75,000,000 AGGREGATE PRINCIPAL AMOUNT CAPLEASE, INC.
$75,000,000
AGGREGATE PRINCIPAL AMOUNT
7.5%
CONVERTIBLE SENIOR NOTES
DUE
2027
DATED
OCTOBER 2, 2007
DEUTSCHE
BANK SECURITIES INC.
as
Representative of the several Initial Purchasers
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▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies
and Gentlemen:
CapLease,
Inc., a Maryland corporation (the “Company”),
proposes to issue and sell to the several purchasers named in Schedule
I
(the
“Initial
Purchasers”)
$75,000,000 in aggregate principal amount of its 7.5% Convertible Senior Notes
due 2027 (the “Firm
Notes”).
In
addition, the Company has granted to the Initial Purchasers an option to
purchase up to an additional $25,000,000 in aggregate principal amount of its
7.5% Convertible Senior Notes due 2027 (the “Optional Notes” and, together with
the Firm Notes, the “Notes”).
Deutsche Bank Securities Inc. has agreed to act as representative of the several
Initial Purchasers (in such capacity, the “Representative”)
in
connection with the offering and sale of the Notes. To the extent that there
are
no additional Initial Purchasers listed on Schedule
I
other
than you, the terms Representative and Initial Purchaser as used herein shall
mean you, as Initial Purchaser. The terms Representative and Initial Purchasers
shall mean either the singular or plural as the context requires.
The
Notes
will be convertible on the terms, and subject to the conditions, set forth
in
the indenture (the “Indenture”)
to be
entered into between the Company and Deutsche Bank Trust Company Americas,
as
trustee (the “Trustee”),
and
Caplease, LP, Caplease Debt Funding, LP, Caplease Services Corp. and Caplease
Credit LLC as guarantors (collectively, the “Guarantors”),
on
the Closing Date (as defined herein). As used herein, “Conversion
Shares”
means
the shares of common stock, par value $0.01 per share, of the Company (the
“Common
Stock”)
to be
received by the holders of the Notes upon conversion of the Notes pursuant
to
the terms of the Notes and the Indenture.
The
Notes
will be fully and unconditionally guaranteed as to the payment of principal
and
interest by the Guarantors (each a “Guarantee”
and
collectively, the “Guarantees”).
The
Notes will be offered and sold to the Initial Purchasers without being
registered under the Securities Act of 1933, as amended (the “Securities
Act”),
and
the rules and regulations of the Securities and Exchange Commission (the
“Commission”)
thereunder (the “Securities
Act Regulations”),
in
reliance upon Rule 144A under the Securities Act.
Holders
of the Notes (including the Initial Purchasers and their direct and indirect
transferees) will be entitled to the benefits of a Resale Registration Rights
Agreement, dated the Closing Date, between the Company and the Representative
(the “Registration
Rights Agreement”),
pursuant to which the Company will agree to file or have on file with the
Commission a shelf registration statement pursuant to Rule 415 under the
Securities Act (the “Registration
Statement”)
covering the resale of the Conversion Shares. This Agreement, the Indenture,
the
Notes, the Guarantees and the Registration Rights Agreement are referred to
herein collectively as the “Operative
Documents.”
The
Company understands that the Initial Purchasers propose to make an offering
of
the Notes on the terms and in the manner set forth herein and in the Disclosure
Package (as defined below), including the Preliminary Offering Memorandum (as
defined below), and the Final Offering Memorandum (as defined below) and agrees
that the Initial Purchasers may resell, subject to the conditions set forth
herein, all or a portion of the Notes to purchasers (the “Subsequent
Purchasers”)
at any
time after the date of this Agreement.
The
Company has prepared an offering memorandum, dated the date hereof, setting
forth information concerning the Company, the Notes, the Guarantees, the
Registration Rights Agreement and the Common Stock, in form and substance
reasonably satisfactory to the Initial Purchasers. As used in this Agreement,
“Offering
Memorandum”
means,
collectively, the Preliminary Offering Memorandum dated as of October 1, 2007
(the “Preliminary
Offering Memorandum”)
and
the offering memorandum dated the date hereof (the “Final
Offering Memorandum”),
each
as then amended or supplemented by the Company.
All
references in this Agreement to financial statements and schedules and other
information which is “contained,” “included” or “stated” in the Disclosure
Package, the Preliminary Offering Memorandum, the Final Offering Memorandum
or
the Offering Memorandum shall be deemed to mean and include all financial
statements and schedules and other information that is incorporated by reference
in or otherwise deemed to be a part of or included in the Disclosure Package,
the Preliminary Offering Memorandum, the Final Offering Memorandum or the
Offering Memorandum, as the case may be; and all references in this Agreement
to
amendments or supplements to the Disclosure Package, the Preliminary Offering
Memorandum, the Final Offering Memorandum or the Offering Memorandum shall
be
deemed to mean and include the filing of any document under the Securities
Exchange Act of 1934 (the “Exchange
Act”)
that
is incorporated by reference in or otherwise deemed to be a part of or included
in the Disclosure Package, the Preliminary Offering Memorandum, the Final
Offering Memorandum or the Offering Memorandum, as the case may be.
The
Company hereby confirms its agreements with the Initial Purchasers as
follows:
SECTION
1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The
Company hereby represents and warrants to each Initial Purchaser as
follows:
(a) No
Registration.
Assuming the accuracy of the representations and warranties of the Initial
Purchasers contained in Section 6 and their compliance with the agreements
set
forth therein, it is not necessary, in connection with the issuance and sale
of
the Notes to the Initial Purchasers, the offer, resale and delivery of the
Notes
by the Initial Purchasers and the conversion of the Notes into Conversion
Shares, in each case in the manner contemplated by this Agreement, the
Indenture, the Disclosure Package and the Offering Memorandum, to register
the
Notes or the Conversion Shares under the Securities Act or to qualify the
Indenture under the Trust Indenture Act of 1939, as amended (the “Trust
Indenture Act”).
(b) No
Integration.
None of
the Company or any of its subsidiaries has, directly or through any agent,
sold,
offered for sale, solicited offers to buy or otherwise negotiated in respect
of,
any “security” (as defined in the Securities Act) that is or will be integrated
with the sale of the Notes or the Conversion Shares in a manner that would
require registration under the Securities Act of the Notes or the Conversion
Shares.
(c) Rule
144A.
No
securities of the same class (within the meaning of Rule 144A(d)(3) under the
Securities Act) as the Notes are listed on any national securities exchange
registered under Section 6 of the Exchange Act, or quoted on an automated
inter-dealer quotation system.
(d) Exclusive
Agreement.
The
Company has not paid or agreed to pay to any person any compensation for
soliciting another person to purchase any securities of the Company in
connection with the offer and sale of the Notes by the Initial Purchasers
(except as contemplated in this Agreement).
(e) Offering
Memoranda.
The
Company hereby confirms that it has authorized the use of the Disclosure
Package, including the Preliminary Offering Memorandum, and the Final Offering
Memorandum in connection with the offer and sale of the Notes by the Initial
Purchasers. Each document, if any, filed or to be filed pursuant to the Exchange
Act and incorporated by reference in the Disclosure Package or the Final
Offering Memorandum complied when it was filed, or will comply when it is filed,
as the case may be, in all material respects with the Exchange Act and the
rules
and regulations of the Commission thereunder (the “Exchange
Act Regulations”),
and
none of such documents contained or will contain an untrue statement of a
material fact or omitted or will omit to state a material fact required to
be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading. The
Preliminary Offering Memorandum, at the date thereof, did not contain any untrue
statement of a material fact or omit to state a material fact necessary in
order
to make the statements therein, in the light of the circumstances under which
they were made, not misleading. At the date of this Agreement, the Closing
Date
and on any Subsequent Closing Date, the Final Offering Memorandum did not and
will not (and any amendment or supplement thereto, at the date thereof, at
the
Closing Date and on any Subsequent Closing Date, will not) contain any untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading; provided that the Company makes no
representation or warranty as to information contained in or omitted from the
Preliminary Offering Memorandum or the Final Offering Memorandum in reliance
upon and in conformity with written information furnished to the Company by
or
on the behalf of the Initial Purchasers specifically for inclusion therein,
it
being understood and agreed that the only such information furnished by or
on
the behalf of the Initial Purchasers consists of the information described
as
such in Section 8 hereof.
(f) Disclosure
Package.
The
term “Disclosure Package” shall mean (i) the Preliminary Offering Memorandum, as
amended or supplemented at the Applicable Time, (ii) the Final Term Sheet (as
defined herein) and (iii) any other writings that the parties expressly agree
in
writing to treat as part of the Disclosure Package (“Issuer
Written Information”)
as
identified on Schedule
IIA
hereto.
The Disclosure Package as of 8:30 a.m. (Eastern time) on October 3, 2007 (the
“Applicable
Time”)
did
not, and on the Closing Date and any Subsequent Closing Date will not, contain
any untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. The preceding sentence
does not apply to statements in or omissions from the Disclosure Package in
reliance upon and in conformity with written information furnished to the
Company by any Initial Purchaser through the Representative specifically for
use
therein, it being understood and agreed that the only such information furnished
by or on behalf of any Initial Purchaser consists of the information described
as such in Section 8 hereof.
(g) Authorization
of the Purchase Agreement.
This
Agreement has been duly authorized, executed and delivered by the Company and
is
a legal, valid and binding agreement of the Company enforceable in accordance
with its terms, except as may be limited by bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium or similar laws affecting creditors’
rights and by general equitable principles (collectively, the “Exceptions”),
and
except to the extent that the indemnification and contribution provisions of
Sections 8 and 9 hereof may be limited by federal or state securities laws
and
public policy considerations in respect thereof.
(h) Authorization
of the Indenture.
The
Indenture has been duly authorized by the Company and the Guarantors and, upon
the effectiveness of the Registration Statement, will be qualified under the
Trust Indenture Act; on the Closing Date, the Indenture will have been duly
executed and delivered by the Company and the Guarantors and, assuming due
authorization, execution and delivery thereof by the Trustee, will constitute
a
legally valid and binding agreement of the Company and the Guarantors
enforceable against the Company and the Guarantors in accordance with its terms,
except as enforcement thereof may be limited by the Exceptions; and the
Indenture conforms in all material respects to the description thereof contained
in the Disclosure Package and the Final Offering Memorandum.
2
(i) Authorization
of the Notes.
The
Notes have been duly authorized by the Company; when the Notes are executed,
authenticated and issued in accordance with the terms of the Indenture and
delivered to and paid for by the Initial Purchasers pursuant to this Agreement
on the Closing Date or any Subsequent Closing Date, as the case may be (assuming
due authentication of the Notes by the Trustee), such Notes will constitute
legally valid and binding obligations of the Company, entitled to the benefits
of the Indenture and enforceable against the Company in accordance with their
terms, except as enforcement thereof may be limited by the Exceptions; and
the
Notes will conform in all material respects to the description thereof contained
in the Disclosure Package and the Final Offering Memorandum.
(j) Authorization
of the Guarantees.
The
Guarantees have been duly authorized by the Guarantors and, on the
Closing Date, or, if any Optional Notes are being purchased, on
the relevant Subsequent Closing Date, will have been duly executed by the
Guarantors and, when the Firm Notes and, if applicable, the Optional
Notes are issued and delivered in the manner provided for in the Indenture,
will constitute valid and binding obligations of the Guarantors, enforceable
against the Guarantors in accordance with their terms, except as enforcement
thereof may be limited by the Exceptions.
