser and counsel for the Initial Purchaser.
SECTION 6. Indemnification and Contribution.
--------------------------------
(a) Indemnification of Initial Purchaser. The Transaction Entities jointly
and severally, shall indemnify and hold harmless the Initial Purchaser, its
officers and employees and each person, if any, who controls the Initial
Purchaser within the meaning of the Securities Act, from and against any loss,
claim, damage or liability, joint or several, or any action in respect thereof
(including, but not limited to, any loss, claim, damage, liability or action
relating to purchases and sales of the Securities), to which that Initial
Purchaser, officer, employee or controlling person may become subject, under the
Securities Act or otherwise, insofar as such loss, claim, damage, liability or
action arises out of, or is based upon, (i) any untrue statement or alleged
untrue statement of a material fact contained (A) in the Offering Circular, an
amendment or supplement to the Offering Circular or in any documents filed under
the Exchange Act and deemed to be incorporated by reference into the Offering
Circular or (B) in any blue sky application or other document prepared or
executed by the Company (or based upon any written information furnished by the
Company) specifically for the purpose of qualifying any or all of the Securities
under the securities laws of any state or other jurisdiction (any such
application, document or information being hereinafter called a "Blue Sky
Application"), (ii) the omission or alleged omission to state in the Offering
Circular, or in any amendment or supplement thereto, or in any Blue Sky
Application any material fact required to be stated therein or necessary to make
the statements therein not misleading (with respect to the Offering Circular, in
light of the circumstances under which they were made), or (iii) any act or
failure to act or any alleged act or failure to act by the Initial Purchaser in
connection with, or relating in any manner to, the Securities or the offering
contemplated hereby, and which is included as part of or referred to in any
loss, claim, damage, liability or action arising out of or based upon matters
covered by clause (i) or (ii) above (provided that the Transaction Entities
--------
shall not be liable under this clause (iii) to the extent that it is determined
in a final judgment by a court of competent jurisdiction that such loss, claim,
damage, liability or action resulted directly from any such acts or failures to
act undertaken or omitted to be taken by such Initial Purchaser through its
gross negligence or willful misconduct), and shall reimburse the Initial
Purchaser and each such officer, employee or controlling person promptly upon
demand for any legal or other expenses reasonably incurred by that Initial
Purchaser, officer, employee or controlling person in connection with
investigating or defending or preparing to defend against any such loss, claim,
damage, liability or action as such expenses are incurred; provided, however,
-------- -------
that the Transaction Entities shall not be liable in any such case to the extent
that any such loss, claim, damage, liability or action arises out of, or is
based upon, any untrue statement or alleged untrue statement or omission or
alleged omission made in the Offering Circular, or in any such amendment or
supplement, or in any Blue Sky Application, in reliance upon and in conformity
with written information concerning the Initial Purchaser furnished to the
Company by or on behalf of the Initial Purchaser specifically for inclusion
therein. The foregoing indemnity agreement is in addition to any liability which
the Transaction Entities may otherwise have to the Initial Purchaser or to any
officer, employee or controlling person of that Initial Purchaser.
14
(b) Indemnification of Company, Directors and Officers. The Initial
Purchaser shall indemnify and hold harmless each Transaction Entity, its
officers and employees, each of its directors or trustees, and each person, if
any, who controls each Transaction Entity within the meaning of the Securities
Act, from and against any loss, claim, damage or liability, joint or several, or
any action in respect thereof, to which each Transaction Entity or any such
director, trustee, officer or controlling person may become subject, under the
Securities Act or otherwise, insofar as such loss, claim, damage, liability or
action arises out of, or is based upon, (i) any untrue statement or alleged
untrue statement of a material fact contained (A) in the Offering Circular, an
amendment or supplement to the Offering Circular or in any documents filed under
the Exchange Act and deemed to be incorporated by reference into the Offering
Circular or (B) in any Blue Sky Application or (ii) the omission or alleged
omission to state in the Offering Circular, or in any amendment or supplement
thereto, or in any Blue Sky Application any material fact required to be stated
therein or necessary to make the statements therein not misleading, but in each
case only to the extent that the untrue statement or alleged untrue statement or
omission or alleged omission was made in reliance upon and in conformity with
written information concerning the Initial Purchaser furnished to the Company by
or on behalf of that Initial Purchaser specifically for inclusion therein, and
shall reimburse each Transaction Entity and any such director, trustee, officer
or controlling person for any legal or other expenses reasonably incurred by
each Transaction Entity or any such director, trustee, officer or controlling
person in connection with investigating or defending or preparing to defend
against any such loss, claim, damage, liability or action as such expenses are
incurred. The foregoing indemnity agreement is in addition to any liability
which the Initial Purchaser may otherwise have to each Transaction Entity or any
such director, trustee, officer, employee or controlling person.
