Exhibit 1.1
10,000,000 SHARES
▇▇ ▇▇▇▇▇ REALTY CORP.
Common Stock
UNDERWRITING AGREEMENT
_________, 1998
▇▇▇▇▇▇ BROTHERS INC.
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
SECURITIES CORPORATION
EVEREN SECURITIES, INC.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, INCORPORATED
PRUDENTIAL SECURITIES INCORPORATED
▇▇▇▇▇▇▇ ▇▇▇▇▇ & ASSOCIATES, INC.
As Representatives of the several
Underwriters named in Schedule 1,
c/▇ ▇▇▇▇▇▇ Brothers Inc.
Three World ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Dear Sirs:
▇▇ ▇▇▇▇▇ Realty Corp., a Maryland corporation (the "COMPANY"),
intending to qualify for federal income tax purposes as a real estate investment
trust pursuant to Sections 856 through 860 of the Internal Revenue Code of 1986,
as amended, including the regulations and published interpretations thereunder
(the "CODE"), ▇▇ ▇▇▇▇▇ Operating Partnership, L.P., a Delaware limited
partnership and the sole general partner of which is the Company (the "OPERATING
PARTNERSHIP"), ▇▇ ▇▇▇▇▇ Management LLC, a Delaware limited liability company and
a wholly owned subsidiary of the Operating Partnership (the "MANAGEMENT LLC"),
▇.▇. ▇▇▇▇▇ Management Corp., a New York corporation and in which the Operating
Partnership owns 100% of the non-voting common stock (which represents 95% of
the economic interest therein) (the "MANAGEMENT CORPORATION"), ▇.▇. ▇▇▇▇▇
Leasing, Inc., a New York corporation and in which the Operating Partnership
owns 100% of the non-voting common stock (which represents 95% of the economic
interest therein) (the "LEASING CORPORATION") and Emerald City Construction
Corp., a New York corporation and in which the Operating Partnership owns 100%
of the non-voting common stock (which represents 95% of the economic interest
therein) (the "CONSTRUCTION CORPORATION," and together with the Management
Corporation and the Leasing Corporation, the "SERVICE CORPORATIONS," and the
Service Corporations collectively with the Company, Operating Partnership and
the Management LLC, the "TRANSACTION ENTITIES") each wish to confirm as follows
its agreement with the Underwriters named in Schedule 1 hereto (the
"UNDERWRITERS," which term shall also include any underwriter substituted as
hereinafter provided in Section 9 of this Agreement) for whom ▇▇▇▇▇▇ Brothers
Inc., ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ Securities Corporation, EVEREN Securities,
Inc., ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
Incorporated, Prudential Securities Incorporated and ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Associates,
Inc. are acting as representatives (the "REPRESENTATIVES"), with respect to the
sale by the Company and the purchase by the Underwriters, acting severally and
not jointly (the "OFFERING"), of an aggregate of 10,000,000 shares (the "FIRM
SHARES") of the Company's common stock, par value $.01 per share (the "COMMON
SHARES"). In addition, the Company proposes to grant to the Underwriters an
option to purchase up to an additional 1,500,000 Common Shares on the terms and
for the purposes set forth in Section 2 (the "OPTION SHARES"). The Firm Shares
and the Option Shares, if purchased, are hereinafter collectively called the
"SHARES."
Capitalized terms used but not otherwise defined herein shall have
the meanings ascribed to them in the Prospectus (as hereinafter defined).
The Transaction Entities understand that the Underwriters propose to
make a public offering of the Shares as soon as the Representatives deem
advisable after the Registration Statement (as hereinafter defined) becomes
effective and this Agreement has been executed and delivered.
1. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE TRANSACTION
ENTITIES. Each of the Transaction Entities, jointly and severally, represents,
warrants and agrees that, as of the date hereof:
(a) A registration statement on Form S-11 (No. 333-50309), and
any amendments thereto, with respect to the Shares has (i) been prepared
by the Company in conformity with the requirements of the United States
Securities Act of 1933, as amended (the "SECURITIES ACT") and the rules
and regulations (the "RULES AND REGULATIONS") of the United States
Securities and Exchange Commission (the "COMMISSION") thereunder, (ii)
been filed with the Commission under the Securities Act and (iii) become
effective under the Securities Act. Copies of such registration statement
and any amendments thereto have been delivered by the Company to you as
the Representatives of the Underwriters. As used in this Agreement,
"EFFECTIVE TIME" means the date and the time as of which such registration
statement, or the most recent post-effective amendment thereto, if any,
was declared effective by the Commission; "EFFECTIVE DATE" means the date
of the Effective Time; "PRELIMINARY PROSPECTUS" means each prospectus
included in such registration statement, or amendments thereto, before it
became effective under the Securities Act and any prospectus filed with
the Commission by the Company with the consent of the Representatives
pursuant to Rule 424(a) of the Rules and Regulations; "REGISTRATION
STATEMENT" means such registration statement, as amended at the Effective
Time, including all information contained in the final prospectus filed
with the Commission pursuant to Rule 424(b) of the Rules and Regulations
and deemed to be a part of the registration statement as of the Effective
Time pursuant to paragraph (b) of Rule 430A of the Rules and Regulations;
and "PROSPECTUS" means such final prospectus, as first filed with the
Commission pursuant to paragraph (1) or (4) of Rule 424(b) of the Rules
and Regulations. Any registration statement (including any amendment or
supplement thereto or information which is deemed to be a part thereof)
filed by the Company to register additional Common Shares under Rule
462(b) of the Rules and Regulations ("RULE 462(B) REGISTRATION STATEMENT")
shall be deemed a part of the Registration Statement. Any prospectus
(including any
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amendment or supplement thereto or information which is deemed to be a
part thereof) included in a Rule 462(b) Registration Statement shall be
deemed to be part of the Prospectus. If a Rule 462(b) Registration
Statement is filed in connection with the offering and sale of the Shares,
the Company will have complied or will comply with the requirements of
Rule 111 under the Securities Act relating to the payment of filing fees
therefor. The Company has not distributed, and prior to the later of the
Closing Date and the completion of the distribution of the Shares, will
not distribute, any offering material in connection with the offering or
sale of the Shares other than the Registration Statement, the Preliminary
Prospectus (as hereinafter defined), the Prospectus or any other
materials, if any, permitted by the Securities Act (which were disclosed
to the Underwriters and Underwriters' counsel). For purposes of this
Agreement, all references to the Registration Statement, any Preliminary
Prospectus or the Prospectus 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
("▇▇▇▇▇").
(b) Each Preliminary Prospectus included as part of the
Registration Statement as originally filed or as part of any amendment or
supplement thereto, or filed pursuant to Rule 424 under the Securities Act
and the Rules and Regulations, complied when so filed in all material
respects with the provisions of the Securities Act. The Commission has not
issued any order preventing or suspending the use of any Preliminary
Prospectus.
(c) The Registration Statement conforms, and the Prospectus
and any further amendments or supplements to the Registration Statement or
the Prospectus will, when they become effective or are filed with the
Commission, as the case may be, conform in all material respects to the
requirements of the Securities Act and the Rules and Regulations and do
not and will not, as of the applicable Effective Date (as to the
Registration Statement and any amendment thereto) and as of the applicable
filing date and at the First Delivery Date (as hereinafter defined) (as to
the Prospectus and any amendment or supplement thereto) contain an untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not
misleading (with respect to the Prospectus, in light of the circumstances
under which they were made); PROVIDED that no representation or warranty
is made as to information contained in or omitted from the Registration
Statement or the Prospectus in reliance upon and in conformity with
written information furnished to the Company through the Representatives
by or on behalf of any Underwriter specifically for inclusion therein. The
Prospectus delivered to the Underwriters for use in connection with the
offering of Shares will, at the time of such delivery, be identical to the
electronically transmitted copies thereof filed with the Commission
pursuant to ▇▇▇▇▇, except to the extent permitted by Regulation S-T.
(d) No stop order suspending the effectiveness of the
Registration Statement or any part thereof has been issued and no
proceeding for that purpose has been instituted or, to the knowledge of
any of the Transaction Entities, threatened by the Commission or by the
state securities authority of any jurisdiction. No order preventing or
suspending the use of any Preliminary Prospectus or the Prospectus has
been issued
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and no proceeding for that purpose has been instituted or, to the
knowledge of any of the Transaction Entities, threatened by the Commission
or by the state securities authority of any jurisdiction.
(e) The Company has been duly formed and is validly existing
as a corporation in good standing under the laws of the State of Maryland,
is duly qualified to do business and is in good standing as a foreign
corporation in each jurisdiction in which its ownership or lease of
property and other assets or the conduct of its business requires such
qualification, except where the failure to so qualify will not have a
material adverse effect on the business, prospects, operations,
management, consolidated financial position, net worth, stockholders'
equity or results of operations of the Transaction Entities considered as
one enterprise or on the use or value of the Properties (as hereinafter
defined), collectively (a "MATERIAL ADVERSE EFFECT"), and has all power
and authority necessary to own or hold its properties and other assets, to
conduct the business in which it is engaged and to enter into and perform
its obligations under this Agreement and the other Operative Documents (as
hereinafter defined) to which it is a party. None of the subsidiaries of
the Company (other than the Operating Partnership, the Management
Corporation, the Management LLC, the Leasing Corporation and Construction
Corporation) is a "SIGNIFICANT SUBSIDIARY," as such term is defined in
Rule 405 of the Rules and Regulations. Except as described in the
Prospectus, the Company owns no direct or indirect equity interest in any
entity other than the Transaction Entities.
(f) The Company has an authorized capitalization as set forth
in the Prospectus, and all of the issued Common Shares (other than the
Shares) have been duly and validly authorized and issued, are fully paid
and non-assessable, have been offered and sold in compliance with all
applicable laws (including, without limitation, federal or state
securities laws), and conform to the description thereof contained in the
Prospectus. Except as disclosed in the Prospectus, (i) no Common Shares
are reserved for any purpose, (ii) except for the equity interests in the
Operating Partnership ("UNITS"), there are no outstanding securities
convertible into or exchangeable for any Common Shares, and (iii) there
are no outstanding options, rights (preemptive or otherwise) or warrants
to purchase or subscribe for Common Shares or any other securities of the
Company.
(g) The Operating Partnership has been duly formed and is
validly existing as a limited partnership in good standing under the laws
of the State of Delaware, is duly qualified to do business and is in good
standing as a foreign limited partnership in each jurisdiction in which
its ownership or lease of property and other assets or the conduct of its
business requires such qualification, except where the failure to so
qualify will not have a Material Adverse Effect, and has all power and
authority necessary to own or hold its properties and other assets, to
conduct the business in which it is engaged and to enter into and perform
its obligations under this Agreement and the other Operative Documents (as
hereinafter defined) to which it is a party. The Company is the sole
general partner of the Operating Partnership. The Agreement of Limited
Partnership of the Operating Partnership, as amended (the "OPERATING
PARTNERSHIP AGREEMENT") is in full force and effect, and the aggregate
percentage interests of the Company and the limited partners in the
Operating Partnership are as set forth in the
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Prospectus; PROVIDED that to the extent any portion of the over-allotment
option described in Section 2 hereof is exercised at the First Delivery
Date, the percentage interest of such partners in the Operating
Partnership will be adjusted accordingly. Additionally, to the extent any
portion of such over-allotment option is exercised subsequent to the First
Delivery Date, the Company will contribute the proceeds from the sale of
the Option Shares to the Operating Partnership in exchange for a number of
Units equal to the number of Option Shares issued.
(h) Each of the Service Corporations has been duly formed and
is validly existing as a corporation in good standing under the laws of
the State of New York, is duly qualified to do business and is in good
standing as a foreign corporation in each jurisdiction in which its
ownership or lease of property and other assets or the conduct of its
business requires such qualification, except where the failure to so
qualify would not have a Material Adverse Effect, and has all power and
authority necessary to own or hold its properties and other assets, to
conduct the business in which it is engaged and to enter into and perform
its obligations under this Agreement and the other Operative Documents (as
hereinafter defined) to which it is a party. All of the issued and
outstanding capital stock of each Service Corporation has been duly
authorized and validly issued, is fully paid and non-assessable, has been
offered and sold in compliance with all applicable laws (including,
without limitation, federal or state securities laws) and, all of such
capital stock owned by the Operating Partnership (100% of the nonvoting
common stock) is owned free and clear of any security interest, mortgage,
pledge, lien, encumbrance, claim, restriction or equities. No shares of
capital stock of any Service Corporation are reserved for any purpose, and
there are no outstanding securities convertible into or exchangeable for
any capital stock of any Service Corporation and no outstanding options,
rights (preemptive or otherwise) or warrants to purchase or to subscribe
for shares of such capital stock or any other securities of any Service
Corporation.
