Draft of January 14, 1998
ELDERTRUST
(a Maryland real estate investment trust)
4,840,000 Common Shares of Beneficial Interest
(Par Value $.01 Per Share)
U.S. PURCHASE AGREEMENT
___, 1998
▇▇▇▇▇▇▇ ▇▇▇▇▇ & CO.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
BT ALEX. ▇▇▇▇▇ INCORPORATED
▇▇▇▇▇▇▇, ▇▇▇▇▇ & CO.
as U.S. Representatives of the several U.S. Underwriters
c/▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
North Tower
World Financial Center
New York, New York 10281-1209
Ladies and Gentlemen:
ElderTrust, a Maryland real estate investment trust (the "Company") and
ElderTrust Operating Limited Partnership, a Delaware limited partnership (the
"Operating Partnership"), each confirms its agreement with ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co.,
▇▇▇▇▇▇▇ Lynch, ▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated ("▇▇▇▇▇▇▇ ▇▇▇▇▇"), BT ▇▇▇▇.
▇▇▇▇▇ Incorporated ("BT ▇▇▇▇. ▇▇▇▇▇") and ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co. ("▇▇▇▇▇▇▇ ▇▇▇▇▇")
and each of the other U.S. Underwriters named in Schedule A hereto
(collectively, the "U.S. Underwriters", which term shall also include any
underwriter substituted as hereinafter provided in Section 10 hereof), for whom
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇. ▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇ are acting as representatives
(in such capacity, the "U.S. Representatives"), with respect to the issue and
sale by the Company and the purchase by the U.S. Underwriters, acting severally
and not jointly, of the respective numbers of common shares of beneficial
interest, par value $.01 per share, of the Company ("Common Shares") set forth
in said Schedule A, and with respect to the grant by the Company to the U.S.
Underwriters, acting severally and not jointly, of the option described in
Section 2(b) hereof to purchase all or any part of 726,000 additional Common
Shares to cover over-allotments, if any. The aforesaid 4,840,000 Common Shares
(the "Initial U.S. Securities") to be purchased by the U.S. Underwriters and all
or any part of the 726,000 Common Shares subject to the option described in
Section 2(b) hereof (the "U.S. Option Securities") are hereinafter called,
collectively, the "U.S. Securities".
It is understood that the Company and the Operating Partnership are
concurrently entering into an agreement dated the date hereof (the
"International Purchase Agreement") providing for the offering by the Company of
an aggregate of 1,210,000 Common Shares (the "Initial International Securities")
through arrangements with certain underwriters outside the United States and
Canada (the "International Managers") for which ▇▇▇▇▇▇▇ ▇▇▇▇▇ International, BT
▇▇▇▇. ▇▇▇▇▇ International, a division of Bankers Trust International PLC and
▇▇▇▇▇▇▇ ▇▇▇▇▇ International are acting as lead managers (the "Lead Managers")
and the grant by the Company to the International Managers, acting severally and
not jointly, of an option to purchase all or any part of the International
Managers' pro rata portion of up to 181,500 additional Common Shares solely to
cover overallotments, if any (the "International Option Securities" and,
together with the U.S. Option Securities, the "Option Securities"). The Initial
International Securities and the International Option Securities are hereinafter
called the "International Securities". It is understood that the Company is not
obligated to sell and the U.S. Underwriters are not obligated to purchase, any
Initial U.S. Securities unless all of the Initial International Securities are
contemporaneously purchased by the International Managers.
The U.S. Underwriters and the International Managers are hereinafter
collectively called the "Underwriters", the Initial U.S. Securities and the
Initial International Securities are hereinafter collectively called the
"Initial Securities", and the U.S. Securities and the International Securities
are hereinafter collectively called the "Securities".
The Underwriters will concurrently enter into an Intersyndicate
Agreement of even date herewith (the "Intersyndicate Agreement") providing for
the coordination of certain transactions among the Underwriters under the
direction of ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., ▇▇▇▇▇▇▇ Lynch, ▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated (in such capacity, the "Global Coordinator").
The Company and the Operating Partnership each understands that the
U.S. Underwriters propose to make a public offering of the U.S. Securities as
soon as the U.S. Representatives deem advisable after this Agreement has been
executed and delivered.
The Company and the U.S. Underwriters agree that up to 484,000 shares
of the Initial U.S. Securities to be purchased by the U.S. Underwriters and that
up to 121,000 shares of the Initial International Securities to be purchased by
the International Managers (collectively, the "Reserved Securities") shall be
reserved for sale by the Underwriters to certain eligible employees and persons
having business relationships with the Company, as part of the distribution of
the Securities by the Underwriters, subject to the terms of this Agreement, the
applicable rules, regulations and interpretations of the National Association of
Securities Dealers, Inc. and all other applicable laws, rules and regulations.
To the extent that such Reserved Securities are not orally confirmed for
purchase by such eligible employees and persons having business relationships
with the Company by the end of the first business day after the date of this
Agreement, such Reserved Securities may be offered to the public as part of the
public offering contemplated hereby.
2
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-11 (No. 333-37451) covering the
registration of the Securities under the Securities Act of 1933, as amended (the
"1933 Act"), including the related preliminary prospectus or prospectuses.
Promptly after execution and delivery of this Agreement, the Company will either
(i) prepare and file a prospectus in accordance with the provisions of Rule 430A
("Rule 430A") of the rules and regulations of the Commission under the 1933 Act
(the "1933 Act Regulations") and paragraph (b) of Rule 424 ("Rule 424(b)") of
the 1933 Act Regulations or (ii) if the Company has elected to rely upon Rule
434 ("Rule 434") of the 1933 Act Regulations, prepare and file a term sheet (a
"Term Sheet") in accordance with the provisions of Rule 434 and Rule 424(b). Two
forms of prospectus are to be used in connection with the offering and sale of
the Securities: one relating to the U.S. Securities (the "Form of U.S.
Prospectus") and one relating to the International Securities (the "Form of
International Prospectus"). The Form of International Prospectus is identical to
the Form of U.S. Prospectus, except for the front cover and back cover pages and
the information under the caption "Underwriting". The information included in
any such prospectus or in any such Term Sheet, as the case may be, that was
omitted from such registration statement at the time it became effective but
that is deemed to be part of such registration statement at the time it became
effective (a) pursuant to paragraph (b) of Rule 430A is referred to as "Rule
430A Information" or (b) pursuant to paragraph (d) of Rule 434 is referred to as
"Rule 434 Information." Each Form of U.S. Prospectus and Form of International
Prospectus used before such registration statement became effective, and any
prospectus that omitted, as applicable, the Rule 430A Information or the Rule
434 Information, that was used after such effectiveness and prior to the
execution and delivery of this Agreement, is herein called a "preliminary
prospectus." Such registration statement, including the exhibits thereto and
schedules thereto at the time it became effective and including the Rule 430A
Information and the Rule 434 Information, as applicable, is herein called the
"Registration Statement." Any registration statement filed pursuant to Rule
462(b) of the 1933 Act Regulations is herein referred to as the "Rule 462(b)
Registration Statement," and after such filing the term "Registration Statement"
shall include the Rule 462(b) Registration Statement. The final Form of U.S.
Prospectus and the final Form of International Prospectus in the forms first
furnished to the Underwriters for use in connection with the offering of the
Securities are herein called the "U.S. Prospectus" and the "International
Prospectus," respectively, and collectively, the "Prospectuses." If Rule 434 is
relied on, the terms "U.S. Prospectus" and "International Prospectus" shall
refer to the preliminary U.S. Prospectus dated _____, 1998 and preliminary
International Prospectus dated ____, 1998, respectively, each together with the
applicable Term Sheet and all references in this Agreement to the date of such
Prospectuses shall mean the date of the applicable Term Sheet. For purposes of
this Agreement, all references to the Registration Statement, any preliminary
prospectus, the U.S. Prospectus, the International Prospectus or any Term Sheet
or any amendment or supplement to any of the foregoing shall be deemed to
include the copy filed with the Commission pursuant to its Electronic Data
Gathering, Analysis and Retrieval system ("▇▇▇▇▇").
At or prior to Closing Time (as hereinafter defined), the Company will
complete a series of transactions (the "Formation Transactions") described in
the Prospectuses under the caption "Structure and Formation of the Company --
Formation of the Company."
3
SECTION 1. Representations and Warranties.
(a) Representations and Warranties by the Company and the Operating
Partnership. The Company and the Operating Partnership each severally represents
and warrants to each U.S. Underwriter as of the date hereof, as of the Closing
Time referred to in Section 2(c) hereof, and as of each Date of Delivery (if
any) referred to in Section 2(b), hereof and agrees with each U.S. Underwriter,
as follows:
(i) Compliance with Registration Requirements. The Company
meets the requirements for use of Form S-11 under the 1933 Act. Each of
the Registration Statement and any Rule 462(b) Registration Statement
has become effective under the 1933 Act and no stop order suspending
the effectiveness of the Registration Statement or any Rule 462(b)
Registration Statement has been issued under the 1933 Act and no
proceedings for that purpose have been instituted or are pending or, to
the knowledge of the Company, are contemplated by the Commission, and
any request on the part of the Commission for additional information
has been complied with.
At the respective times the Registration Statement, any Rule
462(b) Registration Statement and any post-effective amendments thereto
became effective and at the Closing Time (and, if any U.S. Option
Securities are purchased, at the Date of Delivery), the Registration
Statement, the Rule 462(b) Registration Statement and any amendments
and supplements thereto complied and will comply in all material
respects with the requirements of the 1933 Act and the 1933 Act
Regulations and did not 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, and
the Prospectuses, any preliminary prospectuses and any supplements
thereto or prospectus wrapper prepared in connection therewith, at
their respective times of issuance and at the Closing Time, complied
and will comply in all material respects with any applicable laws or
regulations of foreign jurisdictions in which the Prospectuses and such
preliminary prospectuses, as amended or supplemented, if applicable,
are distributed in connection with the offer and sale of Reserved
Securities. Neither of the Prospectuses nor any amendments or
supplements thereto (including any prospectus wrapper), at the time the
Prospectuses or any amendments or supplements thereto were issued and
at the Closing Time (and, if any U.S. Option Securities are purchased,
at the Date of Delivery), included or will include an untrue statement
of a material fact or omitted or will 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. If Rule 434
is used, the Company will comply with the requirements of Rule 434 and
the Prospectuses shall not be "materially different", as such term is
used in Rule 434, from the prospectuses included in the Registration
Statement at the time it became effective. The representations and
warranties in this subsection shall not apply to statements in or
omissions from the Registration Statement or the U.S. Prospectus made
in reliance upon and in conformity with information furnished to the
Company in writing by any U.S. Underwriter through the U.S.
Representatives expressly for use in the Registration Statement or the
U.S. Prospectus.
4
Each preliminary prospectus and the prospectuses filed as part
of the Registration Statement as originally filed or as part of any
amendment thereto, or filed pursuant to Rule 424 under the 1933 Act,
complied when so filed in all material respects with the 1933 Act
Regulations and each preliminary prospectus and the Prospectuses
delivered to the Underwriters for use in connection with this offering
was identical to the electronically transmitted copies thereof filed
with the Commission pursuant to ▇▇▇▇▇, except to the extent permitted
by Regulation S-T.
(ii) Independent Accountants. The accountants who certified
the financial statements included in the Registration Statement are
independent public accountants as required by the 1933 Act and the 1933
Act Regulations.