(k) Authorization
of the Conversion Shares.
The
Conversion Shares have been duly authorized and reserved and, when issued upon
conversion of the Notes in accordance with the terms of the Notes and the
Indenture, will be validly issued, fully paid and non-assessable and will
conform in all material respects to the description thereof contained in the
Disclosure Package and the Final Offering Memorandum, and the issuance of such
Conversion Shares will not be subject to any preemptive or similar
rights.
(l) Authorization
of the Registration Rights Agreement.
The
Registration Rights Agreement has been duly authorized, executed and delivered
by the Company and is a legal, valid and binding obligation of the Company
enforceable in accordance with its terms, except as enforcement thereof may
be
limited by the Exceptions.
(m) Capitalization.
The
authorized, issued and outstanding shares of capital stock of the Company are
as
set forth in the column entitled “Actual” in the “Capitalization” section of the
Disclosure Package and the Final Offering Memorandum (except for subsequent
issuances thereof, if any, contemplated by this Agreement or pursuant to the
Company’s dividend reinvestment and stock purchase plan and employee benefit
plans referred to in the Disclosure Package and the Final Offering Memorandum
or
as otherwise disclosed in the Disclosure Package and the Final Offering
Memorandum); the outstanding shares of stock or, as applicable, partnership,
membership or other equity interests, of the Company and each of the
subsidiaries of the Company (each, a “Subsidiary”
and
collectively, the “Subsidiaries”),
have
been duly authorized and validly issued and are fully paid and, with respect
to
shares of capital stock, limited partnership interests and membership interests,
non-assessable (except to the extent such non-assessability may be affected
by
Section 17-607 of the Delaware Revised Uniform Limited Partnership Act or
Section 18-607 of the Delaware Limited Liability Company Act), and, except
as
disclosed in the Disclosure Package and the Final Offering Memorandum, all
of
the outstanding shares of capital stock or partnership, membership or other
equity interests of the Subsidiaries are directly or indirectly owned of record
and beneficially by the Company, free and clear of any pledge, lien,
encumbrance, security interest or other claim other than such described in
the
Disclosure Package and the Final Offering Memorandum and other than a pledge
of
the membership interest in the owner of the EPA and OSHA buildings to Caplease
Debt Funding, LP, created to facilitate mezzanine financing on such properties,
and, except as disclosed in the Disclosure Package and the Final Offering
Memorandum and as otherwise set forth below, there are no outstanding (i)
securities or obligations of the Company or any of the Subsidiaries convertible
into or exchangeable or redeemable for any capital stock or other equity
interests of the Company or any Subsidiary, (ii) warrants, rights or
options to subscribe for or purchase from the Company or any Subsidiary any
such
capital stock or other equity interests or any such convertible or exchangeable
securities or obligations (except for warrants, rights or options issued under
incentive, benefit or share purchase plans of the Company referred to in the
Disclosure Package and the Final Offering Memorandum for officers, employees
and
others performing or providing similar services), or (iii) obligations of
the Company or any Subsidiary to issue any shares of capital stock or other
equity interests, any such convertible or exchangeable or redeemable securities
or obligations, or any such warrants, rights or options.
(n) Incorporation
and Good Standing.
Each of
the Company and the Subsidiaries (all of which Subsidiaries are named on
Schedule
III,
except
for those Subsidiaries that, considered in the aggregate as a single subsidiary,
do not constitute a “significant subsidiary” as defined in Rule 1-02 of
Regulation S-X promulgated by the Commission) has been duly incorporated or
organized and is validly existing as a corporation, limited partnership, limited
liability company or business or other trust, as applicable, in good standing
(where applicable) under the laws of its respective jurisdiction of
incorporation or organization with full corporate or other power and authority
to own its respective assets and to conduct its respective businesses as
described in the Disclosure Package and the Final Offering Memorandum and,
in
the case of the Company and the Guarantors, to execute and deliver this
Agreement and the other Operative Documents, and to consummate the transactions
contemplated herein and therein, including the issuance of the Notes and the
Guarantees and, upon conversion of the Notes in accordance with the terms of
the
Indenture, the issuance of the Conversion Shares by the Company.
(o) Foreign
Qualification; No Restriction on Distributions.
Each of
the Company and the Subsidiaries is duly qualified and is in good standing
in
each jurisdiction in which the nature or conduct of its business requires such
qualification and in which the failure, individually or in the aggregate, to
be
so qualified could reasonably be expected to have a material adverse effect
on
the assets, business, operations, earnings or financial condition of the Company
and the Subsidiaries taken as a whole (a “Material
Adverse Effect”);
except as disclosed in the Disclosure Package and the Final Offering Memorandum,
no Subsidiary is prohibited or restricted, directly or indirectly, from paying
dividends to the Company or from making any other distribution with respect
to
such Subsidiary’s capital stock or other equity interests (other than customary
restrictions on dividends or other distributions in the Company’s revolving
credit agreement and repurchase agreement) from repaying to the Company or
any
other Subsidiary any amounts that may from time to time become due under any
loans or advances to such Subsidiary from the Company or such other Subsidiary
(other than customary prepayment restrictions included in Subsidiary mortgage
financing agreements).
3
(p) Compliance
with Laws. The
Company and the Subsidiaries are in compliance in all material respects with
all
applicable federal, state, local or foreign laws, regulations, rules, decrees,
judgments and orders, including those relating to transactions with affiliates,
except where any failures to be in compliance could not, individually or in
the
aggregate, reasonably be expected to have a Material Adverse
Effect.
(q) No
Breach or Default. None
of
the Company and the Subsidiaries is in breach of or in default under (nor has
any event occurred which with notice, lapse of time, or both would constitute
a
breach thereof, or default thereunder by the Company or the Subsidiaries) its
respective organizational documents, or in the performance or observance of
any
obligation, agreement, covenant or condition contained in any license,
indenture, mortgage, deed of trust, loan or credit agreement or other agreement
or instrument to which the Company or any of the Subsidiaries is a party or
by
which any of them or their respective properties is bound, except for such
breaches or defaults that, individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect.
(r) Non-Contravention.
The
execution, delivery and performance of this Agreement and the other Operative
Documents and consummation of the transactions contemplated herein and therein,
including the issuance of the Notes and the Guarantees and, upon conversion
of
the Notes in accordance with the terms of the Indenture, the issuance of the
Conversion Shares by the Company, and the application of the proceeds from
the
sale of the Notes as described under “Use of Proceeds” in the Disclosure Package
and the Final Offering Memorandum will not (i) conflict with, or result in
any
breach of, or constitute a default under (nor constitute any event which with
notice, lapse of time, or both would constitute a breach of, or default under),
(A) any provision of the organizational documents of the Company or any
Subsidiary, or (B) any provision of any license, indenture, mortgage, deed
of
trust, loan or credit agreement or other agreement or instrument to which the
Company or any Subsidiary is a party or by which any of them or their respective
assets may be bound or affected, or under any federal, state, local or foreign
law, regulation or rule or any decree, judgment or order applicable to the
Company or any Subsidiary, except in the case of this clause (B) for such
conflicts, breaches or defaults that, individually or in the aggregate, could
not reasonably be expected to have a Material Adverse Effect; or (ii) result
in
the creation or imposition of any lien, charge, claim or encumbrance upon any
asset of the Company or any Subsidiary that, individually or in the aggregate,
could reasonably be expected to have a Material Adverse Effect. For purposes
of
the Ownership Limit contained in the Company’s charter, ownership of the Notes
will not be treated as ownership of the shares of Common Stock that are
potentially issuable upon conversion of the Notes, but any shares of Common
Stock that are received following a conversion will be subject to the Ownership
Limit and the other provisions of the Company’s charter, and such shares would
be subject to the remedies for violation as contained in the Company’s
charter.
(s) No
Further Approvals. No
approval, authorization, consent or order of or filing with any federal, state,
local or foreign governmental or regulatory commission, board, body, authority
or agency or any other third party is required in connection with the Company’s
or the Guarantors’ execution, delivery and performance of this Agreement and the
other Operative Documents, their consummation of the transactions contemplated
herein or therein, including the issuance of the Notes and the Guarantees and,
upon conversion of the Notes in accordance with the terms of the Indenture,
the
issuance of the Conversion Shares by the Company in the manner contemplated
by
this Agreement, the Disclosure Package and the Offering Memorandum, or the
application of the proceeds from the sale of the Notes as described under “Use
of Proceeds” in the Disclosure Package and the Final Offering Memorandum other
than (i) with respect to the transactions contemplated by the Registration
Rights Agreement, as may be required under the Securities Act, the Trust
Indenture Act and the rules and regulations promulgated thereunder, (ii) such
as
have been obtained, or will have been obtained on the Closing Date or the
relevant Subsequent Closing Date, as the case may be, under the Securities
Act
and the Exchange Act, (iii) any necessary qualification under the securities
or
blue sky laws of the various jurisdictions in which the Notes are being offered
by the Initial Purchasers, (iv) filings with and approvals by the Financial
Industry Regulatory Authority Inc. (“FINRA”)
and
(v) such approvals, authorizations, consents or orders or filings, the absence
of which, individually or in the aggregate, could not reasonably be expected
to
have a Material Adverse Effect.
(t) All
Necessary Permits, etc. Each
of
the Company and the Subsidiaries has all necessary licenses, authorizations,
consents and approvals and has made all necessary filings required under any
federal, state, local or foreign law, regulation or rule, and has obtained
all
necessary authorizations, consents and approvals from other persons, required
in
order to conduct the business described in the Disclosure Package and the Final
Offering Memorandum, except to the extent that any failure to have any such
licenses, authorizations, consents or approvals, to make any such filings or
to
obtain any such authorizations, consents or approvals could not, individually
or
in the aggregate, reasonably be expected to have a Material Adverse Effect;
none
of the Company and the Subsidiaries is in violation of, in default under, or
has
received any notice regarding a possible violation, default or revocation of
any
such license, authorization, consent or approval or any federal, state, local
or
foreign law, regulation or rule or any decree, judgment or order applicable
to
the Company or any of the Subsidiaries, the effect of which could reasonably
be
expected to result in a Material Adverse Effect; and no such license,
authorization, consent or approval contains a materially burdensome restriction
that is not adequately disclosed in the Disclosure Package and the Final
Offering Memorandum.
(u) Preparation
of the Financial Statements. The
financial statements, including the related supporting schedules and notes,
included in the Disclosure Package and the Final Offering Memorandum present
fairly the consolidated financial position of the entities to which such
financial statements relate (the “Covered
Entities”)
as of
the dates indicated and the consolidated results of operations and changes
in
financial position and cash flows of the Covered Entities for the periods
specified; such financial statements have been prepared in conformity with
generally accepted accounting principles as applied in the United States and
on
a consistent basis during the periods involved (except as may be expressly
stated in the related notes thereto) and in accordance with Regulation S-X
promulgated by the Commission; the financial data in the Disclosure Package
and
the Final Offering Memorandum fairly presents the information shown therein
and
has been compiled on a basis consistent with the financial statements included
in the Disclosure Package and the Final Offering Memorandum; no other financial
statements or supporting schedules are required to be included in the Disclosure
Package or the Final Offering Memorandum; the unaudited pro forma financial
information (including the related notes) included in the Disclosure Package
and
the Final Offering Memorandum complies as to form in all material respects
with
the applicable accounting requirements of the Securities Act and the Securities
Act Regulations and the Exchange Act and Exchange Act Regulations, as
applicable, and management of the Company believes that the assumptions
underlying the pro forma adjustments are reasonable; such pro forma adjustments
have been properly applied to the historical amounts in the compilation of
the
information; no other pro forma financial information is required to be included
in the Disclosure Package or the Final Offering Memorandum.
