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11,000,000 SHARES
LEXFORD RESIDENTIAL TRUST
COMMON SHARES OF BENEFICIAL INTEREST, PAR VALUE $0.01 PER SHARE
UNDERWRITING AGREEMENT
__________, 1998
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_____________, 1998
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
PaineWebber Incorporated
▇▇▇▇▇ ▇▇▇▇▇▇ Inc.
▇.▇. ▇▇▇▇▇▇▇▇ & Co.
Wheat First Securities, Inc.
c/o Morgan ▇▇▇▇▇▇▇ & Co. Incorporated
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. International Limited
PaineWebber International (U.K.) Ltd.
▇▇▇▇▇ ▇▇▇▇▇▇ Inc.
▇.▇. ▇▇▇▇▇▇▇▇ & Co.
Wheat First Securities, Inc.
c/o Morgan ▇▇▇▇▇▇▇ & Co. International Limited
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇
Dear Sirs and Mesdames:
Lexford Residential Trust, a Maryland real estate investment
trust (the "COMPANY"), proposes to issue and sell to the several Underwriters
(as defined below) 11,000,000 common shares of beneficial interest, par value
$0.01 per share, of the Company (the "FIRM SHARES").
It is understood that, subject to the conditions hereinafter
stated, 8,800,000 Firm Shares (the "U.S. FIRM SHARES") will be sold to the
several U.S. Underwriters named in Schedule I hereto (the "U.S. UNDERWRITERS")
in connection with the offering and sale of such U.S. Firm Shares in the United
States and Canada to United States and Canadian Persons (as such terms are
defined in the Agreement Between U.S. and International Underwriters of even
date herewith), and 2,200,000 Firm Shares (the "INTERNATIONAL SHARES") will be
sold to the several International Underwriters named in Schedule II hereto (the
"INTERNATIONAL UNDERWRITERS") in connection with the offering and sale of such
International Shares outside the United States and Canada to persons other than
United States and Canadian Persons. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated,
PaineWebber Incorporated, ▇▇▇▇▇ ▇▇▇▇▇▇ Inc., ▇.▇.
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Bradford & Co., and Wheat First Securities, Inc. shall act as representatives
(the "U.S. REPRESENTATIVES") of the several U.S. Underwriters, and ▇▇▇▇▇▇
▇▇▇▇▇▇▇ & Co. International Limited, PaineWebber International (U.K.) Ltd.,
▇▇▇▇▇ ▇▇▇▇▇▇ Inc., ▇.▇. ▇▇▇▇▇▇▇▇ & Co., and Wheat First Securities, Inc. shall
act as representatives (the "INTERNATIONAL REPRESENTATIVES") of the several
International Underwriters. The U.S. Underwriters and the International
Underwriters are hereinafter collectively referred to as the "UNDERWRITERS".
The Company also proposes to issue and sell to the several
U.S. Underwriters not more than an additional 1,650,000 common shares of
beneficial interest, par value $0.01 per share, of the Company (the "ADDITIONAL
SHARES") if and to the extent that the U.S. Representatives shall have
determined to exercise, on behalf of the U.S. Underwriters, the right to
purchase such common shares granted to the U.S. Underwriters in Section 2
hereof. The Firm Shares and the Additional Shares are hereinafter collectively
referred to as the "SHARES". The common shares of beneficial interest, par value
$0.01 per share, of the Company to be outstanding after giving effect to the
sales contemplated hereby are hereinafter referred to as the "COMMON SHARES".
Prior to the execution of this Agreement and the purchase and
public offering of the Shares by the several Underwriters, (i) the Company and
Lexford, Inc., an Ohio corporation (the "PREDECESSOR COMPANY"), have entered
into an Agreement and Articles of Merger dated January 29, 1998, (the "MERGER
AGREEMENT") pursuant to which the Predecessor Company was merged into the
Company (the "MERGER") and thereupon the Company has succeeded to the business
conducted by the Predecessor Company and now possesses any and all purposes and
powers of the Predecessor Company, and all leases, licenses, property, rights,
privileges and powers of whatever nature and description of the Predecessor
Company were transferred to, vested in and devolved upon the Company, without
further act or deed, subject to all debts and obligations of the Predecessor
Company, except for such limitations as are necessary to maintain the Company's
status as a real estate investment trust under Title 8 of the Corporations and
Associations Article of the Annotated Code of Maryland (the "MARYLAND REIT
STATUTE") and the Internal Revenue Code of 1986, as amended (the "CODE"), and
the (ii) the Company and the Predecessor Company have caused a Certificate of
Merger to be executed, acknowledged and filed with the Secretary of State of
Ohio as provided in Section 1701.81 of Chapter 1701 of the Ohio Revised Code,
the Ohio General Corporation Law (the "OGCL"), and an Articles of Merger to be
executed, acknowledged and filed with the State Department of Assessments and
Taxation of Maryland as provided in Section 8-501.1 of the Maryland REIT
Statute. The term "Company", unless the context otherwise requires, includes the
Predecessor Company.
The Company has filed with the Securities and Exchange
Commission (the "COMMISSION") a registration statement on Form S-3 (File No.
333-49269) relating to the Shares. The registration statement contains two
prospectuses to be used in connection with the
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offering and sale of the Shares: the U.S. prospectus, to be used in connection
with the offering and sale of Shares in the United States and Canada to United
States and Canadian Persons, and the international prospectus, to be used in
connection with the offering and sale of Shares outside the United States and
Canada to persons other than United States and Canadian Persons. The
international prospectus is identical to the U.S. prospectus except for the
outside front cover page. The registration statement as amended at the time it
becomes effective, including the exhibits thereto and the information (if any)
deemed to be part of the registration statement at the time of effectiveness
pursuant to Rule 430A under the Securities Act of 1933, as amended (the
"SECURITIES ACT"), is hereinafter referred to as the "REGISTRATION STATEMENT";
the U.S. prospectus and the international prospectus in the respective forms
first used to confirm sales of Shares are hereinafter collectively referred to
as the "PROSPECTUS". If the Company has filed an abbreviated registration
statement to register additional Common Shares pursuant to Rule 462(b) under the
Securities Act (the "RULE 462 REGISTRATION STATEMENT"), then any reference
herein to the term "Registration Statement" shall be deemed to include such Rule
462 Registration Statement. As used herein, the terms "Registration Statement",
"Prospectus", "Rule 462 Registration Statement" and "preliminary prospectus"
shall include in each case the documents incorporated by reference therein. The
terms "supplement", "amendment" and "amend" as used herein shall include all
documents deemed to be incorporated by reference in the Prospectus that are
filed subsequent to the date of the Prospectus by the Company with the
Commission pursuant to the Securities Exchange Act of 1934, as amended (the
"EXCHANGE ACT").
At or prior to the Closing Date (as hereinafter defined), the
Company will complete a series of transactions (the "CONSOLIDATION
TRANSACTIONS") described in the Prospectus under the heading "Company History --
Consolidation Plan". As part of these transactions, the Company will acquire
direct or indirect interests in 326 partnerships that own apartment communities.
1. Representations and Warranties. The Company represents and
warrants to and agrees with each of the Underwriters that:
(a) The Registration Statement has become effective; no stop
order suspending the effectiveness of the Registration Statement is in
effect, and no proceedings for such purpose are pending before or
threatened by the Commission.
(b) (i) Each document filed or to be filed pursuant to the
Exchange Act and incorporated by reference in the Prospectus complied
or will comply when so filed in all material respects with the
requirements of the Exchange Act and the applicable rules and
regulations of the Commission thereunder, (ii) the Registration
Statement, when it became effective, did not contain and each such
part, as amended or supplemented, if applicable, will not contain any
untrue statement of a material fact or omit to state a
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material fact required to be stated therein or necessary to make the
statements therein not misleading, (iii) the Registration Statement and
the Prospectus comply and, as amended or supplemented, if applicable,
will comply in all material respects with the Securities Act and the
applicable rules and regulations of the Commission thereunder and (iv)
the Prospectus does not contain and, as amended or supplemented, if
applicable, will not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements therein,
in the light of the circumstances under which they were made, not
misleading, except that the representations and warranties set forth in
this paragraph do not apply to statements or omissions in the
Registration Statement or the Prospectus based upon information
relating to any Underwriter furnished to the Company in writing by such
Underwriter through you expressly for use therein.
(c) Each preliminary prospectus 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 Securities Act,
complied when so filed in all material respects with the Securities Act
and the applicable rules and regulations of the Commission thereunder.