(iii) Financial Statements. The historical balance sheet of
the Company included in the Registration Statement and the
Prospectuses, together with the related notes, presents fairly in
accordance with generally accepted accounting principles ("GAAP") the
financial position of the Company at the date indicated. The selected
historical financial data and the summary financial information
included in the Prospectuses present fairly the information shown
therein and have been compiled on a basis consistent with that of the
audited balance sheet included in the Registration Statement. The
unaudited pro forma balance sheet and statements of operations and the
related notes thereto included in the Registration Statement and the
Prospectuses present fairly the information shown therein, have been
prepared in accordance with the Commission's rules and guidelines with
respect to pro forma balance sheets and statements of operations and
have been properly compiled on the bases described therein, and the
assumptions used in the preparation thereof are reasonable and the
adjustments used therein are appropriate to give effect to the
transactions and circumstances referred to therein.
5
(iv) No Material Adverse Change in Business. Since the
respective dates as of which information is given in the Registration
Statement and the Prospectuses, except as otherwise stated therein, (A)
there has been no material adverse change in the condition, financial
or otherwise, or in the earnings, business affairs or business
prospects of the Company, the Operating Partnership, its Subsidiaries
(as defined below) and the Initial Investments (as defined in the
Registration Statement), considered as one enterprise, whether or not
arising in the ordinary course of business (a "Material Adverse
Effect"), (B) no material casualty loss or material condemnation or
other material adverse event with respect to any of the Initial
Properties has occurred, (C) there have been no transactions entered
into by the Company, the Operating Partnership or any of its
Subsidiaries, other than those in the ordinary course of business,
which are material with respect to the Company, the Operating
Partnership and its Subsidiaries considered as one enterprise except in
connection with the Formation Transactions, and (D) there has been no
dividend or distribution of any kind declared, paid or made by the
Company on any class of its capital stock or by the Operating
Partnership with respect to its partnership interests. As used in this
Agreement, the term "Subsidiary" as it relates to the Operating
Partnership includes ET Capital Corp. as well as any corporation,
limited or general partnership, joint venture or other entity through
which the Operating Partnership, upon completion of the Formation
Transactions, will own an interest, either directly or indirectly, in
an Initial Property.
(v) Good Standing of the Company. 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 and has full
trust power and trust authority to own, lease and operate its
properties and to conduct its business as described in the Prospectuses
and to enter into and perform its obligations under this Agreement and
the International Purchase Agreement and the Transaction Documents (as
hereinafter defined) to which it is a party; and the Company is duly
qualified as a foreign corporation to transact business and is in good
standing in each other jurisdiction in which such qualification is
required, whether by reason of the ownership or leasing of property or
the conduct of business, except where the failure so to qualify or to
be in good standing would not result in a Material Adverse Effect.
(vi) Good Standing of Operating Partnership and its
Subsidiaries. The Agreement of Limited Partnership of the Operating
Partnership (the "Partnership Agreement") has been duly and validly
authorized, executed and delivered by the parties thereto and is a
valid and binding agreement, enforceable in accordance with its terms,
except as such enforceability may be limited by bankruptcy, insolvency,
reorganization or other similar laws affecting creditors' rights
generally and by general principles of equity. The Operating
Partnership and each of its Subsidiaries has been duly formed and is
validly existing as a limited partnership or corporation, as the case
may be, in good standing under the laws of its state of organization
with partnership or corporate power and authority, as the case may be,
to own, lease and operate its properties, to conduct the business in
which it is engaged or proposes to engage as described in the
Prospectuses and to enter into and perform its obligations under this
Agreement and the International Purchase Agreement, if applicable, and
all other Transaction Documents to which it is a party. The Operating
Partnership and each of its Subsidiaries is duly qualified or
6
registered as a foreign partnership or corporation, as the case may be,
and is in good standing in each jurisdiction in which such
qualification or registration is required, whether by reason of the
ownership or leasing of property or the conduct of business, except
where the failure to so qualify or register or to be in good standing
would not result in a Material Adverse Effect. All of the issued and
outstanding capital stock or partnership interests, as the case may be,
of each such Subsidiary which are described in the Prospectuses as
being owned by the Company or the Operating Partnership (directly or
through subsidiaries) upon completion of the Formation Transactions,
will have been duly authorized and, upon completion of the Formation
Transactions, will be validly issued, fully paid and (in the case of
corporations) non-assessable and owned by the Company or the Operating
Partnership (directly or through subsidiaries) as so described, free
and clear of any security interest, mortgage, pledge, lien,
encumbrance, claim or equity (except as described in the Prospectus).
None of the outstanding shares of capital stock of any Subsidiary was
issued in violation of the preemptive or similar rights of any
securityholder of such Subsidiary. As of the date hereof, ElderTrust
Realty Group, Inc. is the sole general partner of the Operating
Partnership and, immediately after the Closing Time referred to in
Section 2(c) hereof, the Company will be the sole general partner of
the Operating Partnership and will be the holder of _________ units of
partnership interest in the Operating Partnership ("Units"), or
approximately __% of the outstanding Units, if the over-allotment
option is not exercised at Closing Time. To the extent any portion of
the over-allotment option is exercised at Closing Time, the relevant
numbers of Units and percentages set forth in this paragraph will be
deemed adjusted accordingly. Additionally, to the extent any portion of
the over-allotment option is exercised subsequent to Closing Time, the
Company will contribute the proceeds from the sale of the Option
Securities to the Operating Partnership in exchange for an equivalent
number of Units. Upon completion of the Formation Transactions, the
Operating Partnership will have no subsidiaries other than the entities
through which it will own interests in the Initial Properties or the
Initial Investments.
(vii) Capitalization. The authorized, issued and outstanding
shares of beneficial interest of the Company are as set forth in the
Prospectuses in the column entitled "Historical" under the caption
"Capitalization" (except for subsequent issuances, if any, pursuant to
this Agreement, pursuant to reservations, agreements or employee
benefit plans referred to in the Prospectuses, pursuant to the
Formation Transactions, pursuant to the redemption or exchange of Units
or pursuant to the exercise of convertible securities or options
referred to in the Prospectuses). The issued and outstanding shares of
beneficial interest of the Company have been duly authorized and
validly issued and are fully paid and non-assessable; none of the
outstanding shares of beneficial interest of the Company were issued in
violation of the preemptive or other similar rights of any
securityholder of the Company.
7
(viii) Authorization of Agreement. This Agreement and the
International Purchase Agreement have been duly authorized, executed
and delivered by the Company.
(ix) Authorization and Description of Securities. The
Securities to be purchased by the U.S. Underwriters and the
International Managers from the Company have been duly authorized for
issuance and sale to the U.S. Underwriters pursuant to this Agreement
and the International Managers pursuant to the International Purchase
Agreement, respectively, and, when issued and delivered by the Company
pursuant to this Agreement and the International Purchase Agreement,
respectively, against payment of the consideration set forth herein and
the International Purchase Agreement, respectively, will be validly
issued, fully paid and non-assessable; the Common Shares conform to all
statements relating thereto contained in the Prospectuses and such
description conforms to the rights set forth in the instruments
defining the same; no holder of the Securities will be subject to
personal liability by reason of being such a holder; and the issuance
of the Securities is not subject to the preemptive or other similar
rights of any securityholder of the Company.
(x) Authorization and Description of Units. The Units to be
issued in connection with the Formation Transactions, including,
without limitation, the Units to be issued to the Company, have been
duly authorized for issuance by the Operating Partnership to the
holders or prospective holders thereof, and at Closing Time will be
validly issued and fully paid. Immediately after Closing Time and not
including any Units issued in exchange for proceeds received by the
Company in connection with the sale of the Option Securities, ______
Units will be issued and outstanding. The Units have been and will be
offered and sold at or prior to Closing Time in compliance with all
applicable laws (including, without limitation, federal and state
securities laws) and the issuance and sale of such Units in the
Formation Transactions will be exempt from the registration
requirements of the 1933 Act pursuant to Section 4(2) thereof. The
terms of the Units conform to all statements and descriptions related
thereto contained in the Prospectuses.
8
(xi) Absence of Defaults and Conflicts. Upon completion of the
Formation Transactions, none of the Company, the Operating Partnership
or any of its Subsidiaries will be in violation of its declaration of
trust, charter, by-laws, partnership agreement, certificate of limited
partnership or other governing document, as the case may be, or in
default in the performance or observance of any obligation, agreement,
covenant or condition contained in any contract, indenture, mortgage,
deed of trust, loan or credit agreement, note, lease or other agreement
or instrument to which the Company, the Operating Partnership or any of
its Subsidiaries is a party or by which it or any of them may be bound,
or to which any of the Initial Properties or any other property or
assets of the Company, the Operating Partnership or any Subsidiary is
subject (collectively, the "Agreements and Instruments") except for
such defaults that would not result in a Material Adverse Effect; and
the execution, delivery and performance of this Agreement and the
International Purchase Agreement and the consummation of the
transactions contemplated in this Agreement, the International Purchase
Agreement and in the Registration Statement (including the issuance and
sale of the Securities, the consummation of the Formation Transactions,
and the use of the proceeds from the sale of the Securities as
described in the Prospectuses under the caption "Use of Proceeds") and
compliance by each of the Company and the Operating Partnership with
its obligations under this Agreement and the International Purchase
Agreement have been duly authorized by all necessary corporate or
partnership action, as the case may be, and do not and will not,
whether with or without the giving of notice or passage of time or
both, conflict with or constitute a breach of, or default or Repayment
Event (as defined below) under, or result in the creation or imposition
of any lien, charge or encumbrance upon any of the Initial Properties
or any other property or assets of the Company, the Operating
Partnership or any Subsidiary pursuant to, the Agreements and
Instruments (except for such conflicts, breaches or defaults or liens,
charges or encumbrances that would not result in a Material Adverse
Effect), nor will such action result in any violation of the provisions
of the declaration of trust, charter, by-laws, partnership agreement,
certificate of limited partnership or other governing document, as the
case may be, of the Company, the Operating Partnership or any
Subsidiary or any applicable law, statute, rule, regulation, judgment,
order, writ or decree of any government, government instrumentality or
court, domestic or foreign, having jurisdiction over the Company, the
Operating Partnership or any subsidiary or any of their assets,
properties or operations. As used herein, a "Repayment Event" means any
event or condition which gives the holder of any note, debenture or
other evidence of indebtedness (or any person acting on such holder's
behalf) the right to require the repurchase, redemption or repayment of
all or a portion of such indebtedness by the Company, the Operating
Partnership or any Subsidiary.
(xii) Transaction Documents. Each of the documents relating to
the Formation Transactions (the "Transaction Documents") to which the
Company, the Operating Partnership or any of its Subsidiaries or any
person or entity contributing interests in an Initial Property or
Subsidiary to the Company or the Operating Partnership in the Formation
Transactions (each such person or entity, an "Original Owner") has been
duly authorized, executed and delivered by such party and constitutes
the binding agreement of such party, enforceable against such party in
accordance with its terms, except as such enforceability may be limited
by bankruptcy, insolvency, reorganization or other similar laws
affecting creditors' rights generally and by general principles of
equity.
9
(xiii) REIT Qualification. Commencing with the Company's
taxable year ending December 31, 1998, the Company will be organized in
conformity with the requirements for qualification as a real estate
investment trust under the Internal Revenue Code of 1986, as amended
(the "Code"), and its proposed method of operation will enable it to
meet the requirements for taxation as a real estate investment trust
under the Code.
(xiv) Absence of Labor Dispute. No labor dispute with the
employees of the Company, the Operating Partnership or any Subsidiary
exists or, to the knowledge of the Company or the Operating
Partnership, is imminent, which, may reasonably be expected to result
in a Material Adverse Effect.