(i) The Management LLC has been duly formed and is validly
existing as a limited liability company in good standing under the laws of
the State of Delaware, is duly qualified to do business and is in good
standing as a foreign limited liability company in each jurisdiction in
which its ownership or lease of property and other assets or the conduct
of its business requires such qualification, except where the failure to
so qualify would not have a Material Adverse Effect, and has all power and
authority necessary to own or hold its properties and other assets, to
conduct the business in which it is engaged and to enter into and perform
its obligations under this Agreement and the other Operative Documents (as
hereinafter defined) to which it is a party. All of the issued and
outstanding membership interests of the Management LLC have been duly
authorized and validly issued, are fully paid and non-assessable, have
been offered and sold in compliance with all applicable laws (including,
without limitation, federal or state securities laws), and 100% of the
membership interests are owned by the Operating Partnership free and clear
of any security interest, mortgage, pledge, lien, encumbrance, claim,
restriction or equities. No membership interests of the Management LLC are
reserved for any purpose, and there are no outstanding securities
convertible into or exchangeable for any membership interests of the
Management LLC and no outstanding
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options, rights (preemptive or otherwise) or warrants to purchase or to
subscribe for membership interests or any other securities of the
Management LLC.
(j) The Shares have been duly and validly authorized and, when
issued and delivered against payment therefor as provided herein, will be
duly and validly issued, fully paid and non-assessable. Upon payment of
the purchase price and delivery of the Shares in accordance herewith, the
Underwriters will receive good, valid and marketable title to the Shares,
free and clear of all security interests, mortgages, pledges, liens,
encumbrances, claims, restrictions and equities. The terms of the Common
Shares conform in substance to all statements and descriptions related
thereto contained in the Prospectus. The form of the certificates to be
used to evidence the Common Shares will, at the First Delivery Date, be in
due and proper form and will comply with all applicable legal
requirements. The issuance of the Shares is not subject to any preemptive
or other similar rights.
(k) All issued and outstanding Units have been duly authorized
and validly issued and have been offered and sold in compliance in all
material respects with all applicable laws (including, without limitation,
federal or state securities laws). Except as disclosed in the Prospectus,
no Units are reserved for any purpose and there are no outstanding
securities convertible into or exchangeable for any Units and no
outstanding options, rights (preemptive or otherwise) or warrants to
purchase or subscribe for Units or other securities of the Operating
Partnership. The terms of the Units conform in all material respects to
statements and descriptions related thereto contained in the Prospectus.
(l) (A) This Agreement has been duly and validly authorized,
executed and delivered by each of the Transaction Entities, and assuming
due authorization, execution and delivery by the Representatives, is a
valid and binding agreement of each of the Transaction Entities,
enforceable against the Transaction Entities in accordance with its terms,
except to the extent that such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization or other similar laws relating to
or affecting creditors' rights and general principles of equity and except
as rights to indemnity and contribution thereunder may be limited by
applicable law or policies underlying such law; (B) each of the Operating
Partnership Agreement and the members agreement of the Management LLC has
been duly and validly authorized, executed and delivered by the parties
thereto and is a valid and binding agreement of the parties thereto,
enforceable against such parties in accordance with its terms, except to
the extent that such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization or other similar laws relating to
or affecting creditors' rights and general principles of equity and except
as rights to indemnity and contribution thereunder may be limited by
applicable law or policies underlying such law; (C) each of the agreements
by and between the Service Corporations and/or the Management LLC and the
Company (the "MANAGEMENT AGREEMENTS") has been duly and validly
authorized, executed and delivered by the parties thereto and is a valid
and binding agreement, enforceable against the parties thereto in
accordance with its terms, except to the extent that such enforceability
may be limited by applicable bankruptcy, insolvency, reorganization or
other similar laws relating to or affecting creditors' rights and general
principles of equity and except as
6
rights to indemnity and contribution thereunder may be limited by
applicable law or policies underlying such law; (D) the employment and
noncompetition agreements between the Company and each of ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇▇ (the "EMPLOYMENT AGREEMENTS")
have been duly and validly authorized, executed and delivered by the
parties thereto and are each a valid and binding agreement, enforceable
against the parties thereto in accordance with its terms, except to the
extent that such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization or other similar laws relating to or affecting
creditors' rights and general principles of equity and except as rights to
indemnity and contribution thereunder may be limited by applicable law or
policies underlying such law; (E) the agreements (the "ACQUISITION
AGREEMENTS") pursuant to which the Company will acquire the Pending
Acquisitions (as defined in the Prospectus) will have been duly and
validly authorized, executed and delivered by each Transaction Entity that
is a party thereto, and are valid and binding agreements, enforceable
against such Transaction Entity in accordance with its terms, except to
the extent that such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization or other similar laws relating to
or affecting creditors' rights and general principles of equity and except
as rights to indemnity and contribution thereunder may be limited by
applicable law or policies underlying such law; and (F) the lockup
agreements by each of the Company and the Operating Partnership (the
"LOCK-UP AGREEMENTS") have been duly and validly authorized, executed and
delivered by such parties and are each a valid and binding agreement of
such parties, enforceable against such parties in accordance with their
terms except to the extent that such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization or other similar laws
relating to or affecting creditors' rights and general principles of
equity and except as rights to indemnity and contribution thereunder may
be limited by applicable law or policies underlying such law. This
Agreement, the Operating Partnership Agreement, the Employment Agreements,
the Acquisition Agreements and the Lock-Up Agreements are sometimes herein
collectively called the "OPERATIVE DOCUMENTS."
(m) The execution, delivery and performance of each Operative
Document by each of the Transaction Entities and the consummation of the
transactions contemplated hereby and thereby will not conflict with or
result in a breach or violation of any of the terms or provisions of, or
constitute (with or without the giving of notice or the passage of time,
or both) a default (or give rise to any right of termination, cancellation
or acceleration) under any of the terms, conditions or provisions of any
note, bond, indenture, mortgage, deed of trust, lease, license, contract,
loan agreement or other agreement or instrument to which any of the
Transaction Entities is a party or by which any of the Transaction
Entities is bound or to which any of the Properties (as hereinafter
defined) or other assets of any of the Transaction Entities is subject,
nor will such actions result in any violation of any of the provisions of
the charter, by-laws, certificate of limited partnership, agreement of
limited partnership or other organizational document of any of the
Transaction Entities, or any statute or any order, writ, injunction,
decree, rule or regulation of any court or governmental agency or body
having jurisdiction over any of the Transaction Entities or any of their
properties or assets, except for any such breach or violation that would
not have a Material Adverse Effect; and except for the registration of the
Shares and the ___% Preferred Income Equity
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Redeemable SharesSM ("PIERSSM"), which are being offered by the Company
concurrently with the Offering, under the Securities Act and such
consents, approvals, authorizations, registrations or qualifications as
may be required under the Exchange Act by the New York Stock Exchange,
Inc. ("NYSE"), or the National Association of Securities Dealers, Inc.
("NASD"), and applicable state securities laws in connection with the
purchase and distribution of the Shares by the Underwriters, no consent,
approval, authorization or order of, or filing or registration with, any
such court or governmental agency or body is required for the execution,
delivery and performance of the Operative Documents by the Transaction
Entities and the consummation of the transactions contemplated hereby and
thereby.
(n) Except as described or referred to in the Registration
Statement, there are no contracts, agreements or understandings between
the Company and any person granting such person the right to require the
Company to file a registration statement under the Securities Act with
respect to any securities of the Company owned or to be owned by such
person or to require the Company to include such securities in the
securities registered pursuant to the Registration Statement or in any
securities being registered pursuant to any other registration statement
filed by the Company under the Securities Act.
(o) Except as described in the Registration Statement, no
Transaction Entity has sold or issued any securities during the six-month
period preceding the date of the Prospectus, including any sales pursuant
to Rule 144A under, or Regulations D or S of, the Securities Act.
(p) None of the Transaction Entities nor any of the Properties
(as hereinafter defined) has sustained, since the date of the latest
audited financial statements included in the Prospectus, any material loss
or interference with its business from fire, explosion, flood or other
calamity, whether or not covered by insurance, or from any labor dispute
or court or governmental action, order or decree, other than as set forth
or contemplated in the Prospectus; and, since such date, there has not
been any change in the capital stock or long-term debt of any of the
Transaction Entities or any material adverse change, or any development
involving a prospective material adverse change, in or affecting any of
the Properties or the business, prospects, operations, management,
financial position, net worth, stockholders' equity or results of
operations of any of the Transaction Entities or use or value of the
Properties, other than as set forth or contemplated in the Prospectus.
(q) The financial statements (including the related notes and
supporting schedules) filed as part of the Registration Statement or
included in the Prospectus present fairly the financial condition, the
results of operations, the statements of cash
_____________________________
"Preferred Income Equity Redeemable SharesSM" and "PIERSSM" are service
marks owned by ▇▇▇▇▇▇ Brothers Inc.
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flows and the statements of stockholders' equity and other information
purported to be shown thereby of the Company and its consolidated
subsidiaries, at the dates and for the periods indicated, have been
prepared in conformity with generally accepted accounting principles
applied on a consistent basis throughout the periods involved and are
correct and complete and are in accordance with the books and records of
the Company and its consolidated subsidiaries. The summary and selected
financial data included in the Prospectus present fairly the information
shown therein as at the respective dates and for the respective periods
specified, and the summary and selected financial data have been presented
on a basis consistent with the financial statements so set forth in the
Prospectus and other financial information. Pro forma financial
information included in the Prospectus has been prepared in accordance
with the applicable requirements of the Securities Act and the Regulations
with respect to pro forma financial information and includes all
adjustments necessary to present fairly the pro forma financial position
of the Company at the respective dates indicated and the results of
operations for the respective periods specified. No other financial
statements (or schedules) of the Company, or any predecessor of the
Company are required by the Securities Act to be included in the
Registration Statement or the Prospectus.
(r) Ernst & Young LLP, who have certified certain financial
statements of the Company, whose reports appear in the Prospectus and who
have delivered the initial letter referred to in Section 7(f) hereof, are,
and during the periods covered by such reports were, independent public
accountants as required by the Securities Act and the Rules and
Regulations.
(s) (A) The Operating Partnership, directly or indirectly, has
good and marketable title to each of the interests in the Properties and
the other assets described in the Prospectus as being owned by the
Operating Partnership (the "PROPERTIES"), in each case free and clear of
all liens, encumbrances, claims, security interests and defects, other
than those referred to in the Prospectus or those which would not have a
Material Adverse Effect and all material consents or approvals with
respect to any such transfer shall have been received; (B) all liens,
charges, encumbrances, claims or restrictions on or affecting any of the
Properties and the assets of any Transaction Entity which are required to
be disclosed in the Prospectus are disclosed therein; (C) except as
otherwise described in the Prospectus, neither any Transaction Entity nor
any tenant of any of the Properties is in default under (i) any space
leases (as lessor or lessee, as the case may be) relating to the
Properties, or (ii) any of the mortgages or other security documents or
other agreements encumbering or otherwise recorded against the Properties,
and no Transaction Entity 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 documents or agreements except with respect to (i) and (ii)
immediately above any such default that would not have a Material Adverse
Effect; (D) no tenant under any of the leases at the Properties has a
right of first refusal to purchase the premises demised under such lease;
(E) to the best knowledge of the Company, each of the Properties complies
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), except for such failures to comply
that would not have a Material Adverse Effect; and (F) no Transaction
Entity has knowledge of any
9
pending or threatened condemnation proceedings, zoning change or other
proceeding or action that will in any material manner affect the size of,
use of, improvements on, construction on or access to the Properties.
(t) The mortgages and deeds of trust which encumber the
Properties are not convertible into equity securities of the entity owning
such Property and said mortgages and deeds of trust are not
cross-defaulted or cross-collateralized with any property other than other
Properties.
(u) The Operating Partnership, directly or indirectly, has
obtained title insurance on the fee interests in each of the Properties,
in an amount at least equal to the greater of (a) the mortgage
indebtedness of each such Property or (b) the purchase price of each such
Property.