4
(v) Independent
Accountants. Ernst
& Young LLP and McGladrey
& ▇▇▇▇▇▇, LLP,
whose
reports on the consolidated financial statements of the Company and the
Subsidiaries and the Company’s predecessor are included or incorporated by
reference in the Disclosure Package and the Final Offering Memorandum were
during the periods covered by their reports independent registered public
accountants as required by the Securities Act, the Securities Act Regulations,
the Exchange Act and the Exchange Act Regulations.
(w) No
Material Adverse Effect. Subsequent
to the respective dates as of which information is given in the Disclosure
Package and the Final Offering Memorandum, and except as may be otherwise stated
in the Disclosure Package and the Final Offering Memorandum, there has not
been
(i) any Material Adverse Effect or any change or event that reasonably could
be
expected to have a Material Adverse Effect, whether or not arising in the
ordinary course of business, (ii) any obligation, contingent or otherwise,
directly or indirectly incurred by the Company or any of the Subsidiaries that
reasonably could be expected to result in a Material Adverse Effect or (iii)
except for regular quarterly dividends on the Common Stock and the Company’s
8.125% Series A Cumulative Redeemable Preferred Stock, $.01 par value per share
(the “Preferred
Stock”),
described in the Disclosure Package and the Final Offering Memorandum, any
dividend or distribution of any kind declared, paid or made by the Company
on
any class of its capital stock.
(x) Compliance
with Securities Laws. All
securities issued by the Company or any of the Subsidiaries prior to the date
hereof have been issued and sold in compliance with (i) all applicable federal
and state securities laws, and (ii) to the extent applicable to the issuing
entity, the requirements of the New York Stock Exchange.
(y) No
Price Stabilization. The
Company has not taken, and will not take, directly or indirectly, any action
that is designed to or that has constituted or that might reasonably be expected
to cause or result in stabilization or manipulation of the price of any security
of the Company to facilitate the sale or resale of the Notes. The Company
acknowledges that the Initial Purchasers may engage in passive market making
transactions in the Notes or the Common Stock in accordance with Regulation
M
under the Exchange Act.
(z) No
Broker. Except
as
set forth on Schedule
IV,
neither
the Company nor any of its affiliates (i) is required to register as a “broker”
or “dealer” in accordance with the provisions of the Exchange Act, or the
Exchange Act Regulations, or (ii) directly, or indirectly through one or more
intermediaries, controls or has any other association with (within the meaning
of Article I of the Bylaws of the FINRA) any member firm of the
FINRA.
(aa) No
Tax, Legal Advice. The
Company has not relied upon the Representative or legal counsel for the
Representative for any legal, tax or accounting advice in connection with the
offering and sale of the Notes.
(bb) No
Material Actions or Proceedings. There
are
no actions, suits, proceedings, inquiries or investigations pending or, to
the
Company’s knowledge, threatened against the Company or any of the Subsidiaries
or any of their respective officers and directors or to which the assets of
any
such entity are subject, at law or in equity, before or by any federal, state,
local or foreign governmental or regulatory commission, board, body, authority,
arbitral panel or agency, that could reasonably be expected to result in a
judgment, decree, award or order which would have a Material Adverse
Effect.
(cc) Statements
in Offering Memorandum. The
descriptions in the Disclosure Package and the Final Offering Memorandum of
the
legal or governmental proceedings, contracts, leases and other legal documents
therein described present fairly in all material respects the information
required to be disclosed, and there are no legal or governmental proceedings,
contracts, leases, or other documents of a character required to be described
in
the Disclosure Package or the Final Offering Memorandum that are not described
or filed as required; all agreements between the Company or any of the
Subsidiaries and third parties expressly referenced in the Disclosure Package
or
the Final Offering Memorandum are legal, valid and binding obligations of the
Company or one or more of the Subsidiaries, enforceable in accordance with
their
respective terms, except to the extent enforceability may be limited by the
Exceptions and, to the Company’s knowledge, no party is in breach or default
under any such agreements that could reasonably be expected to have a Material
Adverse Effect.
(dd) Intellectual
Property Rights. The
Company and the Subsidiaries own or possess adequate licenses or other rights
to
use all patents, trademarks, service marks, trade names, copyrights, software
and design licenses, trade secrets, manufacturing processes, other intangible
property rights and know-how (collectively “Intangibles”)
necessary to entitle the Company and the Subsidiaries to conduct their business
as described in the Disclosure Package and the Final Offering Memorandum, and
none of the Company and the Subsidiaries has received notice of infringement
of
or conflict with (and the Company knows of no such infringement of or conflict
with) asserted rights of others with respect to any Intangibles that,
individually or in the aggregate,
could reasonably be expected to have a Material Adverse Effect.
(ee) Disclosure
Controls, Internal Controls. The
Company and the Subsidiaries have established and maintain disclosure controls
and procedures (as such term is defined in Rule 13a-15 and 15d-15 of the
Exchange Act Regulations); such disclosure controls and procedures are designed
to ensure that material information relating to the Company and its Subsidiaries
is made known to the Company's Chief Executive Officer and its Chief Financial
Officer by others within those entities, and such disclosure controls and
procedures are effective to perform the functions for which they were
established; the Company and the Subsidiaries have established and maintain
internal control over financial reporting (as such term is defined in Rule
13a-15 and 15d-15 of the Exchange Act Regulations); such internal control over
financial reporting is designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements
for external purposes in accordance with generally accepted accounting
principles, including providing reasonable assurance regarding prevention or
timely detection of unauthorized acquisition, use or disposition of the
Company’s assets that could have a material effect on the financial statements;
the Company’s internal controls over financial reporting is effective and the
Company is not aware of any material weakness in its internal control over
financial reporting; the Company's auditors and the audit committee of the
board
of directors have been advised of: (i) any significant deficiencies and material
weaknesses in the design or operation of internal controls which are reasonably
likely to adversely affect the Company's ability to record, process, summarize
and report financial data; and (ii) any fraud, whether or not material, that
involves management or other employees who have a material role in the Company’s
internal controls; since the date of the most recent evaluation of such
disclosure controls and procedures, there have been no changes in internal
control over financial reporting that has materially affected, or is reasonably
likely to materially affect, the Company’s internal control over financial
reporting.
5
(ff) Tax
Matters. Each
of
the Company and the Subsidiaries has filed on a timely basis (including in
accordance with any applicable extensions) all necessary federal, state, local
and foreign income and franchise tax returns required to be filed through the
date hereof
or
have properly requested extensions thereof, and have paid all taxes shown as
due
thereon, and if due and payable, any related or similar assessment, fine or
penalty levied against the Company or any of the Subsidiaries, except for any
failure to file that, individually or in the aggregate, could not reasonably
be
expected to have a Material Adverse Effect; no tax deficiency has been asserted
against any such entity, and the Company does not know of any tax deficiency
that is likely to be asserted against the Company or any of the Subsidiaries
that, individually or in the aggregate, if determined adversely to any such
entity, could reasonably be expected to have a Material Adverse Effect; all
tax
liabilities are adequately provided for on the respective books of the Company
and the Subsidiaries.
(gg) REIT
Status. Commencing
with the taxable year ended December 31, 2004, the Company has been, and upon
the sale of the Notes pursuant to this Agreement will continue to be, organized
and operated in conformity with the requirements for qualification as a real
estate investment trust (“REIT”)
under
the Internal Revenue Code of 1986, as amended, including the regulations and
published interpretations thereunder (“Code”),
and
the current and proposed method of operation of the Company and the Subsidiaries
as described in the Disclosure Package and the Final Offering Memorandum will
enable the Company to continue to meet the requirements for qualification and
taxation as a REIT under the Code; the Company intends to continue to qualify
as
a REIT under the Code for all subsequent years, and the Company does not know
of
any event that could reasonably be expected to cause the Company to fail to
qualify as a REIT under the Code at any time.
(hh) Insurance.
The
Company and the Subsidiaries maintain, and, to the Company’s knowledge, their
borrowers maintain, insurance (issued by insurers of recognized financial
responsibility) of the types and in the amounts generally deemed adequate for
the business of the Company and the Subsidiaries.
(ii) ERISA
Matters. Each
of
the Company and the Subsidiaries is in compliance in all material respects
with
all presently applicable provisions of the Employee Retirement Income Security
Act of 1974, as amended, including the regulations and published interpretations
thereunder (“ERISA”);
no
“reportable event” (as defined in ERISA) has occurred with respect to any
“pension plan” (as defined in ERISA) for which the Company or any of the
Subsidiaries would have any material liability; none of the Company and the
Subsidiaries has incurred or expects to incur material liability under (i)
Title
IV of ERISA with respect to the termination of, or withdrawal from, any “pension
plan” (as defined in ERISA and subject to Title IV of ERISA) or (ii) Section 412
or 4971 of the Code; and each “pension plan” for which the Company or any of the
Subsidiaries would have any material liability and that is intended to be
qualified under Section 401(a) of the Code is so qualified in all material
respects and nothing has occurred, whether by action or by failure to act,
that
would cause the loss of such qualification.
(jj) No
Unlawful Payments. None
of
the Company and the Subsidiaries, or, to the Company’s knowledge, any officer or
director purporting to act on behalf of the Company or any of the Subsidiaries
has at any time (i) made any payment outside the ordinary course of
business to any investment officer or loan broker or person charged with similar
duties of any entity to which the Company or any of the Subsidiaries sells
or
from which the Company or any of the Subsidiaries buys loans or servicing
arrangements for the purpose of influencing such agent, officer, broker or
person to buy loans or servicing arrangements from or sell loans or servicing
arrangements to the Company or any of the Subsidiaries, (ii) engaged in any
transactions, maintained any bank account or used any corporate funds except
for
transactions, bank accounts and funds that have been and are reflected in the
normally maintained books and records of the Company and the Subsidiaries;
or
(iii) made any other payment of funds of the Company or any of the Subsidiaries
or received or retained any funds in violation of any law, rule or regulation
or
of a character required to be disclosed in the Disclosure Package or the Final
Offering Memorandum.
(kk) No
Outstanding Loans; Related Party Transactions. Except
as
otherwise disclosed in the Disclosure Package and the Final Offering Memorandum,
there are no outstanding loans or advances or guarantees of indebtedness by
the
Company or any of the Subsidiaries to or for the benefit of any of the officers
or directors of the Company or of any of the Subsidiaries or any of the members
of the families of any of them; except as otherwise disclosed in the Disclosure
Package and the Final Offering Memorandum, no other relationship, direct or
indirect, exists between or among the Company or any of the Subsidiaries on
the
one hand, and the directors, officers, stockholders, customers or suppliers
of
the Company or any of the Subsidiaries on the other hand, that is required
by
the Securities Act and the Securities Act Regulations to be described in the
Disclosure Package or the Final Offering Memorandum and that is not so
described.
(ll) No
Finder’s Fees.
Except
as disclosed in the Disclosure Package and the Final Offering Memorandum or
payable to the Representative or its affiliates, none of the Company and the
Subsidiaries has incurred any liability for any finder’s fees or similar
payments in connection with the transactions herein contemplated.