(xv) Absence of Proceedings. There is no action, suit,
proceeding, inquiry or investigation before or brought by any court or
governmental agency or body, domestic or foreign, now pending, or, to
the knowledge of the Company or the Operating Partnership, threatened,
against or affecting the Company, the Operating Partnership or any
Subsidiary or any of the Initial Properties, which is required to be
disclosed in the Registration Statement (other than as disclosed
therein), or which might reasonably be expected to result in a Material
Adverse Effect, or which might reasonably be expected to materially and
adversely affect the consummation of the transactions contemplated in
this Agreement and the International Purchase Agreement or the
performance by the Company of its obligations hereunder or thereunder
or the consummation of the Formation Transactions; the aggregate of all
pending legal or governmental proceedings to which the Company, the
Operating Partnership or any Subsidiary is a party or of which any of
their respective property or assets is the subject which are not
described in the Registration Statement, including ordinary routine
litigation incidental to the business, could not reasonably be expected
to result in a Material Adverse Effect.
(xvi) Accuracy of Exhibits. There are no contracts or
documents which are required to be described in the Registration
Statement or the Prospectuses or to be filed as exhibits thereto which
have not been so described and filed as required.
(xvii) Possession of Intellectual Property. The Company, the
Operating Partnership and its Subsidiaries own or possess, or can
acquire on reasonable terms, adequate trademarks, service marks and
trade names necessary to conduct their business as described in the
Registration Statement, and none of the Company, the Operating
Partnership or its Subsidiaries has received any notice of infringement
of or conflict with asserted rights of others with respect to any
trademarks, service marks or trade names which, singly or in the
aggregate, if the subject of an unfavorable decision, ruling or
finding, would result in a Material Adverse Effect.
10
(xviii) Absence of Further Requirements. No filing with, or
authorization, approval, consent, license, order, registration,
qualification or decree of, any court or governmental authority or
agency is necessary or required for the performance by either the
Company or the Operating Partnership of its obligations hereunder, in
connection with the offering, issuance or sale of the Securities under
this Agreement and the International Purchase Agreement or the
consummation of the transactions contemplated by this Agreement and the
International Purchase Agreement, except (i) such as have been already
obtained or as may be required under the 1933 Act or the 1933 Act
Regulations or state securities or blue sky laws and (ii) such as have
been obtained under the laws and regulations of jurisdictions outside
the United States in which the Reserved Securities are offered.
(xix) Possession of Licenses and Permits. Upon completion of
the formation Transactions, each of the Company, the Operating
Partnership and its Subsidiaries possess such permits, licenses,
approvals, consents and other authorizations, if any (collectively,
"Governmental Licenses") issued by the appropriate federal, state,
local or foreign regulatory agencies or bodies necessary to conduct the
business to be conducted by it, except where the failure to possess any
such Governmental License would not have a Material Adverse Effect; the
Company, the Operating Partnership and its Subsidiaries will be in
compliance with the terms and conditions of all such Governmental
Licenses, except where the failure so to comply would not, singly or in
the aggregate, have a Material Adverse Effect; all of the Governmental
Licenses will be valid and in full force and effect, except when the
invalidity of such Governmental Licenses or the failure of such
Governmental Licenses to be in full force and effect would not have a
Material Adverse Effect; and neither the Company nor the Operating
Partnership nor any of its Subsidiaries will have received any notice
of proceedings relating to the revocation or modification of any such
Governmental Licenses which, singly or in the aggregate, if the subject
of an unfavorable decision, ruling or finding, would result in a
Material Adverse Effect.
11
(xx) Title to, Description of and Compliance of Properties.
(a) Upon completion of the Formation Transactions, the Operating
Partnership or a Subsidiary thereof will hold good and marketable title
to all items of real property described in the Prospectuses as being
owned by such entity, in each case free and clear of all liens,
encumbrances, claims, security interests and defects, other than those
referred to in the Prospectuses or which are not material in amount;
(b) all liens, charges, encumbrances, claims, or restrictions on or
affecting the Properties or other assets of the Company, the Operating
Partnership or any Subsidiary thereof which are required to be
disclosed in the Prospectuses are disclosed therein; (c) none of the
Company, the Operating Partnership or any of its Subsidiaries, or, to
the best of the knowledge of the Company and the Operating Partnership,
any lessee under a lease relating to any of the Initial Properties, is
in default under any of the leases relating to the Initial Properties
and neither the Company nor the Operating Partnership knows of any
event which, but for the passage of time or the giving of notice, or
both, would constitute a default under any of such leases, except such
defaults that would not result in a Material Adverse Effect; (d) each
of the Initial Properties is in compliance with all applicable codes
and zoning laws and regulations, except for such failures to comply
which would not individually or in the aggregate result in a Material
Adverse Effect; and (e) neither the Company nor the Operating
Partnership has knowledge of any pending or threatened condemnation,
zoning change, or other proceeding or action that will in any manner
affect adversely the size of, use of, improvements on, construction on,
or access to the Initial Properties, except such proceedings or actions
that would not result in a Material Adverse Effect.
(xxi) Mortgages on Initial Properties. Except as otherwise
described in the Prospectuses, immediately following the application of
the proceeds of the Offering in the manner set forth in the
Prospectuses, the mortgages and deeds of trust encumbering the Initial
Properties and assets described in the Prospectuses will not be
convertible into an equity ownership interest and neither the Company,
the Operating Partnership, any of its Subsidiaries, any Original Owner
nor any person related to or affiliated with the Company, the Operating
Partnership, any of its Subsidiaries, or any Original Owner will hold a
participating interest therein and said mortgages and deeds of trust
will not be cross-defaulted or cross-collateralized with any property
not owned by the Company, the Operating Partnership or any of its
Subsidiaries.
(xxii) Title Insurance. Except as otherwise described in the
Prospectuses, upon completion of the Formation Transactions, the
Operating Partnership or a subsidiary thereof will have title insurance
on all properties and assets described in the Prospectuses as owned by
the Operating Partnership or a Subsidiary thereof, as the case may be,
in an amount at least equal to the greater of (a) the cost of
acquisition of such property or assets and (b) the cost of construction
of the improvements located on such properties.
(xxiii) Investment Company Act. Neither the Company, the
Operating Partnership nor any of its subsidiaries is, and upon the
issuance and sale of the Securities as herein contemplated and the
application of the net proceeds therefrom as described in the
Prospectuses will 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 "1940 Act").
12
(xxiv) Environmental Laws. Except as disclosed in the Phase I
environmental reports and associated materials previously delivered to
the U.S. Underwriters or their counsel, each of the Company and the
Operating Partnership has no knowledge of (a) the unlawful presence of
any substance, material or waste which is regulated by any federal,
state or local governmental or quasi-governmental authority, including,
without limitation, (i) any substance, material or waste defined, used
or listed as a "hazardous waste", "extremely hazardous waste",
"restricted hazardous waste", "hazardous substance", "hazardous
material", "toxic substance" or other similar terms as defined or used
in any Environmental Law (as defined below) (collectively, "Hazardous
Materials"), (ii) any petroleum products, asbestos, polychlorinated
biphenyls, lead-based paint, flammable explosives or radioactive
materials, and (iii) any additional substances or material which are
now hazardous or toxic substances under any Environmental Law relating
to the Properties or of (b) any spill, release, discharge or disposal
of Hazardous Material that have occurred or are presently occurring at,
from or onto any of the Properties or any other property in which the
Operating Partnership or any of its Subsidiaries will have an ownership
interest upon completion of the Formation Transactions or any
properties near or adjacent to the Properties, which presence or
occurrence would result in a Material Adverse Effect. In connection
with the construction on or operation and use of the Initial Properties
or any other property in which the Operating Partnership or any of its
Subsidiaries will have an ownership interest upon completion of the
Formation Transactions, the Company and the Operating Partnership
represent that, except as disclosed in the Phase I environmental
reports and associated materials previously delivered to the U.S.
Underwriters or their counsel, as of the date of this Agreement, (a)
each of the Company and the Operating Partnership has no knowledge of
any material failure to comply with any federal, state, local or
foreign statute, law, rule, regulation, ordinance, code, policy or rule
of common law or any judicial or administrative interpretation thereof,
including any judicial or administrative order, consent, decree or
judgment, relating to pollution or protection of human health, the
environment (including, without limitation, ambient air, surface water,
groundwater, land surface or subsurface strata) or wildlife, including,
without limitation, laws and regulations relating to the release or
threatened release of Hazardous Materials or to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport
or handling of Hazardous Materials (collectively, "Environmental Laws")
that would result in a Material Adverse Effect; (b) the Company, the
Operating Partnership and its Subsidiaries have all permits,
authorizations and approvals required under any applicable
Environmental Laws and are each in compliance with their requirements;
(c) there are no pending or threatened administrative, regulatory or
judicial actions, suits, demands, demand letters, claims, liens,
notices of noncompliance or violation, investigation or proceedings
relating to any Environmental Law against the Company, the Operating
Partnership or any of its Subsidiaries; and (d) there are no events or
circumstances that might reasonably be expected to form the basis of an
order for clean-up or remediation, or an action, suit or proceeding by
any private party or governmental body or agency, against or affecting
the Company, the Operating Partnership or any of its Subsidiaries
relating to Hazardous Materials or any Environmental Laws.
13
(xxv) Registration Rights. Except as set forth in the
Prospectuses under "Shares Available for Future Sale -- Registration
Rights," there are no persons with registration rights or other similar
rights to have any securities registered pursuant to the Registration
Statement or otherwise registered by the Company under the 1933 Act.
(xxvi) Option Properties. At Closing Time, the agreements
pursuant to which the Operating Partnership will have the option and/or
right of first refusal to purchase certain properties (or interests
therein) listed on Schedule D annexed hereto that are not being
acquired by the Operating Partnership pursuant to the Formation
Transactions, will have been duly and validly authorized, executed and
delivered by the parties thereto and will be valid and binding
agreements, enforceable in accordance with their terms, subject as to
enforceability to applicable bankruptcy, insolvency, reorganization and
other similar laws affecting creditors' rights generally and to general
equitable principles.
(b) Officer's Certificates. Any certificate signed by any officer of
the Company or any of its subsidiaries delivered to the Global Coordinator, the
U.S. Representatives or to counsel for the U.S. Underwriters shall be deemed a
representation and warranty by the Company to each U.S. Underwriter as to the
matters covered thereby.
SECTION 2. Sale and Delivery to U.S. Underwriters; Closing.
(a) Initial Securities. 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 each U.S. Underwriter, severally and not
jointly, and each U.S. Underwriter, severally and not jointly, agrees to
purchase from the Company, at the price per share set forth in Schedule B, the
number of Initial U.S. Securities set forth in Schedule A opposite the name of
such U.S. Underwriter, plus any additional number of Initial U.S. Securities
which such Underwriter may become obligated to purchase pursuant to the
provisions of Section 10 hereof.
14
(b) Option Securities. 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 an option to the U.S. Underwriters,
severally and not jointly, to purchase up to an additional 726,000 shares of
Common Shares at the price per share set forth in Schedule B, less an amount per
share equal to any dividends or distributions declared by the Company and
payable on the Initial U.S. Securities but not payable on the U.S. Option
Securities. The option hereby granted will expire 30 days after the date hereof
and may be exercised in whole or in part from time to time only for the purpose
of covering over-allotments which may be made in connection with the offering
and distribution of the Initial U.S. Securities upon notice by the Global
Coordinator to the Company setting forth the number of U.S. Option Securities as
to which the several U.S. Underwriters are then exercising the option and the
time and date of payment and delivery for such U.S. Option Securities. Any such
time and date of delivery for the U.S. Option Securities (a "Date of Delivery")
shall be determined by the Global Coordinator, but shall not be later than seven
full business days after the exercise of said option, nor in any event prior to
the Closing Time, as hereinafter defined. If the option is exercised as to all
or any portion of the U.S. Option Securities, each of the U.S. Underwriters,
acting severally and not jointly, will purchase that proportion of the total
number of U.S. Option Securities then being purchased which the number of
Initial U.S. Securities set forth in Schedule A opposite the name of such U.S.
Underwriter bears to the total number of Initial U.S. Securities, subject in
each case to such adjustments as the Global Coordinator in its discretion shall
make to eliminate any sales or purchases of fractional shares.