(v) Except as disclosed in the Prospectus: (A) to the
knowledge of the Transaction Entities, after due inquiry, the operations
of the Transaction Entities and the Properties are in compliance with all
Environmental Laws (as defined below) and all requirements of applicable
permits, licenses, approvals and other authorizations issued pursuant to
Environmental Laws; (B) to the knowledge of the Transaction Entities,
after due inquiry, none of the Transaction Entities or any Property has
caused or suffered to occur any Release (as defined below) of any
Hazardous Substance (as defined below) into the Environment (as defined
below) on, in, under or from any Property, and no condition exists on, in,
under or adjacent to any Property that could result in the incurrence of
liabilities under, or any violations of, any Environmental Law or give
rise to the imposition of any Lien (as defined below), under any
Environmental Law; (C) none of the Transaction Entities has received any
written notice of a claim under or pursuant to any Environmental Law or
under common law pertaining to Hazardous Substances on, in, under or
originating from any Property; (D) none of the Transaction Entities has
actual knowledge of, or received any written notice from any Governmental
Authority (as defined below) claiming any violation of any Environmental
Law or a determination to undertake and/or request the investigation,
remediation, clean-up or removal of any Hazardous Substance released into
the Environment on, in, under or from any Property; and (E) no Property is
included or, to the knowledge of the Transaction Entities, after due
inquiry, proposed for inclusion on the National Priorities List issued
pursuant to CERCLA (as defined below) by the United States Environmental
Protection Agency (the "EPA") or on the Comprehensive Environmental
Response, Compensation, and Liability Information System database
maintained by the EPA, and none of the Transaction Entities has actual
knowledge that any Property has otherwise been identified in a published
writing by the EPA as a potential CERCLA removal, remedial or response
site or, to the knowledge of the Transaction Entities, is included on any
similar list of potentially contaminated sites pursuant to any other
Environmental Law.
As used herein, "HAZARDOUS SUBSTANCE" shall include any
hazardous substance, hazardous waste, toxic substance, pollutant or
hazardous material, including, without limitation, oil, petroleum or any
petroleum-derived substance or waste, asbestos or asbestos-containing
materials, PCBs, pesticides, explosives, radioactive materials, dioxins,
urea formaldehyde insulation or any constituent of any such substance,
pollutant
10
or waste which is subject to regulation under any Environmental Law
(including, without limitation, materials listed in the United States
Department of Transportation Optional Hazardous Material Table, 49 C.F.R.
ss. 172.101, or in the EPA's List of Hazardous Substances and Reportable
Quantities, 40 C.F.R. Part 302); "ENVIRONMENT" shall mean any surface
water, drinking water, ground water, land surface, subsurface strata,
river sediment, buildings, structures, and ambient, workplace and indoor
and outdoor air; "ENVIRONMENTAL LAW" shall mean the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended
(42 U.S.C. ss. 9601 et seq.) ("CERCLA"), the Resource Conservation and
Recovery Act of 1976, as amended (42 U.S.C. ss. 6901, et seq.), the Clean
Air Act, as amended (42 U.S.C. ss. 7401, et seq.), the Clean Water Act, as
amended (33 U.S.C. ss. 1251, et seq.), the Toxic Substances Control Act,
as amended (15 U.S.C. ss. 2601, et seq.), the Occupational Safety and
Health Act of 1970, as amended (29 U.S.C. ss. 651, et seq.), the Hazardous
Materials Transportation Act, as amended (49 U.S.C. ss. 1801, et seq.),
and all other federal, state and local laws, ordinances, regulations,
rules and orders relating to the protection of the environments or of
human health from environmental effects; "GOVERNMENTAL AUTHORITY" shall
mean any federal, state or local governmental office, agency or authority
having the duty or authority to promulgate, implement or enforce any
Environmental Law; "LIEN" shall mean, with respect to any Property, any
mortgage, deed of trust, pledge, security interest, lien, encumbrance,
penalty, fine, charge, assessment, judgment or other liability in, on or
affecting such Property; and "RELEASE" shall mean any spilling, leaking,
pumping, pouring, emitting, emptying, discharging, injecting, escaping,
leaching, dumping, emanating or disposing of any Hazardous Substance into
the Environment, including, without limitation, the abandonment or discard
of barrels, containers, tanks (including, without limitation, underground
storage tanks) or other receptacles containing or previously containing
any Hazardous Substance.
None of the environmental consultants which prepared
environmental and asbestos inspection reports with respect to any of the
Properties was employed for such purpose on a contingent basis or has any
substantial interest in the Company or any of its Subsidiaries, and none
of them nor any of their directors, officers or employees is connected
with the Company or any of its subsidiaries as a promoter, selling agent,
voting trustee, director, officer or employee.
(w) Except as described or referred to in the Registration
Statement, the Transaction Entities are insured by insurers of recognized
financial responsibility against such losses and risks and in such amounts
and covering such risks as are customary in the businesses in which they
are engaged or propose to engage after giving effect to the transactions
described in the Prospectus; and neither the Company nor any other
Transaction Entity 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 their business at a cost that would not have a Material Adverse
Effect.
(x) Each Transaction Entity owns or possesses adequate rights
to use all material patents, patent applications, trademarks, service
marks, trade names, trademark registrations, service ▇▇▇▇ registrations,
copyrights and licenses necessary for
11
the conduct of its business and has no reason to believe that the conduct
of its business will conflict with, and has not received any notice of any
claim of conflict with, any such rights of others.
(y) Except as described in the Prospectus, there are no legal
or governmental proceedings pending to which any Transaction Entity is a
party or of which any property or assets of any Transaction Entity is the
subject which, if determined adversely to such Transaction Entity, might
have a Material Adverse Effect; and to the best knowledge of the
Transaction Entities, no such proceedings are threatened or contemplated
by governmental authorities or threatened by others.
(z) There are no contracts or other documents which are
required to be described in the Prospectus or filed as exhibits to the
Registration Statement by the Securities Act or by the Rules and
Regulations which have not been described in the Prospectus or filed as
exhibits to the Registration Statement or incorporated therein by
reference as permitted by the Rules and Regulations. Neither the Company,
nor to the Company's knowledge, any other party is in default in the
observance or performance of any term or obligation to be performed by it
under any agreement listed in the exhibits to the Registration Statement,
and no event has occurred which with notice or lapse of time or both would
constitute such a default, in any such case which default or event would
have a Material Adverse Effect. No default exists, and no event has
occurred which with notice or lapse of time or both would constitute a
default, in the due performance and observance of any term, covenant or
condition, by the Company or any of its subsidiaries of any other
agreement or instrument to which the Company or any of its subsidiaries is
a party or by which any of them or their respective properties or
businesses may be bound or affected which default or event would have a
Material Adverse Effect.
(aa) No relationship, direct or indirect, exists between or
among any of the Transaction Entities on the one hand, and the directors,
officers, stockholders, customers or suppliers of the Transaction Entities
on the other hand, which is required to be described in the Prospectus
which is not so described.
(bb) No labor disturbance by the employees of any Transaction
Entity exists or, to the knowledge of the Transaction Entities, is
imminent which might be expected to have a Material Adverse Effect.
(cc) Each Transaction Entity is in compliance in all material
respects with all presently applicable provisions of the Employee
Retirement Income Security Act of 1974, as amended, including the
regulations and published interpretations thereunder ("ERISA"); no
"REPORTABLE EVENT" (as defined in ERISA) has occurred with respect to any
"PENSION PLAN" (as defined in ERISA) for which any Transaction Entity
would have any liability; no Transaction Entity has incurred or expects to
incur liability under (i) Title IV of ERISA with respect to termination
of, or withdrawal from, any "pension plan" or (ii) Sections 412 or 4971 of
the Code; and each "pension plan" for which any Transaction Entity would
have any liability that is intended to be qualified under Section 401(a)
of the Code is so qualified in all material respects and nothing has
12
occurred, whether by action or by failure to act, which would cause the
loss of such qualification, except where the failure to be so qualified
would not have a Material Adverse Effect.
(dd) Each Transaction Entity has filed all federal, state and
local income and franchise tax returns required to be filed through the
date hereof and has paid all taxes due thereon, and no tax deficiency has
been determined adversely to any Transaction Entity which has had (nor
does any Transaction Entity have any knowledge of any tax deficiency
which, if determined adversely to it might have) a Material Adverse
Effect.
(ee) At all times since August 14, 1997, the Company, the
Operating Partnership, the Management LLC and the Service Corporations
have been and upon the sale of Shares will continue to be, organized and
operated in conformity with the requirements for qualification of the
Company as a real estate investment trust ("REIT") under the Code and the
proposed method of operation of the Company, the Operating Partnership,
the Management LLC and the Service Corporations will enable the Company to
continue to meet the requirements for qualification and taxation as a REIT
under the Code.
(ff) Since the date as of which information is given in the
Prospectus through the date hereof, and except as may otherwise be
disclosed in the Prospectus, (i) no Transaction Entity has (a) issued or
granted any securities, (b) incurred any liability or obligation, direct
or contingent, other than liabilities and obligations which were incurred
in the ordinary course of business, (c) entered into any transaction not
in the ordinary course of business or (d) declared or paid any dividend on
its capital stock; and (ii) there has been no Material Adverse Effect.
(gg) Each Transaction Entity (i) makes and keeps accurate
books and records and (ii) maintains internal accounting controls which
provide reasonable assurance that (A) transactions are executed in
accordance with management's authorization, (B) transactions are recorded
as necessary to permit preparation of its financial statements and to
maintain accountability for its assets, (C) access to its assets is
permitted only in accordance with management's authorization and (D) the
reported accountability for its assets is compared with existing assets at
reasonable intervals.
(hh) No Transaction Entity (i) is in violation of its charter,
by-laws, certificate of limited partnership, agreement of limited
partnership or other similar organizational document except for any such
violation which would not have a Material Adverse Effect, (ii) is in
default, and no event has occurred which, with notice or lapse of time or
both, would constitute a default, in the due performance or observance of
any term, covenant or condition contained in any material indenture,
mortgage, deed of trust, loan agreement or other agreement or instrument
to which it is a party or by which it is bound or to which any of the
Properties or any of its other properties or assets is subject, except for
any such default which would not have a Material Adverse Effect or (iii)
is in violation of any law, ordinance, governmental rule, regulation or
court decree to which it or the Properties or any of its other properties
or assets may be subject or has
13
failed to obtain any material license, permit, certificate, franchise or
other governmental authorization or permit necessary to the ownership of
the Properties or any of its other properties or assets or to the conduct
of its business except for any such violation which would not have a
Material Adverse Effect.
(ii) No Transaction Entity, nor any director, officer, agent,
employee or other person associated with or acting on behalf of any
Transaction Entity, has used any corporate funds for any unlawful
contribution, gift, entertainment or other unlawful expense relating to
political activity; made any direct or indirect unlawful payment to any
foreign or domestic government official or employee from corporate funds;
violated or is in violation of any provision of the Foreign Corrupt
Practices Act of 1977; or made any bribe, rebate, payoff, influence
payment, kickback or other unlawful payment.
(jj) No Transaction Entity is an "investment company" within
the meaning of such term under the Investment Company Act of 1940, as
amended, and the rules and regulations of the Commission thereunder.
(kk) The Common Shares have been approved for listing upon
official notice of issuance on the NYSE.
(ll) Other than this Agreement and as set forth in the
Prospectus under the heading "Underwriting," there are no contracts,
agreements or understandings between any Transaction Entity and any person
that would give rise to a valid claim against any Transaction Entity or
any Underwriter for a brokerage commission, finder's fee or other like
payment with respect to the consummation of the transactions contemplated
by this Agreement.
(mm) To apply the net proceeds from the sale of the Shares
being sold by the Company in accordance with the description set forth in
the Prospectus under the caption "Use of Proceeds."
(nn) Except as stated in this Agreement and in the Prospectus,
no Transaction Entity has taken, nor will it take, directly or indirectly,
any action designed to or that might reasonably be expected to cause or
result in stabilization or manipulation of the price of the Common Shares
to facilitate the sale or resale of the Shares.
2. PURCHASE OF THE SHARES BY THE UNDERWRITERS. On the basis of the
representations and warranties contained in, and subject to the terms and
conditions of, this Agreement, the Company agrees to sell 10,000,000 Firm
Shares, severally and not jointly, to the several Underwriters and each of the
Underwriters, severally and not jointly, agrees to purchase the number of Firm
Shares set forth opposite that Underwriter's name in Schedule 1 hereto. The
respective purchase obligations of the Underwriters with respect to the Firm
Shares shall be rounded among the Underwriters to avoid fractional shares, as
the Representatives may determine.
In addition, the Company grants to the Underwriters an option to
purchase up to 1,500,000 Option Shares. Such option is granted solely for the
purpose of covering over-
14
allotments in the sale of Firm Shares and is exercisable as provided in Section
4 hereof. Option Shares shall be purchased severally for the account of the
Underwriters in proportion to the number of Firm Shares set forth opposite the
name of such Underwriters in Schedule 1 hereto. The respective purchase
obligations of each Underwriter with respect to the Option Shares shall be
adjusted by the Representatives so that no Underwriter shall be obligated to
purchase Option Shares other than in 100-share amounts. The price of both the
Firm Shares and any Option Shares shall be $[_____] per share.