(mm) Not
an Investment Company. None
of
the Company and the Subsidiaries is, and after receipt of payment for the Notes
and application of the proceeds therefrom as described under “Use of Proceeds”
in the Disclosure Package and the Final Offering Memorandum will be, an
“investment company” or an entity “controlled” by an “investment company”, as
such terms are defined in the Investment Company Act of 1940, as amended (the
“Investment
Company Act”).
(nn) Statistical
and Market-Related Data. Any
statistical and market-related data included in the Final Offering Memorandum
and the Disclosure Package are based on or derived from sources that the Company
believes to be reliable and accurate.
(oo) No
Registration Rights. There
are
no persons with registration or other similar rights to have any securities
registered pursuant to the Registration Statement (other than as provided in
the
Registration Rights Agreement).
6
(pp) Title
to Property. Except
as
disclosed in the Disclosure Package and the Final Offering Memorandum: (i)
the
Company and the Subsidiaries have good title to (and are the sole legal,
beneficial and equitable owner of) all loan assets and other personal property
described in the Disclosure Package or the Final Offering Memorandum or shown
on
the financial statements included in the Disclosure Package and the Final
Offering Memorandum, and own fee simple title to or have a valid leasehold
interest or estate for years in, as applicable, all real property (other than
real property not purported to be owned or leased by the Company or the
Subsidiaries) described in the Disclosure Package or the Final Offering
Memorandum or shown on the financial statements included in the Disclosure
Package and the Final Offering Memorandum, in each case free and clear of all
liens, security interests, pledges, charges, encumbrances, encroachments,
restrictions, mortgages and defects, except as do not materially and adversely
affect the value of such property or interfere with the use made or proposed
to
be made of such property by the Company and the Subsidiaries; and (ii) any
real
property improvements, equipment and personal property held under lease by
the
Company or any of the Subsidiaries are held under valid, existing and
enforceable leases, with such exceptions as are not material and do not
interfere with the use made or proposed to be made of such real property
improvements, equipment and personal property by the Company or such
Subsidiary.
(qq) Title
Insurance. Other
than with respect to development loans or loans with respect to Yum Brands,
Inc.
franchise lenders, the Company or a Subsidiary has obtained, from a title
insurance company licensed to issue such policy, a lender’s title insurance
policy on any real property in respect of which the Company or any of the
Subsidiaries has a loan in its portfolio as of the date hereof, the Closing
Date
or any Subsequent Closing Date secured thereby that insures the lien of its
mortgage on the real property with coverage equal to the maximum aggregate
principal amount of any indebtedness held by the Company or a Subsidiary and
so
secured by the real property;
the
Company or a Subsidiary has obtained, from a title insurance company licensed
to
issue such policy, an owner’s or leasehold title insurance policy on any real
property owned in fee or leased, as the case may be, by the Company or any
of
the Subsidiaries as of the date hereof, the Closing Date or any Subsequent
Closing Date that insures its fee simple title or leasehold interest
with
coverage in an amount at least equal to the amount generally deemed in the
Company’s industry to be commercially reasonable in the market where the
property is located.
(rr) No
Real Property Interests. There
are
no real property interests or loans in respect of real property that any of
the
Company and the Subsidiaries directly or indirectly intends to acquire, lease,
originate or underwrite or any contracts, letters of intent, term sheets,
agreements, arrangements or understandings with respect to the direct or
indirect acquisition, disposition, origination or underwriting by the Company
or
the Subsidiaries of interests in real property or loans in respect of real
property that are required to be described in the Disclosure Package or the
Final Offering Memorandum and are not so described.
(ss) Mortgages.
Except
as
set forth in the Disclosure Package and the Final Offering Memorandum, the
mortgages and deeds of trust encumbering any real property owned in fee or
leased by the Company or a Subsidiary (i) are not convertible (in the absence
of
foreclosure) into an equity interest in such real property or in the Company
or
any Subsidiary, (ii) are not and will not be cross-defaulted to any indebtedness
other than indebtedness of the Company or any of the Subsidiaries, and (iii)
are
not and will not be cross-collateralized to any property not owned by the
Company or any of the Subsidiaries.
(tt) No
Hazardous Materials. Except
as
otherwise disclosed in the Disclosure Package and the Final Offering Memorandum,
(i) none of the Company and the Subsidiaries has at any time, handled, stored,
treated, transported, manufactured, spilled, leaked, discharged, dumped,
transferred or otherwise disposed of Hazardous Materials (as hereinafter
defined) on, in, under, to or from any of the Real Property (as hereinafter
defined), except as could not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect; (ii) the Company has not received
any notice of any seepage, leak, discharge, release, emission, spill, or dumping
of Hazardous Materials into waters on or adjacent to any of the Real Property,
except as could not reasonably be expected, individually or in the aggregate,
to
have a Material Adverse Effect; (iii) none of the Company and the Subsidiaries
has received any notice of any occurrence or circumstance that, with notice
or
passage of time or both, would give rise to a claim under or pursuant to any
federal, state or local environmental statute, regulation or rule under common
law, pertaining to Hazardous Materials on or originating from any of the Real
Property or any assets described in the Disclosure Package or the Final Offering
Memorandum or arising out of the conduct of any of the Company and the
Subsidiaries, including without limitation a claim under or pursuant to any
Environmental Statute (as hereinafter defined), except for claims that,
individually or in the aggregate, could not reasonably be expected to have
a
Material Adverse Effect; (iv) none of the Real Property is included or, to
the
Company’s knowledge, proposed for inclusion on the National Priorities List
issued pursuant to CERCLA (as hereinafter defined) by the United States
Environmental Protection Agency or, to the Company’s knowledge, proposed for
inclusion on any similar list or inventory issued pursuant to any other
Environmental Statute or issued by any other governmental authority; and (v)
in
the operation of the Company’s and its predecessor’s businesses, the Company or
its predecessor has acquired, before the acquisition or origination of any
loan
in respect of real property or the acquisition of any real property, an
environmental assessment of the real property and, to the extent that any
condition was revealed that could reasonably have been expected to result in
material liability associated with the presence or release of a Hazardous
Material, or any violation or potential violation of any Environmental Statute,
the Company or its predecessor took, or required its borrower to take, all
commercially reasonable action necessary or advisable (including any capital
improvements) for clean-up, closure or other compliance with such Environmental
Statute.
As
used
herein, “Real
Property”
means
collectively any real property underlying any loan held by the Company or any
of
the Subsidiaries or any real property leased or owned by any of
them,
As
used
herein, “Hazardous
Material”
means,
without limitation, any flammable explosives, radioactive materials, hazardous
substances, hazardous wastes, toxic substances, asbestos or any hazardous
material as defined by any applicable federal, state or local environmental
law,
regulation or rule, including, without limitation, the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as amended,
42
U.S.C. Sections 9601-9675 (“CERCLA”),
the
Hazardous Materials Transportation Act, as amended, 49 U.S.C. Sections
1801-1819, the Resource Conservation and Recovery Act, as amended, 42 U.S.C.
Sections 6901-6992K, the Emergency Planning and Community Right-to-Know Act
of
1986, 42 U.S.C. Sections 11001-11050, the Toxic Substances Control Act, 15
U.S.C. Sections
2601-2671,
the Federal Insecticide, Fungicide and Rodenticide Act, 7 U.S.C.
Sections
136-136y, the Clean Air Act, 42 U.S.C. Sections 7401-7642, the Clean Water
Act
(Federal Water Pollution Control Act), 33 U.S.C. Sections 1251-1387, the Safe
Drinking Water Act, 42 U.S.C. Sections 300f-300j-26, and the Occupational Safety
and Health Act, 29 U.S.C. Sections 651-678, as any of the above statutes may
be
amended from time to time, and in the regulations promulgated pursuant to each
of the foregoing (individually, an “Environmental
Statute”
and
collectively the “Environmental
Statutes”)
or by
any federal, state or local governmental authority having or claiming
jurisdiction over the properties described in the Disclosure Package or the
Final Offering Memorandum.
7
(uu) Costs
of Environmental Compliance. To
the
Company’s knowledge, there are no costs or liabilities associated with any of
the Real Property arising under any Environmental Statute (including, without
limitation, any capital or operating expenditures required for clean-up, closure
of properties or compliance with any Environmental Statute or any permit,
license or approval, any related constraints on operating activities and any
potential liabilities to third parties) that, individually or in the aggregate,
could reasonably be expected to have a Material Adverse Effect.
(vv) Phase
Is. None
of
the entities that prepared Phase I or other environmental assessments with
respect to the Real Property was employed for such purpose on a contingent
basis
or has any substantial profit or equity interest in the Company or any of the
Subsidiaries, and none of their directors, officers or employees is connected
with the Company or any of the Subsidiaries as a promoter, selling agent,
trustee, officer, director, employee or significant shareholder.
(ww) Compliance
with Laws. Except
as
disclosed in the Disclosure Package and the Final Offering Memorandum, (i)
the
Company does not know of any violation of any municipal, state or federal law,
rule or regulation concerning the Real Property or any part thereof that,
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect; (ii) to the Company’s knowledge, the Real Property
complies with all applicable zoning laws, ordinances, regulations and deed
restrictions or other covenants in all material respects and, if and to the
extent there is a failure to comply, such failure does not materially impair
the
value of any of the Real Property and will not result in a forfeiture or
reversion of title; (iii) the Company has not received any written notice of
any
condemnation of or zoning change affecting the Real Property or any part
thereof, and the Company does not know of any such condemnation or zoning change
that is threatened and that, individually or in the aggregate, if consummated
could reasonably be expected to have a Material Adverse Effect; (iv) to the
Company’s knowledge, all improvements constituting a part of the Real Property
are free of material structural defects and all building systems contained
therein are in good working order in all material respects, subject to ordinary
wear and tear, except as could not reasonably be expected to have Material
Adverse Effect, (v) all liens, charges, encumbrances, claims, or restrictions
on
or affecting the assets of the Company or any of the Subsidiaries that are
required to be described in the Disclosure Package or the Final Offering
Memorandum are disclosed therein; (vi) all leases of any of the Real Property
constitute the legal, valid and binding agreements of each party thereto
(subject to the Exceptions), to the Company’s knowledge no tenant under any of
such leases is in default thereunder and there is no event that, but for the
passage of time or the giving of notice or both would constitute a default
thereunder, except for such defaults that, individually or in the aggregate,
could not reasonably be expected to have a Material Adverse Effect; (vii) all
notes and other loan agreements, mortgages, assignments of leases and rents,
subordination agreements and other security agreements in favor of the Company
and the Subsidiaries with respect to any of the Real Property constitute the
legal, valid and binding agreements of each party thereto (subject to the
Exceptions), except for such failures to be legal, valid and binding that,
individually or in the aggregate, could not reasonably be expected to have
a
Material Adverse Effect, and to the Company’s knowledge no party to any such
agreement is in default thereunder and there is no event that, but for the
passage of time or the giving of notice or both would constitute a default
thereunder, except for such defaults that, individually or in the aggregate,
could not reasonably be expected to have a Material Adverse Effect and (viii)
no
tenant under any lease pursuant to which any of the Real Property is leased
has
an option or right of first refusal to purchase the premises leased thereunder
or the building of which such premises are a part, except for such options
or
rights of first refusal that, individually or in the aggregate, if exercised,
could not reasonably be expected to have a Material Adverse Effect.