(c) Payment. Payment of the purchase price for, and delivery of
certificates for, the Initial Securities shall be made at the offices of ▇▇▇▇▇ &
▇▇▇▇▇▇▇ L.L.P., ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇▇▇▇▇▇, ▇.▇., or at such other place
as shall be agreed upon by the Global Coordinator and the Company, at 9:00 A.M.
(Eastern time) on the third (fourth, if the pricing occurs after 4:30 P.M.
(Eastern time) on any given day) business day after the date hereof (unless
postponed in accordance with the provisions of Section 10), or such other time
not later than ten business days after such date as shall be agreed upon by the
Global Coordinator and the Company (such time and date of payment and delivery
being herein called "Closing Time").
In addition, in the event that any or all of the U.S. Option Securities
are purchased by the U.S. Underwriters, payment of the purchase price for, and
delivery of certificates for, such U.S. Option Securities shall be made at the
above-mentioned offices, or at such other place as shall be agreed upon by the
Global Coordinator and the Company, on each Date of Delivery as specified in the
notice from the Global Coordinator to the Company.
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 U.S. Representatives for the respective accounts of the U.S. Underwriters of
certificates for the U.S. Securities to be purchased by them. It is understood
that each U.S. Underwriter has authorized the U.S. Representatives, for its
account, to accept delivery of, receipt for, and make payment of the purchase
price for, the Initial U.S. Securities and the U.S. Option Securities, if any,
which it has agreed to purchase. Each of the U.S. Representatives, individually
and not as representatives of the U.S. Underwriters, may (but shall not be
obligated to) make payment of the purchase price for the Initial U.S. Securities
or the U.S. Option Securities, if any, to be purchased by any U.S. Underwriter
whose funds have not been received by the Closing Time or the relevant Date of
Delivery, as the case may be, but such payment shall not relieve such U.S.
Underwriter from its obligations hereunder.
(d) Denominations; Registration. Certificates for the Initial U.S.
Securities and the U.S. Option Securities, if any, shall be in such
denominations and registered in such names as the U.S. Representatives may
request in writing at least one full business day before the Closing Time or the
relevant Date of Delivery, as the case may be. The certificates for the Initial
U.S. Securities and the U.S. Option Securities, if any, will be made available
for examination and packaging by the U.S. Representatives in The City of New
York not later than 10:00 A.M. (Eastern time) on the business day prior to the
Closing Time or the relevant Date of Delivery, as the case may be.
15
SECTION 3. Covenants of the Company and the Operating Partnership. Each
of the Company and the Operating Partnership covenants with each U.S.
Underwriter as follows:
(a) Compliance with Securities Regulations and Commission
Requests. The Company, subject to Section 3(b), will comply with the
requirements of Rule 430A or Rule 434, as applicable, and will notify
the Global Coordinator immediately, and confirm the notice in writing,
(i) when any post-effective amendment to the Registration Statement
shall become effective, or any supplement to the Prospectuses or any
amended Prospectuses shall have been filed, (ii) of the receipt of any
comments from the Commission, (iii) of any request by the Commission
for any amendment to the Registration Statement or any amendment or
supplement to the Prospectuses or for additional information, and (iv)
of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or of any order preventing
or suspending the use of any preliminary prospectus, or of the
suspension of the qualification of the Securities for offering or sale
in any jurisdiction, or of the initiation or threatening of any
proceedings for any of such purposes. The Company will promptly effect
the filings necessary pursuant to Rule 424(b) and will take such steps
as it deems necessary to ascertain promptly whether the form of
prospectus transmitted for filing under Rule 424(b) was received for
filing by the Commission and, in the event that it was not, it will
promptly file such prospectus. The Company will make every reasonable
effort to prevent the issuance of any stop order and, if any stop order
is issued, to obtain the lifting thereof at the earliest possible
moment.
(b) Filing of Amendments. The Company will give the Global
Coordinator notice of its intention to file or prepare any amendment to
the Registration Statement (including any filing under Rule 462(b)),
any Term Sheet or any amendment, supplement or revision to either the
prospectuses included in the Registration Statement at the time it
became effective or to the Prospectuses, will furnish the Global
Coordinator with copies of any such documents a reasonable amount of
time prior to such proposed filing or use, as the case may be, and will
not file or use any such document to which the Global Coordinator or
counsel for the U.S. Underwriters shall reasonably object.
16
(c) Delivery of Registration Statements. The Company has
furnished or will deliver to the U.S. Representatives and counsel for
the U.S. Underwriters, without charge, signed copies of the
Registration Statement as originally filed and of each amendment
thereto (including exhibits filed therewith or incorporated by
reference therein) and signed copies of all consents and certificates
of experts, and will also deliver to the U.S. Representatives, without
charge, a conformed copy of the Registration Statement as originally
filed and of each amendment thereto (without exhibits) for each of the
U.S. Underwriters. The copies of the Registration Statement and each
amendment thereto furnished to the U.S. Underwriters will be identical
to the electronically transmitted copies thereof filed with the
Commission pursuant to ▇▇▇▇▇, except to the extent permitted by
Regulation S-T.
(d) Delivery of Prospectuses. The Company has delivered to
each U.S. Underwriter, without charge, as many copies of each
preliminary prospectus as such U.S. Underwriter reasonably requested,
and the Company hereby consents to the use of such copies for purposes
permitted by the 1933 Act. The Company will furnish to each U.S.
Underwriter, without charge, during the period when the U.S. Prospectus
is required to be delivered under the 1933 Act or the Securities
Exchange Act of 1934 (the "1934 Act"), such number of copies of the
U.S. Prospectus (as amended or supplemented) as such U.S. Underwriter
may reasonably request. The U.S. Prospectus and any amendments or
supplements thereto furnished to the U.S. Underwriters will be
identical to the electronically transmitted copies thereof filed with
the Commission pursuant to ▇▇▇▇▇, except to the extent permitted by
Regulation S-T.
(e) Continued Compliance with Securities Laws. The Company
will comply with the 1933 Act and the 1933 Act Regulations so as to
permit the completion of the distribution of the Securities as
contemplated in this Agreement, the International Purchase Agreement
and in the Prospectuses. If at any time when a prospectus is required
by the 1933 Act to be delivered in connection with sales of the
Securities, any event shall occur or condition shall exist as a result
of which it is necessary, in the opinion of counsel for the U.S.
Underwriters or for the Company, to amend the Registration Statement or
amend or supplement any Prospectus in order that the Prospectuses will
not include any untrue statements 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 existing at the time it is
delivered to a purchaser, or if it shall be necessary, in the
reasonable opinion of such counsel, at any such time to amend the
Registration Statement or amend or supplement any Prospectus in order
to comply with the requirements of the 1933 Act or the 1933 Act
Regulations, the Company will promptly prepare and file with the
Commission, subject to Section 3(b), such amendment or supplement as
may be necessary to correct such statement or omission or to make the
Registration Statement or the Prospectuses comply with such
requirements, and the Company will furnish to the U.S. Underwriters
such number of copies of such amendment or supplement as the U.S.
Underwriters may reasonably request.
17
(f) Blue Sky Qualifications. The Company will use its best
efforts, in cooperation with the U.S. Underwriters, to qualify the
Securities for offering and sale under the applicable securities laws
of such states and other jurisdictions (domestic or foreign) as the
Global Coordinator may designate and to maintain such qualifications in
effect for a period of not less than one year from the later of the
effective date of the Registration Statement and any Rule 462(b)
Registration Statement; provided, however, that the Company shall not
be obligated to file any general consent to service of process or to
qualify as a foreign corporation or as a dealer in securities in any
jurisdiction in which it is not so qualified 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, 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 effective date of the Registration
Statement and any Rule 462(b) Registration Statement.
(g) Rule 158. The Company will timely file such reports
pursuant to the 1934 Act as are necessary in order to make generally
available to its securityholders as soon as practicable an earnings
statement for the purposes of, and to provide the benefits contemplated
by, the last paragraph of Section 11(a) of the 1933 Act.
(h) 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 Prospectuses under "Use of Proceeds".
(i) Listing. The Company will use its best efforts to effect
the listing of the Common Shares (including the Securities) on the New
York Stock Exchange.
(j) Restriction on Sale of Securities. During a period of 12
months from the date of the Prospectuses, neither the Company nor the
Operating Partnership will, without the prior written consent of the
Global Coordinator, (i) directly or indirectly, offer, pledge, sell,
contract to sell, sell any option or contract to purchase, purchase any
option or contract to sell, grant any option, right or warrant to
purchase or otherwise transfer or dispose of any Common Shares or any
Units or any securities convertible into or exercisable or exchangeable
for Common Shares or Units or file any registration statement under the
1933 Act with respect to any of the foregoing or (ii) enter into any
swap or any other agreement or any transaction that transfers, in whole
or in part, directly or indirectly, the economic consequence of
ownership of the Common Shares or Units, whether any such swap or
transaction described in clause (i) or (ii) above is to be settled by
delivery of Common Shares or Units or such other securities, in cash or
otherwise. The foregoing sentence shall not apply to (A) the Securities
to be sold hereunder or under the International Purchase Agreement, (B)
any Common Shares issued or options to purchase Common Shares granted
pursuant to existing employee benefit plans of the Company referred to
in the Prospectuses, (C) any Common Shares issued pursuant to any
non-employee director stock plan or dividend reinvestment plan or (D)
any Common Shares issued as part of the Formation Transactions as
described in the Prospectuses.
18
(k) Reporting Requirements. The Company, during the period
when the Prospectuses are required to be delivered under the 1933 Act
or the 1934 Act, will file all documents required to be filed with the
Commission pursuant to the 1934 Act within the time periods required by
the 1934 Act and the rules and regulations of the Commission
thereunder.
(l) Compliance with NASD Rules. The Company hereby agrees that
it will ensure that the Reserved Securities will be restricted as
required by the National Association of Securities Dealers, Inc. (the
"NASD") or the NASD rules from sale, transfer, assignment, pledge or
hypothecation for a period of three months following the date of this
Agreement. The Underwriters will notify the Company as to which persons
will need to be so restricted. At the request of the Underwriters, the
Company will direct the transfer agent to place a stop transfer
restriction upon such securities for such period of time. Should the
Company release, or seek to release, from such restrictions any of the
Reserved Securities, the Company agrees to reimburse the Underwriters
for any reasonable expenses (including, without limitation, legal
expenses) they incur in connection with such release.
(m) Compliance with Rule 463. The Company will comply with the
requirements of Rule 463 of the 1933 Act Regulations.
(n) REIT Qualification. The Company will use its best efforts
to meet the requirements to qualify, commencing with the tax year
ending December 31, 1998, as a "real estate investment trust" under the
Code.
SECTION 4. Covenants of the U.S. Underwriters. The U.S. Underwriters
each severally covenants with the Company that at no time shall either (x) such
U.S. Underwriter or (y) any Person who would Constructively Own Shares owned by
such U.S. Underwriter Constructively Own, concurrently, 10% or more of the
outstanding securities of any class or series of (i) the Company and any tenant
or lessee of the Company (which, as of the Effective Date, includes, but is not
limited to, Genesis Health Ventures, Inc., Crozer-Genesis ElderCare Limited
Partnership, Senior Life Choice, LLC and the Age Institute of Florida or
subsidiaries of any of the above), and (ii) the Company and any Person that
would be considered to Constructively Own or Beneficially Own 10% or more of any
tenant or lessee of the Company (which, as of the Effective Date, includes, but
is not limited to, Genesis Health Ventures, Inc.). As used in this Section 4,
the terms "Person", "Beneficially Own," "Constructively Own" and "Effective
Date" shall have the meanings ascribed to such terms in the Company's Amended
and Restated Declaration of Trust.