(d) The Company has been duly organized, is validly existing
as a real estate investment trust in good standing under the laws of
the State of Maryland, has the power and authority to own its property
and to conduct its business as described in the Prospectus and to enter
into and perform its obligations under this Agreement, the Merger
Agreement and the contracts, documents and other agreements executed in
connection with the Consolidation Transactions (the "CONSOLIDATION
DOCUMENTS") to which it is a party. The Company is duly qualified to
transact business and is in good standing in each jurisdiction in which
the conduct of its business or its ownership or leasing of property
requires such qualification, except to the extent that the failure to
be so qualified or be in good standing would not have a material
adverse effect on the Company and its subsidiaries taken as a whole.
(e) Each subsidiary of the Company has been duly incorporated
or organized, is validly existing as a partnership, corporation or
limited liability company in good standing under the laws of its
respective jurisdiction of organization, has the partnership, corporate
or other power and authority to own its property and to conduct its
business as described in the Prospectus and to enter into and perform
its obligations under the Consolidation Documents to which it is a
party. Each subsidiary of the Company is duly qualified to transact
business and is in good standing in each jurisdiction in which the
conduct of its business or its ownership or leasing of property
requires such qualification, except to the extent that the failure to
be so qualified or be in good standing would not have a material
adverse effect on the Company and its subsidiaries, taken as a whole;
all of the issued shares of capital stock or other
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ownership interests of each subsidiary of the Company have been duly
and validly authorized and issued, are fully paid and non-assessable,
except for liabilities of a general partner existing under applicable
law, and, except as set forth in the Prospectus, are owned directly or
indirectly by the Company, free and clear of all liens, encumbrances,
equities and claims, except for encumbrances which may be created
pursuant to the Company's existing $40.0 million revolving credit
facility with The Provident Bank. The subsidiaries listed on Schedule
III (the "SUBSIDIARIES") are all the active and direct subsidiaries of
the Company (other than any limited liability company or limited
partnership that owns apartment communities).
(f) This Agreement and the Merger Agreement have been duly
authorized, executed and delivered by the Company.
(g) On the Closing Date, each of the Consolidation Documents
to which the Company or any of its subsidiaries is a party pursuant to
the Consolidation Transactions will have been duly and validly
authorized, executed and delivered by such parties, and will be a valid
and binding agreement of such parties, enforceable in accordance with
its terms; provided, however, that the enforceability of each of the
foregoing documents may be limited by bankruptcy, insolvency,
reorganization or other similar laws affecting creditors' rights
generally and by general principles of equity.
(h) The authorized shares of the Company conform as to legal
matters to the description thereof contained in the Prospectus.
(i) The Common Shares outstanding prior to the issuance of the
Shares have been duly authorized, are validly issued, fully paid and
non-assessable, and have been offered and sold on or prior to Closing
Date in compliance with all applicable laws (including, without
limitation, federal and state securities laws) and are not subject to
preemptive or other similar rights arising by operation of Maryland law
or under the declaration of trust or by-laws of the Company or any
agreement or other instrument. The authorized, issued and outstanding
Common Shares of the Company are as set forth or incorporated by
reference in the Prospectus.
(j) The Shares have been duly authorized and, when issued and
delivered in accordance with the terms of this Agreement, will be
validly issued, fully paid and non-assessable, and the issuance of such
Shares will not be subject to any preemptive or similar rights.
(k) The Shares have been approved for listing on the New York
Stock Exchange, subject to official notice of issuance.
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(l) Neither the execution, delivery and performance of the
Merger Agreement, each of the Consolidation Documents and this
Agreement by the Company, nor the consummation of the transactions
contemplated hereby or thereby nor the sale of the Shares will conflict
with or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, any material indenture,
mortgage, deed of trust, loan agreement, limited liability company
agreement or any other material agreement or instrument to which the
Company or any of its subsidiaries is a party or by which the Company
or any of its subsidiaries is bound or to which any of the property or
assets of the Company or any of its subsidiaries is subject, nor will
such actions result in any violation of the provisions of the
declaration of trust, charter, by-laws, certificate of limited
partnership, partnership agreement or other organizational documents of
the Company or any of its subsidiaries, as the case may be, or any
statute or any order, rule or regulation of any court or governmental
agency or body having jurisdiction over the Company or any of its
subsidiaries or any of the properties, assets or businesses to be owned
by them after the Consolidation Transactions. No consent, approval,
authorization or order of, or qualification with, any governmental body
or agency is required for the performance by the Company or any of its
subsidiaries of its obligations under the Merger Agreement, this
Agreement and the Consolidation Documents and the consummation of the
transactions contemplated hereby and thereby, except as have been
obtained or such as may be required by the securities or Blue Sky laws
of the various states in connection with the offer and sale of the
Shares.
(m) There has not occurred any material adverse change, or any
development involving a prospective material adverse change, in the
condition, financial or otherwise, or in the earnings, business or
operations of the Company and its subsidiaries, taken as a whole, from
that set forth in the Prospectus (exclusive of any amendments or
supplements thereto subsequent to the date of this Agreement).
(n) There are no legal or governmental proceedings pending or
threatened to which the Company or any of its subsidiaries is a party
or to which any of the properties of the Company or any of its
subsidiaries is subject that are required to be described in the
Registration Statement or the Prospectus and are not so described or
any statutes, regulations, contracts or other documents that are
required to be described in the Registration Statement or the
Prospectus or to be filed as exhibits to the Registration Statement
that are not described or filed as required.
(o) Upon completion of the Consolidation Transactions and the
sale of the Shares, the Company will be organized in conformity with
the requirements for qualification as a real estate investment trust
under Sections 856 through 860 of the Code, and its assets, income and
proposed method of operation will enable it to meet
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the requirements for taxation as a real estate investment trust under
the Code for its taxable periods beginning with its first taxable year
which includes the Closing Date and for subsequent taxable periods.
(p) The conditions for use of registration statements on Form
S-3 set forth in the General Instructions on Form S-3 have been
satisfied and the Company is entitled to use such form for the
transaction contemplated herein.
(q) The Company is not and, after giving effect to the
offering and sale of the Shares and the application of the proceeds
thereof as described in the Prospectus, will not be an "investment
company" as such term is defined in the Investment Company Act of 1940,
as amended.
(r) Except with respect to the registration rights of ▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ obtained in connection with the
acquisition of Lexford Properties, Inc. or as otherwise disclosed in
the Prospectus, there are no contracts, agreements or understandings
between the Company and any person granting such person the right to
require the Company to file a registration statement under the
Securities Act with respect to any securities of the Company or to
require the Company to include such securities with the Shares
registered pursuant to the Registration Statement.
(s) Except as otherwise disclosed in the Prospectus: (i) all
apartment communities described in the Prospectus as owned by the
Company or any of its subsidiaries (the "WHOLLY OWNED PROPERTIES") are
owned with good and marketable title by the Company or the
subsidiaries; (ii) all apartment communities described in the
Prospectus as owned by entities (the "SYNDICATED PARTNERSHIPS") in
which the Company or one of its subsidiaries have minority equity
interests (the "SYNDICATED PROPERTIES" and, together with the Wholly
Owned Properties, the "PROPERTIES"), are owned with good and marketable
title by the Syndicated Partnerships; (iii) all liens, charges,
encumbrances, claims or restrictions on or affecting any of the
Properties and the assets of the Company or any of its subsidiaries
which are required to be disclosed in the Prospectus are disclosed
therein; (iv) any real property and buildings held under lease by the
Company and its subsidiaries are held by them under valid, subsisting
and enforceable leases with such exceptions as are not material and do
not interfere with the use made and the proposed to be made of such
property and buildings by the Company and its subsidiaries; (v) no
person has an option or right of first refusal to purchase all or part
of any Wholly Owned Property or any interest therein; (vi) each of the
Properties complies in all material respects with all applicable codes,
laws and regulations (including, without limitation, building and
zoning codes, laws and regulations and laws relating to access to the
properties); and (vii) the Company has no knowledge of any pending or
threatened condemnation proceedings, zoning change, or
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other similar proceeding or action that will in any manner affect the
size of, use of, improvements on, construction on or access to any of
the properties except, in the case of clauses (vi) and (vii) above, as
would not have a material adverse effect on the Company and its
subsidiaries, taken as a whole.