(xx) Certificates.
Any
certificate signed by any officer of the Company delivered to the Representative
or to counsel for the Initial Purchasers pursuant to or in connection with
this
Agreement shall be deemed a representation and warranty by the Company to each
Initial Purchaser as to the matters covered thereby.
(yy) No
Stamp or Transfer Taxes.
To the
Company's knowledge, there are no stamp or other issuance or transfer taxes
or
other similar fees or charges under federal law or the laws of any state, or
any
political subdivision thereof, required to be paid in connection with the
execution and delivery of this Agreement or the issuance by the Company or
sale
by the Company of the Notes or the issuance of the Guarantees by the Guarantors
or upon the issuance of Common Stock upon the conversion of the
Notes.
(zz) No
General Solicitation.
Assuming the accuracy of representations and warranties of the Initial
Purchasers herein, none of the Company or any of its affiliates (as defined
in
Rule 501(b) of Regulation D under the Securities Act (“Regulation D”)), has,
directly or through an agent, engaged in any form of general solicitation or
general advertising in connection with the offering of the Notes or the
Conversion Shares (as those terms are used in Regulation D) under the Securities
Act or in any manner involving a public offering within the meaning of Section
4(2) of the Securities Act; the Company has not entered into any contractual
arrangement with respect to the distribution of the Notes or the Conversion
Shares except for this Agreement, and the Company will not enter into any such
arrangement except for the Registration Rights Agreement and as may be
contemplated thereby.
(aaa) PORTAL.
The
Company has been advised by the FINRA's PORTAL Market that the Notes have been
designated PORTAL-eligible securities in accordance with the rules and
regulations of the FINRA.
SECTION
2. PURCHASE, SALE AND DELIVERY OF THE NOTES
(a) The
Firm Notes.
The
Company agrees to issue and sell to the several Initial Purchasers the Firm
Notes upon the terms herein set forth. On the basis of the representations,
warranties and agreements herein contained, and upon the terms but subject
to
the conditions herein set forth, the Initial Purchasers agree, severally and
not
jointly, to purchase from the Company the respective principal amount of Firm
Notes set forth opposite their names on Schedule
I
at a
purchase price of 97% of the aggregate principal amount thereof.
8
(b) The
Closing Date.
Delivery of the Firm Notes to be purchased by the Initial Purchasers and payment
therefor shall be made at the offices of Shearman & Sterling LLP, ▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (or such other place as may be agreed
to
by the Company and the Representative) at 9:00 a.m. New York City time, on
October 9, 2007, or such other time and date not later than October 12, 2007
as
the Representative shall designate by notice to the Company (the time and date
of such closing are called the “Closing Date”).
(c) The
Optional Notes; Any Subsequent Closing Date.
In
addition, on the basis of the representations, warranties and agreements herein
contained, and upon the terms but subject to the conditions herein set forth,
the Company hereby grants an option to the several Initial Purchasers to
purchase, severally and not jointly, up to $25,000,000 aggregate principal
amount of Optional Notes from the Company at the same price as the purchase
price to be paid by the Initial Purchasers for the Firm Notes. The option
granted hereunder may be exercised at any time and from time to time upon notice
by the Representative to the Company, which notice may be given at any time
within 30 days from the date of this Agreement. Such notice shall set forth
(i)
the amount (which shall be an integral multiple of $1,000 in aggregate principal
amount) of Optional Notes as to which the Initial Purchasers are exercising
the
option, (ii) the names and denominations in which the Optional Notes are to
be
registered and (iii) the time, date and place at which such Notes will be
delivered (which time and date may be simultaneous with, but not earlier than,
the Closing Date; and in such case the term “Closing Date” shall refer to the
time and date of delivery of the Firm Notes and the Optional Notes). Such time
and date of delivery, if subsequent to the Closing Date, is called a “Subsequent
Closing Date” and shall be determined by the Representative. Such date may be
the same as the Closing Date but not earlier than the Closing Date nor later
than 10 business days after the date of such notice. If any Optional Notes
are
to be purchased, each Initial Purchaser agrees, severally and not jointly,
to
purchase the principal amount of Optional Notes (subject to such adjustments
to
eliminate fractional amount as the Representative may determine) that bears
the
same proportion to the total principal amount of Optional Notes to be purchased
as the principal amount of Firm Notes set forth on Schedule
I
opposite
the name of such Initial Purchaser bears to the total principal amount of Firm
Notes.
(d) Payment
for the Notes.
Payment
for the Notes shall be made at the Closing Date (and, if applicable, at any
Subsequent Closing Date) by wire transfer of immediately available funds to
the
order of the Company.
It
is
understood that the Representative has been authorized, for its own account
and
the accounts of the several Initial Purchasers, to accept delivery of and
receipt for, and make payment of the purchase price for, the Firm Notes and
any
Optional Notes the Initial Purchasers have agreed to purchase. Deutsche Bank
Securities Inc., individually and not as the Representative of the Initial
Purchasers, may (but shall not be obligated to) make payment for any Notes
to be
purchased by any Initial Purchaser whose funds shall not have been received
by
the Representative by the Closing Date or any Subsequent Closing Date, as the
case may be, for the account of such Initial Purchaser, but any such payment
shall not relieve such Initial Purchaser from any of its obligations under
this
Agreement.
(e) Delivery
of the Notes.
The
Company shall deliver, or cause to be delivered, to the Representative for
the
accounts of the several Initial Purchasers the Firm Notes at the Closing Date,
against the irrevocable release of a wire transfer of immediately available
funds for the amount of the purchase price therefor. The Company shall also
deliver, or cause to be delivered, to the Representative for the accounts of
the
several Initial Purchasers, the Optional Notes the Initial Purchasers have
agreed to purchase at the Closing Date or any Subsequent Closing Date, as the
case may be, against the irrevocable release of a wire transfer of immediately
available funds for the amount of the purchase price therefor. Delivery of
the
Notes shall be made through the facilities of The Depository Trust Company
(“DTC”)
unless
the Representative shall otherwise instruct. Time shall be of the essence,
and
delivery at the time and place specified in this Agreement is a further
condition to the obligations of the Initial Purchasers.
SECTION
3. COVENANTS OF THE COMPANY
The
Company covenants and agrees with each Initial Purchaser as
follows:
(a) Representative's
Review of Proposed Amendments and Supplements.
During
such period beginning on the date hereof and ending on the date of the
completion of the resale of the Notes by the Initial Purchasers (as notified
by
the Initial Purchasers to the Company), prior to amending or supplementing
the
Disclosure Package or the Final Offering Memorandum, the Company shall furnish
to the Representative for review a copy of each such proposed amendment or
supplement, and the Company shall not print, use or distribute such proposed
amendment or supplement to which the Representative reasonably
objects.
(b) Amendments
and Supplements to the Offering Memorandum and Other Securities Act
Matters.
If, at
any time prior to the completion of the resale of the Notes by the Initial
Purchasers (as notified by the Initial Purchasers to the Company), any event
or
development shall occur or condition exist as a result of which it is necessary
to amend or supplement the Disclosure Package or the Final Offering Memorandum
in order that the Disclosure Package or the Final Offering Memorandum will
not
include an untrue statement of a material fact or omit to state a material
fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made or then prevailing, as the case may
be,
not misleading, or if in the opinion of the Representative it is otherwise
necessary to amend or supplement the Disclosure Package or the Final Offering
Memorandum to comply with law, the Company shall promptly notify the Initial
Purchasers and prepare, subject to Section 3(a) hereof, such amendment or
supplement as may be necessary to correct such untrue statement or
omission.
(c) Copies
of Disclosure Package and the Offering Memorandum.
The
Company agrees to furnish to the Representative, without charge, until the
earlier of nine months after the date hereof or the completion of the resale
of
the Notes by the Initial Purchasers (as notified by the Initial Purchasers
to
the Company) as many copies of the materials contained in the Disclosure Package
and the Final Offering Memorandum and any amendments and supplements thereto
as
the Representative may reasonably request.
(d) Blue
Sky Compliance.
The
Company shall cooperate with the Representative and counsel for the Initial
Purchasers, as the Initial Purchasers may reasonably request from time to time,
to qualify or register the Notes for sale under (or obtain exemptions from
the
application of) the state securities or blue sky laws or Canadian provincial
securities laws of those jurisdictions designated by the Representative, shall
comply with such laws and shall continue such qualifications, registrations
and
exemptions in effect so long as required for the distribution of the Notes.
The
Company shall not be required to qualify as a foreign corporation or to take
any
action that would subject it to general service of process in any such
jurisdiction where it is not presently qualified or where it would be subject
to
taxation as a foreign corporation. The Company will advise the Representative
promptly upon receipt of notice of the suspension of the qualification or
registration of (or any such exemption relating to) the Notes for offering,
sale
or trading in any jurisdiction or any initiation or threat of any proceeding
for
any such purpose, and in the event of the issuance of any order suspending
such
qualification, registration or exemption, the Company shall use its best efforts
to obtain the withdrawal thereof at the earliest possible moment.
9
(e) Rule
144A Information.
For so
long as any of the Notes are “restricted securities” within the meaning of Rule
144(a)(3) under the Securities Act, the Company shall provide to any holder
of
the Notes or to any prospective purchaser of the Notes designated by any holder,
upon request of such holder or prospective purchaser, information required
to be
provided by Rule 144A(d)(4) of the Securities Act if, at the time of such
request, the Company is not subject to the reporting requirements under Section
13 or 15(d) of the Exchange Act.
(f) Legends.
Each of
the Notes will bear, to the extent applicable, the legend contained in “Notice
to Investors; Transfer Restrictions” in the Disclosure Package and the Final
Offering Memorandum for the time period and upon the other terms stated
therein.
(g) Written
Information Concerning the Offering.
Without
the prior written consent of the Representative, the Company will not give
to
any prospective purchaser of the Notes any written information concerning the
offering of the Notes other than the Disclosure Package, the Final Offering
Memorandum or any other offering materials prepared by or with the prior consent
of the Representative.
(h) No
General Solicitation.
Except
following the effectiveness of the Registration Statement, the Company will
not,
and will cause its subsidiaries not to, solicit any offer to buy or offer to
sell the Notes by means of any form of general solicitation or general
advertising (as those terms are used in Regulation D under the Securities Act)
or in any manner involving a public offering within the meaning of Section
4(2)
of the Securities Act.
(i) No
Integration.
The
Company will not, and will cause the Subsidiaries not to, sell, offer for sale
or solicit offers to buy or otherwise negotiate in respect of any “security” (as
defined in the Securities Act) in a transaction that could be integrated with
the sale of the Notes in a manner that would require the registration under
the
Securities Act of the Notes.
(j) Information
to Publishers.
Any
information provided by the Company to publishers of publicly available
databases about the terms of the Notes and the Indenture shall include a
statement substantially to the effect that the Notes have not been registered
under the Securities Act and are subject to restrictions under Rule 144A of
the
Securities Act.
(k) DTC.
The
Company will cooperate with the Representative and use its best efforts to
permit the Notes to be eligible for clearance and settlement through
DTC.
(l) Rule
144 Tolling.
During
the period of two years after the last Closing Date, the Company will not,
and
will not permit any of its “affiliates” (as defined in Rule 144 under the
Securities Act) to, resell any of the Notes that constitute “restricted
securities” under Rule 144 that have been reacquired by any of
them.