19
SECTION 5. Payment of Expenses. (a) Expenses. The Company will pay all
expenses incident to the performance of its obligations under this Agreement,
including (i) the preparation, printing and filing of the Registration Statement
(including financial statements and exhibits) as originally filed and of each
amendment thereto, (ii) the preparation, printing and delivery to the
Underwriters of this Agreement, any Agreement among Underwriters and such other
documents as may be required in connection with the offering, purchase, sale,
issuance or delivery of the Securities, (iii) the preparation, issuance and
delivery of the certificates for the Securities to the Underwriters, including
any stock or other transfer taxes and any stamp or other duties payable upon the
sale, issuance or delivery of the Securities to the Underwriters and the
transfer of the Securities between the U.S. Underwriters and the International
Managers, (iv) the fees and disbursements of the Company's counsel, accountants
and other advisors, (v) the qualification of the Securities under securities
laws in accordance with the provisions of Section 3(f) hereof, including filing
fees and the reasonable fees and disbursements of counsel for the Underwriters
in connection therewith and in connection with the preparation of the Blue Sky
Survey and any supplement thereto, (vi) the printing and delivery to the
Underwriters of copies of each preliminary prospectus, any Term Sheets and of
the Prospectuses and any amendments or supplements thereto, (vii) the
preparation, printing and delivery to the Underwriters of copies of the Blue Sky
Survey and any supplement thereto, (viii) the fees and expenses of any transfer
agent or registrar for the Securities, (ix) the filing fees incident to, and the
reasonable fees and disbursements of counsel to the Underwriters in connection
with, the review by the NASD of the terms of the sale of the Securities, (x) the
fees and expenses incurred in connection with the listing of the Securities on
the New York Stock Exchange and (xi) all costs and expenses of the Underwriters,
including the fees and disbursements of counsel for the Underwriters, in
connection with matters related to the Reserved Securities which are designated
by the Company for sale to eligible employees and others having a business
relationship with the Company.
(b) Termination of Agreement. If this Agreement is terminated by the
U.S. Representatives in accordance with the provisions of Section 6 or Section
10(a)(i) hereof, the Company shall reimburse the U.S. Underwriters for all of
their out-of-pocket expenses, including the reasonable fees and disbursements of
counsel for the U.S. Underwriters.
SECTION 6. Conditions of U.S. Underwriters' Obligations. The
obligations of the several U.S. Underwriters hereunder are subject to the
accuracy of the representations and warranties of the Company and the Operating
Partnership contained in Section 1 hereof or in certificates of any officer of
the Company, the Operating Partnership or any subsidiary delivered pursuant to
the provisions hereof, to the performance by the Company and the Operating
Partnership of their covenants and other obligations hereunder, and to the
following further conditions:
20
(a) Effectiveness of Registration Statement. The Registration
Statement, including any Rule 462(b) Registration Statement, has become
effective and at Closing Time no stop order suspending the
effectiveness of the Registration Statement shall have been issued
under the 1933 Act or proceedings therefor initiated or threatened by
the Commission, and any request on the part of the Commission for
additional information shall have been complied with to the reasonable
satisfaction of counsel to the U.S. Underwriters. A prospectus
containing the Rule 430A Information shall have been filed with the
Commission in accordance with Rule 424(b) (or a post-effective
amendment providing such information shall have been filed and declared
effective in accordance with the requirements of Rule 430A) or, if the
Company has elected to rely upon Rule 434, a Term Sheet shall have been
filed with the Commission in accordance with Rule 424(b).
(b) Opinions of Counsel for the Company and the Operating
Partnership. At Closing Time, the U.S. Representatives shall have
received the favorable opinion, dated as of Closing Time, of ▇▇▇▇▇ &
▇▇▇▇▇▇▇ L.L.P., counsel for the Company and the Operating Partnership,
in form and substance satisfactory to counsel for the U.S.
Underwriters, together with signed or reproduced copies of such letters
for each of the other U.S. Underwriters, to the effect set forth in
Exhibit A and Exhibit B hereto, respectively, and to such further
effect as counsel to the U.S. Underwriters may reasonably request.
(c) Opinion of Counsel for U.S. Underwriters. At Closing Time,
the U.S. Representatives shall have received the favorable opinion,
dated as of Closing Time, of Brown & Wood LLP, counsel for the U.S.
Underwriters, together with signed or reproduced copies of such letter
for each of the other U.S. Underwriters with respect to the matters set
forth in clauses (i), (vii), (viii) (solely as to preemptive or other
similar rights arising by operation of law or under the charter or
by-laws of the Company), (x) through (xii), inclusive, (xiv), (xvi)
(solely as to the information in the Prospectus under "Shares of
Beneficial Interest--Common Shares") and the penultimate paragraph of
Exhibit A hereto. In giving such opinion such counsel may rely, as to
all matters governed by the laws of jurisdictions other than the law of
the State of New York and the federal law of the United States, upon
the opinions of counsel satisfactory to the U.S. Representatives. Such
counsel may also state that, insofar as such opinion involves factual
matters, they have relied, to the extent they deem proper, upon
certificates of officers of the Company, the Operating Partnership and
its subsidiaries and certificates of public officials.
21
(d) Officers' Certificate. At Closing Time, there shall not
have been, since the date hereof or since the respective dates as of
which information is given in the Prospectuses, any material adverse
change in the condition, financial or otherwise, or in the earnings,
business affairs or business prospects of the Company, the Operating
Partnership, its Subsidiaries and the Initial Investments considered as
one enterprise, whether or not arising in the ordinary course of
business, and the U.S. Representatives shall have received a
certificate of the President or a Vice President of the Company and of
the chief financial or chief accounting officer of the Company and of
the general partner of the Operating Partnership, dated as of Closing
Time, to the effect that (i) there has been no such material adverse
change, (ii) the representations and warranties in Section 1(a) hereof
are true and correct in all material respects with the same force and
effect as though expressly made at and as of Closing Time, (iii) the
Company and the Operating Partnership have in all material respects
complied with all agreements and satisfied all conditions on their part
to be performed or satisfied at or prior to Closing Time, and (iv) no
stop order suspending the effectiveness of the Registration Statement
has been issued and no proceedings for that purpose have been
instituted or are pending or are contemplated by the Commission.
(e) Accountant's Comfort Letter. At the time of the execution
of this Agreement, the U.S. Representatives shall have received from
KPMG Peat Marwick LLP a letter dated such date, in form and substance
satisfactory to the U.S. Representatives, together with signed or
reproduced copies of such letter for each of the other U.S.
Underwriters containing statements and information of the type
ordinarily included in accountants' "comfort letters" to underwriters
with respect to the financial statements and certain financial
information contained in the Registration Statement and the
Prospectuses.
(f) Bring-down Comfort Letter. At Closing Time, the U.S.
Representatives shall have received from KPMG Peat Marwick LLP a
letter, dated as of Closing Time, to the effect that they reaffirm the
statements made in the letter furnished pursuant to subsection (e) of
this Section, except that the specified date referred to shall be a
date not more than three business days prior to Closing Time.
(g) Approval of Listing. At Closing Time, the Securities shall
have been approved for listing on the New York Stock Exchange, subject
only to official notice of issuance.
22
(h) No Objection. The NASD has confirmed that it has not
raised any objection with respect to the fairness and reasonableness of
the underwriting terms and arrangements.
(i) Lock-up Agreements. At the date of this Agreement, the
U.S. Representatives shall have received an agreement substantially in
the form of Exhibit C hereto signed by the persons listed on Schedule C
hereto.
(j) Purchase of Initial International Securities.
Contemporaneously with the purchase by the U.S. Underwriters of the
Initial U.S. Securities under this Agreement, the International
Managers shall have purchased the Initial International Securities
under the International Purchase Agreement.
(k) Conditions to Purchase of U.S. Option Securities. In the
event that the U.S. Underwriters exercise their option provided in
Section 2(b) hereof to purchase all or any portion of the U.S. Option
Securities, the representations and warranties of the Company and the
Operating Partnership contained herein and the statements in any
certificates furnished by the Company, the Operating Partnership or any
subsidiary hereunder shall be true and correct as of each Date of
Delivery and, at the relevant Date of Delivery, the U.S.
Representatives shall have received:
(i) Officers' Certificate. A certificate, dated such Date of
Delivery, of the President or a Vice President of the Company
and of the chief financial or chief accounting officer of the
Company and of the general partner of the Operating
Partnership confirming that the certificates delivered at the
Closing Time pursuant to Section 6(d) hereof remain true and
correct as of such Date of Delivery.
(ii) Opinion of Counsel for the Company and the Operating
Partnership. The favorable opinion of ▇▇▇▇▇ & ▇▇▇▇▇▇▇ L.L.P.,
counsel for the Company and the Operating Partnership, in form
and substance satisfactory to counsel for the U.S.
Underwriters, dated such Date of Delivery, relating to the
U.S. Option Securities to be purchased on such Date of
Delivery and otherwise to the same effect as the opinions
required by Section 6(b) hereof.
(iii) Opinion of Counsel for U.S. Underwriters. The favorable
opinion of ▇▇▇▇▇ & Wood LLP, counsel for the U.S.
Underwriters, dated such Date of Delivery, relating to the
U.S. Option Securities to be purchased on such Date of
Delivery and otherwise to the same effect as the opinion
required by Section 6(c) hereof.
(iv) Bring-down Comfort Letter. A letter from KPMG Peat
Marwick LLP, in form and substance satisfactory to the U.S.
Representatives and dated such Date of Delivery, substantially
in the same form and substance as the letter furnished to the
U.S. Representatives pursuant to Section 6(f) hereof, except
that the "specified date" in the letter furnished pursuant to
this paragraph shall be a date not more than five days prior
to such Date of Delivery.
23
(l) Additional Documents. At Closing Time and at each Date of Delivery,
counsel for the U.S. Underwriters shall have been furnished with such documents
and opinions as they may require for the purpose of enabling them 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 U.S.
Representatives and counsel for the U.S. Underwriters.
(m) Termination of Agreement. If any condition specified in this
Section shall not have been fulfilled when and as required to be fulfilled, this
Agreement, or, in the case of any condition to the purchase of U.S. Option
Securities on a Date of Delivery which is after the Closing Time, the
obligations of the several U.S. Underwriters to purchase the relevant Option
Securities, may be terminated by the U.S. Representatives by notice to the
Company at any time at or prior to Closing Time or such Date of Delivery, as the
case may be, and such termination shall be without liability of any party to any
other party except as provided in Section 4 and except that Sections 1, 7, 8 and
9 shall survive any such termination and remain in full force and effect.
SECTION 7. Indemnification.