The Company shall not be obligated to deliver any of the Shares to
be delivered on the First Delivery Date or the Second Delivery Date (as
hereinafter defined), as the case may be, except upon payment for all the Shares
to be purchased on such Delivery Date as provided herein.
3. OFFERING OF SHARES BY THE UNDERWRITERS.
Upon authorization by the Representatives of the release of the Firm
Shares, the several Underwriters propose to offer the Firm Shares for sale upon
the terms and conditions set forth in the Prospectus.
4. DELIVERY OF AND PAYMENT FOR THE SHARES. Delivery of and payment
for the Firm Shares shall be made at the office of ▇▇▇▇▇▇ & ▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, or at such other date or place as shall be
determined by agreement between the Representatives and the Company, at 10:00
A.M., New York City time, on the third full business day following the date of
this Agreement or on the fourth full business day if the Agreement is executed
after the daily closing time of the New York Stock Exchange (unless postponed in
accordance with the provisions of Section 9 hereof). This date and time are
sometimes referred to as the "FIRST DELIVERY DATE." On the First Delivery Date,
the Company shall deliver or cause to be delivered certificates representing the
Firm Shares to the Representatives for the account of each Underwriter against
payment to or upon the order of the Company of the purchase price by wire
transfer of same-day funds. Time shall be of the essence, and delivery at the
time and place specified pursuant to this Agreement is a further condition of
the obligation of each Underwriter hereunder. Upon delivery, the Firm Shares
shall be registered in such names and in such denominations as the
Representatives shall request in writing not less than two full business days
prior to the First Delivery Date. For the purpose of expediting the checking and
packaging of the certificates for the Firm Shares, the Company shall make the
certificates representing the Firm Shares available for inspection by the
Representatives in New York, New York, not later than 2:00 P.M., New York City
time, on the business day prior to the First Delivery Date.
At any time on or before the thirtieth day after the date of this
Agreement, the option granted in Section 2 may be exercised, in whole or in
part, from time to time, by written notice being given to the Company by the
Representatives. Such notice shall set forth the aggregate number of Option
Shares as to which the option is being exercised, the names in which the Option
Shares are to be registered, the denominations in which the Option Shares are to
be issued and the date and time, as determined by the Representatives, when the
Option Shares are to be delivered; PROVIDED, HOWEVER, that this date and time
shall not be earlier than the First Delivery Date nor earlier than the second
business day after the date on which the
15
option shall have been exercised nor later than the fifth business day after the
date on which the option shall have been exercised. The date and time the Option
Shares are delivered are sometimes referred to as the "SECOND DELIVERY DATE" and
the First Delivery Date and the Second Delivery Date are sometimes each referred
to as a "DELIVERY DATE."
Delivery of and payment for the Option Shares shall be made at the
place specified in the first sentence of the first paragraph of this Section 4
(or at such other place as shall be determined by agreement between the
Representatives and the Company) at 10:00 A.M., New York City time, on the
Second Delivery Date. On the Second Delivery Date, the Company shall deliver or
cause to be delivered the certificates representing the Option Shares to the
Representatives for the account of each Underwriter against payment to or upon
the order of the Company of the purchase price by wire transfer of same-day
funds. Time shall be of the essence, and delivery at the time and place
specified pursuant to this Agreement is a further condition of the obligation of
each Underwriter hereunder. Upon delivery, the Option Shares shall be registered
in such names and in such denominations as the Representatives shall request in
the aforesaid written notice. For the purpose of expediting the checking and
packaging of the certificates for the Option Shares, the Company shall make the
certificates representing the Option Shares available for inspection by the
Representatives in New York, New York, not later than 2:00 P.M., New York City
time, on the business day prior to the Second Delivery Date.
5. FURTHER AGREEMENTS OF THE COMPANY. The Company agrees:
(a) To prepare the Prospectus in a form approved by the
Representatives and to file such Prospectus pursuant to Rule 424(b) under
the Securities Act not later than the Commission's close of business on
the second business day following the execution and delivery of this
Agreement or, if applicable, such earlier time as may be required by Rule
430A(a)(3) under the Securities Act; to make no further amendment or any
supplement to the Registration Statement or to the Prospectus except as
permitted herein; to advise the Representatives, promptly after it
receives notice thereof, of the time when any amendment to the
Registration Statement has been filed or becomes effective or any
supplement to the Prospectus or any amended Prospectus has been filed and
to furnish the Representatives with copies thereof; to advise the
Representatives, promptly after it receives notice thereof, of the
issuance by the Commission of any stop order or of any order preventing or
suspending the use of any Preliminary Prospectus or the Prospectus, of the
suspension of the qualification of the Shares for offering or sale in any
jurisdiction, of the initiation or threatening of any proceeding for any
such purpose, or of any request by the Commission for the amending or
supplementing of the Registration Statement or the Prospectus or for
additional information; and, in the event of the issuance of any stop
order or of any order preventing or suspending the use of any Preliminary
Prospectus or the Prospectus or suspending any such qualification, to use
promptly its best efforts to obtain its withdrawal;
(b) To furnish promptly to each of the Representatives and to
counsel for the Underwriters a signed copy of the Registration Statement
as originally filed with the Commission, and each amendment thereto filed
with the Commission, including all consents and exhibits filed therewith;
16
(c) To deliver promptly to the Representatives such number of
the following documents as the Representatives shall reasonably request:
(i) conformed copies of the Registration Statement as originally filed
with the Commission and each amendment thereto (in each case including
consents and exhibits other than this Agreement and the computation of per
share earnings) and (ii) each Preliminary Prospectus, the Prospectus and
any amended or supplemented Prospectus; and, if the delivery of a
prospectus is required at any time after the Effective Time in connection
with the offering or sale of the Shares or any other securities relating
thereto and if at such time any events shall have occurred as a result of
which the Preliminary Prospectus or the Prospectus as then amended or
supplemented would include an untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made when
such Preliminary Prospectus or the Prospectus is delivered, not
misleading, or, if for any other reason it shall be necessary to amend or
supplement the Preliminary Prospectus or the Prospectus in order to comply
with the Securities Act or the Exchange Act, to notify the Representatives
and, upon its request, to file such document and to prepare and furnish
without charge to each Underwriter and to any dealer in securities as many
copies as the Representatives may from time to time reasonably request of
an amended or supplemented Preliminary Prospectus or the Prospectus which
will correct such statement or omission or effect such compliance. The
aforementioned documents furnished to the 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) To file promptly with the Commission any amendment to the
Registration Statement or the Prospectus or any supplement to the
Prospectus that may, in the judgment of the Representatives or Counsel to
the Underwriters, be required by the Securities Act or requested by the
Commission;
(e) Prior to filing with the Commission any amendment to the
Registration Statement or supplement to the Prospectus or any Prospectus
pursuant to Rule 424 of the Rules and Regulations, to furnish a copy
thereof to the Representatives and counsel for the Underwriters and obtain
the consent of the Representatives to the filing;
(f) The Company will make generally available to its security
holders as soon as practicable but no later than 60 days after the close
of the period covered thereby an earnings statement (in form complying
with the provisions of Section 11(a) of the Securities Act and Rule 158 of
the Rules and Regulations), which need not be certified by independent
certified public accountants unless required by the Securities Act or the
Rules and Regulations, covering a twelve-month period commencing after the
"effective date" (as defined in said Rule 158) of the Registration
Statement;
(g) The Company will furnish to each Underwriter, from time to
time during the period when the Prospectus is required to be delivered
under the Securities Act or the Exchange Act such number of copies of the
Prospectus (as amended or supplemented) as such Underwriter may reasonably
request for the purposes contemplated
17
by the Securities Act or the Exchange Act or the respective applicable
rules and regulations of the Commission thereunder;
(h) For a period of five years following the Effective Date,
to furnish to the Representatives copies of all materials furnished by the
Company to its stockholders and all public reports and all reports and
financial statements furnished by the Company to the principal national
securities exchange upon which the Common Shares may be listed pursuant to
requirements of or agreements with such exchange or to the Commission
pursuant to the Exchange Act or any rule or regulation of the Commission
thereunder;
(i) Promptly from time to time to take such action as the
Representatives may reasonably request to qualify the Shares for offering
and sale under the securities, real estate syndication or Blue Sky laws of
such jurisdictions as the Representatives may request and to comply with
such laws so as to permit the continuance of sales and dealings therein in
such jurisdictions for as long as may be necessary to complete the
distribution of the Shares;
(j) For a period of 180 days from the date of the Prospectus,
the Company will not, directly or indirectly, (1) offer for sale, sell,
contract to sell, pledge or otherwise dispose of (or enter into any
transaction or device which is designed to, or could be expected to,
result in the disposition by any person at any time in the future of) any
Common Shares or securities convertible into or exercisable or
exchangeable for Common Shares (other than the Shares, shares issued
pursuant to employee benefit plans, qualified stock option plans or other
employee compensation plans existing on the date hereof and except in
connection with the acquisition of real property or interests therein,
including mortgage or leasehold interests), or sell or grant options,
rights or warrants with respect to any Common Shares or securities
convertible into or exercisable or exchangeable for Common Shares (except
pursuant to customary compensation arrangements and employee benefit
plans) without the prior written consent of ▇▇▇▇▇▇ Brothers Inc.;
(k) To maintain the listing of the Common Shares on the
NYSE;
(l) To take such steps as shall be necessary to ensure that
none of the Transaction Entities shall become an "investment company"
within the meaning of such term under the Investment Company Act of 1940,
as amended, and the rules and regulations of the Commission thereunder;
(m) The Company will use its best efforts to continue to meet
the requirements to qualify as a REIT under the Code; and
(n) If at any time during the 25-day period after the
Registration Statement becomes effective, any rumor, publication or event
relating to or affecting the Company shall occur as a result of which in
your and the Company's opinion the market price of the Common Shares has
been or is likely to be materially affected (regardless of whether such
rumor, publication or event necessitates a supplement to or amendment
18
of the Prospectus), the Company will consult with you concerning the
substance of and the advisability of disseminating a press release or
other public statement responding to or commenting on such rumor,
publication or event.
6. EXPENSES. The Transaction Entities jointly and severally agree to
pay (a) the costs incident to the authorization, issuance, sale and delivery of
the Shares and any taxes payable in that connection; (b) the costs incident to
the preparation, printing, filing and distribution under the Securities Act of
the Registration Statement and any amendments and exhibits thereto; (c) the
costs of distributing the Registration Statement as originally filed and each
amendment thereto and any post-effective amendments thereof (including, in each
case, exhibits), any Preliminary Prospectus, the Prospectus and any amendment or
supplement to the Prospectus, all as provided in this Agreement; (d) the costs
of producing and distributing this Agreement and any other related documents in
connection with the offering, purchase, sale and delivery of the Shares; (f) the
filing fees incident to securing any required review by the NASD of the terms of
sale of the Shares; (g) any applicable listing or other fees; (h) the fees and
expenses of qualifying the Shares under the securities laws of the several
jurisdictions as provided in Section 5(i) and of preparing, printing and
distributing a Blue Sky Memorandum (including related reasonable fees and
expenses of counsel to the Underwriters); (j) all costs and expenses of the
Underwriters, including the reasonable fees and disbursements of counsel for the
Underwriters, incident to the offer and sale of the Common Shares by the
Underwriters to employees and persons having business relationships with the
Company and its subsidiaries, as described in Section 4; (k) all other costs and
expenses incident to the performance of the obligations of the Transaction
Entities under this Agreement; (l) the costs and charges of any transfer agent
and registrar; (m) any expenses incurred by the Company in connection with a
"road show" presentation to potential investors; and (n) the fees and
disbursements of the Company's counsel and accountants; PROVIDED that, except as
provided in this Section 6 and in Section 13 the Underwriters shall pay their
own costs and expenses, including the costs and expenses of their counsel, any
transfer taxes on the Shares which they may sell and the expenses of advertising
any offering of the Shares made by the Underwriters.
7. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The respective
obligations of the Underwriters hereunder are subject to the accuracy, when made
and on each Delivery Date, of the representations and warranties of the
Transaction Entities contained herein, to the performance by each Transaction
Entity and of its obligations hereunder, and to each of the following additional
terms and conditions:
(a) If, at the time this Agreement is executed and delivered,
it is necessary for the Registration Statement or a post-effective
amendment thereto to be declared effective before the offering of the
Shares may commence, the Registration Statement or such post-effective
amendment shall have become effective not later than 5:30 P.M., New York
City time, on the date hereof, or at such later date and time as shall be
consented to in writing by you, and all filings, if any, required by Rules
424 and 430A under the Rules and Regulations shall have been timely made;
no stop order suspending the effectiveness of the Registration Statement
shall have been issued and no proceeding for that purpose shall have been
instituted or, to the knowledge of the Transaction Entities, or any
Underwriter, threatened by the Commission, and any request of the
Commission for additional information (to be included in the Registration
19
Statement or the Prospectus or otherwise) shall have been complied with to
the satisfaction of the Representatives.