(m) Use
of Proceeds.
The
Company shall apply the net proceeds from the sale of the Notes in the manner
described under the caption “Use of Proceeds” in the Disclosure Package and the
Final Offering Memorandum.
(n) Transfer
Agent.
The
Company shall engage and maintain, at its expense, a registrar and transfer
agent for the Common Stock.
(o) NYSE
Listing.
The
Company shall use its best efforts to list the Conversion Shares on the New
York
Stock Exchange.
(p) Available
Conversion Shares.
The
Company will keep available at all times, free of pre-emptive rights, the
maximum number of Conversion Shares.
(q) Conversion
Price.
Between
the date hereof and the Closing Date, the Company will not do or authorize
any
act or thing that would result in an adjustment of the conversion
price.
(r) Agreement
Not to Offer or Sell Additional Securities.
The
Company shall refrain during a period
of
60 days
from the
date of the Final Offering Memorandum, without the prior written consent of
the
Representative, from, directly or indirectly, (i) offering, pledging,
selling, contracting to sell, selling any option or contract to purchase,
purchasing any option or contract to sell, granting any option for the sale
of,
or otherwise disposing of or transferring (or entering into any transaction
or
device which is designed to, or reasonably could be expected to, result in
the
disposition by any person at any time in the future of), any share of Common
Stock or any securities convertible into or exercisable or exchangeable for
Common Stock (including units of limited partnership interest in Caplease,
LP)
or such securities, or filing any registration statement under the Securities
Act with respect to any of the foregoing, or (ii) entering 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 Common Stock
or
such other securities, 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 (other than as contemplated by this Agreement
and the Registration Rights Agreement with respect to the Conversion Shares);
provided, however, that the Company may (A) issue securities pursuant to the
Company’s 2004 Stock Incentive Plan, as it may be amended and restated from time
to time, (B) file or amend a registration statement on Form S-8 relating to
the
Company’s 2004 Stock Incentive Plan, as it may be amended and restated from time
to time, (C) issue shares of Common Stock pursuant to the Company’s existing
dividend reinvestment and stock purchase plan, and (D) issue shares of Common
Stock or options, warrants or convertible securities (including units of limited
partnership interest in Caplease, LP) as consideration in a bona fide merger
or
acquisition transaction by the Company.
10
(s) Future
Reports to Stockholders.
The
Company will make available to its stockholders as soon as practicable after
the
end of each fiscal year an annual report (including a balance sheet and
statements of income, stockholders' equity and cash flows of the Company and
its
consolidated subsidiaries certified by independent public accountants) and,
as
soon as practicable after the end of each of the first three quarters of each
fiscal year (beginning with the fiscal quarter ending after the date of the
Final Offering Memorandum), to make available to its stockholders consolidated
summary financial information of the Company and its subsidiaries for such
quarter in reasonable detail.
(t) No
Manipulation of Price.
The
Company will not, and will use its best efforts to cause its officers and
directors to not, (i) take, directly or indirectly, prior to termination of
the
initial purchaser syndicate contemplated by this Agreement, any action designed
to stabilize or manipulate the price of any security of the Company, or which
may cause or result in, or which might in the future reasonably be expected
to
cause or result in, the stabilization or manipulation of the price of any
security of the Company, to facilitate the sale or resale of any of the Notes,
(ii) sell, bid for, purchase or pay anyone any compensation for soliciting
purchases of the Notes or (iii) pay or agree to pay to any person any
compensation for soliciting any order to purchase any other securities of the
Company.
(u) Final
Term Sheet.
The
Company will prepare or cause to be prepared a final term sheet, containing
solely a description of the Notes and the offering thereof, in the form approved
by the Representative and attached as Schedule
IIB
hereto
(the “Final
Term Sheet”).
(v) REIT
Qualification.
The
Company will use its best efforts to meet the requirements to qualify as a
REIT
under the Code, unless it is determined by the Company’s board of directors to
be in the best interest of the Company for the Company to no longer so
qualify.
(w) Investment
Company.
The
Company will use its best efforts not to invest, or otherwise use the proceeds
received by the Company from its sale of the Notes in such a manner as would
require the Company or any of its Subsidiaries to register as an investment
company under the Investment Company Act.
SECTION
4. PAYMENT OF EXPENSES
(a) The
Company
agrees to pay all costs and expenses incident to the performance of its
obligations under this Agreement, whether or not the transactions contemplated
hereunder are consummated or this Agreement is terminated, including expenses
and fees in connection with: (i) the preparation of the materials contained
in
the Disclosure Package including the Preliminary Offering Memorandum, the Final
Offering Memorandum, and any amendments or supplements thereto and this
Agreement, and the printing and furnishing of copies of each thereof to the
Initial Purchasers (including costs of mailing and shipment); (ii) the
preparation, issuance and delivery of the Notes, including all printing and
engraving costs, any issue or other transfer or stamp taxes or duties payable
upon the sale of the Notes to the Initial Purchasers; (iii) the qualification
(or obtaining exemptions from the qualification) of the Notes for offering
and
sale under state laws that the Company and the Representative have mutually
agreed are appropriate and the determination of their eligibility for investment
under state law as aforesaid, and the printing and furnishing of copies of
any
blue sky surveys or legal investment surveys to the Initial Purchasers; (iv)
the
fees and expenses of the Trustee under the Indenture; (v) the fees and expenses
of any transfer agent or registrar for the Common Stock; (vi) the fees and
expenses incurred in connection with the listing of the Conversion Shares on
the
New York Stock Exchange; (vii) all costs and expenses incident to the travel
and
accommodation of employees of the Company in making road show presentations
with
respect to the offering of the Notes; (viii) costs and expenses of any internet
road show; (ix) all expenses and fees in connection with admitting the Notes
for
trading in the PORTAL market; (x) preparing and distributing three copies of
bound volumes of transaction documents for the Representative and its legal
counsel; and (xi) the performance of the Company’s
other
obligations hereunder; provided that, except as provided in this Section 4
or in
Sections 8 and 9, the Initial Purchasers shall pay their own costs and expenses.
The Company and the Initial Purchasers additionally agree to the provisions
of
Schedule
VA.
(b) If
this
Agreement shall be terminated by the Representative
pursuant
to clause (a) of Section 7, the Company will reimburse the Initial Purchasers
for all out-of-pocket expenses (such as printing, facsimile, courier service,
direct computer expenses, accommodations and travel, including the fees and
expenses of DLA Piper US LLP and Shearman & Sterling LLP) reasonably
incurred by such Initial Purchasers in connection with this Agreement or the
transactions contemplated herein, up to a maximum amount set forth on
Schedule
VB.
SECTION
5. CONDITIONS OF THE OBLIGATIONS OF THE INITIAL PURCHASERS
The
obligations of the several Initial Purchasers to purchase and pay for the Notes
as provided herein on the Closing Date and, with respect to the Optional Notes
on any Subsequent Closing Date, shall be subject to the accuracy of the
representations and warranties on the part of the Company hereunder as of the
date hereof and as of the Closing Date as though then made and, with respect
to
the Optional Notes, as of the related Subsequent Closing Date as though then
made, to the accuracy of the statements of the Company made in any certificates
pursuant to the provisions hereof, to the timely performance by the Company
of
its obligations hereunder, and to each of the following additional
conditions:
(a) Opinion
of Counsel to the Company.
The
Company shall furnish to the Representative on the Closing Date and on each
Subsequent Closing Date opinions of Hunton & ▇▇▇▇▇▇▇▇ LLP, counsel for the
Company and the Subsidiaries, addressed to the Representative and dated the
Closing Date and each Subsequent Closing Date, as set forth on Schedule
VI.
11
(b) Opinion
of General Counsel. The Company shall furnish to the Representative on the
Closing Date and on each Subsequent Closing Date an opinion of the Company’s
Vice President, General Counsel and Corporate Secretary, addressed to the
Representative, dated the Closing Date and each Subsequent Closing Date and
otherwise in form and substance satisfactory to DLA Piper US LLP and Shearman
& Sterling LLP, counsel for the Initial Purchasers, stating as set forth on
Schedule
VII.
(c) Accountants’
Comfort Letters.
The
Representative shall have received from Ernst & Young LLP and McGladrey
& ▇▇▇▇▇▇, LLP, letters dated, respectively, as of the date of this
Agreement, the Closing Date and any Subsequent Closing Date, as the case may
be,
addressed to the Representative, in form and substance satisfactory to the
Representative, relating to the financial statements, including pro forma
financial statements, of the Company, and such other matters customarily covered
by comfort letters to initial purchasers in connection with similar
transactions.
(d) Opinion
of Counsel to the Initial Purchasers.
The
Representative shall have received on the Closing Date and any Subsequent
Closing Date the favorable opinion of DLA Piper US LLP and Shearman &
Sterling LLP dated the Closing Date and each Subsequent Closing Date, addressed
to the Representative and in form and substance satisfactory to the
Representative.
(e) No
Objectionable Amendments.
No
amendment or supplement to the Disclosure Package or the Final Offering
Memorandum shall have been made to which the Representative shall have
reasonably objected in writing.
(f) No
Orders and No Misstatements.
No
order preventing or suspending the use of the Final Offering Memorandum or
any
document in the Disclosure Package or asserting that any of the transactions
contemplated by this Agreement is subject to the registration requirements
of
the Securities Act shall have been issued, and no proceedings for such purpose
shall have been initiated or threatened. None of the Disclosure Package and
the
Final Offering Memorandum shall 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, in the light of the circumstances under which
they
were made, not misleading.
(g) No
Rating Agency Change.
There
shall not have occurred any downgrading, nor shall any notice have been given
of
any intended or potential downgrading or of any review for a possible change
that does not indicate the direction of the possible change, in the rating
accorded any securities of the Company or any of its Subsidiaries by any
“nationally recognized statistical rating organization” as such term is defined
for purposes of Rule 436(g)(2) under the Securities Act.
(h) Lock-Up
Agreements.
The
Representative shall have received executed lockup agreements from each of
the
executive officers and directors of the Company substantially in the form of
Schedule
VIII.
(i) Officers'
Certificate from the Company.
On each
of the Closing Date and any Subsequent Closing Date, the Representative shall
have received a written certificate executed by the Chief Executive Officer
of
the Company or the Chief Financial Officer of the Company, in each case on
behalf of the Company and not individually, dated as of such Closing Date,
to
the effect that:
i. the
Disclosure Package, as of the Applicable Time and the date of such certificate,
did not and does not, and the Final Offering Memorandum, as of its date and
the
date of such certificate, did not and does not include any untrue statement
of a
material fact or omit to state a material fact required to be stated therein
or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; and
ii. the
representations and warranties of the Company in this Agreement that are not
qualified by materiality or Material Adverse Effect are true and correct in
all
material respects and those representations and warranties of the Company in
this Agreement that are qualified by materiality or Material Adverse Effect
are
true and correct in all respects, as if made on and as of such date, and the
Company has complied with all the agreements in all material respects and all
the conditions on its part to be performed or satisfied at or prior to the
date
of such certificate.
(j) Indenture
and Registration Rights Agreement.
Each of
the Company, the Guarantors and the Trustee shall have executed and delivered
the Indenture (including Notes and the Guarantees), and the Company shall have
executed and delivered the Registration Rights Agreement (in form and substance
satisfactory to the Initial Purchasers), and the Registration Rights Agreement
shall be in full force and effect.
