EXHIBIT 1.1
NATIONAL GOLF PROPERTIES, INC.
(a Maryland corporation)
1,100,000 Shares of Common Stock
PURCHASE AGREEMENT
Dated: May 16, 2001
Table of Contents
Page
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SECTION 1. Representations and Warranties.......................................... 2
(a) Representations and Warranties by the Company................. 2
(i) Compliance with Registration Requirements..... 2
(ii) Incorporated Documents........................ 3
(iii) Independent Accountants....................... 3
(iv) Financial Statements.......................... 3
(v) No Material Adverse Change in Business........ 4
(vi) Good Standing of the Company and the Operating
Partnership................................... 4
(vii) Good Standing of Subsidiaries................. 5
(viii) Capitalization................................ 5
(ix) Authorization, Execution and Enforceability
of this Agreement............................. 6
(x) Authorization of Description of Securities.... 6
(xi) Absence of Defaults and Conflicts............. 6
(xii) Absence of Labor Dispute...................... 7
(xiii) Absence of Proceedings........................ 7
(xiv) Accuracy of Exhibits.......................... 7
(xv) Possession of Intellectual Property........... 8
(xvi) Absence of Further Requirements............... 8
(xvii) Possession of Licenses and Permits............ 8
(xviii) Title to Property............................. 8
(xix) Investment Company Act........................ 9
(xx) Environmental Laws............................ 9
(xxi) No Stabilization or Manipulation of the
Price of Securities........................... 10
(xxii) Insurance Coverage............................ 10
(xxiii) No Restrictions on Payments by Subsidiaries... 10
(xxiv) Filing of Tax Returns......................... 11
(xxv) No Ownership of Equity Securities of Others... 11
(xxvi) Internal Accounting Controls.................. 11
(xxvii) No Bankruptcy Proceedings..................... 11
(xxviii) No Relationships with Certain Individuals..... 11
(xxix) No Violation of Regulation M.................. 11
(xxx) REIT Status................................... 12
(xxxi) Property Compliance with Applicable
Laws and Regulations.......................... 12
(b) Representations and Warranties by the Selling Stockholder..... 12
(i) Accurate Disclosure........................... 12
(ii) Authorization of Agreements................... 12
(iii) Good and Valid Title.......................... 13
(iv) Absence of Manipulation....................... 13
i
(v) No Violation of Regulation M.................. 13
(vi) Absence of Further Requirements............... 13
(vii) Certificates Suitable for Transfer............ 13
(viii) No Association with NASD...................... 14
(ix) Form W-9...................................... 14
(c) Officer's Certificates......................................... 14
SECTION 2. Sale and Delivery to Underwriter; Closing............................... 14
(a) Initial Securities............................................. 14
(b) Option Securities.............................................. 14
(c) Payment........................................................ 14
(d) Denominations; Registration.................................... 15
SECTION 3. Covenants of the Company................................................ 15
(a) Compliance with Securities Regulations and Commission
Requests....................................................... 15
(b) Filing of Amendments........................................... 15
(c) Delivery of Registration Statements............................ 15
(d) Delivery of Prospectuses....................................... 16
(e) Continued Compliance with Securities Laws...................... 16
(f) Blue Sky Qualifications........................................ 16
(g) Rule 158....................................................... 16
(h) Listing........................................................ 17
(i) Restriction on Sale of Securities.............................. 17
(j) Reporting Requirements......................................... 17
(k) Qualification as a REIT........................................ 17
SECTION 4. Payment of Expenses..................................................... 17
(a) Expenses....................................................... 17
(b) Expenses of the Selling Stockholder............................ 18
(c) Termination of Agreement....................................... 18
(d) Allocation of Expenses......................................... 18
SECTION 5. Conditions of Underwriter's Obligations................................. 18
(a) Effectiveness of Registration Statement........................ 18
(b) Opinions of Counsel for Company................................ 18
(c) Opinion of Counsel for the Selling Stockholder................. 19
(d) Opinion of Counsel for Underwriter............................. 19
(e) Officers' Certificate.......................................... 19
(f) Certificate of Selling Stockholder............................. 20
(g) Accountant's Comfort Letter.................................... 20
(h) Bring-down Comfort Letter...................................... 20
(i) Approval of Listing............................................ 20
(j) Lock-up Agreements............................................. 20
(k) Conditions to Purchase of Option Securities.................... 20
(i) Officers' Certificate......................... 20
(ii) Certificate of Selling Stockholder............ 21
(iii) Opinion of Counsel for Company ............... 21
(iv) Opinion of Counsel for the Selling
Stockholder................................... 21
(v) Opinion of Counsel for Underwriter............ 21
(vi) Bring-down Comfort Letter..................... 21
(l) Additional Documents........................................... 21
ii
(m) Termination of Agreement....................................... 21
SECTION 6. Indemnification......................................................... 22
(a) Indemnification of the Underwriter............................. 22
(b) Indemnification of the Company, Directors and Officers and
Selling Stockholder............................................ 23
(c) Actions against Parties; Notification.......................... 23
(d) Settlement without Consent if Failure to Reimburse............. 23
(e) Other Agreements with Respect to Indemnification............... 24
SECTION 7. Contribution............................................................ 24
SECTION 8. Representations, Warranties and Agreements to Survive Delivery.......... 25
SECTION 9. Termination of Agreement................................................ 25
(a) Termination; General........................................... 25
(b) Liabilities.................................................... 25
SECTION 10. Notices................................................................. 25
SECTION 11. Parties................................................................. 26
Section 12. Governing Law and Time.................................................. 26
SECTION 13. Effect of Headings...................................................... 26
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Page
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Schedules and Exhibits:
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Schedule A - Pricing Information..................................... Sch A-1
Schedule B - List of Persons and Entities Subject to Lock-Up......... Sch B-1
Exhibit A-1 - Form of Opinion of ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇.................... A-1-1
Exhibit A-2 - Form of Opinion of ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ & Ingersoll... A-2-1
Exhibit A-3 - Form of Opinion of ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇................... A-3-1
Exhibit A-4 - Form of Opinion of ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ as to tax matters.. A-4-1
Exhibit B - Form of Opinion of Counsel for the Selling Stockholder... B-1
Exhibit C - Form of lock-up letter................................... C-1
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NATIONAL GOLF PROPERTIES, INC.
(a Maryland corporation)
1,100,000 Shares of Common Stock
(Par Value $.01 Per Share)
PURCHASE AGREEMENT
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May 16, 2001
▇▇▇▇▇▇▇ ▇▇▇▇▇ & CO.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Ladies and Gentlemen:
National Golf Properties, Inc., a Maryland corporation (the "Company"),
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National Golf Operating Partnership, L.P., a Delaware limited partnership (the
"Operating Partnership"), and Oaks Christian High School, a California nonprofit
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public benefit corporation (the "Selling Stockholder"), confirm their respective
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agreements with ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated ("▇▇▇▇▇▇▇ ▇▇▇▇▇" or the "Underwriter"), with respect to (i) the
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sale by the Selling Stockholder and the purchase by the Underwriter of 1,100,000
shares of Common Stock, par value $.01 per share ("Common Stock"), of the
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Company and (ii) the grant by the Selling Stockholder to the Underwriter of the
option described in Section 2(b) hereof to purchase all or any part of 150,000
additional shares of Common Stock to cover over-allotments, if any. The
aforesaid 1,100,000 shares of Common Stock (the "Initial Securities") to be
------------------
purchased by the Underwriter and all or any part of the 150,000 shares of Common
Stock subject to the option described in Section 2(b) hereof (the "Option
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Securities") are hereinafter called, collectively, the "Securities."
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The Company and the Selling Stockholder understand that the Underwriter
proposes to make a public offering of the Securities as soon as the Underwriter
deems advisable after this Agreement has been executed and delivered.
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-3 (No. 333-67403) covering the
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registration of the Securities under the Securities Act of 1933, as amended (the
"1933 Act"), and the offering thereof from time to time in accordance with Rule
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415 of the rules and regulations of the Commission under the 1933 Act (the "1933
----
Act Regulations"), including the related preliminary prospectus or prospectuses.
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The Company shall file such additional amendments thereto and such amended and
supplemental prospectuses as may hereafter be required prior to the execution of
this Agreement. Promptly after execution and delivery of this Agreement, the
Company shall either (i) prepare and file a prospectus in accordance with the
provisions of Rule 430A ("Rule 430A") of the 1933 Act Regulations and paragraph
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(b) of Rule 424 ("Rule 424(b)") of the 1933 Act Regulations or (ii) if the
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Company has elected to rely upon Rule 434 ("Rule 434") of the 1933 Act
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Regulations, prepare and file a term sheet (a "Term Sheet") in accordance with
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the provisions of Rule 434 and Rule 424(b). The information included in any
such prospectus or in any such Term Sheet, as the case may be, that was omitted
from such registration statement at the time it became effective but that is
deemed to be part of such registration statement at the time it became effective
(a) pursuant to paragraph (b) of Rule 430A is referred to as "Rule 430A
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Information" or (b) pursuant to paragraph (d) of Rule 434 is referred to as
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"Rule 434 Information." Each prospectus used before such registration
---------------------
1
statement became effective, and any prospectus that omitted, as applicable, the
Rule 430A Information or the Rule 434 Information, that was used after such
effectiveness and prior to the execution and delivery of this Agreement, is
herein called a preliminary prospectus." Such registration statement, including
-----------------------
the exhibits thereto, schedules thereto, if any, and the documents incorporated
by reference therein pursuant to Item 12 of Form S-3 under the 1933 Act, at the
time it became effective and including the Rule 430A Information and the
Rule 434 Information, as applicable, is herein called the "Registration
Statement." Any registration statement filed pursuant to Rule 462(b) of the
1933 Act Regulationsis herein referred to as the "Rule 462(b) Registration
------------------------
Statement," and after such filing the term "Registration Statement" shall
--------- ----------------------
include the Rule 462(b) Registration Statement. The final prospectus, including
the prospectus supplement relating to the offering of the Securities
contemplated hereby and the documents incorporated by reference therein pursuant
to Item 12 of Form S-3 under the 1933 Act, in the form first furnished to the
Underwriter for use in connection with such offering of the Securities is herein
called the
"Prospectus." If Rule 434 is relied on, the term "Prospectus" shall refer to
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the preliminary prospectus dated May 16, 2001 together with the Term Sheet and
all references in this Agreement to the date of the Prospectus shall mean the
date of the Term Sheet. For purposes of this Agreement, all references to the
Registration Statement, any preliminary prospectus, the Prospectus or any Term
Sheet or any amendment or supplement to any of the foregoing shall be deemed to
include the copy filed with the Commission pursuant to its Electronic Data
Gathering, Analysis and Retrieval system ("▇▇▇▇▇").