(b) Subsequent to the effective date of this Agreement, there
shall not have occurred (i) any Material Adverse Effect, or (ii) any event
or development relating to or involving any Transaction Entity, or any
partner, officer, director or trustee of any Transaction Entity, which
makes any statement of a material fact made in the Prospectus untrue or
which, in the opinion of the Company and its counsel or the Underwriters
and their counsel, requires the making of any addition to or change in the
Prospectus in order to state a material fact required by the Securities
Act or any other law to be stated therein or necessary in order to make
the statements therein not misleading, if amending or supplementing the
Prospectus to reflect such event or development would, in your opinion,
adversely affect the market for the Shares.
(c) All corporate proceedings and other legal matters incident
to the authorization, form and validity of this Agreement, the Shares, the
Registration Statement and the Prospectus, and all other legal matters
relating to this Agreement and the transactions contemplated hereby shall
be reasonably satisfactory in all material respects to counsel for the
Underwriters, and the Company shall have furnished to such counsel all
documents and information that they may reasonably request to enable them
to pass upon such matters.
(d) ▇▇▇▇▇ & Wood LLP shall have furnished to the
Representatives its written opinion, as counsel to the Company, addressed
to the Underwriters and dated such Delivery Date, in form and substance
reasonably satisfactory to the Representatives and counsel to the
Underwriters, to the effect that:
(i) The Company has been duly formed and is validly
existing as a corporation in good standing under the laws of the
State of Maryland, is in good standing with the State Department of
Assessments and Taxation of Maryland and is duly qualified to do
business and is in good standing as a foreign corporation in each
jurisdiction in which its ownership or lease of property or other
assets or the conduct of its business requires such qualification,
except where the failure to so qualify would not have a Material
Adverse Effect, and has all power and authority necessary to own or
hold its properties or other assets, to conduct the business in
which it is engaged as described in the Registration Statement and
the Prospectus, and to enter into and perform its obligations under
this Agreement and the other Operative Documents to which it is a
party.
(ii) The Company has an authorized capitalization as
set forth in the Prospectus under the caption "Capitalization," and
all of the issued Common Shares (other than the Shares) have been
duly and validly authorized and issued, are fully paid and
non-assessable, have been offered and sold in compliance with all
applicable laws (including, without limitation, federal and state
securities laws) and conform to the description thereof contained in
the Prospectus. Except as disclosed in the Prospectus, to such
counsel's knowledge,
20
no Common Shares are reserved for any purpose and except for the
Units, there are no outstanding securities convertible into or
exchangeable for any Common Shares, and no outstanding options,
rights (preemptive or otherwise) or warrants to purchase or
subscribe for Common Shares or any other securities of the Company.
(iii) The Operating Partnership has been duly formed
and is validly existing as a limited partnership in good standing
under the laws of the State of Delaware, is duly qualified to do
business and is in good standing as a foreign limited partnership in
each jurisdiction in which its ownership or lease of property and
other assets or the conduct of its business requires such
qualification, except where the failure to so qualify would not have
a Material Adverse Effect, and has all power and authority necessary
to own or hold its properties and other assets, to conduct the
business in which it is engaged as described in the Registration
Statement and the Prospectus, and to enter into and perform its
obligations under this Agreement and the other Operative Documents
to which it is a party. The Company is the sole general partner of
the Operating Partnership. The Operating Partnership Agreement is in
full force and effect, and the aggregate percentage interests of the
Company and the limited partners in the Operating Partnership are as
set forth in the Prospectus.
(iv) The Management LLC has been duly formed and is
validly existing as a limited liability company in good standing
under the laws of the State of Delaware, is duly qualified to do
business and is in good standing as a foreign limited liability
company in each jurisdiction in which its ownership or lease of
property and other assets or the conduct of its business requires
such qualification, except where the failure to so qualify would not
have a Material Adverse Effect, and has all power and authority
necessary to own or hold its properties and other assets, to conduct
the business in which it is engaged as described in the Registration
Statement and the Prospectus and to enter into and perform its
obligations under this Agreement and the other Operative Documents
to which it is a party. All of the issued and outstanding membership
interests of the Management LLC have been duly authorized and
validly issued, and 100% of the membership interest is owned by the
Operating Partnership. No membership interests of the Management LLC
are reserved for any purpose, and there are no outstanding
securities convertible into or exchangeable for any membership
interests of the Management LLC and no outstanding options, rights
(preemptive or otherwise) or warrants to purchase or to subscribe
for membership interests or any other securities of the Management
LLC.
(v) Each of the Service Corporations has been duly
formed and is validly existing as a corporation in good standing
under the laws of the State of New York, is duly qualified to do
business and is in good standing as a foreign corporation in each
jurisdiction in which its ownership or lease of property and other
assets or the conduct of its business requires such qualification,
and has all power and authority necessary to own or hold its
properties and other assets, to conduct the business in which it is
engaged as
21
described in the Registration Statement and the Prospectus, and to
enter into and perform its obligations under this Agreement and the
other Operative Documents to which it is a party. All of the issued
and outstanding capital stock of each Service Corporation has been
duly authorized and validly issued and is fully paid and
non-assessable, has been offered and sold in compliance with all
applicable laws (including, without limitation, federal or state
securities laws) and, all of such capital stock is owned by the
Operating Partnership (100% of the nonvoting common stock). No
shares of capital stock of any Service Corporation are reserved for
any purpose, and there are no outstanding securities convertible
into or exchangeable for any capital stock of any Service
Corporation and no outstanding options, rights (preemptive or
otherwise) or warrants to purchase or to subscribe for shares of
such capital stock or any other securities of any Service
Corporation.
(vi) The Shares have been duly and validly authorized
and, when issued and delivered against payment therefor as provided
herein, will be duly and validly issued, fully paid and
non-assessable. The terms of the Common Shares conform in substance
to all statements and descriptions related thereto contained in the
Prospectus. The form of the certificate to be used to evidence the
Common Shares is in due and proper form and comply with all
applicable legal requirements. The issuance of the Shares is not
subject to any preemptive or other similar rights arising under the
Articles of Incorporation or by-laws of the Company, the
Corporations and Associations Article of the Annotated Code of
Maryland, as amended, or any agreement or other instrument to which
the Company is a party known to such counsel.
(vii) All issued and outstanding Units have been duly
authorized and validly issued. Except as set forth in the
Prospectus, to such counsel's knowledge, no Units are reserved for
any purpose, and there are no outstanding securities convertible
into or exchangeable for any Units and no outstanding options,
rights (preemptive or otherwise) or warrants to purchase or to
subscribe for Units or other securities of the Operating
Partnership. The terms of the Units conform in all material respects
to the statements and descriptions related thereto contained in the
Prospectus.
(viii) (A) This Agreement has been duly and validly
authorized, executed and delivered by each of the Transaction
Entities and, and assuming due authorization, execution and delivery
by the Representatives, is a valid and binding agreement of each of
the Transaction Entities, enforceable against such parties in
accordance with its terms, except to the extent that such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization or other similar laws relating to or affecting
creditors' rights and general principles of equity and except as
rights to indemnity and contribution thereunder may be limited by
applicable law or policies underlying such law; (B) the Operating
Partnership Agreement has been duly and validly authorized, executed
and delivered by each Transaction Entity which is a party thereto
and is a valid and binding agreement, enforceable against such
Transaction Entity in
22
accordance with its terms, except to the extent that such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization or other similar laws relating to or affecting
creditors' rights and general principals of equity and except as
rights to indemnity and contribution thereunder may be limited by
applicable law or policies underlying such law; (C) the Acquisition
Agreements have been duly and validly authorized, executed and
delivered by each Transaction Entity that is a party thereto, and is
a valid and binding agreement, enforceable against such Transaction
Entity in accordance with its terms, except to the extent that such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization or other similar laws relating to or affecting
creditors' rights and general principles of equity and except as
rights to indemnity and contribution thereunder may be limited by
applicable law or policies underlying such law; (D) the Employment
Agreements have been duly and validly authorized, executed and
delivered by the Company and are valid and binding agreements,
enforceable against the Company in accordance with their respective
terms, except to the extent that such enforceability may be limited
by applicable bankruptcy, insolvency, reorganization or other
similar laws relating to or affecting creditors' rights and general
principles of equity and except as rights to indemnity and
contribution thereunder may be limited by applicable law or policies
underlying such law; and (E) the Lock-up Agreements of the Company
and the Operating Partnership have been duly and validly authorized,
executed and delivered by the Company or the Operating Partnership,
as applicable, and are valid and binding agreements, enforceable
against such parties in accordance with their terms, except to the
extent that such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization or other similar laws
relating to or affecting creditors' rights and general principles of
equity and except as rights to indemnity and contribution thereunder
may be limited by applicable law or policies underlying such law.
(ix) The execution, delivery and performance of each
Operative Document by each of the Transaction Entities and the
consummation of the transactions contemplated hereby and thereby
will not conflict with or result in a breach or violation of any of
the terms or provisions of, or constitute a default under any of the
terms, conditions or provisions of, any note, bond, indenture,
mortgage, deed of trust, lease, license, contract, loan agreement or
other agreement or instrument to which any of the Transaction
Entities is a party or by which any of the Transaction Entities is
bound or to which any of the Properties or other assets of any of
the Transaction Entities is subject, nor will such actions result in
any violation of the provisions of the charter, by-laws, certificate
of limited partnership, agreement of limited partnership, or other
organizational documents of any of the Transaction Entities, or any
statute or any order, writ, injunction, decree, rule or regulation
of any court or governmental agency or body having jurisdiction over
any of the Transaction Entities or any of their properties or
assets, except for any such breach or violation that would not have
a Material Adverse Effect; and except for the registration of the
Shares under the Securities Act and such consents, approvals,
authorizations, registrations or qualifications as may be required
under the Exchange Act, by the
23
NYSE or the NASD and applicable state securities or real estate
syndication laws in connection with the purchase and distribution of
the Shares by the Underwriters, no consent, approval, authorization
or order of, or filing or registration with, any such court or
governmental agency or body is required for the execution, delivery
and performance of the Operative Documents by the Transaction
Entities and the consummation of the transactions contemplated
hereby and thereby.
(x) To such counsel's knowledge, other than as set
forth or referred to in the Registration Statement, there are no
contracts, agreements or understandings between the Company and any
person granting such person the right to require the Company to file
a registration statement under the Securities Act with respect to
any securities of the Company owned or to be owned by such person or
to require the Company to include such securities in the securities
registered pursuant to the Registration Statement or in any
securities being registered pursuant to any other registration
statement filed by the Company under the Securities Act.
(xi) To such counsel's knowledge, other than as set
forth in the Prospectus, there are no legal or governmental
proceedings pending to which any Transaction Entity is a party or of
which any property or assets of any Transaction Entity is the
subject which, if determined adversely to such Transaction Entity,
might reasonably be expected to have a Material Adverse Effect; and
to the best knowledge of such counsel no such proceedings are
threatened or contemplated by governmental authorities or threatened
by others.
(xii) To the best knowledge of such counsel, there are
no contracts or other documents which are required to be described
in the Prospectus or filed as exhibits to the Registration Statement
by the Securities Act or by the Rules and Regulations which have not
been described in the Prospectus or filed as exhibits to the
Registration Statement or incorporated therein by reference as
permitted by the Rules and Regulations.
(xiii) To the best knowledge of such counsel, no
relationship, direct or indirect, exists between or among any of the
Transaction Entities on the one hand, and the directors, officers,
stockholders, customers or suppliers of the Transaction Entities on
the other hand, which is required to be described in the Prospectus
which is not so described.
(xiv) To the best knowledge of such counsel and other
than as described in the Prospectus, no Transaction Entity (i) is in
violation of its charter, by-laws, certificate of limited
partnership, agreement of limited partnership or other similar
organizational document, (ii) is in default, and no event has
occurred which, with notice or lapse of time or both, would
constitute a default, in the due performance or observance of any
term, covenant or condition contained in any material indenture,
mortgage, deed of trust, loan agreement or other agreement or
instrument to which it is a party or by which it
24
is bound or to which any of the Properties or any of its other
properties or assets is subject or (iii) is in violation of any law,
ordinance, governmental rule, regulation or court decree to which it
or the Properties or any of its other properties or assets may be
subject or has failed to obtain any material license, permit,
certificate, franchise or other governmental authorization or permit
necessary to the ownership of the Properties or any of its other
properties or assets or to the conduct of its business, except, in
the case of each of (i), (ii) and (iii) immediately above, any such
violation or default that would not have a Material Adverse Effect.