(t) Each of the partnership agreements to which any of the
Company and its subsidiaries is a party, and which relates to the
Properties, has been duly authorized, executed and delivered by the
Company or the subsidiary and constitutes the valid agreement thereof,
enforceable in accordance with its terms against the Company or the
subsidiary, provided, however, that the enforceability of each of the
foregoing documents may be limited by bankruptcy, insolvency,
reorganization or other similar laws affecting creditors's rights
generally and by general principles of equity; and the execution,
delivery and performance of any of such agreements did not, at the time
of execution and delivery, and does not constitute a breach of, or
default under, the declaration of trust of the Company or the
certificate of incorporation, partnership agreement or similar
agreement or by-laws of such party or any material contract, lease or
other instrument to which such party is a party or by which it or any
of its properties may be bound or any law, administrative regulation or
administrative or court decree, except for such breaches and defaults
that do not have a material adverse effect on the Company and its
subsidiaries, taken as a whole.
(u) The Company and its subsidiaries (i) are in compliance
with any and all applicable foreign, federal, state and local laws and
regulations relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants ("ENVIRONMENTAL LAWS") (ii) have received all permits,
licenses or other approvals required of them under applicable
Environmental Laws to conduct their respective businesses and (iii) are
in compliance with all terms and conditions of any such permit, license
or approval, except where such noncompliance with Environmental Laws,
failure to receive required permits, licenses or other approvals or
failure to comply with the terms and conditions of such permits,
licenses or approvals would not, singly or in the aggregate, have a
material adverse effect on the Company and its subsidiaries, taken as a
whole.
(v) Neither the Company nor any of its subsidiaries have
knowledge of (a) the unlawful presence of any hazardous substances,
hazardous materials, toxic substances or waste materials (collectively,
"HAZARDOUS MATERIALS") on any of the Properties as of the date hereof
or any properties owned by the Company or any entity controlled by the
Company prior to the date hereof with respect to the period prior to
the sale of such property by the Company or entity controlled by the
Company, or (b) any unlawful spills, releases, discharges or disposal
of Hazardous Materials that have occurred or are presently occurring on
such properties as a result of any construction on
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or operation and use of such properties; which presence or occurrence
would have a material adverse effect on the Company and its
subsidiaries, taken as a whole.
(w) There are no costs or liabilities associated with
Environmental Laws (including, without limitation, any capital or
operating expenditures required for clean-up, closure of properties or
compliance with Environmental Laws or any permit, license or approval,
any related constraints on operating activities and any potential
liabilities to third parties) which would, singly or in the aggregate,
have a material adverse effect on the Company and its subsidiaries,
taken as a whole.
(x) Neither the Company nor any of its subsidiaries is
required to own or possess any trademarks, service marks, trade names
or copyrights in order to conduct the business now operated by it,
other than those which it has a valid right to use or other than those
the failure to possess or own would not have a material adverse effect
on the Company and its subsidiaries, taken as a whole.
(y) ▇▇▇▇▇ & Young LLP, who have certified certain financial
statements in the Registration Statement, whose report appears in the
Prospectus, are independent public accountants as required by the
Securities Act and the rules and regulations of the Commission
thereunder during the periods covered by the financial statements on
which they reported contained in the Prospectus.
(z) The Company and its subsidiaries are insured by insurers
of recognized financial responsibility against such losses and risks
and in such amounts as are prudent and customary in the businesses in
which they are engaged and the geographic area thereof; neither the
Company nor any of its subsidiaries has any reason to believe that it
will not be able to renew its existing insurance coverage as and when
such coverage expires or to obtain similar coverage from similar
insurers as may be necessary to continue its business at a cost that
would not result in a material adverse effect on the Company and its
subsidiaries, taken as a whole, except as described in the Prospectus.
(aa) Except as described in the Prospectus, the Company and
its subsidiaries possess all licenses, consents, authorizations,
approvals, orders, certificates and permits of and from, and has made
all declarations and filings with, all federal, state, local, foreign
and other governmental authorities, all self-regulatory organizations
and all courts and other tribunals, to own, lease, license and use its
properties and assets and to conduct its business in the manner
described in the Prospectus, and neither the Company nor any of its
subsidiaries has received any notice of proceedings relating to the
revocation, modification or non-renewal of any such license, consent,
authorization, approval, order, certificate or permit which, singly or
in the aggregate, if the subject of
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an unfavorable decision, ruling or finding, would have a material
adverse effect on the Company and its subsidiaries, taken as a whole.
(bb) The Company and each of its subsidiaries maintain a
system of internal accounting controls sufficient to provide reasonable
assurance that (i) transactions are executed in accordance with
management's general or specific authorizations; (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to
maintain asset accountability; (iii) access to assets is permitted only
in accordance with management's general or specific authorization; and
(iv) the recorded accountability for assets is compared with the
existing assets at reasonable intervals and appropriate action is taken
with respect to any differences.
(cc) The Company has complied with all provisions of Section
517.075, Florida Statutes relating to doing business with the
Government of Cuba or with any person or affiliate located in Cuba.
(dd) Each of the Company and its subsidiaries has filed all
federal, state and local income tax returns which have been required to
be filed and has paid all taxes required to be paid and any other
assessment, fine or penalty levied against it, to the extent that any
of the foregoing is due and payable, except, in all cases, for any such
tax, assessment, fine or penalty that is being contested in good faith
(and except in any case in which the failure to so file or pay would
not have a material adverse effect on the Company and its subsidiaries,
taken as a whole).
(ee) The financial statements (including the notes thereto)
included in the Registration Statement and the Prospectus present
fairly the financial position of the respective entity or entities
presented therein at the respective dates indicated and the results of
their operations for the respective periods specified, and except as
otherwise stated in the Registration Statement, said financial
statements have been prepared in conformity with generally accepted
accounting principles ("GAAP") applied on a consistent basis. The
supporting schedules included in the Registration Statement present
fairly the information required to be stated therein. The financial
information and data included in the Registration Statement and the
Prospectus present fairly the information included therein and have
been prepared on a basis consistent with that of the books and records
of the respective entities presented therein. Pro forma financial
information included in the Prospectus has been prepared in accordance
with the applicable requirements of Rules 11-01 and 11-02 of Regulation
S-X under the Securities Act, and the necessary pro forma adjustments
have been properly applied to the historical amounts in the compilation
of such information, and, in the opinion of the Company, the
assumptions used in the preparation thereof are reasonable and the
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adjustments used therein are appropriate to give effect to the
transactions and circumstances referred to therein.
(ff) Upon the Merger, the Predecessor Company was merged into
the Company, and, thereupon the Company has succeeded to the business
conducted by the Predecessor Company and now possesses any and all
purposes and powers of the Predecessor Company, and all leases,
licenses, property, rights, privileges and powers of whatever nature
and description of the Predecessor Company were transferred to, vested
in and devolved upon the Company, without further act or deed, subject
to all debts and obligations of the Predecessor Company, except for
such limitations as are necessary to maintain the Company's status as a
real estate investment trust under the Maryland REIT Statute and the
Code. Each share of the Predecessor Company's common stock was
converted into two Common Shares, without the necessity of any action
on the part of the holder thereof.
(gg) The Merger was approved by holders of at least a majority
of shares of common stock of the Predecessor Company.
(hh) The Certificate of ▇▇▇▇▇▇ was properly authorized,
executed and filed with the Secretary of State of Ohio as provided by
Section 1701.81 of the OGCL and the Articles of Merger were properly
authorized, executed and filed with the State Department of Assessments
and Taxation of Maryland as provided in Section 8-501.1 of the Maryland
REIT Statute.
(ii) Any certificate signed by any officer of the Company and
delivered to the Underwriters, or to counsel for the Underwriters shall
be deemed a representation and warranty by the Company to each
Underwriter as to the matters covered thereby.
2. Agreements to Sell and Purchase. The Company hereby agrees
to sell to the several Underwriters, and each Underwriter, upon the basis of the
representations and warranties herein contained, but subject to the conditions
hereinafter stated, agrees, severally and not jointly, to purchase from the
Company the respective numbers of Firm Shares set forth in Schedules I and II
hereto opposite its name at U.S.$_____ a share ("PURCHASE PRICE").
On the basis of the representations and warranties contained
in this Agreement, and subject to its terms and conditions, the Company agrees
to sell to the U.S. Underwriters the Additional Shares, and the U.S.
Underwriters shall have a one-time right to purchase, severally and not jointly,
up to 1,650,000 Additional Shares at the Purchase Price. If the U.S.