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All references in this Agreement to financial statements and schedules and
other information which is "contained," "included" or "stated" in the
Registration Statement, any preliminary prospectus or the Prospectus (or other
references of like import) shall be deemed to mean and include all such
financial statements and schedules and other information which is incorporated
by reference in the Registration Statement, any preliminary prospectus or the
Prospectus, as the case may be; and all references in this Agreement to
amendments or supplements to the Registration Statement, any preliminary
prospectus or the Prospectus shall be deemed to mean and include the filing of
any document under the Securities Exchange Act of 1934 (the "1934 Act") which is
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incorporated by reference in the Registration Statement, such preliminary
prospectus or the Prospectus, as the case may be.
Section 1. Representations and Warranties.
(a) Representations and Warranties by the Company. The
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Company and the Operating Partnership, jointly and severally, represent and
warrant to the Underwriter as of the date hereof, as of the Closing Time
referred to in Section 2(c) hereof, and as of each Date of Delivery (if any)
referred to in Section 2(b) hereof, and agree with the Underwriter, as follows:
(i) Compliance with Registration Requirements. The
-----------------------------------------
Company meets the requirements for use of Form S-3 under the 1933 Act. The
Registration Statement has been filed with the Commission and, one or more
amendments to such Registration Statement may have been so filed. Each of the
Registration Statement and any Rule 462(b) Registration Statement has become
effective under the 1933 Act and no stop order suspending the effectiveness of
the Registration Statement or any Rule 462(b) Registration Statement has been
issued under the 1933 Act and no proceedings for that purpose have been
instituted or are pending or, to the knowledge of the Company, are contemplated
by the Commission, and any request on the part of the Commission for additional
information has been complied with.
2
At the respective times the Registration Statement, any Rule
462(b) Registration Statement and any post-effective amendments
thereto became effective and at the Closing Time (and, if any Option
Securities are purchased, at the Date of Delivery), the Registration
Statement, the Rule 462(b) Registration Statement and any amendments
and supplements thereto complied and will comply in all material
respects with the requirements of the 1933 Act and the 1933 Act
Regulations and did not and will not contain an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading.
Neither the Prospectus nor any amendments or supplements thereto, at
the time the Prospectus or any such amendment or supplement was issued
and at the Closing Time (and, if any Option Securities are purchased,
at the Date of Delivery), included or will include an untrue statement
of a material fact or omitted or will omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. If Rule 434
is used, the Company shall comply with the requirements of Rule 434.
The representations and warranties in this subsection shall not apply
to statements in or omissions from the Registration Statement or
Prospectus made in reliance upon and in conformity with information
furnished to the Company in writing by ▇▇▇▇▇▇▇ ▇▇▇▇▇ expressly for use
in the Registration Statement or Prospectus.
Each preliminary prospectus and the prospectus filed as part of
the Registration Statement as originally filed or as part of any
amendment thereto, or filed pursuant to Rule 424 under the 1933 Act,
complied when so filed in all material respects with the 1933 Act
Regulations and each preliminary prospectus and the Prospectus
delivered to the Underwriter for use in connection with the offering
contemplated hereby was identical to the electronically transmitted
copies thereof filed with the Commission pursuant to ▇▇▇▇▇, except to
the extent permitted by Regulation S-T.
The Company has not distributed and, prior to the later of (i)
the Closing Date and (ii) the completion of the distribution of the
Securities, will not distribute any offering material in connection
with the offering and sale of the Securities other than the
Registration Statement or any amendment thereto or any Prospectus or
any amendment or supplement thereto, or other materials, if any,
permitted by the 1933 Act.
(ii) Incorporated Documents. The documents incorporated
----------------------
or deemed to be incorporated by reference in the Registration Statement and the
Prospectus, when they became effective or at the time they were or hereafter are
filed with the Commission, complied and will comply in all material respects
with the requirements of the 1933 Act and the 1933 Act Regulations or the 1934
Act and the rules and regulations of the Commission under the 1934 Act (the
"1934 Act Regulations"), as applicable, and, when read together with the other
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information in the Prospectus, at the time the Registration Statement became
effective, at the time the Prospectus was issued and at the Closing Time (and,
if any Option Securities are purchased, at the Date of Delivery), did not and
will not contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading.
(iii) Independent Accountants. The accountants who
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certified the financial statements and supporting schedules included in the
Registration Statement are independent public accountants as required by the
1933 Act and the 1933 Act Regulations.
3
(iv) Financial Statements. The financial statements
--------------------
included in the Registration Statement and the Prospectus, together with the
related schedules and notes, present fairly the financial position of the
Company and its consolidated subsidiaries and of American Golf Corporation at
the dates indicated and the statements of operations, stockholders' equity and
cash flows and changes in financial condition of the Company and its
consolidated subsidiaries and of American Golf Corporation for the periods
specified; said financial statements have been prepared in conformity with
generally accepted accounting principles ("GAAP") applied on a consistent basis
----
throughout the periods involved, except as otherwise stated therein. The
supporting schedules, if any, included in the Registration Statement present
fairly in accordance with GAAP the information required to be stated therein.
The selected financial data and the summary financial information included in
the Prospectus present fairly the information shown therein and have been
compiled on a basis consistent with that of the audited financial statements
included in the Registration Statement. The financial data and the statistical
information and data set forth or incorporated by reference in the Prospectus
fairly present, as of the date of such data or information, on the basis stated
in the Registration Statement and the Prospectus, the information included
therein. The pro forma financial statements and the related notes thereto
included in the Registration Statement and the Prospectus present fairly the
information shown therein, have been prepared in accordance with the
Commission's rules and guidelines with respect to pro forma financial statements
and have been properly compiled on the bases described therein, and the
assumptions used in the preparation thereof are reasonable and the adjustments
used therein are appropriate to give effect to the transactions and
circumstances referred to therein. Other than the historical financial
statements (or schedules) included therein, no other historical financial
statements (or schedules) are required to be included in the Registration
Statement or Prospectus.
(v) No Material Adverse Change in Business. Since the
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respective dates as of which information is given in the Registration Statement
and the Prospectus, except as otherwise stated therein, (A) there has been no
material adverse change, or any development involving a prospective material
adverse change, in the condition, financial or otherwise, or in the earnings,
business affairs or business prospects of the Company and its subsidiaries
considered as one enterprise, regardless of whether arising in the ordinary
course of business (a "Material Adverse Effect"), (B) neither the Company nor
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any of its subsidiaries has sustained any material loss or interference with
their respective businesses or properties from fire, flood, hurricane, accident
or other calamity, regardless of whether covered by insurance, or from any labor
dispute or any legal or governmental proceeding, (C) there have been no
transactions entered into by the Company or any of its subsidiaries, other than
those in the ordinary course of business, which are material with respect to the
Company and its subsidiaries considered as one enterprise, (D) except for
regular dividends on the Common Stock in amounts per share that are consistent
with past practice, there has been no dividend or distribution of any kind
declared, paid or made by the Company on any class of its capital stock, (E) the
Company and its subsidiaries have not incurred any material liability or
obligation, direct or contingent, nor entered into any material transaction not
in the ordinary course of business, (F) the Company has not purchased any of its
outstanding capital stock (other than as contemplated by Section 1(viii) hereof)
and (G) there has not been any material change in the capital stock or
partnership interests (as the case may be), short-term debt or long-term debt of
the Company and its subsidiaries.
(vi) Good Standing of the Company and the Operating
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Partnership. The Company has been duly organized and is validly existing as a
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corporation in good standing under the laws of the State of Maryland and has
corporate power and authority to own and lease its properties and to conduct its
business as described in the
4
Prospectus and to enter into and perform its obligations under this Agreement;
and the Company is duly qualified as a foreign corporation to transact business
and is in good standing in each other jurisdiction in which such qualification
is required, whether by reason of the ownership or leasing of property or the
conduct of business, except where the failure so to qualify or to be in good
standing would not result in a Material Adverse Effect. The Operating
Partnership has been duly organized and is validly existing as a limited
partnership in good standing under the laws of the State of Delaware and has
full power and authority to own and lease its properties and to conduct its
business as described in the Prospectus and to enter into and perform its
obligations under this Agreement; and the Operating Partnership is duly
qualified as a foreign limited partnership to transact business and is in good
standing in each other jurisdictions in which such qualification is required,
whether by reason of the ownership or leasing of property or the conduct of
business, except where the failure so to qualify or to be in good standing would
not result in a Material Adverse Effect.
(vii) Good Standing of Subsidiaries. Each of the Company's
-----------------------------
subsidiaries that is a corporation has been duly organized and is validly
existing as a corporation in good standing under the laws of the jurisdiction of
its incorporation, has corporate power and authority to own and lease its
properties and to conduct its business as described in the Prospectus and is
duly qualified as a foreign corporation to transact business and is in good
standing in each jurisdiction in which such qualification is required, whether
by reason of the ownership or leasing of property or the conduct of business,
except where the failure so to qualify or to be in good standing would not
result in a Material Adverse Effect; except as otherwise disclosed in the
Registration Statement, all of the issued and outstanding capital stock of each
such subsidiary has been duly authorized and validly issued, is fully paid and
non-assessable and is owned by the Company, directly or through subsidiaries,
free and clear of any security interest, mortgage, pledge, lien, encumbrance,
claim or equity; none of the outstanding shares of capital stock of any
subsidiary of the Company was issued in violation of the preemptive or similar
rights of any securityholder of such subsidiary. Each of the subsidiaries of the
Company that is a partnership has been duly organized and is validly existing as
a partnership in good standing under the laws of the jurisdiction of its
organization, has full power and authority to own and lease its properties and
to conduct its business as described in the Prospectus and is duly qualified as
a foreign partnership to transact business and is in good standing in each
jurisdiction in which such qualification is required, whether by reason of the
ownership or leasing of property or the conduct of business, except where the
failure so to qualify or to be in good standing would not result in a Material
Adverse Effect. The partnership agreements of the subsidiaries of the Company
that are partnerships have been duly authorized, executed and delivered by the
general partners thereof and constitute the valid and binding obligation of the
general partners thereof. Such partnership agreements reflect the Company and/or
one or more its subsidiaries as the sole beneficial owners of the partnership
interests in such partnerships, except as otherwise described in the
Registration Statement. The only subsidiaries of the Company are the Operating
Partnership and Pumpkin Ridge Joint Venture.