(xv) Commencing with the taxable year ending December
31, 1997, the Company has been organized in conformity with the
requirements for qualification and taxation as a REIT under the Code
and the proposed method of operation of the Company will enable the
Company to continue to meet the requirements for qualification and
taxation as a REIT under the Code and the Operating Partnership is
classified as a partnership and not as (a) an association taxable as
a corporation or (b) a "publicly traded partnership" taxable as a
corporation under Section 7704(a) of the Code.
(xvi) No Transaction Entity is an "investment company"
within the meaning of such term under the Investment Company Act of
1940, as amended and the rules and regulations of the Commission
thereunder. The Common Shares have been approved for listing on the
NYSE upon notice of issuance.
(xvii) The Registration Statement was declared
effective under the Securities Act as of the date and time specified
in such opinion, the Prospectus was filed with the Commission
pursuant to the subparagraph of Rule 424(b) of the Rules and
Regulations specified in such opinion on the date specified therein
and, to the best knowledge of such counsel, no stop order suspending
the effectiveness of the Registration Statement has been issued and,
to the best knowledge of such counsel, no proceeding for that
purpose is pending or threatened by the Commission.
(xviii) The Registration Statement and the Prospectus
and any further amendments or supplements thereto made by the
Company prior to such Delivery Date (other than the financial
statements and related schedules and other financial and statistical
data included therein, as to which such counsel need express no
opinion) comply as to form in all material respects with the
requirements of the Securities Act and the Rules and Regulations.
(xix) The statements contained in the Prospectus under
the captions "Capital Stock," "Certain Provisions of Maryland Law
and the Company's Charter and Bylaws," "Shares Available for Future
Sale," "Partnership Agreement," and "Material Federal Income Tax
Consequences," insofar as those statements are descriptions of
contracts, agreements or other legal documents, or they describe
federal statutes, rules and regulations or legal
25
conclusions, constitute a fair summary thereof, and the opinion of
such counsel filed as Exhibit 8 to the Registration Statement is
confirmed and the Underwriters may rely upon such opinion as if it
were addressed to them.
In rendering such opinion, such counsel may (i) state that its opinion is
limited to matters governed by the Federal laws of the United States of
America and the States of Delaware, Maryland and New York; (ii) rely (to
the extent such counsel deems proper and specifies in their opinion), as
to matters involving the application of the laws of the States of Maryland
and Delaware upon the opinion of other counsel of good standing, PROVIDED
that such other counsel is reasonably satisfactory to counsel for the
Underwriters and furnishes a copy of its opinion to the Representatives;
(iii) in respect of matters of fact, upon certificates of officers of the
Company or its subsidiaries, PROVIDED that such counsel shall state that
it believes that both the Underwriters and it are justified in relying
upon such opinions, of local counsel. Such counsel shall also have
furnished to the Representatives a written statement, addressed to the
Underwriters and dated such Delivery Date, in form and substance
satisfactory to the Representatives and counsel to the Underwriters, to
the effect that (x) such counsel has acted as counsel to the Company in
connection with the preparation of the Registration Statement and the
Prospectus, and (y) based on the foregoing, no facts have come to the
attention of such counsel which lead it to believe that the Registration
Statement, as of the Effective Date, contained any untrue statement of a
material fact or omitted to state a material fact required to be stated
therein or necessary in order to make the statements therein not
misleading, or that the Prospectus contains any untrue statement of a
material fact or omits to state a material fact necessary in order to make
the statements therein, in light of the circumstances under which they
were made, not misleading. The foregoing opinion and statement may be
qualified by a statement to the effect that such counsel does not assume
any responsibility for the accuracy, completeness or fairness of the
statements contained in the Registration Statement or the Prospectus and
may state that such counsel expresses no belief with respect to the
financial statements and notes thereto and other financial and statistical
data included in the Registration Statement or the Prospectus.
(e) The Representatives shall have received from ▇▇▇▇▇▇ &
▇▇▇▇▇ LLP, counsel for the Underwriters, such opinion or opinions, dated
such Delivery Date, with respect to the issuance and sale of the Shares,
the Registration Statement, the Prospectus and other related matters as
the Representatives may reasonably require, and the Company shall have
furnished to such counsel such documents as they reasonably request for
the purpose of enabling them to pass upon such matters.
(f) At the time of execution of this Agreement, the
Representatives shall have received from Ernst & Young LLP a letter, in
form and substance satisfactory to the Representatives, addressed to the
Underwriters and dated the date hereof (i) confirming that they are
independent public accountants within the meaning of the Securities Act
and are in compliance with the applicable requirements relating to the
qualification of accountants under Rule 2-01 of Regulation S-X of the
Commission, and (ii) stating, as of the date hereof (or, with respect to
matters involving changes or developments since the respective dates as of
which specified financial information is
26
given in the Prospectus, as of a date not more than five days prior to the
date hereof), the conclusions and findings of such firm with respect to
the financial information and other matters ordinarily covered by
accountants' "comfort letters" to underwriters in connection with
registered public offerings as contemplated in the Statement on Auditing
Standards No. 72.
(g) With respect to the letter of Ernst & Young LLP referred
to in the preceding paragraph and delivered to the Representatives
concurrently with the execution of this Agreement (the "INITIAL LETTER"),
the Company shall have furnished to the Representatives a letter (the
"BRING-DOWN LETTER") of such accountants, addressed to the Underwriters
and dated such Delivery Date (i) confirming that they are independent
public accountants within the meaning of the Securities Act and are in
compliance with the applicable requirements relating to the qualification
of accountants under Rule 2-01 of Regulation S-X of the Commission, (ii)
stating, as of the date of the bring-down letter (or, with respect to
matters involving changes or developments since the respective dates as of
which specified financial information is given in the Prospectus, as of a
date not more than five days prior to the date of the bring-down letter),
the conclusions and findings of such firm with respect to the financial
information and other matters covered by the initial letter and (iii)
confirming in all material respects the conclusions and findings set forth
in the initial letter.
(h) Each Transaction Entity shall have furnished to the
Representatives a certificate, dated such Delivery Date, of its, or its
general partner's or managing member's Chairman of the Board, its
President or a Vice President and its chief financial officer stating
that:
(i) The representations, warranties and agreements
of the Transaction Entities in Section 1 are true and correct as of
such Delivery Date; the Company has complied with all its agreements
contained herein; and the conditions set forth in Sections 7(a) and
(b) have been fulfilled; and
(ii) They have carefully examined the Registration
Statement and the Prospectus and, in their opinion (A) as of the
Effective Date, the Registration Statement and Prospectus did not
include any untrue statement of a material fact and did not omit to
state a material fact required to be stated therein or necessary to
make the statements therein not misleading (with respect to the
Prospectus, in light of the circumstances under which they were
made), and (B) since the Effective Date no event has occurred which
should have been set forth in a supplement or amendment to the
Registration Statement or the Prospectus.
(i) The NYSE shall have approved the Shares for listing,
subject only to official notice of issuance.
(j) On the First Delivery Date, counsel for the 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 Shares as herein contemplated
27
and related proceedings, 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 Transaction
Entities in connection with the issuance and sale of the Shares as herein
contemplated shall be satisfactory in form and substance to the
Representatives and counsel for the Underwriters.
(k) The Company shall have furnished or caused to be furnished
to you such further certificates and documents as the Representatives or
counsel to the Underwriters shall have reasonably requested.
(l) In the event that the Underwriters exercise their option
provided in Section 2(b) hereof to purchase all or any portion of the
Option Shares, the representations and warranties of the Transaction
Entities contained herein and the statements in any certificates furnished
by the Transaction Entities hereunder shall be true and correct as of each
Date of Delivery and, at the relevant Date of Delivery, the
Representatives shall have received:
(i) A certificate, dated such Date of Delivery, of
the President or a Vice President of each Transaction Entity or of
its general partner or managing member and of the chief financial or
chief accounting officer of each Transaction Entity or of its
general partner or managing member, and confirming that the
certificate delivered on the First Delivery Date pursuant to Section
7(h) hereof remains true and correct as of such Date of Delivery.
(ii) The favorable opinion of ▇▇▇▇▇ & ▇▇▇▇ LLP,
counsel for the Transaction Entities, in form and substance
satisfactory to counsel for the Underwriters, dated such Date of
Delivery, relating to the Option Shares to be purchased on such Date
of Delivery and otherwise to the same effect as the opinions
required by Section 7(d) hereof.
(iii) The favorable opinion of ▇▇▇▇▇▇ & ▇▇▇▇▇ LLP,
counsel for the Underwriters, dated such Date of Delivery, relating
to the Option Shares to be purchased on such Date of Delivery and
otherwise to the same effect as the opinion required by Section 7(e)
hereof.
(iv) A letter from Ernst & Young LLP, in form and
substance satisfactory to the Representatives and dated such Date of
Delivery, substantially the same in form and substance as the
letters furnished to the Representatives pursuant to Sections 7(f)
and (g) hereof.
All opinions, letters, evidence and certificates mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance reasonably satisfactory
to counsel for the Underwriters.
28
Any certificate or document signed by any officer of the Transaction
Entities and delivered to the Underwriters, or to counsel for the Underwriters,
shall be deemed a representation and warranty by the Transaction Entities to
each Underwriter as to the statements made therein.
The several obligations of the Underwriters to purchase Option
Shares hereunder are subject to the satisfaction on and as of any Date of
Delivery of the conditions set forth in this Section 7, except that, if any Date
of Delivery is other than the First Delivery Date, the certificates, opinions
and letters referred to in Sections 7(d) through 7(i) hereof shall be dated the
Date of Delivery in question and the opinions called for by Sections 7(d) and
7(e) hereof shall be revised to reflect the sale of Option Shares.
8. EFFECTIVE DATE OF AGREEMENT.
This Agreement shall become effective: (i) upon the execution hereof
by the parties hereto; or (ii) if, at the time this Agreement is executed and
delivered, it is necessary for the Registration Statement or a post-effective
amendment thereto to be declared effective before the offering of the Shares may
commence, when notification of the effectiveness of the Registration Statement
or such post-effective amendment has been released by the Commission.
9. DEFAULT BY ONE OR MORE OF THE UNDERWRITERS.
If, on either Delivery Date, any Underwriter defaults in the
performance of its obligations under this Agreement, the remaining
non-defaulting Underwriters shall be obligated to purchase the Shares which the
defaulting Underwriter agreed but failed to purchase on such Delivery Date in
the respective proportions which the number of Firm Shares set forth opposite
the name of each remaining non-defaulting Underwriter in Schedule 1 hereto bears
to the total number of Firm Shares set forth opposite the names of all the
remaining non-defaulting Underwriters in Schedule 1 hereto; PROVIDED, HOWEVER,
that the remaining non-defaulting Underwriters shall not be obligated to
purchase any of the Shares on such Delivery Date if the total number of Shares
which the defaulting Underwriter or Underwriters agreed but failed to purchase
on such date exceeds 9.09% of the total number of Shares to be purchased on such
Delivery Date, and any remaining non-defaulting Underwriter shall not be
obligated to purchase more than 110% of the number of Shares which it agreed to
purchase on such Delivery Date pursuant to the terms of Section 2. If the
foregoing maximums are exceeded, the remaining non-defaulting Underwriters, or
those other underwriters satisfactory to the Representatives who so agree, shall
have the right, but shall not be obligated, to purchase, in such proportion as
may be agreed upon among them, all the Shares to be purchased on such Delivery
Date. If the remaining Underwriters or other underwriters satisfactory to the
Representatives do not elect to purchase the Shares which the defaulting
Underwriter or Underwriters agreed but failed to purchase on such Delivery Date,
this Agreement (or, with respect to the Second Delivery Date, the obligation of
the Underwriters to purchase, and of the Company to sell, the Option Shares)
shall terminate without liability on the part of any non-defaulting Underwriter
or the Transaction Entities, except that the Transaction Entities will continue
to be liable for the payment of expenses to the extent set forth in Sections 6
and 13. As used in this Agreement, the term "Underwriter" includes, for all
purposes of this Agreement unless the context requires otherwise,
29
any party not listed in Schedule 1 hereto who, pursuant to this Section 9,
purchases Firm Shares which a defaulting Underwriter agreed but failed to
purchase.