Representatives, on behalf of the U.S. Underwriters, elect to exercise such
option, the U.S. Representatives shall so notify the Company in writing not
later than 30 days after the date of this Agreement, which notice shall specify
the number of Additional Shares to be
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purchased by the U.S. Underwriters and the date on which such shares are to be
purchased. Such date may be the same as the Closing Date (as defined below) but
not earlier than the Closing Date nor later than ten business days after the
date of such notice. Additional Shares may be purchased as provided in Section 4
hereof solely for the purpose of covering overallotments made in connection with
the offering of the Firm Shares. If any Additional Shares are to be purchased,
each U.S. Underwriter agrees, severally and not jointly, to purchase the number
of Additional Shares (subject to such adjustments to eliminate fractional shares
as the U.S. Representatives may determine) that bears the same proportion to the
total number of Additional Shares to be purchased as the number of U.S. Firm
Shares set forth in Schedule I hereto opposite the name of such U.S. Underwriter
bears to the total number of U.S. Firm Shares.
The Company hereby agrees that, without the prior written
consent of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated on behalf of the Underwriters, it
will not, during the period ending 180 days after the date of the Prospectus,
(i) offer, pledge, sell, contract to sell, sell any option or contract to
purchase, purchase any option or contract to sell, grant any option, right or
warrant to purchase, lend, or otherwise transfer or dispose of, directly or
indirectly, any Common Shares or any securities convertible into or exercisable
or exchangeable for Common Shares or (ii) enter into any swap or other
arrangement that transfers to another, in whole or in part, any of the economic
consequences of ownership of the Common Shares, whether any such transaction
described in clause (i) or (ii) above is to be settled by delivery of Common
Shares or such other securities, in cash or otherwise. The foregoing sentence
shall not apply to (A) the Shares to be sold hereunder, (B) the issuance by the
Company of Common Shares upon the exercise of an option or warrant or the
conversion of a security outstanding on the date hereof of which the
Underwriters have been advised in writing, (C) the issuance of partner interests
in Lexford Properties, L.P., as long as such partner interests are not
exchangeable for or convertible into Common Shares during the period ending 180
days after the date of the Prospectus, or (D) recurring issuances of Common
Shares under existing employment agreements or arrangements, provided, however,
that prior to the receipt of any such Common Shares, the recipient thereof shall
have executed a "lock-up" agreement in the form of Exhibit A hereto.
3. Terms of Public Offering. The Company is advised by you
that the Underwriters propose to make a public offering of their respective
portions of the Shares as soon after the Registration Statement and this
Agreement have become effective as in your judgment is advisable. The Company is
further advised by you that the Shares are to be offered to the public initially
at U.S.$_____ a share (the "PUBLIC OFFERING PRICE") and to certain dealers
selected by you at a price that represents a concession not in excess of $____ a
share under the Public Offering Price, and that any Underwriter may allow, and
such dealers may reallow, a concession, not in excess of U.S.$____ a share, to
any Underwriter or to certain other dealers.
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4. Payment and Delivery. Payment for the Firm Shares shall be
made to the Company in Federal or other funds immediately available in New York
City against delivery of such Firm Shares for the respective accounts of the
several Underwriters at 10:00 a.m., New York City time, on ____________, 1998,
or at such other time on the same or such other date, not later than _________,
1998, as shall be designated in writing by you. The time and date of such
payment are hereinafter referred to as the "CLOSING DATE".
Payment for any Additional Shares shall be made to the Company
in Federal or other funds immediately available in New York City against
delivery of such Additional Shares for the respective accounts of the several
Underwriters at 10:00 a.m., New York City time, on the date specified in the
notice described in Section 2 or at such other time on the same or on such other
date, in any event not later than _______, 1998, as shall be designated in
writing by the U.S. Representatives. The time and date of such payment are
hereinafter referred to as the "OPTION CLOSING DATE".
Certificates for the Firm Shares and Additional Shares shall
be in definitive form and registered in such names and in such denominations as
you shall request in writing not later than one full business day prior to the
Closing Date or the Option Closing Date, as the case may be. The certificates
evidencing the Firm Shares and Additional Shares shall be delivered to you on
the Closing Date or the Option Closing Date, as the case may be, for the
respective accounts of the several Underwriters, with any transfer taxes payable
in connection with the transfer of the Shares to the Underwriters duly paid,
against payment of the Purchase Price therefor.
5. Conditions to the Underwriters' Obligations. The
obligations of the Company to sell the Shares to the Underwriters and the
several obligations of the Underwriters to purchase and pay for the Shares on
the Closing Date are subject to the condition that the Registration Statement
shall have become effective not later than 2:00 p.m. (New York City time) on the
date hereof.
The several obligations of the Underwriters are subject to the
following further conditions:
(a) Subsequent to the execution and delivery of this Agreement
and prior to the Closing Date:
(i) there shall not have occurred any downgrading,
nor shall any notice have been given of any intended or
potential downgrading or of any review for a possible change
that does not indicate the direction of the possible change,
in the rating accorded any of the Company's securities by any
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"nationally recognized statistical rating organization", as
such term is defined for purposes of Rule 436(g)(2) under the
Securities Act; and
(ii) there shall not have occurred any change, or any
development involving a prospective change, in the condition,
financial or otherwise, or in the earnings, business or
operations of the Company and its subsidiaries, taken as a
whole, from that set forth in the Prospectus (exclusive of any
amendments or supplements thereto subsequent to the date of
this Agreement) that, in your judgment, is material and
adverse and that makes it, in your judgment, impracticable to
market the Shares on the terms and in the manner contemplated
in the Prospectus.
(b) The Underwriters shall have received on the Closing Date a
certificate, dated the Closing Date and signed by an executive officer
of the Company, to the effect set forth in Section 5(a)(i) above and to
the effect that the representations and warranties of the Company
contained in this Agreement are true and correct as of the Closing Date
and that the Company has complied with all of the agreements and
satisfied all of the conditions on its part to be performed or
satisfied hereunder on or before the Closing Date.
The officer signing and delivering such certificate may rely
upon the best of his or her knowledge as to proceedings threatened.
(c) The Underwriters shall have received on the Closing Date
an opinion of ▇▇▇▇▇▇▇ ▇. ▇▇▇ ▇▇▇▇▇, General Counsel of the Company,
dated the Closing Date, to the effect that:
(i) the Company is duly qualified to transact
business and is in good standing in each jurisdiction in which
the conduct of its business or its ownership or leasing of
property requires such qualification, except to the extent
that the failure to be so qualified or be in good standing
would not have a material adverse effect on the Company and
its subsidiaries, taken as a whole;
(ii) each of the Consolidation Documents to which the
Company or any of its subsidiaries is a party pursuant to the
Consolidation Transactions has been duly and validly
authorized, executed and delivered by such parties, and is a
valid and enforceable agreement of such parties, enforceable
in accordance with its terms; provided however that the
enforceability of the foregoing documents may be limited by
bankruptcy, insolvency, reorganization or other similar laws
affecting creditors' rights generally and by general
principles of equity;
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(iii) neither the execution, delivery and performance
of each of the Consolidation Documents by the Company nor the
consummation of the transactions contemplated thereby (A) will
contravene any provision of the Maryland REIT statute, (B)
will result in any violation of the provisions of the
declaration of trust or by-laws of the Company or (C) will, to
the best of such counsel's knowledge, result in any violation
of any statute or any order, rule or regulation issued under
or pursuant to the Maryland REIT statute and applicable to the
Company or any of its subsidiaries or any of the properties,
assets or businesses to be owned by them after the
Consolidation Transactions;
(iv) neither the Company nor any Subsidiary is
required to own or possess any trademarks, service marks,
trade names or copyrights in order to conduct the business now
operated by it, other than those which it has a valid right to
use or other than those the failure to possess or own would
not have a material adverse effect on the Company and its
subsidiaries taken as a whole;
(v) after due inquiry, such counsel does not know of
any legal or governmental proceedings pending or threatened to
which the Company or any of its subsidiaries is a party or to
which any of the properties of the Company or any of its
subsidiaries is subject that are required to be described in
the Registration Statement or the Prospectus and are not so
described or of any statutes, regulations, contracts or other
documents that are required to be described in the
Registration Statement or the Prospectus or to be filed as
exhibits to the Registration Statement that are not described
or filed as required; and
(vi) such counsel (A) is of the opinion that the
Registration Statement and Prospectus (except for financial
statements and schedules and other financial and statistical
data included therein as to which such counsel need not
express any opinion) comply as to form in all material
respects with the Securities Act and the applicable rules and
regulations of the Commission thereunder, (B) has no reason to
believe that (except for financial statements and schedules
and other financial and statistical data as to which such
counsel need not express any belief) the Registration
Statement and the prospectus included therein at the time the
Registration Statement became effective contained any untrue
statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the
statements therein not misleading and (C) has no reason to
believe that (except for financial statements and schedules
and other financial and statistical data as to which such
counsel need not express any belief) the Prospectus when
issued contained or as of the date such opinion is issued
contains any untrue statement of a material fact or omitted or
omits to state a
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material fact necessary in order to make the statements
therein, in the light of the circumstances under which they
were made, not misleading.