(viii) Capitalization. The authorized, issued and
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outstanding capital stock of the Company is as set forth or incorporated by
reference in the Registration Statement (except for subsequent issuances, if
any, pursuant to reservations, agreements or employee benefit plans referred to
in the Prospectus or pursuant to the exercise of convertible securities or
options referred to in the Prospectus). The shares of issued and outstanding
capital stock of the Company have been duly authorized and validly issued and
are fully paid and non-assessable; none of the outstanding shares of capital
stock of the Company was issued in violation of the preemptive or other similar
rights of any securityholder of the Company, and no
5
securityholder of the Company or the Operating Partnership has any right that
has not been fully exercised or waived to require the Company to register the
offer or sale of any securities owned by such securityholder under the 1933 Act
in a public offering contemplated by this Agreement. All of the issued and
outstanding shares of capital stock of the Company have been offered and sold in
compliance with all applicable laws (including, without limitation, federal and
state securities laws). Except for shares of Common Stock issued in exchange for
Units (as defined below), shares of restricted Common Stock issued pursuant to
the Company's employee benefit plans, shares of Common Stock issued upon
exercise of stock options by directors and employees of the Company and its
affiliates, and as described in the Prospectus, the Company has not issued or
sold any shares of its capital stock during the six-month period preceding the
initial filing date of the Registration Statement including any sales pursuant
to Rule 144A under, or Regulation D or S of, the Act. Except as disclosed in the
Prospectus, there are no outstanding (i) securities, equity interests or
obligations of the Company or any of its subsidiaries convertible into or
exchangeable for any capital stock or equity interests (as the case may be) of
the Company or any such subsidiary, (ii) warrants, rights or options to
subscribe for or purchase from the Company or any such subsidiary any such
capital stock or equity interests or any such convertible or exchangeable
securities, equity interests or obligations, or (iii) obligations of the Company
or any such subsidiary to issue any shares of capital stock, equity interests,
any such convertible or exchangeable securities, equity interests or
obligations, or any such warrants, rights or options. All of the outstanding
partnership interests in the Operating Partnership (the "Units") have been duly
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authorized and validly issued and are owned as set forth in the Prospectus and,
in the case of Units issued to the Company, are owned free and clear of any
security interests, liens, encumbrances, equities or claims, except as otherwise
disclosed in the Prospectus. The Units conform in all material respects to the
description thereof contained in the Prospectus. The Company is, and immediately
after the Closing Date will be, the sole general partner of the Operating
Partnership.
(ix) Authorization, Execution and Enforceability of this Agreement. This
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Agreement has been duly authorized, executed and delivered by each of the
Company and the Operating Partnership. This Agreement is the valid and binding
agreement of each of the Company and the Operating Partnership, enforceable
against the Company and the Operating Partnership in accordance with its terms,
subject to the effect of bankruptcy, insolvency, moratorium, fraudulent
conveyance, reorganization and similar laws relating to creditors' rights
generally, to the application of equitable principles in any proceeding, whether
at law or in equity, as limited by the unenforceability under certain
circumstances under law or court decisions of provisions providing for the
indemnification of or contribution to a party with respect to a liability where
such indemnification or contribution is contrary to public policy and to the
extent that enforceability of such provisions may be limited due to the
existence of an untrue statement of a material fact in the Registration
Statement and the Prospectus or omission to state a material fact therein
necessary to make the statements in the Registration Statement and the
Prospectus, respectively, not misleading.
(x) Authorization and Description of Securities. The Securities to be
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purchased by the Underwriter from the Selling Stockholder pursuant to this
Agreement have been duly authorized and validly issued, fully paid and non-
assessable. The Common Stock conforms in all material respects to the statements
relating thereto contained in the Prospectus and such description conforms to
the rights set forth in the instruments defining the same; no holder of the
Securities will be subject to personal liability by reason of being such a
holder; and the issuance of the Securities is not subject to the preemptive or
other similar rights of any securityholder of the Company.
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(xi) Absence of Defaults and Conflicts. Neither the
---------------------------------
Company nor any of its subsidiaries is in violation of its charter or by-laws or
partnership agreement or in default in the performance or observance of any
obligation, agreement, covenant or condition contained in any contract,
indenture, mortgage, deed of trust, loan or credit agreement, note, lease or
other agreement or instrument to which the Company or any of its subsidiaries is
a party or by which it or any of them may be bound, or to which any of the
property or assets of the Company or any of its subsidiaries is subject
(collectively, "Agreements and Instruments") except for such defaults that would
--------------------------
not result in a Material Adverse Effect. The execution, delivery and performance
of this Agreement and the consummation of the transactions contemplated herein
and in the Registration Statement and compliance by each of the Company and the
Operating Partnership with its obligations hereunder have been duly authorized
by all necessary corporate and partnership action and do not and will not,
whether with or without the giving of notice or passage of time or both,
conflict with or constitute a breach of, or default or Repayment Event (as
defined below) under, or result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of the Company or any of its
subsidiaries pursuant to, the Agreements and Instruments (except for such
conflicts, breaches or defaults or liens, charges or encumbrances that would not
result in a Material Adverse Effect), nor will such action result in any
violation of the provisions of the charter or bylaws of the Company or the
charter or bylaws or partnership agreement of any subsidiary of the Company or
any applicable law, statute, rule, regulation, judgment, order, writ or decree
of any government, government instrumentality or court, domestic or foreign,
having jurisdiction over the Company or any of its subsidiaries or any of their
assets, properties or operations. As used herein, a "Repayment Event" means any
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event or condition which gives the holder of any note, debenture or other
evidence of indebtedness (or any person acting on such holder's behalf) the
right to require the repurchase, redemption or repayment of all or a portion of
such indebtedness by the Company or any of its subsidiaries.
(xii) Absence of Labor Dispute. No labor dispute with the
------------------------
employees of the Company or any of its subsidiaries exists or, to the knowledge
of the Company, is imminent, and the Company is not aware of any existing or
imminent labor disturbance by the employees of any of its or any subsidiary's
principal suppliers, manufacturers, customers or contractors, which, in either
case, may reasonably be expected to result in a Material Adverse Effect.
(xiii) Absence of Proceedings. There is no action, suit,
----------------------
proceeding, inquiry or investigation before or brought by any court or
governmental agency or body, domestic or foreign, now pending, or, to the
knowledge of the Company, threatened, against or affecting the Company or any of
its subsidiaries or any of their respective properties, which is required to be
disclosed in the Registration Statement (other than as disclosed therein), or
which might reasonably be expected to result in a Material Adverse Effect, or
which might reasonably be expected to materially and adversely affect the
properties or assets thereof or the consummation of the transactions
contemplated in this Agreement or the performance by the Company or the
Operating Partnership of their respective obligations hereunder; the aggregate
of all pending legal or governmental proceedings to which the Company or any of
its subsidiaries is a party or of which any of their respective property or
assets is the subject which are not described in the Registration Statement,
including ordinary routine litigation incidental to the business, could not
reasonably be expected to result in a Material Adverse Effect.
7
(xiv) Accuracy of Exhibits. There are no contracts or
--------------------
documents that are required to be described in the Registration Statement, the
Prospectus or the documents incorporated by reference therein or to be filed as
exhibits thereto that have not been so described and filed as required.
(xv) Possession of Intellectual Property. The Company
-----------------------------------
and its subsidiaries own or possess, or can acquire on reasonable terms,
adequate patents, patent rights, licenses, inventions, copyrights, know-how
(including trade secrets and other unpatented and/or unpatentable proprietary or
confidential information, systems or procedures), trademarks, service marks,
trade names or other intellectual property (collectively, "Intellectual
------------
Property") necessary to carry on the business now conducted by them, and neither
--------
the Company nor any of its subsidiaries has received any notice or is otherwise
aware of any infringement of or conflict with asserted rights of others with
respect to any Intellectual Property or of any facts or circumstances which
would render any Intellectual Property invalid or inadequate to protect the
interest of the Company or any of its subsidiaries therein, and which
infringement or conflict (if the subject of any unfavorable decision, ruling or
finding) or invalidity or inadequacy, singly or in the aggregate, would result
in a Material Adverse Effect.
(xvi) Absence of Further Requirements. No filing with, or
-------------------------------
authorization, approval, consent, license, order, registration, qualification or
decree of, any court or governmental authority or agency is necessary or
required for the performance by each of the Company and the Operating
Partnership of its obligations hereunder, in connection with the offering or
sale of the Securities hereunder or the consummation of the transactions
contemplated by this Agreement, except such as have been already obtained or as
may be required under the 1933 Act or the 1933 Act Regulations or state
securities laws.
(xvii) Possession of Licenses and Permits. The Company and
----------------------------------
its subsidiaries possess such permits, licenses, approvals, consents and other
authorizations (collectively, "Governmental Licenses") issued by the appropriate
---------------------
federal, state, local or foreign regulatory agencies or bodies necessary to
conduct the business now operated by them, except for such Governmental Licenses
held by the operator of any of the Company's properties; the Company and its
subsidiaries, and to the Company's knowledge, the operators of the Company's
properties are in compliance with the terms and conditions of all such
Governmental Licenses, except where the failure so to comply would not, singly
or in the aggregate, have a Material Adverse Effect; all of the Governmental
Licenses are valid and in full force and effect, except when the invalidity of
such Governmental Licenses or the failure of such Governmental Licenses to be in
full force and effect would not have a Material Adverse Effect; and neither the
Company nor any of its subsidiaries has received any notice of proceedings
relating to the revocation or modification of any such Governmental Licenses
which, singly or in the aggregate, if the subject of an unfavorable decision,
ruling or finding, would result in a Material Adverse Effect.
(xviii) Title to Property. The Company and its subsidiaries
-----------------
have good and marketable title to all real property owned by the Company and its
subsidiaries (the "Properties"), including, without limitation, all of the real
----------
property described in the Registration Statement or the Prospectus as being
owned by the Company or any of its subsidiaries, and good title to all other
properties owned by them, in each case, free and clear of all mortgages,
pledges, liens, security interests, claims, restrictions or encumbrances of any
kind except such as (a) are described in the Prospectus or (b) do not, singly or
in the aggregate, materially affect the value of
8
such property and do not interfere with the use made and proposed to be made of
such property by the Company or any of its subsidiaries; and all of the leases
and subleases that are material to the business of the Company and its
subsidiaries, considered as one enterprise, and under which the Company or any
of its subsidiaries holds properties described in the Prospectus, are in full
force and effect, and neither the Company nor any subsidiary has any notice of
any material claim of any sort that has been asserted by anyone adverse to the
rights of the Company or any of its subsidiaries under any of the leases or
subleases mentioned above, or affecting or questioning the rights of the Company
or such subsidiary to the continued possession of the leased or subleased
premises under any such lease or sublease.
(xix) Investment Company Act. Neither the Company nor
----------------------
the Operating Partnership is, and upon the issuance and sale of the Securities
as herein contemplated and the application of the net proceeds therefrom as
described in the Prospectus, neither the Company nor the Operating Partnership
will be, an "investment company" or an entity "controlled" by an "investment
company" as such terms are defined in the Investment Company Act of 1940, as
amended.