Nothing contained herein shall relieve a defaulting Underwriter of
any liability it may have to the Transaction Entities for damages caused by its
default. If other underwriters are obligated or agree to purchase the Shares of
a defaulting or withdrawing Underwriter, either the Representatives or the
Company may postpone the Delivery Date for up to seven full business days in
order to effect any changes that in the opinion of counsel for the Company or
counsel for the Underwriters may be necessary in the Registration Statement, the
Prospectus or in any other document or arrangement.
10. INDEPENDENT UNDERWRITER.
(a) Although the Conduct Rules of the NASD exempts REITs from the
conflict of interest provisions thereof, because ▇▇▇▇▇▇ Brothers Inc. and
certain of its affiliates will receive more than 10% of the net proceeds of the
Offering in payment of the Acquisition Facility, the Underwriters have
determined to conduct the Offering in accordance with the applicable provisions
of Rule 2720 of the Conduct Rules ("RULE 2720"). In accordance with these
requirements, the Company hereby confirms its engagement, without compensation,
of the services of Prudential Securities Incorporated as, and Prudential
Securities Incorporated hereby confirms its agreement with the Company to render
services as, a "qualified independent underwriter" (in such capacity, the
"Independent Underwriter") within the meaning of Rule 2720 of the NASD with
respect to the offering and sale of the Securities.
(b) The Independent Underwriter hereby represents and warrants to,
and agrees with, the Company, ▇▇▇▇▇▇ Brothers Inc., and the other Underwriters
that with respect to the offering and sale of Securities as described in the
Prospectus:
(i) the Independent Underwriter is a "qualified
independent underwriter" within the meaning of Rule 2720;
(ii) the Independent Underwriter has participated
in the preparation of the Registration Statement and the Prospectus
and has exercised the usual standards of "due diligence" with
respect thereto;
(iii) the Independent Underwriter has undertaken the
legal responsibilities and liabilities of an underwriter under the
Securities Act, including those contained in Section 11 thereof,
subject to the limitations on such liabilities set forth herein. It
is specifically understood, however, that Prudential Securities
Incorporated will bear such legal responsibilities and liabilities
only to the extent, if any, that a court of competent jurisdiction
rules in a judgment which has become final, and not subject to
further appeal, that Prudential Securities Incorporated, as
Independent Underwriter, bears the legal responsibilities and
liabilities of an "underwriter";
(iv) based upon, among other factors, the information
set forth in the Preliminary Prospectus and its review of such other
documents and
30
the taking of such other actions as the Independent Underwriter, in
its sole discretion, has deemed necessary or appropriate for the
purposes of delivering its recommendation hereunder, the Independent
Underwriter recommends, as of the date of the execution and delivery
of this Agreement, that the public offering price for the Securities
not exceed the amount of $[____] per share, which price should in no
way be considered or relied upon except as set forth therein and in
the letter referred to in clause (v) below; and
(v) the Independent Underwriter will furnish to the
other Underwriters on the date hereof a letter, dated the date
hereof, substantially to the effect set forth in Schedule 2 hereto.
(c) The Company, the Independent Underwriter and the other
Underwriters agree to comply in all material respects with all of the
requirements of Rule 2720 applicable to them in connection with the offering and
sale of the Securities. The Company agrees to cooperate with the Underwriters to
enable the Underwriters to comply with Rule 2720 and the Independent Underwriter
to perform the services contemplated by this Agreement.
(d) The Independent Underwriter hereby consents to the references to
it as set forth under the caption "Underwriting" in the Prospectus.
11. INDEMNIFICATION AND CONTRIBUTION.
(a) The Transaction Entities jointly and severally, shall indemnify
and hold harmless each Underwriter, its officers and employees and each person,
if any, who controls any Underwriter within the meaning of the Securities Act,
from and against any loss, claim, damage or liability, joint or several, or any
action in respect thereof (including, but not limited to, any loss, claim,
damage, liability or action relating to purchases and sales of Shares), to which
that Underwriter, officer, employee or controlling person may become subject,
under the Securities Act or otherwise, insofar as such loss, claim, damage,
liability or action arises out of, or is based upon, (i) any untrue statement or
alleged untrue statement of a material fact contained (a) in any Preliminary
Prospectus, the Registration Statement or the Prospectus or in any amendment or
supplement thereto or (b) in any blue sky application or other document prepared
or executed by the Company (or based upon any written information furnished by
the Company) specifically for the purpose of qualifying any or all of the Shares
under the securities laws of any state or other jurisdiction (any such
application, document or information being hereinafter called a "Blue Sky
Application"), (ii) the omission or alleged omission to state in any Preliminary
Prospectus, the Registration Statement or the Prospectus, or in any amendment or
supplement thereto, or in any Blue Sky Application any material fact required to
be stated therein or necessary to make the statements therein not misleading
(with respect to the Prospectus, in light of the circumstances under which they
were made) or (iii) any act or failure to act or any alleged act or failure to
act by any Underwriter in connection with, or relating in any manner to, the
Shares or the offering contemplated hereby, and which is included as part of or
referred to in any loss, claim, damage, liability or action arising out of or
based upon matters covered by clause (i) or (ii) above (PROVIDED that the
Transaction Entities shall not be liable under this clause (iii) to the extent
that it is determined in a final judgment by a court of competent jurisdiction
that such loss, claim, damage, liability or action resulted directly from
31
any such acts or failures to act undertaken or omitted to be taken by such
Underwriter through its gross negligence or willful misconduct), and shall
reimburse each Underwriter and each such officer, employee or controlling person
promptly upon demand for any legal or other expenses reasonably incurred by that
Underwriter, officer, employee or controlling person in connection with
investigating or defending or preparing to defend against any such loss, claim,
damage, liability or action as such expenses are incurred; PROVIDED, HOWEVER,
that the Transaction Entities shall not be liable in any such case to the extent
that any such loss, claim, damage, liability or action arises out of, or is
based upon, any untrue statement or alleged untrue statement or omission or
alleged omission made in any Preliminary Prospectus, the Registration Statement
or the Prospectus, or in any such amendment or supplement, or in any Blue Sky
Application, in reliance upon and in conformity with written information
concerning such Underwriter furnished to the Company through the Representatives
by or on behalf of any Underwriter specifically for inclusion therein. The
foregoing indemnity agreement is in addition to any liability which the
Transaction Entities may otherwise have to any Underwriter or to any officer,
employee or controlling person of that Underwriter.
(b) Each Underwriter, severally and not jointly, shall indemnify and
hold harmless each Transaction Entity, its officers and employees, each of its
directors (including any person who, with his consent, is named in the
Registration Statement as about to become a director of the Company), and each
person, if any, who controls each Transaction Entity within the meaning of the
Securities Act, from and against any loss, claim, damage or liability, joint or
several, or any action in respect thereof, to which each Transaction Entity or
any such director, officer or controlling person may become subject, under the
Securities Act or otherwise, insofar as such loss, claim, damage, liability or
action arises out of, or is based upon, (i) any untrue statement or alleged
untrue statement of a material fact contained (A) in any Preliminary Prospectus,
the Registration Statement or the Prospectus or in any amendment or supplement
thereto, or (B) in any Blue Sky Application or (ii) the omission or alleged
omission to state in any Preliminary Prospectus, the Registration Statement or
the Prospectus, or in any amendment or supplement thereto, or in any Blue Sky
Application any material fact required to be stated therein or necessary to make
the statements therein not misleading, but in each case only to the extent that
the untrue statement or alleged untrue statement or omission or alleged omission
was made in reliance upon and in conformity with written information concerning
such Underwriter furnished to the Company through the Representatives by or on
behalf of that Underwriter specifically for inclusion therein, and shall
reimburse each Transaction Entity and any such director, officer or controlling
person for any legal or other expenses reasonably incurred by each Transaction
Entity or any such director, officer or controlling person in connection with
investigating or defending or preparing to defend against any such loss, claim,
damage, liability or action as such expenses are incurred. The foregoing
indemnity agreement is in addition to any liability which any Underwriter may
otherwise have to each Transaction Entity or any such director, officer,
employee or controlling person.
(c) The Company also agrees to indemnify and hold harmless
Prudential Securities Incorporated and each person, if any, who controls
Prudential Securities Incorporated within the meaning of either Section 15 of
the Act or Section 20 of the Exchange Act, from and against any and all losses,
claims, damages, liabilities and judgments incurred as a result of Prudential
Securities Incorporated's participation as a "qualified independent underwriter"
within the meaning of Rule 2720 in connection with the offering of the
Securities, except for any
32
losses, claims, damages, liabilities and judgments resulting from Prudential
Securities Incorporated's, or such controlling person's, willful misconduct or
gross negligence.
(d) Promptly after receipt by an indemnified party under this
Section 11 of notice of any claim or the commencement of any action, the
indemnified party shall, if a claim in respect thereof is to be made against the
indemnifying party under this Section 11, notify the indemnifying party in
writing of the claim or the commencement of that action; PROVIDED, HOWEVER, that
the failure to notify the indemnifying party shall not relieve it from any
liability which it may have under this Section 11 except to the extent it has
been materially prejudiced by such failure and, PROVIDED FURTHER, that the
failure to notify the indemnifying party shall not relieve it from any liability
which it may have to an indemnified party otherwise than under this Section 11.
If any such claim or action shall be brought against an indemnified party, and
it shall notify the indemnifying party thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it wishes, jointly with
any other similarly notified indemnifying party, to assume the defense thereof
with counsel reasonably satisfactory to the indemnified party. After notice from
the indemnifying party to the indemnified party of its election to assume the
defense of such claim or action, the indemnifying party shall not be liable to
the indemnified party under this Section 11 for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof other than reasonable costs of investigation; PROVIDED, HOWEVER, that
the Representatives shall have the right to employ counsel to represent jointly
the Representatives and those other Underwriters and their respective officers,
employees and controlling persons who may be subject to liability arising out of
any claim in respect of which indemnity may be sought by the Underwriters
against the Transaction Entities under this Section 11 if, in the reasonable
judgment of the Representatives, it is advisable for the Representatives and
those Underwriters, officers, employees and controlling persons to be jointly
represented by separate counsel, and in that event the fees and expenses of such
separate counsel shall be paid by the indemnifying party. No indemnifying party
shall (i) without the prior written consent of the indemnified parties (which
consent shall not be unreasonably withheld), settle or compromise or consent to
the entry of any judgment with respect to any pending or threatened claim,
action, suit or proceeding in respect of which indemnification or contribution
may be sought hereunder (whether or not the indemnified parties are actual or
potential parties to such claim or action) unless such settlement, compromise or
consent includes an unconditional release of each indemnified party from all
liability arising out of such claim, action, suit or proceeding, or (ii) be
liable for any settlement of any such action effected without its written
consent (which consent shall not be unreasonably withheld), but if settled with
the consent of the indemnifying party or if there be a final judgment of the
plaintiff in any such action, the indemnifying party agrees to indemnify and
hold harmless any indemnified party from and against any loss or liability by
reason of such settlement or judgment.
(e) If the indemnification provided for in this Section 11 shall for
any reason be unavailable to or insufficient to hold harmless an indemnified
party under Section 11(a) or 11(d) in respect of any loss, claim, damage or
liability, or any action in respect thereof, referred to therein, then each
indemnifying party shall, in lieu of indemnifying such indemnified party,
contribute to the amount paid or payable by such indemnified party as a result
of such loss, claim, damage or liability, or action in respect thereof, (i) in
such proportion as shall be appropriate to reflect the relative benefits
received by the Transaction Entities on the one hand
33
and the Underwriters on the other from the offering of the Shares or (ii) if the
allocation provided by clause (i) above is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Transaction
Entities on the one hand and the Underwriters on the other with respect to the
statements or omissions which resulted in such loss, claim, damage or liability,
or action in respect thereof, as well as any other relevant equitable
considerations. The relative benefits received by the Transaction Entities on
the one hand and the Underwriters on the other with respect to such offering
shall be deemed to be in the same proportion as the total net proceeds from the
offering of the Shares purchased under this Agreement (before deducting
expenses) received by the Transaction Entities, on the one hand, and the total
underwriting discounts and commissions received by the Underwriters with respect
to the Shares purchased under this Agreement, on the other hand, bear to the
total gross proceeds from the offering of the Shares under this Agreement, in
each case as set forth in the table on the cover page of the Prospectus. The
relative fault shall be determined by reference to whether the untrue or alleged
untrue statement of a material fact or omission or alleged omission to state a
material fact relates to information supplied by the Transaction Entities or the
Underwriters, the intent of the parties and their relative knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Transaction Entities and the Underwriters agree that it would not be just
and equitable if contributions pursuant to this Section were to be determined by
pro rata allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation which does not take into
account the equitable considerations referred to herein. The amount paid or
payable by an indemnified party as a result of the loss, claim, damage or
liability, or action in respect thereof, referred to above in this Section shall
be deemed to include, for purposes of this Section 11(e), 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 11(e), 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 was offered to the public
exceeds the amount of any damages which such Underwriter has otherwise paid or
become liable to pay by reason of any untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations to contribute as provided in
this Section 11(e) are several in proportion to their respective underwriting
obligations and not joint.