(d) The Underwriters shall have received on the Closing Date
an opinion of ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, outside counsel
for the Company, dated the Closing Date to the effect that:
(i) the Registration Statement has become effective
under the Securities Act based upon oral communications with
the Commission on ______, 1998; no stop order suspending the
effectiveness of the Registration Statement is in effect, and,
to such counsel's knowledge, no proceedings for such purpose
are pending before or threatened by the Commission;
(ii) each Subsidiary has been duly incorporated or
organized, is validly existing as a partnership, corporation
or limited liability company in good standing under the laws
of its respective jurisdiction of organization, has the
partnership, corporate or other power and authority to own its
property and to conduct its business as described in the
Prospectus and to enter into and perform its obligations under
the Consolidation Documents to which it is a party. Each
Subsidiary is duly qualified to transact business and is in
good standing in each jurisdiction in which the conduct of its
business or its ownership or leasing of property requires such
qualification, except to the extent that the failure to be so
qualified or be in good standing would not have a material
adverse effect on the Company and its subsidiaries, taken as a
whole;
(iii) all of the issued shares of capital stock or
other ownership interests of each Subsidiary have been duly
authorized and validly issued, are fully paid and
non-assessable, except for liabilities in connection with
general partnership interests pursuant to applicable law and,
except as set forth in the Prospectus, are, to such counsel's
knowledge, owned directly or indirectly by the Company, free
and clear of all liens, encumbrances, equities and claims,
except for encumbrances which may be created pursuant to the
Company's existing $40.0 million revolving credit facility
with The Provident Bank;
(iv) neither the execution, delivery and performance
of the Merger Agreement, each of the Consolidation Documents
and this Agreement by the Company, nor the consummation by the
Company of the transactions contemplated hereby and thereby
nor the sale of the Shares by the Company (A) will conflict
with or result in a breach or violation of, or constitute a
default under, any material indenture, mortgage (in the case
of mortgages to be prepaid with the proceeds of the offering
and sale of the Shares as described under "Use
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of Proceeds" in the Prospectus, assuming such prepayment),
deed of trust, loan agreement, limited liability company
agreement or any other material agreement or instrument known
to such counsel to which the Company or any of the
Subsidiaries is a party or by which the Company or any of the
Subsidiaries is bound or to which any of the properties or
assets of the Company or any of the Subsidiaries is subject;
(B) will result in any violation of the provisions of the
declaration of trust, charter, by-laws, certificate of limited
partnership, partnership agreement or other organizational
documents of any Subsidiary and (C) will, to such counsel's
knowledge, result in the violation of any statute or any
order, rule or regulation of any court or governmental agency
or body having jurisdiction over the Company or any of the
Subsidiaries or any of the properties, assets or businesses to
be owned by them after the Consolidation Transactions. No
consent, approval, authorization or order of, or qualification
with, any governmental body or agency is required for the
performance by the Company of its obligations under the Merger
Agreement, this Agreement and the Consolidation Documents,
except such as have been obtained or as may be required by the
securities or Blue Sky laws of the various states in
connection with the offer and sale of the Shares by the
Underwriters;
(v) the statements (A) in the Prospectus under the
captions "Operating Partnership Agreement" and "ERISA
Considerations" and (B) in the Registration Statement in Item
15, in each case insofar as such statements constitute
summaries of the legal matters, documents or proceedings
referred to therein, fairly present the information called for
with respect to such legal matters, documents and proceedings
and fairly summarize in all material respects the matters
referred to therein;
(vi) after due inquiry, such counsel does not know of
any legal or governmental proceedings pending or threatened to
which the Company or any of its subsidiaries is a party or to
which any of the properties of the Company or any of its
subsidiaries is subject that are required to be described in
the Registration Statement or the Prospectus and are not so
described or of any statutes or regulations that are required
to be described in the Registration Statement or the
Prospectus that are not so described;
(vii) the Company is not and, after giving effect to
the offering and sale of the Shares and the application of the
proceeds thereof as described in the Prospectus, will not be
an "investment company" as such term is defined in the
Investment Company Act of 1940, as amended;
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(viii) each of the written partnership agreements to
which any of the Company and the Subsidiaries is a party, and
which relates to the Properties, has been duly authorized,
executed and delivered by the Company or such Subsidiary and
constitutes the valid agreement thereof, enforceable in
accordance with its terms against the Company or such
Subsidiary, provided, however, that the enforceability of each
of the foregoing documents may be limited by bankruptcy,
insolvency, reorganization or other similar laws affecting
creditors's rights generally and by general principles of
equity; and the performance of any of such agreements does not
constitute a breach of, or default under, the declaration of
trust of the Company or the certificate of incorporation,
partnership agreement or similar agreement of any of the
Subsidiaries or the by-laws of the Company or any of the
Subsidiaries or any material contract, lease or other
instrument to which the Company or any of the Subsidiaries is
a party or by which it or any of its properties may be bound
or any law, administrative regulation or, to such counsel's
knowledge, administrative or court decree, except for such
breaches and defaults that do not have a material adverse
effect on the Company and its subsidiaries, taken as a whole.
Such counsel is not aware of any verbal partnership agreement
relating to any of the Properties;
(ix) the Certificate of ▇▇▇▇▇▇ was properly
authorized, executed and filed with the Secretary of State of
Ohio as provided by Section 1701.81 of the OGCL;
(x) the Common Shares issued in connection with the
Merger were offered and sold in compliance with all applicable
laws, including, without limitation, federal and state
securities laws;
(xi) such counsel (A) is of the opinion that the
Registration Statement and Prospectus (except for financial
statements and schedules and other financial and statistical
data included therein as to which such counsel need not
express any opinion) comply as to form in all material
respects with the Securities Act and the applicable rules and
regulations of the Commission thereunder, (B) has no reason to
believe that (except for financial statements and schedules
and other financial and statistical data as to which such
counsel need not express any belief) the Registration
Statement and the prospectus included therein at the time the
Registration Statement became effective contained any untrue
statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the
statements therein not misleading and (C) has no reason to
believe that (except for financial statements and schedules
and other financial and statistical data as to which such
counsel need not express any belief) the
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Prospectus when issued contained or as of the date such
opinion is issued contains any untrue statement of a material
fact or omitted or omits to state a material fact necessary in
order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; and
(xii) the opinions expressed in subparagraphs (iv)
and (vii) above as to compliance with any law, statute, rule
or regulation applicable to the Company or any Subsidiary and
the obtaining or performing of authorizations, consents,
approvals or filings required thereby are based upon a review
of, and are limited to, those laws, statutes, rules or
regulations that are applicable to the transactions
contemplated herein, in the Merger Agreement and in the
Prospectus.
(e) The Underwriters shall have received on the Closing Date
an opinion of ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇, special Maryland counsel
for the Company, dated the Closing Date, to the effect that:
(i) the Company has been duly organized, is validly
existing as a real estate investment trust in good standing
under the laws of the State of Maryland, has the power and
authority to own its property and to conduct its business as
described in the Prospectus and to enter into and perform its
obligations under this Agreement and the Merger Agreement;
(ii) this Agreement and the Merger Agreement have
been duly authorized, executed and delivered by the Company;
(iii) the description of authorized shares of the
Company in the Prospectus conforms as to legal matters to the
declaration of trust and bylaws of the Company;
(iv) the Common Shares outstanding prior to the
issuance of the Shares have been duly authorized and are
validly issued, fully paid and non-assessable and are not
subject to preemptive or other similar rights arising by
operation of Maryland law or under the declaration of trust or
by-laws of the Company or any agreement or other instrument
known to such counsel. The authorized, issued and outstanding
Common Shares are as set forth or incorporated by reference in
the Prospectus;
(v) the Shares have been duly authorized and, when
issued and delivered in accordance with the terms of this
Agreement, will be validly issued,
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fully paid and non-assessable, and the issuance of such Shares
will not be subject to any preemptive or similar rights;
(vi) neither the execution, delivery and performance
of the Merger Agreement and this Agreement by the Company nor
the consummation of the transactions contemplated hereby and
thereby nor the sale of the Shares (A) will contravene any
provision of the Maryland REIT Statute, (B) will result in any
violation of the provisions of the declaration of trust or
by-laws of the Company or (C) will, to the best of such
counsel's knowledge, result in any violation of any order,
rule or regulation issued under or pursuant to the Maryland
REIT Statute and applicable to the Company;
(vii) no consent, approval, authorization, order of or
qualification with any court or governmental agency or
authority or other entity is required to be obtained by the
Company or any of its subsidiaries under the Maryland REIT
Statute in connection with the offering, issuance or sale of
the Shares under this Agreement except for such as have been
obtained;
(viii) upon the Merger, the Predecessor Company was
merged into the Company, and, thereupon, the Company possesses
any and all purposes and powers of the Company as it existed
prior to the Merger and all assets the Predecessor Company
were transferred to, vested in, and devolved upon the Company,
without further act or deed, subject to all of the debts and
obligations of the Predecessor Company. Each share of the
Predecessor Company's common stock was converted into two
Common Shares, without the necessity of any action on the part
of the holder thereof;
(ix) the form of certificate used to evidence the
Shares is in due and proper form and complies with all
applicable statutory requirements under the laws of the State
of Maryland;
(x) the statements (A) in the Prospectus under the
captions "Risk Factors -- Risks Related to the Declaration of
Trust and Bylaws of the Company and Maryland Law" and "-- Risk
Related to REIT Conversion and REIT Status", "Policies and
Objectives with Respect to Certain Activities" and
"Description of Common Shares", and (B) in the Registration
Statement in Item 15, in each case insofar as such statements
constitute matters of Maryland law, summaries of the legal
matters, documents or proceedings referred to therein, fairly
present the information called for with respect to such legal
matters,
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documents and proceedings and fairly summarize the matters
referred to therein; and
(xi) The Articles of Merger were properly authorized,
executed and filed with the State Department of Assessments
and Taxation of Maryland as provided in Section 8-501.1 of the
Maryland REIT Statute.