(c) Actions Against Parties; Notification. Promptly after receipt by an
indemnified party under this Section 6 of notice of any claim or the
commencement of any action, the indemnified party shall, if a claim in respect
thereof is to be made against the indemnifying party under this Section 6,
notify the indemnifying party in writing of the claim or the commencement of
that action; provided, however, that the failure to notify the indemnifying
-------- -------
party shall not relieve it from any liability which it may have under this
Section 6 except to the extent it has been materially prejudiced by such failure
and, provided further, that the failure to notify the indemnifying party shall
--------
not relieve it from any liability which it may have to an indemnified party
otherwise than under this Section 6. If any such claim or action shall be
brought against an indemnified party, and it shall notify the indemnifying party
thereof, the indemnifying party shall be entitled to participate therein and, to
the extent that it wishes, jointly with any other similarly notified
indemnifying party, to assume the defense thereof with counsel reasonably
satisfactory to the indemnified party. After notice from the indemnifying party
to the indemnified party of its election to assume the defense of such claim or
action, the indemnifying party shall not be liable to the indemnified party
under this Section 6 for any legal or other expenses subsequently incurred by
the indemnified party in connection with the defense thereof other than
reasonable costs of investigation; provided, however, that the indemnified party
-------- -------
shall have the right to employ counsel to represent jointly the indemnified
party and their respective officers, employees and controlling persons who may
be subject to liability arising out of any claim in respect of which indemnity
may be sought by the indemnified party against the indemnifying parties under
this Section 6 if, in the reasonable judgment of the indemnified party, it is
advisable for the indemnified party, its officers, employees and controlling
persons to be jointly represented by separate counsel, and in that event the
fees and expenses of such separate counsel shall be paid by the indemnifying
party. No indemnifying party shall (i) without the prior written consent of the
indemnified parties (which consent shall not be unreasonably withheld), settle
or compromise or consent to the entry of any judgment with respect to any
pending or threatened claim, action, suit or proceeding in respect of which
indemnification or contribution may be sought hereunder (whether or not the
indemnified parties are actual or potential parties to such claim or action)
unless such settlement, compromise or consent includes an unconditional release
of each indemnified party from all liability arising out of such claim, action,
suit or proceeding, or (ii) be liable for any settlement of any such action
effected without its written consent (which consent shall not be unreasonably
withheld), but if
15
settled with the consent of the indemnifying party or if there be a final
judgment of the plaintiff in any such action, the indemnifying party agrees to
indemnify and hold harmless any indemnified party from and against any loss or
liability by reason of such settlement or judgment.
(d) Contribution. If the indemnification provided for in this Section 6
shall for any reason be unavailable to or insufficient to hold harmless an
indemnified party under Section 6(a) or 6(c) in respect of any loss, claim,
damage or liability, or any action in respect thereof, referred to therein, then
each indemnifying party shall, in lieu of indemnifying such indemnified party,
contribute to the amount paid or payable by such indemnified party as a result
of such loss, claim, damage or liability, or action in respect thereof, (i) in
such proportion as shall be appropriate to reflect the relative benefits
received by the Transaction Entities on the one hand and the Initial Purchaser
on the other from the offering of the Securities or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of the Transaction Entities
on the one hand and the Initial Purchaser on the other with respect to the
statements or omissions which resulted in such loss, claim, damage or liability,
or action in respect thereof, as well as any other relevant equitable
considerations. The relative benefits received by the Transaction Entities on
the one hand and the Initial Purchaser on the other with respect to such
offering shall be deemed to be in the same proportion as the total net proceeds
from the offering of the Securities purchased under this Agreement (before
deducting expenses) received by the Transaction Entities, on the one hand, and
the total discounts received by the Initial Purchaser with respect to the
Securities purchased under this Agreement, on the other hand, bear to the total
gross proceeds from the offering of the Securities under this Agreement, in each
case as set forth on the cover page of the Offering Circular. The relative fault
shall be determined by reference to whether the untrue or alleged untrue
statement of a material fact or omission or alleged omission to state a material
fact relates to information supplied by the Transaction Entities or the Initial
Purchaser, the intent of the parties and their relative knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Transaction Entities and the Initial Purchaser agree that it would not be
just and equitable if contributions pursuant to this Section were to be
determined by pro rata allocation or by any other method of allocation which
does not take into account the equitable considerations referred to herein. The
amount paid or payable by an indemnified party as a result of the loss, claim,
damage or liability, or action in respect thereof, referred to above in this
Section shall be deemed to include, for purposes of this Section 6(d), any legal
or other expenses reasonably incurred by such indemnified party in connection
with investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 6(d), no Initial Purchaser shall be required to
contribute any amount in excess of the amount by which the total price at which
the Securities purchased by it and deposited with the Trust exceeds the amount
of any damages which the Initial Purchaser has otherwise paid or become liable
to pay by reason of any 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.
(e) Information Furnished. The Initial Purchaser confirms and each
Transaction Entity acknowledges that the statements with respect to the deposit
of the Securities by the Initial Purchaser into the Trust set forth on the cover
page of the Offering Circular are correct and constitute the only information
concerning the Initial Purchaser furnished in writing to the Company by or on
behalf of the Initial Purchaser specifically for inclusion in the Offering
Circular.