(a) Indemnification of U.S. Underwriters. The Company and the Operating
Partnership jointly and severally hereby agree to indemnify and hold harmless
each U.S. Underwriter and each person, if any, who controls any U.S. Underwriter
within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act
as follows:
(i) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of any untrue statement or
alleged untrue statement of a material fact contained in the
Registration Statement (or any amendment thereto), including the Rule
430A Information and the Rule 434 Information, if applicable, or the
omission or alleged omission therefrom of a material fact required to
be stated therein or necessary to make the statements therein not
misleading or arising out of any untrue statement or alleged untrue
statement of a material fact included in any preliminary prospectus or
the Prospectuses (or any amendment or supplement thereto), or the
omission or alleged omission therefrom of a material fact necessary in
order to make the statements therein, in the light of the circumstances
under which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of (A) the violation of
any applicable laws or regulations of foreign jurisdictions where
Reserved Securities have been offered and (B) any untrue statement or
alleged untrue statement of a material fact included in the supplement
or prospectus wrapper material distributed in Canada or in connection
with the reservation and sale of the Reserved Securities to eligible
employees and others having a business relationship with the Company or
the omission or alleged omission therefrom of a material fact necessary
to make the statements therein, when considered in conjunction with the
Prospectuses or preliminary prospectuses, not misleading;
(iii) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the aggregate amount
paid in settlement of any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or threatened,
or of any claim whatsoever based upon any such untrue statement or
omission, or any such alleged untrue statement or omission or in
connection with any violation of the nature referred to in Section
7(a)(ii)(A) hereof; provided that (subject to Section 7(d) below) any
such settlement is effected with the written consent of the Company;
and
(iv) against any and all expense whatsoever, as incurred
(including the fees and disbursements of counsel chosen by ▇▇▇▇▇▇▇
▇▇▇▇▇), reasonably incurred in investigating, preparing or defending
against any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim
whatsoever based upon any such untrue statement or omission, or any
such alleged untrue statement or omission or in connection with any
violation of the nature referred to in Section 7(a)(ii)(A) hereof, to
the extent that any such expense is not paid under (i), (ii) or (iii)
above;
24
provided, however, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of (A) any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company by any
U.S. Underwriter through the U.S. Representatives expressly for use in the
Registration Statement (or any amendment thereto), including the Rule 430A
Information and the Rule 434 Information, if applicable, or any preliminary
prospectus or the U.S. Prospectus (or any amendment or supplement thereto) or
(B) the fact that such U.S. Underwriter sold Securities to a person as to whom
it shall be established that there was not sent or given, at or prior to the
written confirmation of such sale, a copy of the U.S. Prospectus or of the U.S.
Prospectus as then amended or supplemented in any case where such delivery is
required by the 1933 Act if the Company has previously furnished copies thereof
in sufficient quantity to such U.S. Underwriter and the loss, claim, damage or
liability of such U.S. Underwriter results from an untrue statement or omission
of a material fact contained in any preliminary prospectus or U.S. Prospectus
(or any amendment or supplement thereto), which was corrected in the U.S.
Prospectus or in the U.S. Prospectus as then amended or supplemented and
delivery would have cured the defect giving rise to such loss, claim, damage or
liability.
(b) Indemnification of Company, the Operating Partnership, Trustees,
Trustee Nominees and Officers. Each U.S. Underwriter severally agrees to
indemnify and hold harmless the Company, its trustees, trustee nominees named in
the Registration Statement, each of its officers who signed the Registration
Statement, the Operating Partnership, and each person, if any, who controls the
Company or the Operating Partnership within the meaning of Section 15 of the
1933 Act or Section 20 of the 1934 Act against any and all loss, liability,
claim, damage and expense described in the indemnity contained in subsection (a)
of this Section, as incurred, but only with respect to untrue statements or
omissions, or alleged untrue statements or omissions, made in the Registration
Statement (or any amendment thereto), including the Rule 430A Information and
the Rule 434 Information, if applicable, or any preliminary U.S. prospectus or
the U.S. Prospectus (or any amendment or supplement thereto) in reliance upon
and in conformity with written information furnished to the Company by such U.S.
Underwriter through the U.S. Representatives expressly for use in the
Registration Statement (or any amendment thereto) or such preliminary prospectus
or the U.S. Prospectus (or any amendment or supplement thereto). The Company and
the Operating Partnership acknowledge that the statements set forth in the last
paragraph of the cover page and in paragraphs 4,5,8,9 and 15 under the caption
"Underwriting" in the Prospectuses constitute the only information furnished in
writing by or on behalf of any Underwriter expressly for use in the Registration
Statement relating to the Securities as originally filed or in any amendment
thereof, a related preliminary prospectus or the Prospectuses or in any
amendment thereof or supplement thereto, as the case may be.
25
(c) Actions against Parties; Notification. Each indemnified party shall
give notice as promptly as reasonably practicable to each indemnifying party of
any action commenced against it in respect of which indemnity may be sought
hereunder, but failure to so notify an indemnifying party shall not relieve such
indemnifying party from any liability hereunder to the extent it is not
materially prejudiced as a result thereof and in any event shall not relieve it
from any liability which it may have otherwise than on account of this indemnity
agreement. In the case of parties indemnified pursuant to Section 7(a) above,
counsel to the indemnified parties shall be selected by ▇▇▇▇▇▇▇ ▇▇▇▇▇, and, in
the case of parties indemnified pursuant to Section 7(b) above, counsel to the
indemnified parties shall be selected by the Company. An indemnifying party may
participate at its own expense in the defense of any such action; provided,
however, that counsel to the indemnifying party shall not (except with the
consent of the indemnified party) also be counsel to the indemnified party.
Notwithstanding the foregoing, if it so elects within a reasonable time after
receipt of such notice, an indemnifying party, jointly with any other
indemnifying parties receiving such notice, may assume the defense of such
action with counsel chosen by it and approved by the indemnified parties
defendant in such action (which approval shall not be unreasonably withheld),
unless such indemnified parties reasonably object to such assumption on the
ground that there may be legal defenses available to them which are different
from or in addition to those available to such indemnifying party. If an
indemnifying party assumes the defense of such action, the indemnifying party
shall not be liable for any fees and expenses of counsel for the indemnified
parties incurred thereafter in connection with such action, except the
indemnifying party shall be liable for the reasonable costs of investigation
subsequently incurred by the indemnified party in connection with the defense.
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 prior written consent of the indemnified parties, settle or
compromise or consent to the entry of any judgment with respect to any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever in respect of which
indemnification or contribution could be sought under this Section 7 or Section
8 hereof (whether or not the indemnified parties are actual or potential parties
thereto), unless such settlement, compromise or consent (i) includes an
unconditional release of each indemnified party from all liability arising out
of such litigation, investigation, proceeding 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) Settlement without Consent if Failure to Reimburse. If at any time
an indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel, such indemnifying party
agrees that it shall be liable for any settlement of the nature contemplated by
Section 7(a)(iii) effected without its written consent if (i) such settlement is
entered into more than 45 days after receipt by such indemnifying party of the
aforesaid request, (ii) such indemnifying party shall have received notice of
the terms of such settlement at least 30 days prior to such settlement being
entered into and (iii) such indemnifying party shall not have reimbursed such
indemnified party in accordance with such request prior to the date of such
settlement.
26
(e) Indemnification for Reserved Securities. In connection with the
offer and sale of the Reserved Securities, the Company and the Operating
Partnership agree, promptly upon a request in writing to indemnify and hold
harmless the Underwriters from and against any and all losses, liabilities,
claims, damages and expenses incurred by them as a result of the failure of
eligible employees and persons having business relationships with the Company to
pay for and accept delivery of Reserved Securities which, by the end of the
first business day following the date of this Agreement, were subject to a
properly confirmed agreement to purchase.
SECTION 8. Contribution. If the indemnification provided for in Section
7 hereof is for any reason unavailable to or insufficient to hold harmless an
indemnified party in respect of any losses, liabilities, claims, damages or
expenses referred to therein, then each indemnifying party shall contribute to
the aggregate amount of such losses, liabilities, claims, damages and expenses
incurred by such indemnified party, as incurred, (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company and the
Operating Partnership on the one hand and the U.S. Underwriters on the other
hand from the offering of the Securities pursuant to this Agreement or (ii) if
the allocation provided by clause (i) is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Company and
the Operating Partnership on the one hand and of the U.S. Underwriters on the
other hand in connection with the statements or omissions, or in connection with
any violation of the nature referred to in Section 7(a)(ii)(A) hereof, which
resulted in such losses, liabilities, claims, damages or expenses, as well as
any other relevant equitable considerations.
The relative benefits received by the Company and the Operating
Partnership on the one hand and the U.S. Underwriters on the other hand in
connection with the offering of the U.S. Securities pursuant to this Agreement
shall be deemed to be in the same respective proportions as the total net
proceeds from the offering of the U.S. Securities pursuant to this Agreement
(before deducting expenses) received by the Company and the Operating
Partnership and the total underwriting discount received by the U.S.
Underwriters, in each case as set forth on the cover of the U.S. Prospectus, or,
if Rule 434 is used, the corresponding location on the Term Sheet, bear to the
aggregate initial public offering price of the U.S. Securities as set forth on
such cover.
The relative fault of the Company and the Operating Partnership on the
one hand and the U.S. Underwriters on the other hand shall be determined by
reference to, among other things, whether any such 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 Company or the Operating Partnership
or by the U.S. Underwriters and the parties' relative intent, knowledge, access
to information and opportunity to correct or prevent such statement or omission
or any violation of the nature referred to in Section 7(a)(ii)(A) hereof.
27
The Company and the Operating Partnership and the U.S. Underwriters
agree that it would not be just and equitable if contribution pursuant to this
Section 8 were determined by pro rata allocation (even if the U.S. Underwriters
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 Section 8. The aggregate amount of losses, liabilities, claims,
damages and expenses incurred by an indemnified party and referred to above in
this Section 8 shall be deemed to include any legal or other expenses reasonably
incurred by such indemnified party in investigating, preparing or defending
against any litigation, or any investigation or proceeding by any governmental
agency or body, commenced or threatened, or any claim whatsoever based upon any
such untrue or alleged untrue statement or omission or alleged omission.
Notwithstanding the provisions of this Section 8, no U.S. Underwriter
shall be required to contribute any amount in excess of the amount by which the
total price at which the U.S. Securities underwritten by it and distributed to
the public were offered to the public exceeds the amount of any damages which
such U.S. Underwriter has otherwise been required to pay by reason of any such
untrue or alleged untrue statement or omission or alleged omission.
No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the 1933 Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 8, each person, if any, who controls a
U.S. Underwriter within the meaning of Section 15 of the 1933 Act or Section 20
of the 1934 Act shall have the same rights to contribution as such U.S.
Underwriter, and each trustee of the Company, each trustee nominee of the
Company named in the Registration Statement, each officer of the Company who
signed the Registration Statement, and each person, if any, who controls the
Company or the Operating Partnership within the meaning of Section 15 of the
1933 Act or Section 20 of the 1934 Act shall have the same rights to
contribution as the Company and the Operating Partnership, respectively. The
U.S. Underwriters' respective obligations to contribute pursuant to this Section
8 are several in proportion to the number of Initial U.S. Securities set forth
opposite their respective names in Schedule A hereto and not joint. For purposes
of this Section 8, the Company, the Operating Partnership and its subsidiaries
shall be deemed one party jointly and severally liable for any obligations
hereunder.
SECTION 9. Representations, Warranties and Agreements to Survive
Delivery. All representations, warranties and agreements contained in this
Agreement or in certificates of officers of the Company and the Operating
Partnership or any of its subsidiaries submitted pursuant hereto, shall remain
operative and in full force and effect, regardless of any investigation made by
or on behalf of any U.S. Underwriter or controlling person, or by or on behalf
of the Company or the Operating Partnership, and shall survive delivery of the
Securities to the U.S. Underwriters.
28
SECTION 10. Termination of Agreement.
(a) Termination; General. The U.S. Representatives may terminate this
Agreement, by notice to the Company, at any time at or prior to Closing Time (i)
if there has been, since the time of execution of this Agreement or since the
respective dates as of which information is given in the U.S. Prospectus, any
material adverse change in the condition, financial or otherwise, or in the
earnings, business affairs or business prospects of the Company, the Operating
Partnership, its Subsidiaries and the Initial Investments considered as one
enterprise, whether or not arising in the ordinary course of business, or (ii)
if there has occurred any material adverse change in the financial markets in
the United States or the International financial markets, any outbreak of
hostilities or escalation thereof or other calamity or crisis or any change or
development involving a prospective change in national or International
political, financial or economic conditions, in each case the effect of which is
such as to make it, in the judgment of the U.S. Representatives, impracticable
to market the Securities or to enforce contracts for the sale of the Securities,
or (iii) if trading in any securities of the Company has been suspended or
materially limited by the Commission or the New York Stock Exchange, or if
trading generally on the American Stock Exchange or the New York Stock Exchange
or in the Nasdaq National Market has been suspended or materially limited, or
minimum or maximum prices for trading have been fixed, or maximum ranges for
prices have been required, by any of said exchanges or by such system or by
order of the Commission, the National Association of Securities Dealers, Inc. or
any other governmental authority, or (iv) if a banking moratorium has been
declared by either Federal or New York authorities.