(xx) Environmental Laws. Except as otherwise disclosed
------------------
in the Prospectus and except as would not, singly or in the aggregate result in
a Material Adverse Effect or otherwise require disclosure under federal
securities laws, (i) none of the Company or any of its subsidiaries is in
violation of any federal, state or local laws and regulations relating to
pollution or protection of human health or the environment, including, without
limitation, laws and regulations relating to emissions, discharges, releases or
threatened releases of toxic or hazardous substances, materials or wastes, or
petroleum and petroleum products ("Materials of Environmental Concern"), or
----------------------------------
otherwise relating to the protection of human health and safety, or the use,
treatment, storage, disposal, transport or handling of Materials of
Environmental Concern (collectively, "Environmental Laws"), which violation
------------------
includes, but is not limited to, noncompliance with, or lack of, any permits or
other environmental authorizations, and (ii) (A) none of the Company or any of
its subsidiaries has received any communication (written or oral), whether from
a governmental authority or otherwise, alleging any such violation or
noncompliance, and there are no circumstances, either past, present or that are
reasonably foreseeable, that may lead to any such violation in the future, (B)
there is no pending or to the Company's knowledge threatened claim, action,
investigation or notice (written or oral) by any person or entity alleging
potential liability for investigatory, cleanup, or governmental response costs,
or natural resources or property damages, or personal injuries, attorney's fees
or penalties relating to (x) the presence, or release into the environment, of
any Materials of Environmental Concern at any location owned or operated by the
Company or any of its subsidiaries now or in the past, or (y) circumstances
forming the basis of any violation or potential violation, of any Environmental
Law (collectively, "Environmental Claims"), and (C) there are no past or present
--------------------
actions, activities, circumstances, conditions, events or incidents that could
form the basis of any Environmental Claim against the Company or any of its
subsidiaries or against any person or entity for whose acts or omissions the
Company or any of its subsidiaries is or may reasonably be expected to be
liable, either contractually or by operation of law. In the ordinary course of
business, the Company, and each of its subsidiaries or tenants of its
properties, as appropriate, (i) review and respond as appropriate, regarding the
effect of Environmental Laws on the business, operations and properties of the
Company and each of its subsidiaries, in the course of which, or as a result of
which, the Company has identified and evaluated associated costs and liabilities
(including, without limitation, any capital or operating expenditures required
for cleanup, closure of properties or compliance with Environmental Laws or any
permit, license or approval, any related constraints on operating activities,
and any potential liabilities to third parties), and (ii)
9
have conducted environmental investigations of, and have reviewed reasonably
available information regarding, the business, properties and operations of the
Company and each of its subsidiaries, as appropriate for the circumstances of
each such property and operation; on the basis of such reviews, investigations
and inquiries, the Company has reasonably concluded that, except as disclosed in
the Registration Statement, any costs and liabilities associated with such
matters would not have, singularly or in the aggregate, a Material Adverse
Effect or otherwise require disclosure in the Registration Statement. All
Environmental Claims that are required to be disclosed in the Prospectus have
been disclosed.
(xxi) No Stabilization or Manipulation of the Price of
- -----------------------------------------------
Securities. Except for the Company's stock repurchase program, as described in
-----------
the Registration Statement, neither the Company nor the Operating Partnership
has, directly or indirectly, (i) taken any action designed to cause or to result
in, or that has constituted or that might reasonably be expected to constitute,
the stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of the Securities or (ii) since the filing of the
Registration Statement (A) sold, bid for, purchased, or paid anyone any
compensation for soliciting purchases of, the Securities or (B) paid or agreed
to pay to any person any compensation for soliciting another to purchase any
other securities of the Company.
(xxii) Insurance Coverage. The Company and each of its
------------------
subsidiaries (or tenants of the Properties, as appropriate) are insured by
insurers of recognized financial responsibility against such losses and risks
and in such amounts as are prudent and customary in the businesses in which they
are engaged as described in the Prospectus; and neither the Company nor any such
subsidiary has any reason to believe that it will not be able to renew such
insurance coverage as and when such coverage expires or to obtain similar
coverage from similar insurers as may be necessary to continue its business at a
cost that would not result in a Material Adverse Effect, except as described in
or contemplated by the Prospectus.
(xxiii) No Restrictions on Payments by Subsidiaries. No
-------------------------------------------
subsidiary of the Company is currently prohibited, directly or indirectly, from
paying any dividends to the Company, from making any other distribution on such
subsidiary's capital stock or partnership interests, from repaying to the
Company any loans or advances to such subsidiary from the Company or from
transferring any of such subsidiary's property or assets to the Company or any
other subsidiary of the Company, except as described in or contemplated by the
Prospectus and except pursuant to (i) applicable law (ii) with respect to
prohibitions only against transferring any of such subsidiary's property or
assets to the Company or any other subsidiary of the Company, (A) customary non-
assignment provisions contained in leases to which the Company or any of its
subsidiaries is a party and (B) security interests, including purchase money
obligations, applicable to any property of the Company or any of its
subsidiaries as of the date hereof and (iii) as provided in Article VII of the
Amended and Restated Credit Agreement dated July 30, 1999, as amended, among
National Golf Operating Partnership, L.P., as Borrower, National Golf
Properties, Inc., as General Partner and Guarantor, The First National Bank of
Chicago and the other lenders signatory thereto; Section 6 of the National Golf
Operating Partnership, L.P. Note Purchase Agreement, dated as of December 15,
1994, as amended; the General Continuing Guaranty, dated as of December 15,
1994, of National Golf Properties, Inc., a Delaware corporation, in favor of the
Persons listed on Schedule A thereto and certain other Persons, as amended;
Section 6 of the National Golf Operating Partnership, L.P. Restated Note
Agreement, dated as of July 1, 1996, as amended; and Article 5 and Sections 16.2
and 17.2 of the
10
Third Amended and Restated Agreement of Limited Partnership of the Operating
Partnership, dated as of July 28, 1999, as amended.
(xxiv) Filing of Tax Returns. Each of the Company and its
---------------------
subsidiaries has timely filed all material foreign, federal, state and local tax
returns that are required to be filed or has requested extensions thereof and
has paid all material taxes (including any interest, penalty or addition
thereto) required to be paid by it and any other material assessment, fine or
penalty levied against it, to the extent that any of the foregoing is due and
payable, except for any such assessment, fine or penalty that is currently being
contested in good faith by appropriate proceedings promptly instituted and
diligently pursued and for which an adequate reserve in accordance with GAAP has
been established. No audit, inquiry, investigation or similar proceeding is
currently pending or, to the knowledge of the Company, threatened against the
Company or any of its assets with respect to which it may be liable for the
payment of material taxes.
(xxv) No Ownership of Equity Securities of Others. Except
-------------------------------------------
as described in or contemplated by the Prospectus and except for shares of stock
of water companies, the sole purpose of which investment is to obtain water for
irrigation of the Company's golf courses, neither the Company nor any of its
subsidiaries owns any shares of stock or any other equity securities of any
corporation or has any equity interest in any firm, partnership, company,
association or other entity.
(xxvi) Internal Accounting Controls. The Company and each
----------------------------
of its subsidiaries maintain a system of internal accounting controls sufficient
to provide reasonable assurance that (i) transactions are executed in accordance
with management's general or specific authorizations; (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to maintain asset
accountability; (iii) access to assets is permitted only in accordance with
management's general or specific authorization; and (iv) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.
(xxvii) No Bankruptcy Proceedings. (i) To the knowledge of
-------------------------
the Company or any of its subsidiaries, no proceeding or filing of a petition
seeking relief under Title 11 of the United States Code or any other federal,
state or foreign bankruptcy, insolvency, liquidation or similar law has been
commenced or instituted (whether voluntary or involuntary) by or with respect to
the Company or any of its subsidiaries or American Golf Corporation, (ii) none
of the Company, its subsidiaries or American Golf Corporation has applied for or
consented to the appointment of a receiver, trustee, custodian, sequestrator or
similar official for any such persons or for a substantial part of any such
persons' property or assets and (iii) none of the Company, its subsidiaries or
American Golf Corporation has made a general assignment for the benefit of its
creditors.
(xxviii) No Relationships with Certain Individuals. No
-----------------------------------------
relationship, direct or indirect, exists between or among the Company or the
Operating Partnership on the one hand, and the directors, officers, stockholders
(in the case of the Company), limited partners (in the case of the Operating
Partnership), tenants, customers or
11
suppliers of the Company or the Operating Partnership on the other hand, which
is required to be described in the Prospectus and is not so described.
(xxix) No Violation of Regulation M. The Company has not
----------------------------
taken any action that would violate Rule 102 of Regulation M of the 1934 Act.
(xxx) REIT Status. The Company has at all times been
-----------
organized and operated in conformity with the requirements for qualification and
taxation as a "real estate investment trust" (a "REIT") under the Internal
----
Revenue Code of 1986, as amended (the "Code") for each of its taxable years
----
ended December 31, 1993 through December 31, 2000, and the Company is and will
as of closing be organized and operated in conformity with the requirements for
qualification and taxation as a REIT under the Code and the Company's proposed
method of operation will enable it to continue to qualify as a REIT under the
Code.
(xxxi) Property Compliance with Applicable Laws and
--------------------------------------------
Regulations.
------------
(1) Each of the Properties complies with all
applicable codes, laws, ordinances and regulations (including, without
limitation, building and zoning codes and laws and regulations relating to
access to the Properties) and deed restrictions or other covenants, except
for such failures to comply that would not result in a Material Adverse
Effect; and
(2) neither the Company, any of its subsidiaries
nor any tenant of any portion of any of the Properties is in default under
any of the ground leases or air space leases (as lessee), space leases (as
lessor or lessee, as the case may be) or other occupancy, license or
operating agreement relating to, or under any of the mortgages or other
security documents or other agreements encumbering or otherwise recorded
against, the Properties and there is no event that, 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 such defaults that would not result
in a Material Adverse Effect.
(b) Representations and Warranties by the Selling
---------------------------------------------
Stockholder. The Selling Stockholder represents and warrants to the Underwriter
-----------
as of the date hereof, as of the Closing Time, and as of each Date of Delivery
(if any) referred to in Section 2(b) hereof, and agrees with the Underwriter, as
follows:
(i) Accurate Disclosure. Such parts of the
-------------------
Registration Statement and the Prospectus comprising information under the
captions "Selling Stockholders" and "Selling Stockholder" which specifically
relates to the Selling Stockholder, do not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, and, at the date of the
Prospectus, at the Closing Time and at each Date of Delivery (if any), will not
contain any untrue statement of a
12
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they are made, not misleading. The Selling Stockholder has no knowledge of
any material fact or condition that is not set forth in the Registration
Statement or the Prospectus and has adversely affected, or may adversely affect,
the business, properties, business prospects, condition (financial or otherwise)
or results of operations of the Company, and the sale of the Securities proposed
to be sold by the Selling Stockholder is not prompted by any such knowledge.