SECTION 7. Termination. The obligations of the Initial Purchaser hereunder
-----------
may be terminated by the Initial Purchaser by notice given to and received by
the Company prior to delivery of and payment for the Securities if, prior to
that time, any of the events described in Sections 5(h), 5(i) or 5(k), shall
have occurred or if the Initial Purchaser shall decline to purchase the
Securities for any reason permitted under this Agreement.
16
SECTION 8. Reimbursement of Initial Purchaser's Expenses. If the Company
---------------------------------------------
shall fail to tender the Securities for delivery to the Initial Purchaser by
reason of any failure, refusal or inability on the part of the Transaction
Entities to perform any agreement on their part to be performed, or because any
other condition of the Initial Purchaser's obligations hereunder required to be
fulfilled by the Transaction Entities is not fulfilled (other than the condition
set forth in Section 7(i) herein), the Transaction Entities will reimburse the
Initial Purchaser for all reasonable out-of-pocket expenses (including fees and
disbursements of counsel) incurred by the Initial Purchaser in connection with
this Agreement and the proposed purchase of the Securities.
SECTION 9. Notices, etc.
------------
All statements, requests, notices and agreements hereunder shall be in
writing, and:
(a) if to the Initial Purchaser, shall be delivered or sent by mail, telex
or facsimile transmission to ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Inc., ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Manager, Investment Banking Division (Fax:
▇▇▇-▇▇▇-▇▇▇▇), with a copy, in the case of any notice pursuant to Section 6(c),
to the Director of Litigation, Office of the General Counsel, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Barney Inc., ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇; with a copy to ▇▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇, Esq., ▇▇▇▇▇▇▇▇ Chance ▇▇▇▇▇▇ & ▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (Fax: ▇▇▇-▇▇▇-▇▇▇▇);
(b) if to the Transaction Entities shall be delivered or sent by mail,
telex or facsimile transmission to ▇▇▇▇▇▇▇▇ Properties Trust, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇ August (Fax:
▇▇▇-▇▇▇-▇▇▇▇); with a copy to ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq., Akin, Gump, Straus,
▇▇▇▇▇ & ▇▇▇▇, L.L.P., ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ (Fax:
▇▇▇-▇▇▇-▇▇▇▇).
Any such statements, requests, notices or agreements shall take effect at
the time of receipt thereof.
SECTION 10. Persons Entitled to Benefit of Agreement. This Agreement shall
----------------------------------------
inure to the benefit of and be binding upon the Initial Purchaser, the
Transaction Entities and their respective personal representatives and
successors. This Agreement and the terms and provisions hereof are for the sole
benefit of only those persons, except that (A) the representations, warranties,
indemnities and agreements of the Transaction Entities contained in this
Agreement shall also be deemed to be for the benefit of the person or persons,
if any, who control the Initial Purchaser within the meaning of Section 15 of
the Securities Act and (B) the indemnity agreement of the Initial Purchaser
contained in Section 6(b) of this Agreement shall be deemed to be for the
benefit of directors, officers and trustees of the Transaction Entities and any
person controlling the Transaction Entities within the meaning of Section 15 of
the Securities Act. Nothing in this Agreement is intended or shall be construed
to give any person, other than the persons referred to in this Section 10, any
legal or equitable right, remedy or claim under or in respect of this Agreement
or any provision contained herein.
SECTION 11. Survival. The respective indemnities, representations,
--------
warranties and agreements of the Transaction Entities and the Initial Purchaser
contained in this Agreement or made by or on behalf on them, respectively,
pursuant to this Agreement, shall survive the delivery of and payment for the
Securities and shall remain in full force and effect, regardless of any
investigation made by or on behalf of any of them or any person controlling any
of them.
17
SECTION 12. Definition of the Terms "Business Day" and "Subsidiary". For
------------------------------------------------------
purposes of this Agreement, (a) "business day" means any day on which the New
York Stock Exchange, Inc. is open for trading and (b) "subsidiary" has the
meaning set forth in Rule 405 of the Securities Act.
SECTION 13. Governing Law. This Agreement shall be governed by and
--------------
construed in accordance with the laws of New York.
SECTION 14. Counterparts. This Agreement may be executed in one or more
------------
counterparts and, if executed in more than one counterpart, the executed
counterparts shall each be deemed to be an original but all such counterparts
shall together constitute one and the same instrument.
SECTION 15. Headings. The headings herein are inserted for convenience of
---------
reference only and are not intended to be part of, or to affect the meaning or
interpretation of, this Agreement.
18
If the foregoing correctly sets forth the agreement between the Company and
the Initial Purchaser, please indicate your acceptance in the space provided for
that purpose below.
Very truly yours,
▇▇▇▇▇▇▇▇ PROPERTIES TRUST
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Senior Vice President and Chief Financial
Officer
▇▇▇▇▇▇▇▇ PROPERTIES ACQUISITION
PARTNERS, L.P.
By ▇▇▇▇▇▇▇▇ Properties I, Inc., its general partner
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Senior Vice President and Chief Financial
Officer
▇▇▇▇▇▇▇▇ PROPERTIES I, INC.
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Senior Vice President and Chief Financial
Officer
Accepted:
▇▇▇▇▇▇▇ ▇▇▇▇▇ Barney Inc.
By /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Managing Director
19