(b) Liabilities. If this Agreement is terminated pursuant to this
Section, such termination shall be without liability of any party to any other
party except as provided in Section 4 hereof, and provided further that Sections
1, 7, 8 and 9 shall survive such termination and remain in full force and
effect.
SECTION 11. Default by One or More of the U.S. Underwriters. If one or
more of the U.S. Underwriters shall fail at Closing Time or a Date of Delivery
to purchase the Securities which it or they are obligated to purchase under this
Agreement (the "Defaulted Securities"), the U.S. Representatives shall have the
right, within 24 hours thereafter, to make arrangements for one or more of the
non-defaulting U.S. Underwriters, or any other underwriters, to purchase all,
but not less than all, of the Defaulted Securities in such amounts as may be
agreed upon and upon the terms herein set forth; if, however, the U.S.
Representatives shall not have completed such arrangements within such 24-hour
period, then:
(a) if the number of Defaulted Securities does not exceed 10%
of the number of U.S. Securities to be purchased on such date, each of
the non-defaulting U.S. Underwriters shall be obligated, severally and
not jointly, to purchase the full amount thereof in the proportions
that their respective underwriting obligations hereunder bear to the
underwriting obligations of all non-defaulting U.S. Underwriters, or
29
(b) if the number of Defaulted Securities exceeds 10% of the
number of U.S. Securities to be purchased on such date, this Agreement
or, with respect to any Date of Delivery which occurs after the Closing
Time, the obligation of the U.S. Underwriters to purchase and of the
Company to sell the Option Securities to be purchased and sold on such
Date of Delivery shall terminate without liability on the part of any
non-defaulting U.S. Underwriter.
No action taken pursuant to this Section shall relieve any defaulting
U.S. Underwriter from liability in respect of its default.
In the event of any such default which does not result in a termination
of this Agreement or, in the case of a Date of Delivery which is after the
Closing Time, which does not result in a termination of the obligation of the
U.S. Underwriters to purchase and the Company to sell the relevant U.S. Option
Securities, as the case may be, either the U.S. Representatives or the Company
shall have the right to postpone Closing Time or the relevant Date of Delivery,
as the case may be, for a period not exceeding seven days in order to effect any
required changes in the Registration Statement or Prospectus or in any other
documents or arrangements. As used herein, the term "U.S. Underwriter" includes
any person substituted for a U.S. Underwriter under this Section 10.
SECTION 12. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the U.S.
Underwriters shall be directed to the U.S. Representatives at North Tower, World
Financial Center, New York, New York 10281-1201, attention of ▇▇. ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇, Managing Director; and notices to the Company or the Operating
Partnership shall be directed to the Company at ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, attention of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.,
President and Chief Executive Officer.
SECTION 13. Parties. This Agreement shall each inure to the benefit of
and be binding upon the U.S. Underwriters and the Company and their respective
successors. Nothing expressed or mentioned in this Agreement is intended or
shall be construed to give any person, firm or corporation, other than the U.S.
Underwriters and the Company and the Operating Partnership and their respective
successors and the controlling persons and officers, trustee and trustee
nominees referred to in Sections 7 and 8 and their heirs and legal
representatives, any legal or equitable right, remedy or claim under or in
respect of this Agreement or any provision herein contained. This Agreement and
all conditions and provisions hereof are intended to be for the sole and
exclusive benefit of the U.S. Underwriters and the Company and the Operating
Partnership and their respective successors, and said controlling persons and
officers, trustee and trustee nominees and their heirs and legal
representatives, and for the benefit of no other person, firm or corporation. No
purchaser of Securities from any U.S. Underwriter shall be deemed to be a
successor by reason merely of such purchase.
30
SECTION 14. GOVERNING LAW AND TIME. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. SPECIFIED
TIMES OF DAY REFER TO NEW YORK CITY TIME.
SECTION 15. Effect of Headings. The Article and Section headings herein
and the Table of Contents are for convenience only and shall not affect the
construction hereof.
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company a counterpart hereof, whereupon
this instrument, along with all counterparts, will become a binding agreement
between the U.S. Underwriters and the Company in accordance with its terms.
Very truly yours,
ElderTrust
By_________________________________
Name:______________________________
Title:_____________________________
ElderTrust Operating Limited Partnership
By: ElderTrust
(its general partner)
By_________________________________
Name:______________________________
Title:_____________________________
CONFIRMED AND ACCEPTED, as of the date first above written:
▇▇▇▇▇▇▇ ▇▇▇▇▇ & CO.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
BT ALEX. BROWN INCORPORATED
▇▇▇▇▇▇▇, ▇▇▇▇▇ & CO.
By: ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇
INCORPORATED
By____________________________________________
Authorized Signatory
For themselves and as U.S. Representatives of the
other U.S. Underwriters named in Schedule A hereto.
31
SCHEDULE A
Name of U.S. Underwriter Number of
Initial U.S
Securities
--------------
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated...........................
BT ▇▇▇▇. ▇▇▇▇▇ Incorporated ...........................
▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co.. .................................
-----------
Total.................................................. 4,840,000
=========
Sch A-1
SCHEDULE B
ELDERTRUST
4,840,000 Common Shares of Beneficial Interest
(Par Value $.01 Per Share)
1. The initial public offering price per share for the
Securities, determined as provided in Section 2, shall be $o.
2. The purchase price per share for the U.S. Securities to be
paid by the several U.S. Underwriters shall be $o, being an amount
equal to the initial public offering price set forth above less $o per
share; provided that the purchase price per share for any U.S. Option
Securities purchased upon the exercise of the over-allotment option
described in Section 2(b) shall be reduced by an amount per share equal
to any dividends or distributions declared by the Company and payable
on the Initial U.S. Securities but not payable on the U.S. Option
Securities.
Sch B-1
SCHEDULE C
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
▇. ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇.
Sch C-1
SCHEDULE D
[List of Option Properties]
Sch D-1
Exhibit A
FORM OF OPINION OF COMPANY'S COUNSEL
TO BE DELIVERED PURSUANT TO
SECTION 5(b)1
(i) The Company was formed, and is validly existing and in
good standing as of the date of the certificate specified in such
opinion, under Title 8 of the Maryland Corporations and Associations
Code ▇▇▇.
(ii) The Operating Partnership is a limited partnership formed
and validly existing existing and in good standing as of the date of
the certificate specified in such opinion, under the laws of the State
of Delaware.
(iii) Each subsidiary was incorporated or formed, as the case
may be, and is validly existing and in good standing as of the date of
the certificate specified in such opinion, under the laws of the
jurisdiction of its incorporation or formation.2
(iv) Each of the Company, the Operating Partnership and its
Subsidiaries has trust, corporate or partnership power, as the case may
be, and trust, corporate or partnership authority, as the case may be,
under its declaration of trust, charter or partnership agreement, as
the case may be, and under the laws of the jurisdiction of its
formation or incorporation to own, lease and operate its current
properties and to conduct its business as described in the Prospectuses
and, in the case of each of the Company and the Operating Partnership,
to enter into and perform its obligations under the U.S. Purchase
Agreement and the International Purchase Agreement.
(v) The Company, the Operating Partnership and its
Subsidiaries are authorized to transact business as foreign
corporations or are registered as foreign limited partnerships, as the
case my be, under the laws of the States, and as of the respective
dates of the certificates, specified in such opinion.
(vi) The authorized, issued and outstanding Common Shares of
the Company, as of September 30, 1997, was set forth under the caption
"Capitalization" in the Prospectuses. All Common Shares of the Company
shown as issued and outstanding under said caption are duly authorized
and, assuming the receipt of consideration therefor as provided in
resolutions of the Company's Board of Trustees authorizing issuance
thereof, are validly issued, fully paid and non-assessable. None of the
outstanding Common Shares of the Company was issued in violation of any
statutory preemptive right under Title 8 of the Maryland Corporations
and Associations Code ▇▇▇. or, to our knowledge, any contractual right
of any securityholder of the Company to subscribe for any of the Common
Shares.
----------------
1 As used herein, the term "Subsidiaries" shall mean only those
Subsidiaries formed by the Operating Partnership.
2 Opinions with respect to "good standing" of limited partnerships
will be provided only if the applicable certificates refer to
their "good standing."
A-1
(vii) When issued in accordance with the provisions of the U.S.
Purchase Agreement and the International Purchase Agreement, the
Securities will be validly issued, fully paid and non-assessable and no
holder of the Securities will be subject to personal liability under
Title 8 of the Maryland Corporations and Associations Code ▇▇▇. by
reason of being such holder.
(viii) No holder of outstanding Common Shares of the Company
has any statutory preemptive right under Title 8 of the Maryland
Corporations and Associations Code ▇▇▇. or, to our knowledge, any
contractual right to subscribe for any of the Securities.
(ix) The Units to be issued in connection with the Formation
Transactions, including, without limitation, the Units to be issued to
the Company, have been duly authorized for issuance by the Operating
Partnership to the holders or prospective holders thereof, and at
Closing Time, assuming the receipt of the consideration therefor as
provided in resolutions authorizing the issuance thereof, will be
validly issued and fully paid. Immediately after Closing Time and not
including any Units issued in exchange for proceeds received by the
Company in connection with the sale of the Option Securities, ______
Units will be issued and outstanding. The issuance and sale of such
Units in the Formation Transactions is not required to be registered
under the 1933 Act. The Units conform in all material respects to the
description thereof contained under the caption "Partnership Agreement"
in the Prospectuses.
(x) The U.S. Purchase Agreement and the International Purchase
Agreement have been duly authorized, executed and delivered by or on
behalf of each of the Company and the Operating Partnership.
(xi) The Registration Statement, including any Rule 462(b)
Registration Statement, has been declared effective under the 1933 Act;
any required filing of the Prospectuses pursuant to Rule 424(b) has
been made in the manner and within the time period required by Rule
424(b); and, to our knowledge, no stop order suspending the
effectiveness of the Registration Statement or any Rule 462(b)
Registration Statement has been issued under the 1933 Act and no
proceedings for that purpose have been instituted or are threatened by
the Commission.
(xii) The Registration Statement, including any Rule 462(b)
Registration Statement, the Rule 430A Information and the Rule 434
Information, as applicable, the Prospectuses and each amendment or
supplement to the Registration Statement and the Prospectuses as of
their respective effective or issue dates (other than the financial
statements and supporting schedules included therein or omitted
therefrom, as to which we need express no opinion) complied as to form
in all material respects with the requirements of the 1933 Act and the
1933 Act Regulations.
A-2
(xiii) The form of certificate used to evidence the Common
Shares complies in all material respects with any applicable
requirements of Title 8 of the Maryland Corporations and Associations
Code ▇▇▇. and the Amended and Restated Declaration of Trust and Bylaws
of the Company and the rules and regulations of the New York Stock
Exchange, Inc.
(xiv) The information in the Prospectuses under the captions
"Shares of Beneficial Interest," "Certain Provisions of Maryland Law
and the Company's Declaration of Trust and Bylaws" and "Shares
Available for Future Sale," to the extent that it constitutes matters
of law, summaries of certain provisions of the Company's Amended and
Restated Declaration of Trust and Bylaws or legal conclusions, has been
reviewed by us and is correct in all material respects.
(xv) The execution, delivery and performance as of the date
hereof by the Company and the Operating Partnership of the U.S.