(ii) Authorization of Agreements. The Selling
---------------------------
Stockholder has the full right, power and authority to enter into this Agreement
and to sell, transfer and deliver the Securities to be sold by the Selling
Stockholder hereunder. The execution and delivery of this Agreement and the sale
and delivery of the Securities to be sold by the Selling Stockholder and the
consummation of the transactions contemplated herein and compliance by the
Selling Stockholder with its obligations hereunder have been duly authorized by
the Selling Stockholder and do not and will not, whether with or without the
giving of notice or passage of time or both, conflict with or constitute a
breach of, or default under, or result in the creation or imposition of any tax,
lien, charge or encumbrance upon the Securities to be sold by the Selling
Stockholder or any property or assets of the Selling Stockholder pursuant to any
contract, indenture, mortgage, deed of trust, loan or credit agreement, note,
license, lease or other agreement or instrument to which the Selling Stockholder
is a party or by which the Selling Stockholder may be bound, or to which any of
the property or assets of the Selling Stockholder is subject, nor will such
action result in any violation of the provisions of the charter or by-laws or
other organizational instrument of the Selling Stockholder, if applicable, or
any applicable treaty, law, statute, rule, regulation, judgment, order, writ or
decree of any government, government instrumentality or court, domestic or
foreign, having jurisdiction over the Selling Stockholder or any of its
properties.
(iii) Good and Valid Title. The Selling Stockholder
--------------------
will at the Closing Time and, if any Option Securities are purchased, on the
Date of Delivery, have good and valid title to the Securities to be sold by the
Selling Stockholder hereunder, free and clear of any security interest,
mortgage, pledge, lien, charge, claim, equity or encumbrance of any kind, other
than pursuant to this Agreement; and provided that the Underwriter does not have
notice of any "adverse claim" (within the meaning given to such term in Article
8 of the Uniform Commercial Code of the State of New York), the Underwriter will
be a "protected purchaser" (within the meaning given to such term in Article 8
of the Uniform Commercial Code of the State of New York) with respect to the
Securities and will acquire the Securities free of any "adverse claim" (within
the meaning given to such term in Article 8 of the Uniform Commercial Code of
the State of New York).
(iv) Absence of Manipulation. The Selling Stockholder
-----------------------
has not taken and will not take, directly or indirectly, any action designed to
or which has constituted or which might reasonably be expected to cause or
result under the 1934 Act or otherwise, in stabilization or manipulation of the
price of any security of the Company to facilitate the sale or resale of the
Securities.
(v) No Violation of Regulation M. The Selling
-----------------------------
Stockholder has not taken any action that would violate Rule 102 of Regulation
M of the 1934 Act.
13
(vi) Absence of Further Requirements. No filing
-------------------------------
with, or consent, approval, authorization, order, registration, qualification or
decree of, any court or governmental authority or agency, domestic or foreign,
is necessary or required for the performance by the Selling Stockholder of its
obligations hereunder or in connection with the sale and delivery of the
Securities hereunder or the consummation of the transactions contemplated by
this Agreement, except such as may have previously been made or obtained or as
may be required under the 1933 Act or the 1933 Act Regulations or state
securities laws.
(vii) Certificates Suitable for Transfer. At the
----------------------------------
Closing Time (and, if any Option Securities are purchased, at the Date of
Delivery), the certificates representing all of the Securities to be sold by the
Selling Stockholder pursuant to this Agreement at such time will be in suitable
form for transfer by delivery or are accompanied by duly executed instruments of
transfer or assignment in blank with signatures guaranteed.
(viii) No Association with NASD Neither the Selling
------------------------
Stockholder nor any of its affiliates directly, or indirectly through one or
more intermediaries, controls, or is controlled by, or is under common control
with a member, or is a "person associated with a member" (within the meaning
given to such phrase in Article I, Section 1(ee) of the By-laws of the National
Association of Securities Dealers, Inc.), of the National Association of
Securities Dealers, Inc.
(ix) Form W-9. The Selling Stockholder shall deliver
--------
to the Underwriter prior to or at the Closing Time a properly completed and
executed United States Treasury Department Form W-9 (or other applicable form or
statement specified by Treasury Department regulations in lieu thereof).
(c) Officer's Certificates. Any certificate signed by any
----------------------
officer of the Company or any of its subsidiaries delivered to the Underwriter
or to counsel for the Underwriter shall be deemed a representation and warranty
by the Company to the Underwriter as to the matters covered thereby; and any
certificate signed by or on behalf of the Selling Stockholder as such and
delivered to the Underwriter or to counsel for the Underwriter pursuant to the
terms of this Agreement shall be deemed a representation and warranty by the
Selling Stockholder as to the matters covered thereby.
Section 2. Sale and Delivery to Underwriter; Closing.
(a) Initial Securities. On the basis of the representations
------------------
and warranties herein contained and subject to the terms and conditions herein
set forth, the Selling Stockholder agrees to sell to the Underwriter, and the
Underwriter agrees to purchase from the Selling Stockholder, at the price per
share set forth in Schedule A, the Initial Securities.
(b) Option Securities. In addition, on the basis of the
-----------------
representations and warranties herein contained and subject to the terms and
conditions herein set forth, the Selling
14
Stockholder hereby grants an option to the Underwriter to purchase up to an
additional 150,000 shares of Common Stock, at the price per share set forth in
Schedule A, less an amount per share equal to any dividends or distributions
declared by the Company and payable on the Initial Securities but not payable on
the Option Securities. The option hereby granted will expire 30 days after the
date hereof and may be exercised in whole or in part from time to time only for
the purpose of covering over-allotments which may be made in connection with the
offering and distribution of the Initial Securities upon notice by the
Underwriter to the Selling Stockholder setting forth the number of Option
Securities as to which the Underwriter is then exercising the option and the
time and date of payment and delivery for such Option Securities. Any such time
and date of delivery (a "Date of Delivery") shall be determined by the
----------------
Underwriter, but shall not be later than seven full business days after the
exercise of said option, nor in any event prior to the Closing Time (as
hereinafter defined).
(c) Payment. Payment of the purchase price for, and
-------
delivery of certificates for, the Initial Securities shall be made at the
offices of Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ or at such other place as shall be
agreed upon by the Underwriter and the Company and the Selling Stockholder,
at 6:30 A.M. (California time) on the third (fourth, if the pricing occurs
after 4:30 P.M. (Eastern time) on any given day) business day after the date
hereof (unless postponed in accordance with the provisions of Section 10
hereof), or such other time not later than ten business days after such date
as shall be agreed upon by the Underwriter and the Company and the Selling
Stockholder (such time and date of payment and delivery being herein called
"Closing Time").
------------
In addition, in the event that any or all of the Option Securities are
purchased by the Underwriter, payment of the purchase price for, and
delivery of certificates for, such Option Securities shall be made at the
above-mentioned offices, or at such other place as shall be agreed upon by
the Underwriter and the Company and the Selling Stockholder, on each Date
of Delivery as specified in the notice from the Underwriter to the Selling
Stockholder.
Payment shall be made to the Selling Stockholder by wire transfer of
immediately available funds to a bank account designated by the Selling
Stockholder against delivery to the Underwriter for its account of
certificates for the Securities to be purchased by it.
(d) Denominations; Registration. Certificates for the
---------------------------
Initial Securities and the Option Securities, if any, shall be in such
denominations and registered in such names as the Underwriter may request in
writing at least one full business day before the Closing Time or the relevant
Date of Delivery, as the case may be. The certificates for the Initial
Securities and the Option Securities, if any, will be made available for
examination and packaging by the Underwriter in The City of New York not later
than 10:00 A.M. (Eastern time) on the business day prior to the Closing Time
or the relevant Date of Delivery, as the case may be.
Section 3. Covenants of the Company. Each of the Company and the
------------------------
Operating Partnership, jointly and severally, covenants with the Underwriter
as follows:
15
(a) Compliance with Securities Regulations and Commission
-----------------------------------------------------
Requests. Subject to the provisions of Section 3(b) hereof, the Company shall
--------
comply with the requirements of Rule 430A or Rule 434, as applicable, and shall
notify the Underwriter immediately, and confirm the notice in writing, (i) when
any post-effective amendment to the Registration Statement shall become
effective, or any supplement to the Prospectus or any amended Prospectus shall
have been filed, (ii) of the receipt of any comments from the Commission, (iii)
of any request by the Commission for any amendment to the Registration Statement
or any amendment or supplement to the Prospectus or for additional information,
and (iv) of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or of any order preventing or
suspending the use of any preliminary prospectus, or of the suspension of the
qualification of the Securities for offering or sale in any jurisdiction, or of
the initiation or threatening of any proceedings for any of such purposes. The
Company shall effect promptly the filings necessary pursuant to Rule 424(b) and
shall take such steps as it deems necessary to ascertain promptly whether the
form of prospectus transmitted for filing under Rule 424(b) was received for
filing by the Commission and, in the event that it was not, it shall file
promptly such prospectus. The Company shall make every reasonable effort to
prevent the issuance of any stop order and, if any stop order is issued, to
obtain the lifting thereof at the earliest possible moment.
(b) Filing of Amendments. The Company shall give the Underwriter
--------------------
notice of its intention to file or prepare any amendment to the Registration
Statement (including any filing under Rule 462(b)), any Term Sheet or any
amendment, supplement or revision to either the prospectus included in the
Registration Statement at the time it became effective or to the Prospectus,
whether pursuant to the 1933 Act, the 1934 Act or otherwise, shall furnish the
Underwriter with copies of any such documents a reasonable amount of time prior
to such proposed filing or use, as the case may be, and shall not file or use
any such document to which the Underwriter or counsel for the Underwriter shall
object.
(c) Delivery of Registration Statements. The Company has furnished
-----------------------------------
or shall deliver to the Underwriter and counsel for the Underwriter, without
charge, signed copies of the Registration Statement as originally filed and of
each amendment thereto (including exhibits filed therewith or incorporated by
reference therein and documents incorporated or deemed to be incorporated by
reference therein) and signed copies of all consents and certificates of
experts, and shall also deliver to the Underwriter, without charge, a conformed
copy of the Registration Statement as originally filed and of each amendment
thereto (without exhibits) for the Underwriter. The copies of the Registration
Statement and each amendment thereto furnished to the Underwriter shall be
identical to the electronically transmitted copies thereof filed with the
Commission pursuant to ▇▇▇▇▇, except to the extent permitted by Regulation S-T.
(d) Delivery of Prospectuses. The Company has delivered to the
------------------------
Underwriter, without charge, as many copies of each preliminary prospectus as
the Underwriter reasonably requested, and the Company hereby consents to the use
of such copies for purposes permitted by the 1933 Act. The Company shall furnish
to the Underwriter, without charge, during the period when the Prospectus is
required to be delivered under the 1933 Act or the 1934 Act, such number of
copies of the Prospectus (as amended or supplemented) as the Underwriter
16
may reasonably request. The Prospectus and any amendments or supplements thereto
furnished to the Underwriter shall be identical to the electronically
transmitted copies thereof filed with the Commission pursuant to ▇▇▇▇▇, except
to the extent permitted by Regulation S-T.