(k) PORTAL
Designation.
The
Notes shall have been designated PORTAL-eligible securities in accordance with
the rules and regulations of the FINRA.
(l) Conversion
Share Listing.
The
Company shall have caused the Conversion Shares to be approved for listing,
subject to issuance, on the New York Stock Exchange.
12
SECTION
6. REPRESENTATIONS AND WARRANTIES OF INITIAL PURCHASERS
Each
of
the Initial Purchasers represents and warrants that it is a “qualified
institutional buyer,” as defined in Rule 144A of the Securities Act. Each
Initial Purchaser agrees with the Company that:
(a) it
has
offered and sold and will only offer or sell the Notes to persons whom it
reasonably believes to be “qualified institutional buyers” (as defined in Rule
144A under the Securities Act);
(b) neither
it nor any person acting on its behalf has made or will make offers or sales
of
the Notes in the United States by means of any form of general solicitation
or
general advertising (within the meaning of Regulation D) in the United
States;
(c) in
connection with each sale pursuant to Section 6(a), it has taken or will take
reasonable steps to ensure that the purchaser of such Notes is aware that such
sale is being made in reliance on Rule 144A;
(d) any
information provided by the Initial Purchasers to publishers of publicly
available databases about the terms of the Notes and the Indenture shall include
a statement that the Notes have not been registered under the Securities Act
and
are subject to restrictions under Rule 144A under the Securities Act;
and
(e) it
acknowledges that additional restrictions on the offer and sale of the Notes
and
the Common Stock issuable upon conversion thereof are described in the
Disclosure Package and the Final Offering Memorandum.
SECTION
7. TERMINATION
The
obligations of the several Initial Purchasers hereunder shall be subject to
termination in the absolute discretion of the Representative, at any time prior
to the Closing Date or the Subsequent Closing Date, (a) if any of the conditions
specified in Section 5 shall not have been fulfilled when and as required by
this Agreement to be fulfilled, or (b) if there has been since the respective
dates as of which information is given in the Preliminary Offering Memorandum
or
the Final Offering Memorandum, any change or event that has had, or reasonably
could be expected to have, a Material Adverse Effect, whether or not arising
in
the ordinary course of business, or (c) if there has occurred any outbreak
or
escalation of hostilities or other national or international calamity or crisis
or change in economic, political or other conditions, the effect of which on
the
financial markets of the United States is such as to make it, in the judgment
of
the Representative, impracticable to market the Notes or enforce contracts
for
the sale of the Notes, or (d) if trading in any securities of the Company has
been suspended by the Commission or by the New York Stock Exchange, or if
trading generally on the New York Stock Exchange has been suspended (including
an automatic halt in trading pursuant to market-decline triggers, other than
those in which solely program trading is temporarily halted), or limitations
on
prices for trading (other than limitations on hours or numbers of days of
trading) have been fixed, or maximum ranges for prices for securities have
been
required, by such exchange or by order of the Commission or any other
governmental authority or (e) a general banking moratorium shall have been
declared by any federal, Maryland or New York authorities, or (f) any federal
or
state statute, regulation, rule or order of any court or other governmental
authority has been enacted, published, decreed or otherwise promulgated that,
in
the reasonable opinion of the Representative, will have a Material Adverse
Effect.
If
the
Representative elects to terminate this Agreement as provided in this Section
7,
the Company and the Initial Purchasers shall be notified promptly by telephone,
promptly confirmed by facsimile.
If
the
purchase by the Initial Purchasers of the Notes, as contemplated by this
Agreement, is not consummated by the Initial Purchasers for any reason permitted
under this Agreement or if such sale is not consummated because the Company
shall be unable to comply in all material respects with any of the terms of
this
Agreement, the Company shall not be under any obligation or liability under
this
Agreement (except to the extent provided in Sections 4, 8 and 9 hereof) and
the
Initial Purchasers shall be under no obligation or liability to the Company
under this Agreement (except to the extent provided in Sections 8 and 9 hereof)
or to one another hereunder.
SECTION
8. INDEMNIFICATION
(a) Indemnification
of the Initial Purchasers.
The
Company agrees to indemnify and hold harmless each Initial Purchaser, its
directors, officers and employees, agents, and each person, if any, who controls
any Initial Purchaser within the meaning of the Securities Act and the Exchange
Act against any loss, claim, damage, liability or expense, as incurred, to
which
such Initial Purchaser, director, officer, employee, agent or controlling person
may become subject, insofar as such loss, claim, damage, liability or expense
(or actions in respect thereof as contemplated below) arises out of or is based
upon any untrue statement or alleged untrue statement of a material fact
contained in the Preliminary Offering Memorandum, the Final Offering Memorandum,
the Final Term Sheet, any Issuer Written Information or any other written
information that constitutes an offer to sell or a solicitation of an offer
to
buy the Notes used by the Company, if any, in connection with the offer or
sale
of the Notes (or any amendment or supplement to the foregoing), or the omission
or alleged omission therefrom of a material fact, in each case, necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading, and to reimburse each Initial Purchaser,
its officers, directors, employees, agents and each such controlling person
for
any and all reasonable expenses (including the fees and disbursements of counsel
chosen by the Representative) as such expenses are reasonably incurred by such
Initial Purchaser, its officers, directors, employees, agents or such
controlling person in connection with investigating, defending, settling,
compromising or paying any such loss, claim, damage, liability, expense or
action; provided, however, that the foregoing indemnity agreement shall not
apply to any loss, claim, damage, liability or expense to the extent, but only
to the extent, arising out of or based upon any untrue statement or alleged
untrue statement or omission or alleged omission made in reliance upon and
in
conformity with written information furnished to the Company by the
Representative expressly for use in the Preliminary Offering Memorandum, the
Final Offering Memorandum, the Final Term Sheet, any Issuer Written Information
or any other written information that constitutes an offer to sell or a
solicitation of an offer to buy the Notes used by the Company in connection
with
the offer or sale of the Notes (or any amendment or supplement to the
foregoing). The indemnity agreement set forth in this Section 8(a) shall be
in
addition to any liabilities that the Company may otherwise have.
13
(b) Indemnification
of the Company, its Directors and Officers.
Each
Initial Purchaser agrees, severally and not jointly, to indemnify and hold
harmless the Company, each of its directors, each of its officers and each
person, if any, who controls the Company within the meaning of the Securities
Act or the Exchange Act, against any loss, claim, damage, liability or expense,
as incurred, to which the Company, or any such director, officer or controlling
person may become subject, insofar as such loss, claim, damage, liability or
expense (or actions in respect thereof as contemplated below) arises out of
or
is based upon any untrue or alleged untrue statement of a material fact
contained in the Preliminary Offering Memorandum, the Final Offering Memorandum,
the Final Term Sheet, any Issuer Written Information or any other written
information that constitutes an offer to sell or a solicitation of an offer
to
buy the Notes used by the Company in connection with the offer or sale of the
Notes (or any amendment or supplement to the foregoing), or arises out of or
is
based upon the omission or alleged omission to state therein a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, in each case to the
extent, and only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in the Preliminary Offering
Memorandum, the Final Offering Memorandum, the Final Term Sheet, any Issuer
Written Information or any other written information that constitutes an offer
to sell or a solicitation of an offer to buy the Notes used by the Company
in
connection with the offer or sale of the Notes (or any amendment or supplement
to the foregoing), in reliance upon and in conformity with written information
furnished to the Company by the Representative expressly for use therein; and
to
reimburse the Company, or any such director, officer or controlling person
for
any reasonable legal and other expenses as such expenses are reasonably incurred
by the Company, or any such director, officer or controlling person in
connection with investigating, defending, settling, compromising or paying
any
such loss, claim, damage, liability, expense or action. The Company hereby
acknowledges that the only information that the Initial Purchasers have
furnished to the Company expressly for use in the Preliminary Offering
Memorandum, the Final Offering Memorandum, the Final Term Sheet, any Issuer
Written Information or any other written information that constitutes an offer
to sell or a solicitation of an offer to buy the Notes used by the Company
in
connection with the offer or sale of the Notes (or any amendment or supplement
to the foregoing) are the statements set forth in Schedule
IX.
The
indemnity agreement set forth in this Section 8(b) shall be in addition to
any
liabilities that each Initial Purchaser may otherwise have.
(c) Notifications
and Other Indemnification Procedures.
Promptly after receipt by an indemnified party under this Section 8 of notice
of
the commencement of any action, such indemnified party will, if a claim in
respect thereof is to be made against an indemnifying party under this Section
8, notify the indemnifying party in writing of the commencement thereof, but
the
failure to so notify the indemnifying party (i) will not relieve it from
liability under paragraph (a) or (b) above unless and to the extent it did
not
otherwise learn of such action and such failure results in the forfeiture by
the
indemnifying party of substantial rights and defenses and (ii) will not, in
any
event, relieve the indemnifying party from any obligations to any indemnified
party other than the indemnification obligation provided in paragraph (a) or
(b)
above. In case any such action is brought against any indemnified party and
such
indemnified party seeks or intends to seek indemnity from an indemnifying party,
the indemnifying party will be entitled to participate in, and, to the extent
that it shall elect, jointly with all other indemnifying parties similarly
notified, by written notice delivered to the indemnified party promptly after
receiving the aforesaid notice from such indemnified party, to assume the
defense thereof with counsel reasonably satisfactory to such indemnified party;
provided, however, if the defendants in any such action include both the
indemnified party and the indemnifying party and the indemnified party shall
have reasonably concluded that a conflict may arise between the positions of
the
indemnifying party and the indemnified party in conducting the defense of any
such action or that there may be legal defenses available to it and/or other
indemnified parties that are different from or additional to those available
to
the indemnifying party, the indemnified party or parties shall have the right
to
select separate counsel to assume such legal defenses and to otherwise
participate in the defense of such action on behalf of such indemnified party
or
parties. Upon receipt of notice from the indemnifying party to such indemnified
party of such indemnifying party's election so to assume the defense of such
action and approval by the indemnified party of counsel, the indemnifying party
will not be liable to such indemnified party under this Section 8 for any legal
or other expenses subsequently incurred by such indemnified party in connection
with the defense thereof unless (i) the indemnified party shall have employed
separate counsel in accordance with the proviso to the preceding sentence (it
being understood, however, that the indemnifying party shall not be liable
for
the expenses of more than one separate counsel (other than local counsel),
reasonably approved by the indemnifying party (or by the Representative in
the
case of Section 8(b)), representing the indemnified parties who are parties
to
such action) or (ii) the indemnifying party shall not have employed counsel
satisfactory to the indemnified party to represent the indemnified party within
a reasonable time after notice of commencement of the action, in each of which
cases the fees and expenses of counsel shall be at the expense of the
indemnifying party.
(d) Settlements.
The
indemnifying party under this Section 8 shall not be liable for any settlement
of any proceeding effected without its written consent, which shall not be
withheld unreasonably, but if settled with such consent or if there is a final
judgment for the plaintiff, the indemnifying party agrees to indemnify the
indemnified party against any loss, claim, damage, liability or expense by
reason of such settlement or judgment. Notwithstanding the foregoing sentence,
if at any time an indemnified party shall have requested an indemnifying party
to reimburse the indemnified party for fees and expenses of counsel as
contemplated by Section 8(c) hereof, the indemnifying party agrees that it
shall
be liable for any settlement of any proceeding effected without its written
consent if (i) such settlement is entered into more than 30 days after receipt
by such indemnifying party of the aforesaid request and (ii) such indemnifying
party shall not have reimbursed the indemnified party in accordance with such
request prior to the date of such settlement. No indemnifying party shall,
without the prior written consent of the indemnified party, effect any
settlement, compromise or consent to the entry of judgment in any pending or
threatened action, suit or proceeding in respect of which any indemnified party
is or could have been a party and indemnity was or could have been sought
hereunder by such indemnified party, unless such settlement, compromise or
consent (x) includes an unconditional release of such indemnified party from
all
liability on claims that are the subject matter of such action, suit or
proceeding and (y) 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.