(f) The Underwriters shall have received on the Closing Date
an opinion of ▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, special tax counsel for the
Company, dated the Closing Date, to the effect that:
(i) upon completion of the Consolidation Transactions
and the sale of the Shares, the Company will be organized in
conformity with the requirements for qualification as a real
estate investment trust under Sections 856 through 860 of the
Internal Revenue Code of 1986, as amended, and its assets,
income and proposed method of operation will enable it to meet
the requirements for taxation as a real estate investment
trust under the Code for its taxable periods beginning with
its 1998 taxable year and for subsequent taxable periods; and
(ii) the statements in the Prospectus under the
captions "Description of Common Shares", "Risk Factors --
Risks Related to REIT Conversion and REIT Status" and "-- Tax
Risks of REIT Status", "Distribution Policy" and "Federal
Income Tax Considerations", in each case insofar as such
statements constitute summaries of the federal tax matters
referred to therein, fairly present the information called for
with respect to such federal tax matters and accurately
summarize the matters referred to therein.
(g) The Underwriters shall have received on the Closing Date
an opinion of ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, counsel for the Underwriters, dated
the Closing Date, with respect to the Registration Statement and the
Prospectus and such other related matters as the Underwriters may
reasonably request.
With respect to Sections 5(c)(vi) and 5(d)(xi) above, ▇▇▇▇▇▇▇
▇. ▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, respectively,
may state that their opinion and belief are based upon their
participation in the preparation of the Registration Statement and
Prospectus and any amendments or supplements thereto and review and
discussion of the contents thereof, but are without independent check
or verification, except as specified.
The opinions of ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ described in
Sections 5(d), 5(e) and 5(f)
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above shall be rendered to the Underwriters at the request of the
Company and shall so state therein.
(h) The Underwriters shall have received, on each of the date
hereof and the Closing Date, a letter dated the date hereof or the
Closing Date, as the case may be, in form and substance satisfactory to
the Underwriters, from Ernst & Young LLP, independent public
accountants, containing statements and information of the type
ordinarily included in accountants' "comfort letters" to underwriters
with respect to the financial statements and certain financial
information contained in the Registration Statement and the Prospectus;
provided that the letter delivered on the Closing Date shall use a
"cut-off date" not earlier than the date hereof.
(i) The "lock-up" agreements, each substantially in the form
of Exhibit D hereto, between you and the officers and trustees of the
Company relating to sales and certain other dispositions of Common
Shares or certain other securities, delivered to you on or before the
date hereof, shall be in full force and effect on the Closing Date.
(j) You shall have received such other documents and
certificates as are reasonably requested by you or your counsel.
(k) The several obligations of the U.S. Underwriters to
purchase Additional Shares hereunder are subject to the delivery to the
U.S. Representatives on the Option Closing Date of such documents as
they may reasonably request with respect to the good standing of the
Company, the due authorization and issuance of the Additional Shares
and other matters related to the issuance of the Additional Shares.
6. Covenants of the Company. In further consideration of the
agreements of the Underwriters herein contained, the Company covenants with each
Underwriter as follows:
(a) To furnish to you, without charge, twelve signed copies of
the Registration Statement (including documents incorporated by
reference therein and exhibits thereto) and for delivery to each other
Underwriter a conformed copy of the Registration Statement (without
documents incorporated by reference therein and exhibits thereto) and
to furnish to you in New York City, without charge, prior to 10:00 a.m.
New York City time on the business day next succeeding the date of this
Agreement and during the period mentioned in Section 6(c) below, as
many copies of the Prospectus and any supplements and amendments
thereto or to the Registration Statement as you may reasonably request.
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(b) Before amending or supplementing the Registration
Statement or the Prospectus, to furnish to you a copy of each such
proposed amendment or supplement and not to file any such proposed
amendment or supplement to which you reasonably object, and to file
with the Commission within the applicable period specified in Rule
424(b) under the Securities Act any prospectus required to be filed
pursuant to such Rule.
(c) If, during such period after the first date of the public
offering of the Shares as in the opinion of counsel for the
Underwriters the Prospectus is required by law to be delivered in
connection with sales by an Underwriter or dealer, any event shall
occur or condition exist as a result of which it is necessary to amend
or supplement the Prospectus in order to make the statements therein,
in the light of the circumstances when the Prospectus is delivered to a
purchaser, not misleading, or if, in the opinion of counsel for the
Underwriters, it is necessary to amend or supplement the Prospectus to
comply with applicable law, forthwith to prepare, file with the
Commission and furnish, at its own expense, to the Underwriters and to
the dealers (whose names and addresses you will furnish to the Company)
to which Shares may have been sold by you on behalf of the Underwriters
and to any other dealers upon request, either amendments or supplements
to the Prospectus so that the statements in the Prospectus as so
amended or supplemented will not, in the light of the circumstances
when the Prospectus is delivered to a purchaser, be misleading or so
that the Prospectus, as amended or supplemented, will comply with law.
(d) To endeavor to qualify the Shares for offer and sale under
the securities or Blue Sky laws of such jurisdictions as you shall
reasonably request.
(e) To make generally available to the Company's security
holders and to you as soon as practicable an earning statement covering
the twelve month period ending June 30, 1999 that satisfies the
provisions of Section 11(a) of the Securities Act and the rules and
regulations of the Commission thereunder.
(f) Whether or not the transactions contemplated in this
Agreement are consummated or this Agreement is terminated, to pay or
cause to be paid all expenses incident to the performance of its
obligations under this Agreement, including: (i) the fees,
disbursements and expenses of the Company's counsel and the Company's
accountants in connection with the registration and delivery of the
Shares under the Securities Act and all other fees or expenses in
connection with the preparation and filing of the Registration
Statement, any preliminary prospectus, the Prospectus and amendments
and supplements to any of the foregoing, including all printing costs
associated therewith, and the mailing and delivering of copies thereof
to the Underwriters and dealers, in the quantities hereinabove
specified, (ii) all costs and
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expenses related to the transfer and delivery of the Shares to the
Underwriters, including any transfer or other taxes payable thereon,
(iii) the cost of printing or producing any Blue Sky or Legal
Investment memorandum in connection with the offer and sale of the
Shares under state securities laws and all expenses in connection with
the qualification of the Shares for offer and sale under state
securities laws as provided in Section 6(d) hereof, including filing
fees and the reasonable fees and disbursements of counsel for the
Underwriters in connection with such qualification and in connection
with the Blue Sky or Legal Investment memorandum, (iv) all filing fees
and the reasonable fees and disbursements of counsel to the
Underwriters incurred in connection with the review and qualification
of the offering of the Shares by the National Association of Securities
Dealers, Inc., (v) all fees and expenses in connection with the
preparation and filing of the registration statement on Form 8-A
relating to the Common Shares and all costs and expenses incident to
listing the Shares on the New York Stock Exchange, (vi) the cost of
printing certificates representing the Shares, (vii) the costs and
charges of any transfer agent, registrar or depositary, (viii) the
costs and expenses of the Company relating to investor presentations on
any "road show" undertaken in connection with the marketing of the
offering of the Shares, including, without limitation, expenses
associated with the production of road show slides and graphics, fees
and expenses of any consultants engaged in connection with the road
show presentations with the prior approval of the Company, travel and
lodging expenses of the representatives and officers of the Company and
any such consultants, and the cost of any aircraft chartered in
connection with the road show, (ix) all expenses in connection with any
offer and sale of the Shares outside of the United States, including
filing fees and reasonable fees and disbursements of counsel for the
Underwriters in connection with offers and sales outside of the United
States, and (x) all other costs and expenses incident to the
performance of the obligations of the Company hereunder for which
provision is not otherwise made in this Section. It is understood,
however, that except as provided in this Section, Section 7 entitled
"Indemnity and Contribution", and the last paragraph of Section 9
below, the Underwriters will pay all of their costs and expenses,
including fees and disbursements of their counsel, stock transfer taxes
payable on resale of any of the Shares by them and any advertising
expenses connected with any offers they may make.