(e) Continued Compliance with Securities Laws. The Company shall
-----------------------------------------
comply with the 1933 Act and the 1933 Act Regulations and the 1934 Act and the
1934 Act Regulations so as to permit the completion of the distribution of the
Securities as contemplated in this Agreement and in the Prospectus. If at any
time when a prospectus is required by the 1933 Act to be delivered in connection
with sales of the Securities, any event shall occur or condition shall exist as
a result of which it is necessary, in the opinion of counsel for the Underwriter
or for the Company, to amend the Registration Statement or amend or supplement
the Prospectus in order that the Prospectus will not include any untrue
statements of a material fact or omit to state a material fact necessary in
order to make the statements therein not misleading in the light of the
circumstances existing at the time it is delivered to a purchaser, or if it
shall be necessary, in the opinion of such counsel, at any such time to amend
the Registration Statement or amend or supplement the Prospectus in order to
comply with the requirements of the 1933 Act or the 1933 Act Regulations, the
Company shall promptly prepare and file with the Commission, subject to Section
3(b), such amendment or supplement as may be necessary to correct such statement
or omission or to make the Registration Statement or the Prospectus comply with
such requirements, and the Company shall furnish to the Underwriter such number
of copies of such amendment or supplement as the Underwriter may reasonably
request.
(f) Blue Sky Qualifications. The Company shall use its best
-----------------------
efforts, in cooperation with the Underwriter, to qualify the Securities for
offering and sale under the applicable securities laws of such states and other
jurisdictions (domestic or foreign) as the Underwriter may designate and to
maintain such qualifications in effect for a period of not less than one year
from the later of the effective date of the Registration Statement and any Rule
462(b) Registration Statement; provided, however, that the Company shall not be
obligated to file any general consent to service of process or to qualify as a
foreign corporation or as a dealer in securities in any jurisdiction in which it
is not so qualified or to subject itself to taxation in respect of doing
business in any jurisdiction in which it is not otherwise so subject. In each
jurisdiction in which the Securities have been so qualified, the Company shall
file such statements and reports as may be required by the laws of such
jurisdiction to continue such qualification in effect for a period of not less
than one year from the effective date of the Registration Statement and any Rule
462(b) Registration Statement.
(g) Rule 158. The Company shall timely file such reports pursuant
--------
to the 1934 Act as are necessary in order to make generally available to its
securityholders as soon as practicable an earnings statement for the purposes
of, and to provide the benefits contemplated by, the last paragraph of Section
11(a) of the 1933 Act.
(h) Listing. The Company shall use its best efforts to effect the
-------
listing of the Securities on the New York Stock Exchange.
17
(i) Restriction on Sale of Securities. During a period of 30 days
---------------------------------
from the date of the Prospectus, each of the Company and the Operating
Partnership shall not, without the prior written consent of ▇▇▇▇▇▇▇ ▇▇▇▇▇, (i)
directly or indirectly, offer, pledge, sell, contract to sell, sell any option
or contract to purchase, purchase any option or contract to sell, grant any
option, right or warrant to purchase or otherwise transfer or dispose of any
share of Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock or file any registration statement under the 1933
Act with respect to any of the foregoing or (ii) enter into any swap or any
other agreement or any transaction that transfers, in whole or in part, directly
or indirectly, the economic consequence of ownership of the Common Stock,
whether any such swap or transaction described in clause (i) or (ii) above is to
be settled by delivery of Common Stock or such other securities, in cash or
otherwise. The foregoing sentence shall not apply to (A) any shares of Common
Stock issued by the Company upon the exercise of an option or warrant or the
conversion of a security outstanding on the date hereof and referred to in the
Prospectus, (B) any shares of Common Stock issued or options to purchase Common
Stock granted pursuant to existing employee benefit plans of the Company
referred to in the Prospectus, (C) any shares of Common Stock issued pursuant to
any non-employee director stock plan or dividend reinvestment plan, (D) Units
issued in exchange for contributions of property to the Operating Partnership or
(E) issuances of preferred Units in exchange for cash contributed to the
Operating Partnership.
(j) Reporting Requirements. The Company, during the period when
----------------------
the Prospectus is required to be delivered under the 1933 Act or the 1934 Act,
shall file all documents required to be filed with the Commission pursuant to
the 1934 Act within the time periods required by the 1934 Act and the 1934 Act
Regulations.
(k) Qualification as a REIT. The Company will meet the
-----------------------
requirements necessary to qualify as a REIT under the Code for its 2001 taxable
year, and the Company has no present plan or intention not to qualify as a REIT
under the Code.
Section 4. Payment of Expenses.
(a) Expenses. The Company and the Selling Stockholder shall pay
--------
or cause to be paid all expenses incident to the performance of their
obligations under this Agreement, including (i) the preparation, printing and
filing of the Registration Statement (including financial statements and
exhibits) as originally filed and of each amendment thereto, (ii) the
preparation, printing and delivery to the Underwriter of this Agreement and such
other documents as may be required in connection with the offering, purchase,
sale, issuance or delivery of the Securities, (iii) the preparation, issuance
and delivery of the certificates for the Securities to the Underwriter,
including any stock or other transfer taxes and any stamp or other duties
payable upon the sale, issuance or delivery of the Securities to the
Underwriter, (iv) the fees and disbursements of the Company's counsel,
accountants and other advisors, (v) the qualification of the Securities under
securities laws in accordance with the provisions of Section 3(f) hereof,
including filing fees and the reasonable fees and disbursements of counsel for
the Underwriter in connection therewith and in connection with the preparation
of the blue sky survey, if any, and any supplement thereto, (vi) the printing
and delivery to the Underwriter
18
of copies of each preliminary prospectus, any Term Sheets and of the Prospectus
and any amendments or supplements thereto, (vii) the preparation, printing and
delivery to the Underwriter of copies of the blue sky survey, if any, and any
supplement thereto, (viii) the fees and expenses of any transfer agent or
registrar for the Securities and (ix) the fees and expenses incurred in
connection with the listing of the Securities on the New York Stock Exchange.
(b) Expenses of the Selling Stockholder. The Selling Stockholder
-----------------------------------
shall pay all expenses incident to the performance of its obligations under, and
the consummation of the transactions contemplated by this Agreement, including
(i) any stamp duties, capital duties and stock transfer taxes, if any, payable
upon the sale of the Securities to the Underwriter and (ii) the fees and
disbursements of its counsel and accountants.
(c) Termination of Agreement. If this Agreement is terminated by
------------------------
the Underwriter in accordance with the provisions of Section 5 or Section
9(a)(i) hereof, the Company and the Selling Stockholder shall reimburse the
Underwriter for all of their out-of-pocket expenses, including the reasonable
fees and disbursements of counsel for the Underwriter.
(d) Allocation of Expenses. The provisions of this Section 4
----------------------
shall not affect any agreement that the Company and the Selling Stockholder may
make for the sharing of such costs and expenses.
Section 5. Conditions of Underwriter's Obligations. The obligations
---------------------------------------
of the Underwriter hereunder are subject to the accuracy of the representations
and warranties of the Company, the Operating Partnership and the Selling
Stockholder contained in Section 1 hereof or in certificates of any officer of
the Company or any of its subsidiaries or on behalf of the Selling Stockholder
delivered pursuant to the provisions hereof, to the performance by each of the
Company and the Operating Partnership of its covenants and other obligations
hereunder, and to the following further conditions:
(a) Effectiveness of Registration Statement. The Registration
---------------------------------------
Statement, including any Rule 462(b) Registration Statement, has become
effective and at Closing Time no stop order suspending the effectiveness of the
Registration Statement shall have been issued under the 1933 Act or proceedings
therefor initiated or threatened by the Commission, and any request on the part
of the Commission for additional information shall have been complied with to
the reasonable satisfaction of counsel to the Underwriter. A prospectus
containing the Rule 430A Information shall have been filed with the Commission
in accordance with Rule 424(b) (or a post-effective amendment providing such
information shall have been filed and declared effective in accordance with the
requirements of Rule 430A) or, if the Company has elected to rely upon Rule 434,
a Term Sheet shall have been filed with the Commission in accordance with Rule
424(b).
19
(b) Opinions of Counsel for Company. At the Closing Time, the
-------------------------------
Underwriter shall have received:
(i) the favorable opinion, dated as of Closing Time, of ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇,
counsel for the Company and its subsidiaries, in form and substance satisfactory
to counsel for the Underwriter, to the effect set forth in Exhibit A-1 hereto
and to such further effect as counsel to the Underwriter may reasonably request.
(ii) the favorable opinion, dated as of Closing Time, of ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
& Ingersoll, special Maryland counsel for the Company and its subsidiaries, in
form and substance satisfactory to counsel for the Underwriter, to the effect
set forth in Exhibit A-2 hereto and to such further effect as counsel to the
Underwriter may reasonably request.
(iii) the favorable opinion, dated as of Closing Time, of ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇,
General Counsel for the Company, in form and substance satisfactory to counsel
for the Underwriter, to the effect set forth in Exhibit A-3 hereto and to such
further effect as counsel to the Underwriter may reasonably request.
(iv) the favorable tax opinion, dated as of Closing Time, of ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇,
counsel for the Company and its subsidiaries, in form and substance satisfactory
to counsel for the Underwriter, to the effect set forth in Exhibit A-4 hereto
and to such further effect as counsel to the Underwriter may reasonably request.
(c) Opinion of Counsel for the Selling Stockholder. At Closing
----------------------------------------------
Time, the Underwriter shall have received the favorable opinion, dated as of
Closing Time, of ▇▇▇▇▇▇▇▇▇ Glusker Fields Claman, Machtinger & ▇▇▇▇▇▇▇▇ LLP,
counsel for the Selling Stockholder, in form and substance satisfactory to
counsel for the Underwriter, to the effect set forth in Exhibit B hereto and to
such further effect as counsel to the Underwriter may reasonably request.
(d) Opinion of Counsel for Underwriter. At the Closing Time, the
----------------------------------
Underwriter shall have received the favorable opinion, dated as of Closing Time,
of Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP, counsel for the Underwriter to the
effect that, subject to the limitations, qualification, exceptions and
assumptions set forth therein, the Registration Statement, as of its effective
date, and the Prospectus, as supplemented, as of the date of such supplements,
appeared on their face to be appropriately responsive in all material respects
to the requirements of the 1933 Act and the 1933 Act Regulations, except that no
opinion need be given as to documents incorporated by reference in the
Registration Statement, the financial statements and notes thereto, schedules
and other financial data included therein or excluded therefrom or the exhibits
to the Registration Statement, and such counsel need not assume any
responsibility for the accuracy, completeness or fairness of the statements
contained in the Registration Statement, the Prospectus or any supplements
thereto. In giving such opinion such counsel may rely, insofar as such opinion
involves factual matters, to the extent they deem
20
proper, upon oral or written statements and representation of officers and other
representatives of the Company and others.