SECTION
9. CONTRIBUTION
If
the
indemnification provided for in Section 8 is for any reason unavailable to
or
otherwise insufficient to hold harmless an indemnified party in respect of
any
losses, claims, damages, liabilities or expenses referred to therein, then
each
indemnifying party shall contribute to the aggregate amount paid or payable
by
such indemnified party, as incurred, as a result of any losses, claims, damages,
liabilities or expenses referred to therein (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company, on the
one
hand, and the Initial Purchasers, on the other hand, from the offering of the
Notes pursuant to this Agreement or (ii) if the allocation provided by clause
(i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause
(i)
above but also the relative fault of the Company, on the one hand, and the
Initial Purchasers, on the other hand, in connection with the statements or
omissions or alleged statements or alleged omissions that resulted in such
losses, claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations. The relative benefits received by the Company, on
the
one hand, and the Initial Purchasers, on the other hand, in connection with
the
offering of the Notes pursuant to this Agreement shall be deemed to be in the
same respective proportions as the total net proceeds from the offering of
the
Notes pursuant to this Agreement (before deducting expenses) received by the
Company, and the total discount received by the Initial Purchasers bear to
the
aggregate initial offering price of the Notes. The relative fault of the
Company, on the one hand, and the Initial Purchasers, 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, on the
one
hand, or the Initial Purchasers, on the other hand, and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.
14
The
amount paid or payable by a party as a result of the losses, claims, damages,
liabilities and expenses referred to above shall be deemed to include, subject
to the limitations set forth in Section 8(c), any legal or other fees or
expenses reasonably incurred by such party in connection with investigating
or
defending any action or claim.
The
Company and the Initial Purchasers agree that it would not be just and equitable
if contribution pursuant to this Section 9 were determined by pro rata
allocation (even if the Initial Purchasers were treated as one entity for such
purpose) or by any other method of allocation which does not take account of
the
equitable considerations referred to in this Section 9.
Notwithstanding
the provisions of this Section 9, no Initial Purchaser shall be required to
contribute any amount in excess of the purchase discount or commission received
by such Initial Purchaser in connection with the Notes purchased by it
hereunder. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. The Initial
Purchasers' obligations to contribute pursuant to this Section 9 are several,
and not joint, in proportion to their respective commitments as set forth
opposite their names in Schedule
I.
For
purposes of this Section 9, each director, officer, employee and agent of an
Initial Purchaser and each person, if any, who controls an Initial Purchaser
within the meaning of the Securities Act and the Exchange Act shall have the
same rights to contribution as such Initial Purchaser, and each director of
the
Company, each officer of the Company, and each person, if any, who controls
the
Company within the meaning of the Securities Act and the Exchange Act shall
have
the same rights to contribution as the Company.
SECTION
10. DEFAULT OF ONE OR MORE OF THE SEVERAL INITIAL PURCHASERS
If,
on
the Closing Date or any Subsequent Closing Date, as the case may be, any one
or
more of the several Initial Purchasers shall fail or refuse to purchase Notes
that it or they have agreed to purchase hereunder on such date, and the
aggregate principal amount of Notes which such defaulting Initial Purchaser
or
Initial Purchasers agreed but failed or refused to purchase does not exceed
10%
of the aggregate principal amount of the Notes to be purchased on such date,
the
other Initial Purchasers shall be obligated, severally, in the proportions
that
the principal amount of Firm Notes set forth opposite their respective names
on
Schedule
I
bears to
the aggregate principal amount of Firm Notes set forth opposite the names of
all
such non-defaulting Initial Purchasers, or in such other proportions as may
be
specified by the Representative with the consent of the non-defaulting Initial
Purchasers, to purchase the Notes which such defaulting Initial Purchaser or
Initial Purchasers agreed but failed or refused to purchase on such date. If,
on
the Closing Date or any Subsequent Closing Date, as the case may be, any one
or
more of the Initial Purchasers shall fail or refuse to purchase Notes and the
aggregate principal amount of Notes with respect to which such default occurs
exceeds 10% of the aggregate principal amount of Notes to be purchased on such
date, and arrangements satisfactory to the Representative and the Company for
the purchase of such Notes are not made within 48 hours after such default,
this
Agreement shall terminate without liability of any party (other than a
defaulting Initial Purchaser) to any other party except that the provisions
of
Section 4, Section 8 and Section 9 shall at all times be effective and shall
survive such termination. In any such case either the Representative or the
Company shall have the right to postpone the Closing Date or any Subsequent
Closing Date, as the case may be, but in no event for longer than seven days
in
order that the required changes, if any, to the Final Offering Memorandum or
any
other documents or arrangements may be effected.
As
used
in this Agreement, the term “Initial Purchaser” shall be deemed to include any
person substituted for a defaulting Initial Purchaser under this Section 10.
Any
action taken under this Section 10 shall not relieve any defaulting Initial
Purchaser from liability in respect of any default of such Initial Purchaser
under this Agreement.
SECTION
11. SURVIVAL
The
indemnity and contribution agreements contained in Sections 8 and 9 and the
covenants, warranties and representations of the Company contained in Sections
1, 3 and 4 of this Agreement shall remain in full force and effect regardless
of
any investigation made by or on behalf of any Initial Purchaser, or any person
who controls any Initial Purchaser within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, or by or on behalf of the
Company, its directors and officers or any person who controls the Company
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act, and shall survive any termination of this Agreement or the sale
and delivery of the Notes. The Company and each Initial Purchaser agree promptly
to notify the others of the commencement of any litigation or proceeding against
it and, in the case of the Company, against any of the Company’s officers and
directors, in connection with the sale and delivery of the Notes, or in
connection with the Disclosure Package or Final Offering
Memorandum.
15
SECTION
12. NOTICES
Except
as
otherwise herein provided, all statements, requests, notices and agreements
shall be in writing or by telegram and, if to the Initial Purchasers, shall
be
sufficient in all respects if delivered to:
|
|
Deutsche
Bank Securities Inc.
|
| ▇▇ ▇▇▇▇ ▇▇▇▇▇▇ |
| ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ |
| Facsimile: ▇▇▇-▇▇▇-▇▇▇▇ |
| Attention: Equity Capital Markets Syndicate |
With
a
copy to:
|
Deutsche
Bank Securities Inc.
|
| ▇▇ ▇▇▇▇ ▇▇▇▇▇▇ |
| ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ |
| Facsimile: 212-797-4564 |
| Attention: General Counsel |
,
or if
to the Company shall be sufficient in all respects if delivered to the Company
at the offices of the Company at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇
▇▇▇▇▇, Attention: General Counsel.
SECTION
13. GOVERNING LAW; HEADINGS
THIS
AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS
OF
THE STATE OF NEW YORK,
WITHOUT
REGARD TO CONFLICTS OF LAWS PRINCIPLES.
The
section headings in this Agreement have been inserted as a matter of convenience
of reference and are not a part of this Agreement.
SECTION
14. DUTIES
Nothing
in this Agreement shall be deemed to create a partnership, joint venture or
agency relationship between the parties. The Initial Purchasers undertake
to perform such duties and obligations only as expressly set forth herein.
Such duties and obligations of the Initial Purchasers with respect to the
Notes shall be determined solely by the express provisions of this Agreement,
and the Initial Purchasers shall not be liable except for the performance
of such duties and obligations with respect to the Notes as are specifically
set
forth in this Agreement. The Company acknowledges and agrees that: (a) the
purchase and sale of the Notes pursuant to this Agreement, including the
determination of the offering price of the Notes and any related discounts
and
commissions, is an arm’s-length commercial transaction between the Company, on
the one hand, and the several Initial Purchasers, on the other hand, and the
Company is capable of evaluating and understanding and understands and accepts
the terms, risks and conditions of the transactions contemplated by this
Agreement; (b) in connection with each transaction contemplated hereby and
the
process leading to such transaction each Initial Purchaser is and has been
acting solely as a principal and is not the financial advisor, agent or
fiduciary of the Company or its affiliates, stockholders, creditors or employees
or any other party; (c) no Initial Purchaser has assumed or will assume an
advisory, agency or fiduciary responsibility in favor of the Company with
respect to any of the transactions contemplated hereby or the process leading
thereto (irrespective of whether such Initial Purchaser has advised or is
currently advising the Company on other matters); and (d) the several Initial
Purchasers and their respective affiliates may be engaged in a broad range
of
transactions that involve interests that differ from those of the Company and
that the several Initial Purchasers have no obligation to disclose any of such
interests. The Company acknowledges that the Initial Purchasers disclaim any
implied
duties
(including any fiduciary duty), covenants or obligations arising from the
Initial Purchasers’ performance of the duties and obligations expressly set
forth herein. The
Company hereby waives and releases, to the fullest extent permitted by law,
any
claims that the Company may have against the several Initial Purchasers with
respect to any breach or alleged breach of agency or fiduciary
duty.
SECTION
15. PARTIES AT INTEREST
The
Agreement herein set forth has been and is made solely for the benefit of the
Initial Purchasers, the Company and the controlling persons, directors and
officers referred to in Sections 8 and 9 hereof, and their respective
successors, assigns, executors and administrators. No other person, partnership,
association or corporation (including a purchaser, as such purchaser, from
any
of the Initial Purchasers) shall acquire or have any right under or by virtue
of
this Agreement.
SECTION
16. COUNTERPARTS AND FACSIMILE SIGNATURES
This
Agreement may be signed by the parties in counterparts, which together shall
constitute one and the same agreement among the parties. A facsimile signature
shall constitute an original signature for all purposes.
SECTION
17. U.S.A. PATRIOT ACT NOTIFICATION
The
Company acknowledges that federal law, to help fight the funding of terrorism
and money laundering activities, requires the Initial Purchasers to obtain,
verify and record vital information that identifies each person or entity that
opens an account and/or enters into a business relationship with such financial
institutions.
16
If
the
foregoing is in accordance with your understanding of our agreement, kindly
sign
and return to the Company the enclosed copies hereof, whereupon this instrument,
along with all counterparts hereof, shall become a binding agreement in
accordance with its terms.
| Very truly yours, | ||
| CAPLEASE, INC. | ||
| |
|
|
| By: | /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇ | |
|
Name:
▇▇▇▇
▇. ▇▇▇▇▇▇
|
||
|
Title: Vice
President, General Counsel and
Corporate Secretary
|
||
The
foregoing Purchase Agreement is hereby confirmed and accepted by the
Representative as of the date first above written.
DEUTSCHE
BANK SECURITIES INC.
Acting
as
Representative of the
several
Initial Purchasers named in
the
attached Schedule
I.
DEUTSCHE
BANK SECURITIES INC.
| By: | /s/ ▇▇▇▇ ▇▇▇▇ | |||
|
Authorized Representative |
| By: | /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ | |||
|
Authorized Representative |
17