Purchase Agreement and the International Purchase Agreement do not (i)
violate Title 8 of the Maryland Corporations and Associations Code
▇▇▇., the Delaware Revised Uniform Limited Partnership Act, as amended,
the Amended and Restated Declaration of Trust or Bylaws of the Company
or the Limited Partnership Agreement of the Operating Partnership, (ii)
to our knowledge, violate any applicable law, rule, regulation, order,
judgment or decree of any Maryland or Delaware governmental agency or
court or (iii) breach or constitute a default under any agreement or
contract filed as an exhibit to the Registration Statement.
(xvi) No approval or consent of, or registration or filing
with, any Maryland or Delaware governmental agency is required to be
obtained or made by the Company or the Operating Partnership in
connection with the execution, delivery and performance as of the date
hereof by the Company and the Operating Partnership of the U.S.
Purchase Agreement and the International Purchase Agreement.
(xvii) The Limited Partnership Agreement of the Operating
Partnership has been duly executed and delivered on behalf of
ElderTrust Realty Group, Inc., as general partner of the Operating
Partnership, and constitutes a valid and binding obligation of the
Operating Partnership, enforceable in accordance with its terms, except
as may be limited by bankruptcy, insolvency, reorganization, moratorium
or other laws affecting creditors' rights (including, without
limitation, the effect of statutory and other law regarding fraudulent
conveyances, fraudulent transfers and preferential transfers) and as
may be limited by the exercise of judicial discretion and the
application of principles of equity including, without limitation,
requirements of good faith, fair dealing, conscionability and
materiality (regardless of whether such agreement is considered in a
proceeding in equity or at law).
A-3
(xviii) The Registration Rights Agreement has been duly
executed and delivered on behalf of the Company and constitutes a valid
and binding obligation of the Company, enforceable in accordance with
its terms, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium or other laws affecting creditors' rights
(including, without limitation, the effect of statutory and other law
regarding fraudulent conveyances, fraudulent transfers and preferential
transfers) and as may be limited by the exercise of judicial discretion
and the application of principles of equity including, without
limitation, requirements of good faith, fair dealing, conscionability
and materiality (regardless of whether such agreement is considered in
a proceeding in equity or at law).
(xix) To our knowledge, except as set forth under the caption
"Shares Available for Future Sale--Registration Rights" in the
Prospectuses, there are no persons with registration rights or other
similar rights to have any securities registered pursuant to the
Registration Statement or otherwise registered by the Company under the
1933 Act.
(xx) The Company is not an "investment company," as such
term is defined in the 1940 Act.
The opinion expressed in paragraphs (xvii) and (xviii) above shall be
understood to mean only that if there is a default in performance of an
obligation, (i) if a failure to pay or other damage can be shown and (ii) if the
defaulting party can be brought into a court which will hear the case and apply
the governing law, then, subject to the availability of defenses, and to the
exceptions set forth in Paragraphs (xvii) and (xviii) above, the court will
provide a money damage (or perhaps injunctive or specific performance) remedy.
During the course of the preparation of the Registration Statement, we
participated in conferences with officers and other representatives of the
Company, with representatives of the independent public accountants of the
Company and with you and your representatives. While we have not undertaken to
determine independently, and we do not assume any responsibility for, the
accuracy, completeness, or fairness of the statements in the Registration
Statement or the Prospectuses, we may state on the basis of these conferences
and our activities as counsel to the Company in connection with the Registration
Statement that no facts have come to our attention which cause us to believe
that (i) the Registration Statement, at the time it became effective, contained
an untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading, or that the Prospectuses, as of the date hereof, contain 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, (ii) there are any legal or governmental
proceedings pending or threatened against the Company that are required to be
disclosed in the Registration Statement or the Prospectuses, other than those
disclosed therein, or (iii) there are any contracts or documents of a character
required to be described in the Registration Statement or the Prospectuses or to
be filed as exhibits to the Registration Statement that are not described or
referred to therein or so filed; provided that in making the foregoing
statements (which shall not constitute an opinion), we are not expressing any
views as to the financial statements and supporting schedules and other
financial data included in or omitted from the Registration Statement or the
Prospectuses.
In rendering such opinion, such counsel may rely as to matters of fact
(but not as to legal conclusions), to the extent they deem proper, on
certificates of responsible officers of the Company, the Operating Partnership,
the Subsidiaries and public officials. Such opinion shall not state that it is
to be governed or qualified by, or that it is otherwise subject to, any
treatise, written policy or other document relating to legal opinions,
including, without limitation, the Legal Opinion Accord of the ABA Section of
Business Law (1991).
A-4
Exhibit B
FORM OF TAX OPINION OF COMPANY'S COUNSEL
TO BE DELIVERED PURSUANT TO
SECTION 5(b)
(i) The information in the Prospectuses under "Federal Income Tax
Consequences", to the extent that it constitutes matters of law or legal
conclusions, has been reviewed by us and is correct in all material respects.
(ii) Commencing with the Company's taxable year ending December 31,
1998, and assuming that the actions contemplated in the Prospectuses are
completed in a timely fashion, the Company is organized in conformity with the
requirements for qualification and taxation as a real estate investment trust
under the Code, and its proposed method of operation will enable it to meet the
requirements for qualification and taxation as a real estate investment trust
under the Code.
B-1
[Form of lock-up from directors and trustees pursuant to Section 5(i)]
Exhibit C
____________ , 1998
▇▇▇▇▇▇▇ ▇▇▇▇▇ & CO.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
BT ALEX. ▇▇▇▇▇ INCORPORATED
▇▇▇▇▇▇▇, ▇▇▇▇▇ & CO.
as U.S. Representatives of the several
U.S. Underwriters to be named in the
within-mentioned U.S. Purchase Agreement
c/▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
North Tower
World Financial Center
New York, New York 10281-1209
Re: Proposed Public Offering by ElderTrust
---------------------------------------
Dear Sirs:
The undersigned, an officer and/or trustee of ElderTrust, a Maryland
real estate investment trust (the "Company"), understands that ▇▇▇▇▇▇▇ ▇▇▇▇▇ &
Co., ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated ("▇▇▇▇▇▇▇ ▇▇▇▇▇"), BT
▇▇▇▇. ▇▇▇▇▇ Incorporated and ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co. propose to enter into a U.S.
Purchase Agreement (the "U.S. Purchase Agreement") with the Company and
ElderTrust Operating Limited Partnership, a Delaware limited partnership (the
"Operating Partnership") providing for the public offering of the Company's
common shares of beneficial interest, par value $.01 per share (the "Common
Shares"). In recognition of the benefit that such an offering will confer upon
the undersigned as an officer and/or trustee of the Company, and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the undersigned agrees with each underwriter to be named in the
U.S. Purchase Agreement that, during a period of 12 months from the date of the
U.S. Purchase Agreement, the undersigned will not, without the prior written
consent of ▇▇▇▇▇▇▇ ▇▇▇▇▇, directly or indirectly, (i) offer, pledge, sell,
contract to sell, sell any option or contract to purchase, purchase any option
or contract to sell, grant any option, right or warrant for the sale of, or
otherwise dispose of or transfer any Common Shares or any units of partnership
interest in the Operating Partnership ("Units") or any securities convertible
into or exchangeable or exercisable for Common Shares or Units, whether now
owned or hereafter acquired by the undersigned or with respect to which the
undersigned has or hereafter acquires the power of disposition, or file any
registration statement under the Securities Act of 1933, as amended, with
respect to any of the foregoing or (ii) enter into any swap or any other
agreement or any transaction that transfers, in whole or in part, directly or
indirectly, the economic consequence of ownership of the Common Shares or Units,
whether any such swap or transaction is to be settled by delivery of Common
Shares or Units or other securities, in cash or otherwise.
Very truly yours,
Signature:___________________________
Print Name:__________________________
C-1
Annex A
[FORM OF ACCOUNTANTS' COMFORT LETTER PURSUANT TO SECTION 5(e)]
We are independent public accountants with respect to the Company within the
meaning of the 1933 Act and the applicable published 1933 Act Regulations
(i) in our opinion, the audited financial statements and the
related financial statement schedule included in the Registration
Statement and the Prospectuses comply as to form in all material
respects with the applicable accounting requirements of the 1933 Act
and the published rules and regulations thereunder;
(ii) on the basis of procedures (but not an examination in
accordance with generally accepted auditing standards) consisting of a
reading of the latest available unaudited interim financial statements
of the Company, a reading of the minute books of the Company, inquiries
of certain officials of the Company responsible for financial and
accounting matters and such other inquiries and procedures as may be
specified in such letter, nothing came to our attention that caused us
to believe that:
(A) at a specified date not more than five days prior
to the date of this Agreement, there was any change in
the shares of beneficial interest of the Company or any
decrease in the net assets of the Company or any increase
in the debt of the Company, in each case as compared with
amounts shown in the latest balance sheet included in the
Registration Statement, except in each case for changes,
decreases or increases that the Registration Statement
discloses have occurred or may occur; or
(B) for the period from _________, 1997 to a
specified date not more than five days prior to the date
of this Agreement, there was any decrease in revenues or
net income of the Company, in each case as compared with
the comparable period in the preceding year, except in
each case for any decreases that the Registration
Statement discloses have occurred or may occur;
(iii) based upon the procedures set forth in clause (ii) above
and a reading of the Selected Financial Information included in the
Registration Statement (the "Selected Financial Information"), nothing
came to our attention that caused us to believe that the Selected
Financial Information do not comply as to form in all material respects
with the disclosure requirements of Item 301 of Regulation S-K of the
1933 Act or that the amounts included in the Selected Financial
Information are not in agreement with the corresponding amounts in the
audited financial statements for the respective periods;
Annex A-1
(iv) we have compared the information in the Registration
Statement under selected captions with the disclosure requirements of
Regulation S-K of the 1933 Act and on the basis of limited procedures
specified herein, nothing came to our attention that caused us to
believe that this information does not comply as to form in all
material respects with the disclosure requirements of Items 302, 402
and 503(d), respectively, of Regulation S-K;
(v) based upon the procedures set forth in clause (ii) above
and a reading of the Selected Financial Information, nothing came to
our attention that caused us to believe that the unaudited operating
data, balance sheet data and other data set forth in the Selected
Financial Information do not agree with the amounts set forth in the
unaudited financial statements for those periods or that such unaudited
amounts were not determined on a basis substantially consistent with
that of the corresponding amounts in the audited financial statements;
(vi) we are unable to and do not express any opinion on the
pro forma financial information (the "Pro Forma Information") included
in the Registration Statement or on the pro forma adjustments applied
to the historical amounts included in the Pro Forma Information;
however, for purposes of this letter we have:
(A) read the Pro Forma Information;
(B) performed [an audit] [a review in
accordance with SAS 71] of the financial statements
to which the pro forma adjustments were applied;
(C) made inquiries of certain officials of
the Company who have responsibility for financial and
accounting matters about the basis for their
determination of the pro forma adjustments and
whether the Pro Forma Information complies as to form
in all material respects with the applicable
accounting requirements of Rule 11-02 of Regulation
S-X; and
(D) proved the arithmetic accuracy of the
application of the pro forma adjustments to the
historical amounts in the Pro Forma Information; and
on the basis of such procedures and such other inquiries and
procedures as specified herein, nothing came to our
attention that caused us to believe that the Pro Forma
Information included in the Registration Statement does
not comply as to form in all material respects with the
applicable requirements of Rule 11-02 of Regulation S-X
or that the pro forma adjustments have not been properly
applied to the historical amounts in the compilation of
those statements; and
(vii) in addition to the procedures referred to in clause (ii)
above, we have performed other procedures, not constituting an audit,
with respect to certain amounts, percentages, numerical data and
financial information appearing in the Registration Statement, which
are specified herein, and have compared certain of such items with, and
have found such items to be in agreement with, the accounting and
financial records of the Company.
Annex A-2