In addition, such counsel shall also state that they have participated
in conferences with officers and other representatives of the Company,
counsel for the Company, representatives of the independent public
accountants of the Company and the Underwriter at which the contents of the
Registration Statement and Prospectus and related matters were discussed
and, although such counsel is not passing upon, and does not assume any
responsibility for, the accuracy, completeness or fairness of the
statements contained in the Registration Statement and the Prospectus and
have made no independent check or verification thereof, on the basis of the
foregoing, no facts have come to the attention of such counsel that have
led such counsel to believe that the Registration Statement, at the time it
became effective, contained an untrue statement of a material fact or
omitted to state any material fact required to be stated therein or
necessary to make the statements therein not misleading or that the
Prospectus as supplemented by the prospectus supplements, as of the date of
the prospectus supplements and as of the date hereof, contained an untrue
statement of a material fact or omitted 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, except that in each case such
counsel need express no opinion as to the documents incorporated by
reference therein, the financial statements and the notes thereto,
schedules and other financial data included therein or excluded therefrom
or the exhibits to the Registration Statement.
(e) Officers' Certificate. At Closing Time, there shall not have
---------------------
been, since the date hereof or since the respective dates as of which
information is given in the Prospectus, any material adverse change in the
condition, financial or otherwise, or in the earnings, business affairs or
business prospects of the Company and its subsidiaries considered as one
enterprise, regardless of whether arising in the ordinary course of business,
and the Underwriter shall have received a certificate of the President or a Vice
President of the Company and of the chief financial or chief accounting officer
of the Company, dated as of Closing Time, to the effect that (i) there has been
no such material adverse change, (ii) the representations and warranties in
Section 1(a) hereof are true and correct with the same force and effect as
though expressly made at and as of Closing Time, (iii) each of the Company and
the Operating Partnership has complied in all material respects with all
agreements and satisfied all conditions on its part to be performed or satisfied
at or prior to Closing Time, and (iv) no stop order suspending the effectiveness
of the Registration Statement has been issued and no proceedings for that
purpose have been instituted or are pending or are contemplated by the
Commission.
(f) Certificate of Selling Stockholder. At Closing Time, the
----------------------------------
Underwriter shall have received a certificate of the Selling Stockholder, dated
as of Closing Time, to the effect that (i) the representations and warranties of
the Selling Stockholder contained in Section 1(b) hereof are true and correct in
all respects with the same force and effect as though expressly made at and as
of Closing Time and (ii) the Selling Stockholder has complied in all material
respects with all agreements and all conditions on its part to be performed
under this Agreement at or prior to Closing Time.
(g) Accountant's Comfort Letter. At the time of the execution of
---------------------------
this Agreement, the Underwriter shall have received from PricewaterhouseCoopers
LLP a letter
21
dated such date, in form and substance satisfactory to the Underwriter,
containing statements and information of the type ordinarily included in
accountants' "comfort letters" to underwriters with respect to the financial
statements and certain financial information contained in the Registration
Statement and the Prospectus.
(h) Bring-down Comfort Letter. At Closing Time, the Underwriter
-------------------------
shall have received from PricewaterhouseCoopers LLP a letter, dated as of
Closing Time, to the effect that they reaffirm the statements made in the letter
furnished pursuant to subsection (g) of this Section 5, except that the
specified date referred to shall be a date not more than three business days
prior to Closing Time.
(i) Approval of Listing. At Closing Time, the Securities shall
-------------------
have been approved for listing on the New York Stock Exchange.
(j) Lock-up Agreements. The Underwriter shall have received an
------------------
agreement substantially in the form of Exhibit C hereto, dated as of the date of
this Agreement, and signed by the persons listed on Schedule B hereto.
(k) Conditions to Purchase of Option Securities. In the event
-------------------------------------------
that the Underwriter exercise its option provided in Section 2(b) hereof to
purchase all or any portion of the Option Securities, the representations and
warranties of the Company and the Selling Stockholder contained herein and the
statements in any certificates furnished by the Company, any subsidiary of the
Company and the Selling Stockholder hereunder shall be true and correct as of
each Date of Delivery and, at the relevant Date of Delivery, the Underwriter
shall have received:
(i) Officers' Certificate. A certificate, dated such Date
---------------------
of Delivery, of the President or a Vice President of the Company and of the
chief financial or chief accounting officer of the Company confirming that the
certificate delivered at the Closing Time pursuant to Section 5(e) hereof
remains true and correct as of such Date of Delivery.
(ii) Certificate of Selling Stockholder. A certificate,
----------------------------------
dated such Date of Delivery, of the Selling Stockholder confirming that the
certificate delivered at Closing Time pursuant to Section 5(f) hereof remains
true and correct as of such Date of Delivery.
(iii) Opinion of Counsel for Company. The favorable opinion
------------------------------
of ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, counsel for the Company, together with the favorable
opinion of ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ & Ingersoll, special Maryland counsel for the
Company, and the favorable opinion of ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, General Counsel to the
Company, each in form and substance satisfactory to counsel for the Underwriter,
dated such Date of Delivery, relating to the Option Securities to be purchased
on such Date of Delivery and otherwise to the same effect as the respective
opinions required by Section 5(b) hereof.
22
(iv) Opinion of Counsel for the Selling Stockholder. The
----------------------------------------------
favorable opinion of ▇▇▇▇▇▇▇▇▇ Glusker Fields Claman, Machtinger & ▇▇▇▇▇▇▇▇ LLP,
counsel for the Selling Stockholder, in form and substance satisfactory to
counsel for the Underwriter, dated such Date of Delivery, relating to the Option
Securities to be purchased on such Date of Delivery and otherwise to the same
effect as the opinion required by Section 5(c) hereof.
(v) Opinion of Counsel for Underwriter. The favorable
----------------------------------
opinion of Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP, counsel for the
Underwriter, dated such Date of Delivery, relating to the Option Securities to
be purchased on such Date of Delivery and otherwise to the same effect as the
opinion required by Section 5(d) hereof.
(vi) Bring-down Comfort Letter. A letter from
-------------------------
PricewaterhouseCoopers LLP, in form and substance satisfactory to the
Underwriter and dated such Date of Delivery, substantially in the same form and
substance as the letter furnished to the Underwriter pursuant to Section 5(g)
hereof, except that the "specified date" in the letter furnished pursuant to
this paragraph shall be a date not more than five days prior to such Date of
Delivery.
(l) Additional Documents. At Closing Time and at each Date of
--------------------
Delivery counsel for the Underwriter shall have been furnished with such
documents and opinions as they may require for the purpose of enabling them to
pass upon the issuance and sale of the Securities as herein contemplated, or in
order to evidence the accuracy of any of the representations or warranties, or
the fulfillment of any of the conditions, herein contained; and all proceedings
taken by the Company and the Selling Stockholder in connection with the issuance
and sale of the Securities as herein contemplated shall be satisfactory in form
and substance to the Underwriter and counsel for the Underwriter.
(m) Termination of Agreement. If any condition specified in this
------------------------
Section 5 shall not have been fulfilled when and as required to be fulfilled,
this Agreement, or, in the case of any condition to the purchase of Option
Securities on a Date of Delivery which is after the Closing Time, the
obligations of the Underwriter to purchase the relevant Option Securities, may
be terminated by the Underwriter by notice to the Company at any time at or
prior to Closing Time or such Date of Delivery, as the case may be, and such
termination shall be without liability of any party to any other party except as
provided in Section 4 hereof and except that Sections 1, 6, 7 and 8 hereof shall
survive any such termination and remain in full force and effect.
Section 6. Indemnification.
(a) Indemnification of the Underwriter. The Company and the
----------------------------------
Operating Partnership, jointly and severally agree to indemnify and hold
harmless the Underwriter and each person, if any, who controls the Underwriter
within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act
against:
23
(i) any and all loss, liability, claim, damage and expense whatsoever, as
incurred, arising out of any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement (or any amendment
thereto), including the Rule 430A Information and the Rule 434 Information, if
applicable, or the omission or alleged omission therefrom of a material fact
required to be stated therein or necessary to make the statements therein not
misleading or arising out of any untrue statement or alleged untrue statement of
a material fact included in any preliminary prospectus or the Prospectus (or any
amendment or supplement thereto), or the omission or alleged omission therefrom
of a material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading;
(ii) any and all loss, liability, claim, damage and expense whatsoever, as
incurred, to the extent of the aggregate amount paid in settlement of any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or of any claim whatsoever based upon any such
untrue statement or omission, or any such alleged untrue statement or omission;
provided that (subject to Section 6(d) below) any such settlement is effected
with the written consent of the Company; and
(iii) any and all expense whatsoever, as incurred (including the fees and
disbursements of counsel chosen by ▇▇▇▇▇▇▇ ▇▇▇▇▇), reasonably incurred in
investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue statement or
omission, or any such alleged untrue statement or omission, to the extent that
any such expense is not paid under (i) or (ii) above;
provided, however, that this indemnity agreement shall not apply to any
loss, liability, claim, damage or expense to the extent arising out of any
untrue statement or omission or alleged untrue statement or omission made
in reliance upon and in conformity with written information furnished to
the Company by the Underwriter expressly for use in the Registration
Statement (or any amendment thereto), including the Rule 430A Information
and the Rule 434 Information, if applicable, or any preliminary prospectus
or the Prospectus (or any amendment or supplement thereto).
The Selling Stockholder agrees to indemnify and hold harmless the
Underwriter and each person, if any, who controls the Underwriter within
the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act
against any and all loss, liability, claim, damage and expense described in
the indemnity contained above in this subsection (a), as incurred, but only
with respect to untrue statements or omissions or alleged untrue statements
or omissions, made in the Registration Statement (or any amendment
thereto), including the Rule 430A Information and the Rule 434 Information,
if applicable, or any preliminary prospectus or the Prospectus (or any
amendment or supplement thereto) in reliance upon, and in conformity with,
written information relating specifically to the Selling Stockholder
furnished to the Company by or on behalf of the Selling Stockholder
expressly for use in the Registration Statement (or any amendment thereto),
including the Rule 430A Information and the Rule 434 Information, if
applicable, or any preliminary prospectus or the Prospectus (or any
amendment or supplement thereto).
24
(b) Indemnification of the Company, Directors and Officers and
Selling Stockholder. The Underwriter agrees to indemnify and hold harmless the
Company, its directors, each of its officers who signed the Registration
Statement, and each person, if any, who controls the Company within the meaning
of Section 15 of the 1933 Act or Section 20 of the 1934 Act, the Operating
Partnership and the Selling Stockholder and each person, if any, who controls
the Selling Stockholder within the meaning of Section 15 of the 1933 Act or
Section 20 of the 1934 Act against any and all loss, liability, claim, damage
and expense described in the indemnity contained in clause (i) of subsection (a)
of this Section 6, as incurred, but only with respect to untrue statements or
omissions, or alleged untrue statements or omissions, made in the Registration
Statement (or any amendment thereto), including the Rule 430A Information and
the Rule 434 Information, if applicable, or any preliminary prospectus or the
Prospectus (or any amendment or supplement thereto) in reliance upon and in
conformity with written information furnished to the Company by the Underwriter
expressly for use in the Registration Statement (or any amendment thereto) or
such preliminary prospectus or the Prospectus (or any amendment or supplement
thereto).