(g) To use the net proceeds received by the Company from the
sale of the Shares hereunder in the manner set forth in the Prospectus.
(h) To ensure, as promptly as possible, that the company will
be duly qualified to transact business and in good standing in each
jurisdiction in which the conduct of its business or its ownership or
leasing of property requires such qualification.
7. Indemnity and Contribution. (a) The Company agrees to
indemnify and hold harmless each Underwriter and each person, if any, who
controls any Underwriter within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act, from and against any and all
losses, claims, damages and liabilities (including, without limitation, any
legal or other expenses reasonably incurred in connection with defending or
investigating
26
25
any such action or claim) caused by any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement or any
amendment thereof, any preliminary prospectus or the Prospectus (as amended or
supplemented if the Company shall have furnished any amendments or supplements
thereto), or caused by any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, except insofar as such losses, claims, damages or
liabilities are caused by any such untrue statement or omission or alleged
untrue statement or omission based upon information relating to any Underwriter
furnished to the Company in writing by such Underwriter through you expressly
for use therein.
(b) Each Underwriter agrees, severally and not jointly, to
indemnify and hold harmless the Company, its trustees, its officers who sign the
Registration Statement and each person, if any, who controls the Company within
the meaning of either Section 15 of the Securities Act or Section 20 of the
Exchange Act to the same extent as the foregoing indemnity from the Company to
such Underwriter, but only with reference to information relating to such
Underwriter furnished to the Company in writing by such Underwriter through you
expressly for use in the Registration Statement, any preliminary prospectus, the
Prospectus or any amendments or supplements thereto.
(c) In case any proceeding (including any governmental
investigation) shall be instituted involving any person in respect of which
indemnity may be sought pursuant to Section 7(a) or 7(b), such person (the
"INDEMNIFIED PARTY") shall promptly notify the person against whom such
indemnity may be sought (the "INDEMNIFYING PARTY") in writing and the
indemnifying party, upon request of the indemnified party, shall retain counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party and any others the indemnifying party may designate in such proceeding and
shall pay the fees and disbursements of such counsel related to such proceeding.
In any such proceeding, any indemnified party shall have the right to retain its
own counsel, but the fees and expenses of such counsel shall be at the expense
of such indemnified party unless (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel or (ii) the
named parties to any such proceeding (including any impleaded parties) include
both the indemnifying party and the indemnified party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. It is understood that the indemnifying party
shall not, in respect of the legal expenses of any indemnified party in
connection with any proceeding or related proceedings in the same jurisdiction,
be liable for the fees and expenses of more than one separate firm (in addition
to any local counsel) for all such indemnified parties and that all such fees
and expenses shall be reimbursed as they are incurred. Such firm shall be
designated in writing by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated, in the case of
parties indemnified pursuant to Section 7(a), and by the Company, in the case of
parties indemnified pursuant to Section 7(b). The indemnifying party shall not
be liable for any settlement of any proceeding effected without its written
consent, but if settled with such
27
26
consent or if there be a final judgment for the plaintiff, the indemnifying
party agrees to indemnify the indemnified party from and against any loss or
liability by reason of such settlement or judgment. Notwithstanding the
foregoing sentence, if at any time an indemnified party shall have requested an
indemnifying party to reimburse the indemnified party for fees and expenses of
counsel as contemplated by the second and third sentences of this paragraph, the
indemnifying party agrees that it shall be liable for any settlement of any
proceeding effected without its written consent if (i) such settlement is
entered into more than 30 days after receipt by such indemnifying party of the
aforesaid request and (ii) such indemnifying party shall not have reimbursed the
indemnified party in accordance with such request prior to the date of such
settlement. No indemnifying party shall, without the prior written consent of
the indemnified party, effect any settlement of any pending or threatened
proceeding in respect of which any indemnified party is or could have been a
party and indemnity could have been sought hereunder by such indemnified party,
unless such settlement includes an unconditional release of such indemnified
party from all liability on claims that are the subject matter of such
proceeding.
(d) To the extent the indemnification provided for in Section
7(a) or 7(b) is unavailable to an indemnified party or insufficient in respect
of any losses, claims, damages or liabilities referred to therein, then each
indemnifying party under such paragraph, in lieu of indemnifying such
indemnified party thereunder, shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company on the one hand and the Underwriters on the
other hand from the offering of the Shares or (ii) if the allocation provided by
clause 7(d)(i) above is not permitted by applicable law, in such proportion as
is appropriate to reflect not only the relative benefits referred to in clause
7(d)(i) above but also the relative fault of the Company on the one hand and of
the Underwriters on the other hand in connection with the statements or
omissions that resulted in such losses, claims, damages or liabilities, as well
as any other relevant equitable considerations. The relative benefits received
by the Company on the one hand and the Underwriters on the other hand in
connection with the offering of the Shares shall be deemed to be in the same
respective proportions as the net proceeds from the offering of the Shares
(before deducting expenses) received by the Company and the total underwriting
discounts and commissions received by the Underwriters, in each case as set
forth in the table on the cover of the Prospectus, bear to the aggregate Public
Offering Price of the Shares. The relative fault of the Company on the one hand
and the Underwriters on the other hand shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information supplied by the Company or by the Underwriters and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The Underwriters' respective obligations to
contribute pursuant to this Section 7 are several in proportion to the
respective number of Shares they have purchased hereunder, and not joint.
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27
(e) The Company and the Underwriters agree that it would not
be just or equitable if contribution pursuant to this Section 7 were determined
by pro rata allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation that does not take account of
the equitable considerations referred to in Section 7(d). The amount paid or
payable by an indemnified party as a result of the losses, claims, damages and
liabilities referred to in the immediately preceding paragraph shall be deemed
to include, subject to the limitations set forth above, any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 7, no Underwriter shall be required to contribute any
amount in excess of the amount by which the total price at which the Shares
underwritten by it and distributed to the public were offered to the public
exceeds the amount of any damages that such Underwriter has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The remedies provided for in this Section 7 are not exclusive
and shall not limit any rights or remedies which may otherwise be available to
any indemnified party at law or in equity.
(f) The indemnity and contribution provisions contained in
this Section 7 and the representations, warranties and other statements of the
Company contained in this Agreement shall remain operative and in full force and
effect regardless of (i) any termination of this Agreement, (ii) any
investigation made by or on behalf of any Underwriter or any person controlling
any Underwriter or by or on behalf of the Company, its officers or trustees or
any person controlling the Company and (iii) acceptance of and payment for any
of the Shares.
8. Termination. This Agreement shall be subject to termination
by notice given by you to the Company, if (a) after the execution and delivery
of this Agreement and prior to the Closing Date (i) trading generally shall have
been suspended or materially limited on or by, as the case may be, any of the
New York Stock Exchange, the American Stock Exchange, the National Association
of Securities Dealers, Inc., the Chicago Board of Options Exchange, the Chicago
Mercantile Exchange or the Chicago Board of Trade, (ii) trading of any
securities of the Company shall have been suspended on any exchange or in any
over-the-counter market, (iii) a general moratorium on commercial banking
activities in New York shall have been declared by either Federal or New York
State authorities or (iv) there shall have occurred any outbreak or escalation
of hostilities or any change in financial markets or any calamity or crisis
that, in your judgment, is material and adverse and (b) in the case of any of
the events specified in clauses 8(a)(i) through 8(a)(iv), such event, singly or
together
29
28
with any other such event, makes it, in your judgment, impracticable to market
the Shares on the terms and in the manner contemplated in the Prospectus.
9. Effectiveness; Defaulting Underwriters. This Agreement
shall become effective upon the execution and delivery hereof by the parties
hereto.