(f) The Underwriters severally confirm and each Transaction Entity
acknowledges that (i) the statements with respect to the public offering of the
Shares by the Underwriters set forth on the cover page of, (ii) the legend
concerning over-allotments on the inside front cover page of and (iii) the names
of the Underwriters and the number of Shares which they are each purchasing, the
concession and reallowance figures and the information contained in the third,
ninth, tenth, eleventh, twelfth, thirteenth, fifteenth and sixteenth paragraphs,
in each case appearing under the caption "Underwriting" in, the Prospectus are
correct and constitute the only information concerning such Underwriters
furnished in writing to the Company by or on behalf of the Underwriters
specifically for inclusion in the Registration Statement and the Prospectus.
34
12. TERMINATION. The obligations of the Underwriters hereunder may
be terminated by the Representatives by notice given to and received by the
Company prior to delivery of and payment for the Firm Shares if, prior to that
time, any of the following events shall have occurred or if the Underwriters
shall decline to purchase the Shares for any reason permitted under this
Agreement:
(a) (i) Any of the Transaction Entities or any Property shall
have sustained since the date of the latest audited financial statements
included in the Prospectus any loss or interference with its business from
fire, explosion, flood or other calamity, whether or not covered by
insurance, or from any labor dispute or court or governmental action,
order or decree, otherwise than as set forth or contemplated in the
Prospectus or (ii) since such date there shall have been any change in the
capital stock or long-term debt of any Transaction Entity or any change,
or any development involving a prospective change, in or affecting any
Property or the general affairs, management, financial position,
stockholders' equity or results of operations of any Transaction Entity,
otherwise than as set forth or contemplated in the Prospectus, the effect
of which, in any such case described in clause (i) or (ii), is, in the
judgment of the Representatives, so material and adverse as to make it
impracticable or inadvisable to proceed with the public offering or the
delivery of the Shares being delivered on such Delivery Date on the terms
and in the manner contemplated in the Prospectus;
(b) Subsequent to the execution and delivery of this Agreement
there shall have occurred any of the following: (i) trading in securities
generally on the New York Stock Exchange or the American Stock Exchange or
in the over-the-counter market, or trading in any securities of the
Company on any exchange or in the over-the-counter market, shall have been
suspended or minimum prices shall have been established on any such
exchange or such market by the Commission, by such exchange or by any
other regulatory body or governmental authority having jurisdiction, (ii)
a banking moratorium shall have been declared by Federal or state
authorities, (iii) the United States shall have become engaged in
hostilities, there shall have been an escalation in hostilities involving
the United States or there shall have been a declaration of a national
emergency or war by the United States or (iv) there shall have occurred
such a material adverse change in general economic, political or financial
conditions (or the effect of international conditions on the financial
markets in the United States shall be such) as to make it, in the judgment
of a majority in interest of the several Underwriters, impracticable or
inadvisable to proceed with the public offering or delivery of the Shares
being delivered on such Delivery Date on the terms and in the manner
contemplated in the Prospectus; or
(c) The Transaction Entities shall have failed at or prior to
such Delivery Date to have performed or complied with any of their
agreements herein contained and required to be performed or complied with
by them hereunder at or prior to such Delivery Date.
13. REIMBURSEMENT OF UNDERWRITERS' EXPENSES. The Company shall
reimburse the Underwriters in an amount equal to $40,000 for legal expenses. If
(a) the Company shall fail to tender the Shares for delivery to the Underwriters
by reason of any failure, refusal or
35
inability on the part of the Transaction Entities to perform any agreement on
their part to be performed, or because any condition specified in Sections 12(a)
and (c) hereof required to be fulfilled by the Transaction Entities is not
fulfilled, the Transaction Entities will reimburse the Underwriters for all
reasonable out-of-pocket expenses (including fees and disbursements of counsel)
incurred by the Underwriters in connection with this Agreement and the proposed
purchase of the Shares, and upon demand the Transaction Entities shall pay the
full amount thereof to the Representatives. If this Agreement is terminated
pursuant to Section 12(b) or pursuant to Section 9 by reason of the default of
one or more Underwriters, the Transaction Entities shall not be obligated to
reimburse any defaulting Underwriter on account of those expenses.
14. NOTICES, ETC. All statements, requests, notices and
agreements hereunder shall be in writing, and:
(a) if to the Underwriters, shall be delivered or sent by
mail, telex or facsimile transmission to ▇▇▇▇▇▇ Brothers Inc., Three World
Financial Center, New York, New York 10285, Attention: Syndicate
Department (Fax: ▇▇▇-▇▇▇-▇▇▇▇), with a copy, in the case of any notice
pursuant to Section 8(c), to the Director of Litigation, Office of the
General Counsel, ▇▇▇▇▇▇ Brothers Inc., ▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇;
(b) if to the Transaction Entities shall be delivered or sent
by mail, telex or facsimile transmission to the Company, ▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ (Fax:
(▇▇▇) ▇▇▇-▇▇▇▇);
PROVIDED, HOWEVER, that any notice to an Underwriter pursuant to Section 11(d)
shall be delivered or sent by mail, telex or facsimile transmission to such
Underwriter at its address set forth in its acceptance telex to the
Representatives, which address will be supplied to any other party hereto by the
Representatives upon request. Any such statements, requests, notices or
agreements shall take effect at the time of receipt thereof. The Transaction
Entities shall be entitled to act and rely upon any request, consent, notice or
agreement given or made on behalf of the Underwriters by ▇▇▇▇▇▇ Brothers Inc.
15. PERSONS ENTITLED TO BENEFIT OF AGREEMENT. This Agreement shall
inure to the benefit of and be binding upon the Underwriters, the Transaction
Entities, and their respective personal representatives and successors. This
Agreement and the terms and provisions hereof are for the sole benefit of only
those persons, except that (a) the representations, warranties, indemnities and
agreements of the Transaction Entities contained in this Agreement shall also be
deemed to be for the benefit of the person or persons, if any, who control any
Underwriter within the meaning of Section 15 of the Securities Act and (b) the
indemnity agreement of the Underwriters contained in Section 11(c) of this
Agreement shall be deemed to be for the benefit of directors of the Transaction
Entities, officers of the Company who have signed the Registration Statement and
any person controlling the Transaction Entities within the meaning of Section 15
of the Securities Act. Nothing in this Agreement is intended or shall be
construed to give any person, other than the persons referred to in this Section
14, any legal or equitable right, remedy or claim under or in respect of this
Agreement or any provision contained herein.
36
16. SURVIVAL. The respective indemnities, representations,
warranties and agreements of the Transaction Entities, and the Underwriters
contained in this Agreement or made by or on behalf on them, respectively,
pursuant to this Agreement, shall survive the delivery of and payment for the
Shares and shall remain in full force and effect, regardless of any
investigation made by or on behalf of any of them or any person controlling any
of them.
17. DEFINITION OF THE TERMS "BUSINESS DAY" AND "SUBSIDIARY". For
purposes of this Agreement, (a) "business day" means any day on which the New
York Stock Exchange, Inc. is open for trading and (b) "subsidiary" has the
meaning set forth in Rule 405 of the Rules and Regulations.
18. GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of New York.
19. COUNTERPARTS. This Agreement may be executed in one or more
counterparts and, if executed in more than one counterpart, the executed
counterparts shall each be deemed to be an original but all such counterparts
shall together constitute one and the same instrument.
20. HEADINGS. The headings herein are inserted for convenience of
reference only and are not intended to be part of, or to affect the meaning or
interpretation of, this Agreement.
[Remainder of page intentionally left blank.]
37
If the foregoing correctly sets forth the agreement between the
Company and the Underwriters, please indicate your acceptance in the space
provided for that purpose below.
Very truly yours,
▇▇ ▇▇▇▇▇ REALTY CORP.
By:
---------------------------------
Name:
Title:
▇▇ ▇▇▇▇▇ OPERATING PARTNERSHIP, L.P.
By: ▇▇ ▇▇▇▇▇ Realty Corp.,
its general partner
By:
--------------------------
Name:
Title:
▇▇ ▇▇▇▇▇ MANAGEMENT LLC
By: ▇▇ ▇▇▇▇▇ Operating Partnership, L.P.,
its managing member
By:
--------------------------
Name:
Title:
▇.▇. ▇▇▇▇▇ MANAGEMENT CORP.
By:
---------------------------------
Name:
Title:
▇.▇. ▇▇▇▇▇ LEASING, INC.
By:
---------------------------------
Name:
Title:
38
EMERALD CITY CONSTRUCTION CORP.
By:
---------------------------------
Name:
Title:
Accepted:
▇▇▇▇▇▇ BROTHERS INC.
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
SECURITIES CORPORATION
EVEREN SECURITIES, INC.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, INCORPORATED
PRUDENTIAL SECURITIES INCORPORATED
▇▇▇▇▇▇▇ ▇▇▇▇▇ & ASSOCIATES, INC.
By: ▇▇▇▇▇▇ BROTHERS INC.
By:
--------------------------------
Name:
Title:
For itself and as Representatives
of the several Underwriters named
in Schedule 1 hereto
Schedule 1
NUMBER OF
UNDERWRITERS SHARES
▇▇▇▇▇▇ Brothers Inc...........................................
▇▇▇▇▇▇▇▇▇, Lufkin & ▇▇▇▇▇▇▇▇ Securities Corporation...........
EVEREN Securities.............................................
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, Incorporated..........................
Prudential Securities Incorporated............................
▇▇▇▇▇▇▇ ▇▇▇▇▇ & Associates, Inc...............................
Total.............................................. 10,000,000
==========
S-1
Schedule 2
Form of Pricing Opinion
▇▇▇▇▇▇ Brothers Inc.
Three World Financial Center
New York, New York 10285
▇▇ ▇▇▇▇▇ Realty Corp.
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
PRICING OPINION
Ladies and Gentlemen:
▇▇ ▇▇▇▇▇ Realty Corp., a Maryland corporation (the "COMPANY"), has filed with
the Securities and Exchange Commission a registration statement on Form S-11
(Reg. No. 333-50309) relating to the offering of 10,000,000 shares of common
stock (plus up to 1,500,000 shares of common stock subject to the underwriters'
over-allotment option), par value $.01 per share (the "COMMON STOCK").
▇▇▇▇▇▇ Brothers Inc. ("▇▇▇▇▇▇") is acting as one of the several underwriters of
the offering to the public of the Common Stock (the "OFFERING"). In connection
with the Offering an affiliate of ▇▇▇▇▇▇ will receive $240 million in net
proceeds in repayment of amounts outstanding under a loan made to the Company.
As a result, an affiliate of ▇▇▇▇▇▇, will receive more than 10% of the proceeds
of the Offering.
Although the Conduct Rules of the NASD exempt REITs from the conflict of
interest provisions thereof, because ▇▇▇▇▇▇ and certain of its affiliates will
receive more than 10% of the net proceeds of the Offering, the underwriters have
determined to conduct the Offering in accordance with the applicable provisions
of Rule 2720 of the Conduct Rules. Accordingly, the public offering price can be
no higher than that recommended by a "qualified independent underwriter" meeting
certain standards.
We have been retained as a Qualified Independent Underwriter to recommend to you
the maximum offering price for the Common Stock as required by the NASD Conduct
Rules.
We have participated in the preparation of the Registration Statement and the
Prospectus (as such terms are defined in the Underwriting Agreement) and have
exercised the usual standards of "due diligence" with respect thereto. Assuming
that the Offering is commenced on [________], 1998, we recommend that the
offering price of the Common Stock be no higher than $[_______], which price
should in no event be considered or relied upon as an indication of the actual
value of the Common Stock.
Our recommendations are based on economic, market, financial and other
conditions as they exist at the date hereof and on other conditions and
circumstances relating to the Company as described
S-1
in the Registration Statement. Changes in the conditions and circumstances
relating to the Company from those described in the Registration Statement and
events occurring after the date hereof, including changes in the markets in
which the Company operates, could materially affect the conclusions stated in
this letter. We shall not be obligated or required to reaffirm or revise these
recommendations or otherwise to comment on any events occurring after the date
hereof or on any change to the conditions or circumstances relating to the
Company from those so described.
Very truly yours,
PRUDENTIAL SECURITIES INCORPORATED
By:
---------------------------------
Name:
Title:
S-2