(c) Actions against Parties; Notification. Each indemnified party
-------------------------------------
shall give notice as promptly as reasonably practicable to each indemnifying
party of any action commenced against it in respect of which indemnity may be
sought hereunder, but failure to so notify an indemnifying party shall not
relieve such indemnifying party from any liability hereunder to the extent it is
not materially prejudiced as a result thereof and in any event shall not relieve
it from any liability which it may have otherwise than on account of this
indemnity agreement. In the case of parties indemnified pursuant to Section 6(a)
above, counsel to the indemnified parties shall be selected by ▇▇▇▇▇▇▇ ▇▇▇▇▇,
and, in the case of parties indemnified pursuant to Section 6(b) above, counsel
to the indemnified parties shall be selected by the Company. An indemnifying
party may participate at its own expense in the defense of any such action;
provided, however, that counsel to the indemnifying party shall not (except with
the consent of the indemnified party) also be counsel to the indemnified party.
In no event shall the indemnifying parties be liable for fees and expenses of
more than one counsel (in addition to any local counsel) separate from their own
counsel for all indemnified parties in connection with any one action or
separate but similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances. No indemnifying party shall,
without the prior written consent of the indemnified parties, settle or
compromise or consent to the entry of any judgment with respect to any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever in respect of which
indemnification or contribution could be sought under this Section 6 or Section
7 hereof (regardless of whether the indemnified parties are actual or potential
parties thereto), unless such settlement, compromise or consent (i) includes an
unconditional release of each indemnified party from all liability arising out
of such litigation, investigation, proceeding or claim and (ii) does not include
a statement as to or an admission of fault, culpability or a failure to act by
or on behalf of any indemnified party.
(d) Settlement without Consent if Failure to Reimburse. If at any
--------------------------------------------------
time an indemnified party shall have requested an indemnifying party to
reimburse the indemnified party for fees and expenses of counsel, such
indemnifying party agrees that it shall be liable for any settlement of the
nature contemplated by Section 6(a)(ii) hereof effected without its written
25
consent if (i) such settlement is entered into more than 45 days after receipt
by such indemnifying party of the aforesaid request, (ii) such indemnifying
party shall have received notice of the terms of such settlement at least 30
days prior to such settlement being entered into and (iii) such indemnifying
party shall not have reimbursed such indemnified party in accordance with such
request prior to the date of such settlement.
(e) Other Agreements with Respect to Indemnification. The
------------------------------------------------
provisions of this Section 6 shall not affect any agreement between the Company
and the Selling Stockholder with respect to indemnification.
Section 7. Contribution. If the indemnification provided for in
------------
Section 6 hereof is for any reason unavailable to or insufficient to hold
harmless an indemnified party in respect of any losses, liabilities, claims,
damages or expenses referred to therein, then each indemnifying party shall
contribute to the aggregate amount of such losses, liabilities, claims, damages
and expenses incurred by such indemnified party, as incurred, (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company, the Operating Partnership and the Selling Stockholder on the one hand
and the Underwriter on the other hand from the offering of the Securities
pursuant to this Agreement or (ii) if the allocation provided by clause (i) is
not permitted by applicable law, in such proportion as is appropriate to reflect
not only the relative benefits referred to in clause (i) above but also the
relative fault of the Company, the Operating Partnership and the Selling
Stockholder on the one hand and of the Underwriter on the other hand in
connection with the statements or omissions which resulted in such losses,
liabilities, claims, damages or expenses, as well as any other relevant
equitable considerations.
The relative benefits received by the Company, the Operating Partnership
and the Selling Stockholder on the one hand and the Underwriter on the other
hand in connection with the offering of the Securities pursuant to this
Agreement shall be deemed to be in the same respective proportions as the total
net proceeds from the offering of the Securities pursuant to this Agreement
(before deducting expenses) received by the Company and the Selling Stockholder
and the total underwriting discount received by the Underwriter, in each case as
set forth on the cover of the Prospectus, or, if Rule 434 is used, the
corresponding location on the Term Sheet bear to the aggregate initial public
offering price of the Securities as set forth on such cover.
The relative fault of the Company, the Operating Partnership and the
Selling Stockholder on the one hand and the Underwriter on the other hand shall
be determined by reference to, among other things, whether any such untrue or
alleged untrue statement of a material fact or omission or alleged omission to
state a material fact relates to information supplied by the Company or the
Selling Stockholder or by the Underwriter and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
The Company, the Operating Partnership, the Selling Stockholder and the
Underwriter agree that it would not be just and equitable if contribution
pursuant to this Section 7 were determined by pro rata allocation or by any
other method of allocation which does not take account of the equitable
considerations referred to above in this Section 7. The aggregate amount of
losses, liabilities, claims, damages and expenses incurred by an indemnified
party and referred to above in this Section 7 shall be deemed to include any
legal or other expenses reasonably incurred by such indemnified party in
investigating, preparing or defending against any litigation, or any
investigation or proceeding by any
26
governmental agency or body, commenced or threatened, or any claim whatsoever
based upon any such untrue or alleged untrue statement or omission or alleged
omission.
Notwithstanding the provisions of this Section 7, the Underwriter shall not
be required to contribute any amount in excess of the amount by which the total
price at which the Securities underwritten by it and distributed to the public
were offered to the public exceeds the amount of any damages which the
Underwriter has otherwise been required to pay by reason of any such untrue or
alleged untrue statement or omission or alleged omission.
No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the ▇▇▇▇ ▇▇▇) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 7, each person, if any, who controls the
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act shall have the same rights to contribution as the Underwriter, and
each director of the Company, each officer of the Company who signed the
Registration Statement, and each person, if any, who controls the Company or the
Selling Stockholder within the meaning of Section 15 of the 1933 Act or Section
20 of the 1934 Act shall have the same rights to contribution as the Company or
the Selling Stockholder, as the case may be.
The provisions of this Section 7 shall not affect any agreement between the
Company and the Selling Stockholder with respect to contribution.
Section 8. Representations, Warranties and Agreements to Survive
-----------------------------------------------------
Delivery. All representations, warranties and agreements contained in this
---------
Agreement or in certificates of officers of the Company or any of its
subsidiaries or the Selling Stockholder submitted pursuant hereto, shall remain
operative and in full force and effect, regardless of any investigation made by
or on behalf of the Underwriter or controlling person, or by or on behalf of the
Company or the Selling Stockholder, and shall survive delivery of the Securities
to the Underwriter.
Section 9. Termination of Agreement.
(a) Termination; General. The Underwriter may terminate this
--------------------
Agreement, by notice to the Company and the Selling Stockholder, at any time at
or prior to Closing Time (i) if there has been, since the time of execution of
this Agreement or since the respective dates as of which information is given in
the Prospectus, any material adverse change in the condition, financial or
otherwise, or in the earnings, business affairs or business prospects of the
Company and its subsidiaries considered as one enterprise, regardless of whether
arising in the ordinary course of business, or (ii) if there has occurred any
material adverse change in the financial markets in the United States, any
outbreak of hostilities or escalation thereof or other calamity or crisis or any
change or development involving a prospective change in national or
international political, financial or economic conditions, in each case the
effect of which is such as to make it, in the judgment of the Underwriter,
impracticable to market the Securities or to enforce contracts for the sale of
the Securities, or (iii) if trading in any securities of the Company has been
suspended or materially limited by the Commission or the New York Stock
Exchange, or if trading generally on the American Stock Exchange or the New York
Stock Exchange or in the Nasdaq National Market has been suspended or materially
limited, or minimum or maximum prices for trading have been fixed, or maximum
ranges for prices have been required, by any of
27
said exchanges or by such system or by order of the Commission, the National
Association of Securities Dealers, Inc. or any other governmental authority, or
(iv) if a banking moratorium has been declared by either Federal or New York
authorities.
(b) Liabilities. If this Agreement is terminated pursuant to
-----------
this Section 9, such termination shall be without liability of any party to any
other party except as provided in Section 4 hereof, and provided further that
Sections 1, 6, 7 and 8 hereof shall survive such termination and remain in full
force and effect.
Section 10. Notices. All notices and other communications hereunder
-------
shall be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the
Underwriter shall be directed to the Underwriter at ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Facsimile (▇▇▇) ▇▇▇-▇▇▇▇, attention
of ▇▇▇▇▇ ▇▇▇▇▇▇▇; notices to the Company or the Operating Partnership shall be
directed to them at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, Facsimile (▇▇▇) ▇▇▇-▇▇▇▇, attention of ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇; and notices to
the Selling Stockholder shall be directed to it at C/O American Golf
Corporation, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
Facsimile (▇▇▇) ▇▇▇-▇▇▇▇, attention of ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇.
Section 11. Parties. This Agreement shall each inure to the benefit
-------
of and be binding upon the Underwriter, the Company, the Operating Partnership
and the Selling Stockholder and their respective successors. Nothing expressed
or mentioned in this Agreement is intended or shall be construed to give any
person, firm or corporation, other than the Underwriter, the Company, the
Operating Partnership and the Selling Stockholder and their respective
successors and the controlling persons and officers and directors referred to in
Sections 6 and 7 hereof and their heirs and legal representatives, any legal or
equitable right, remedy or claim under or in respect of this Agreement or any
provision herein contained. This Agreement and all conditions and provisions
hereof are intended to be for the sole and exclusive benefit of the Underwriter,
the Company, the Operating Partnership and the Selling Stockholder and their
respective successors, and said controlling persons and officers and directors
and their heirs and legal representatives, and for the benefit of no other
person, firm or corporation. No purchaser of Securities from the Underwriter
shall be deemed to be a successor by reason merely of such purchase.
Section 12. Governing Law and Time. THIS AGREEMENT SHALL BE GOVERNED
----------------------
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, INCLUDING
WITHOUT LIMITATION, SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK GENERAL
OBLIGATIONS LAW. EXCEPT AS OTHERWISE SET FORTH HEREIN, SPECIFIED TIMES OF DAY
REFER TO NEW YORK CITY TIME.
Section 13. Effect of Headings. The Article and Section headings
------------------
herein and the Table of Contents are for convenience only and shall not affect
the construction hereof.
28
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to the Company, the Operating Partnership and the Selling
Stockholder a counterpart hereof, whereupon this instrument, along with all
counterparts, will become a binding agreement among the Underwriter, the
Company, the Operating Partnership and the Selling Stockholder in accordance
with its terms.
Very truly yours,
NATIONAL GOLF PROPERTIES, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
__________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Name:________________________
President
Title:_______________________
NATIONAL GOLF OPERATING PARTNERSHIP, L.P.
By: NATIONAL GOLF PROPERTIES, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
__________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Name:________________________
President
Title:_______________________
OAKS CHRISTIAN HIGH SCHOOL
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
__________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇
Name:________________________
President
Title:_______________________
CONFIRMED AND ACCEPTED,
as of the date first above written:
▇▇▇▇▇▇▇ ▇▇▇▇▇ & CO.
▇▇▇▇▇▇▇ LYNCH, PIERCE, ▇▇▇▇▇▇ & ▇▇▇▇▇
INCORPORATED
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
_____________________________
Authorized Signatory
29