If, on the Closing Date or the Option Closing Date, as the
case may be, any one or more of the Underwriters shall fail or refuse to
purchase Shares that it has or they have agreed to purchase hereunder on such
date, and the aggregate number of Shares which such defaulting Underwriter or
Underwriters agreed but failed or refused to purchase is not more than one-tenth
of the aggregate number of the Shares to be purchased on such date, the other
Underwriters shall be obligated severally in the proportions that the number of
Firm Shares set forth opposite their respective names in Schedule I or Schedule
II bears to the aggregate number of Firm Shares set forth opposite the names of
all such non-defaulting Underwriters, or in such other proportions as you may
specify, to purchase the Shares which such defaulting Underwriter or
Underwriters agreed but failed or refused to purchase on such date; provided
that in no event shall the number of Shares that any Underwriter has agreed to
purchase pursuant to this Agreement be increased pursuant to this Section 9 by
an amount in excess of one-ninth of such number of Shares without the written
consent of such Underwriter. If, on the Closing Date, any Underwriter or
Underwriters shall fail or refuse to purchase Firm Shares and the aggregate
number of Firm Shares with respect to which such default occurs is more than
one-tenth of the aggregate number of Firm Shares to be purchased, and
arrangements satisfactory to you and the Company for the purchase of such Firm
Shares are not made within 36 hours after such default, this Agreement shall
terminate without liability on the part of any non-defaulting Underwriter or the
Company. In any such case either you or the Company shall have the right to
postpone the Closing Date, but in no event for longer than seven days, in order
that the required changes, if any, in the Registration Statement and in the
Prospectus or in any other documents or arrangements may be effected. If, on the
Option Closing Date, any Underwriter or Underwriters shall fail or refuse to
purchase Additional Shares and the aggregate number of Additional Shares with
respect to which such default occurs is more than one-tenth of the aggregate
number of Additional Shares to be purchased, the non-defaulting Underwriters
shall have the option to (i) terminate their obligation hereunder to purchase
Additional Shares or (ii) purchase not less than the number of Additional Shares
that such non-defaulting Underwriters would have been obligated to purchase in
the absence of such default. Any action taken under this paragraph shall not
relieve any defaulting Underwriter from liability in respect of any default of
such Underwriter under this Agreement.
If this Agreement shall be terminated by the Underwriters, or
any of them, because of any failure or refusal on the part of the Company to
comply with the terms or to fulfill any of the conditions of this Agreement, or
if for any reason the Company shall be unable to perform its obligations under
this Agreement, the Company will reimburse the
30
29
Underwriters or such Underwriters as have so terminated this Agreement with
respect to themselves, severally, for all out-of-pocket expenses (including the
fees and disbursements of their counsel) reasonably incurred by such
Underwriters in connection with this Agreement or the offering contemplated
hereunder.
10. Counterparts. This Agreement may be signed in two or more
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
11. Applicable Law. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of New York.
31
30
12. Headings. The headings of the sections of this Agreement
have been inserted for convenience of reference only and shall not be deemed a
part of this Agreement.
Very truly yours,
LEXFORD RESIDENTIAL TRUST
By:_______________________
Name:
Title:
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31
Accepted as of the date hereof
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & CO. INCORPORATED
PaineWebber Incorporated
▇▇▇▇▇ ▇▇▇▇▇▇ Inc.
▇.▇. ▇▇▇▇▇▇▇▇ & Co.
Wheat First Securities, Inc.
Acting severally on behalf of themselves
and the several U.S.Underwriters
named in Schedule I hereto.
By: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
By: ___________________________
Name:
Title:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & CO. INTERNATIONAL LIMITED
PaineWebber International (U.K.) Ltd.
▇▇▇▇▇ ▇▇▇▇▇▇ Inc.
▇.▇. ▇▇▇▇▇▇▇▇ & Co.
Wheat First Securities, Inc.
Acting severally on behalf of themselves
and the several International Underwriters
named in Schedule II hereto.
By: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. International Limited
By: ______________________________
Name:
Title:
33
SCHEDULE I
U.S. UNDERWRITERS
NUMBER OF
FIRM SHARES
UNDERWRITER TO BE PURCHASED
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
PaineWebber Incorporated
▇▇▇▇▇ ▇▇▇▇▇▇ Inc.
▇.▇. ▇▇▇▇▇▇▇▇ & Co.
Wheat First Securities, Inc.
[NAMES OF OTHER U.S. UNDERWRITERS]
--------------
Total U.S. Firm Shares.................................
==============
34
SCHEDULE II
INTERNATIONAL UNDERWRITERS
NUMBER OF
FIRM SHARES
UNDERWRITER TO BE PURCHASED
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. International Limited
PaineWebber International (U.K.) Ltd.
▇▇▇▇▇ ▇▇▇▇▇▇ Inc.
▇.▇. ▇▇▇▇▇▇▇▇ & Co.
Wheat First Securities, Inc.
[NAMES OF OTHER INTERNATIONAL UNDERWRITERS]
-------------
Total International Firm Shares..........................
=============
35
SCHEDULE III
SUBSIDIARIES
Lexford Properties, Inc.
Lexford Properties, L.P.
Lexford Partners, L.L.C.
Cardinal Industries Development Corporation
Cardinal Ancillary Insurance Agency, Inc. (Ohio)
Cardinal Ancillary Insurance Agency, Inc. (Delaware)
36
EXHIBIT A
FORM OF LOCK-UP LETTER
____________, 1998
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
PaineWebber Incorporated
▇▇▇▇▇ ▇▇▇▇▇▇ Inc.
▇.▇. ▇▇▇▇▇▇▇▇ & Co.
Wheat First Securities, Inc.
c/o Morgan ▇▇▇▇▇▇▇ & Co. Incorporated
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. International Limited
PaineWebber International (U.K.) Ltd.
▇▇▇▇▇ ▇▇▇▇▇▇ Inc.
▇.▇. ▇▇▇▇▇▇▇▇ & Co.
Wheat First Securities, Inc.
c/o Morgan ▇▇▇▇▇▇▇ & Co. International Limited
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇
Dear Sirs and Mesdames:
The undersigned understands that ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co.
Incorporated ("▇▇▇▇▇▇ ▇▇▇▇▇▇▇") and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. International Limited
("MSIL") propose to enter into an Underwriting Agreement (the "UNDERWRITING
AGREEMENT") with Lexford Residential Trust, a Maryland real estate investment
trust (the "COMPANY") providing for the public offering (the "PUBLIC OFFERING")
by the several Underwriters, including ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and MSIL (the
"UNDERWRITERS") of 11,000,000 shares (the "SHARES") of the common shares of
beneficial interest of the Company (the "COMMON SHARES").
To induce the Underwriters that may participate in the Public
Offering to continue their efforts in connection with the Public Offering, the
undersigned hereby agrees
37
that, without the prior written consent of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ on behalf of the
Underwriters, it will not, [and it will not permit FSC Realty, LLC to] during
the period commencing on the date hereof and ending 180 days after the date of
the final prospectus relating to the Public Offering (the "PROSPECTUS"), (1)
offer, pledge, sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or warrant to
purchase, lend, or otherwise transfer or dispose of, directly or indirectly, any
Common Shares or any securities convertible into or exercisable or exchangeable
for Common Shares, or (2) enter into any swap or other arrangement that
transfers to another, in whole or in part, any of the economic consequences of
ownership of the Common Shares, whether any such transaction described in clause
(1) or (2) above is to be settled by delivery of Common Shares or such other
securities, in cash or otherwise. The foregoing sentence shall not apply to (a)
the sale of any Shares to the Underwriters pursuant to the Underwriting
Agreement, (b) transactions relating to Common Shares or other securities
acquired in open market transactions after the completion of the Public
Offering or (c) the pledge of Common Shares in order to finance the purchase of
Common Shares [or, in the case of FSC Realty, LLC, to obtain commercial credit
loans.] In addition, the undersigned agrees that, without the prior written
consent of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ on behalf of the Underwriters, it will not, [and will
not permit FSC Realty, LLC to] during the period commencing on the date hereof
and ending 180 days after the date of the Prospectus, make any demand for or
exercise any right with respect to, the registration of any Common Shares or any
security convertible into or exercisable or exchangeable for Common Shares.
Whether or not the Public Offering actually occurs depends on
a number of factors, including market conditions. Any Public Offering will only
be made pursuant to an Underwriting Agreement, the terms of which are subject to
negotiation between the Company and the Underwriters.
Very truly yours,
-------------------------
(Name)
-------------------------
(Address)