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EXHIBIT 1.01
CRESCENT REAL ESTATE EQUITIES COMPANY
(a Texas real estate investment trust)
Preferred Shares of Beneficial Interest
PURCHASE AGREEMENT
February 13, 1997
▇▇▇▇▇ ▇▇▇▇▇▇ INC.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
Crescent Real Estate Equities Company, a Texas real estate
investment trust (the "COMPANY"), proposes to issue and sell to ▇▇▇▇▇ ▇▇▇▇▇▇
Inc. ("YOU" or the "UNDERWRITER") an aggregate of 8,000,000 shares (the "INITIAL
SHARES") of the Company's 6.75% Series A Preferred Shares of beneficial
interest, $.01 par value per share (the "SERIES A PREFERRED SHARES"). In
addition, solely for the purpose of covering overallotments, if any, the Company
proposes to grant to the Underwriter the option to purchase from the Company up
to an additional 1,200,000 Series A Preferred Shares (the "OPTION SHARES"). The
Initial Shares and the Option Shares are hereinafter referred to collectively as
the "UNDERWRITTEN SECURITIES".
The Company has filed with the U.S. Securities and Exchange
Commission (the "COMMISSION") a registration statement on Form S-3 (No.
333-38071) for the registration of certain preferred shares of beneficial
interest, $.01 par value per share (the "PREFERRED SHARES"), common shares of
beneficial interest, $.01 par value per share (the "COMMON SHARES"), and
warrants for the purchase of Common Shares (collectively, the "REGISTERED
SECURITIES") under the Securities Act of 1933, as amended (the "1933 ACT"), and
the offering thereof from time to time in accordance with Rule 415 of the rules
and regulations of the Commission under the 1933 Act (the "1933 ACT
REGULATIONS"), and the Company has filed such amendment or amendments thereto as
may have been required prior to the execution of this Purchase Agreement (the
"AGREEMENT"). Such registration statement, as amended, has been declared
effective by the Commission. Such registration statement and the prospectus
constituting a part thereof (including, in each case, any information deemed to
be a part thereof pursuant to Rule 430A(b) of the 1933 Act Regulations and any
prospectus supplement relating to the offering of
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the Underwritten Securities pursuant to Rule 415 of the 1933 Act regulations (a
"PROSPECTUS SUPPLEMENT")), as from time to time amended or supplemented pursuant
to the 1933 Act or otherwise, are hereinafter referred to as the "REGISTRATION
STATEMENT," and the "PROSPECTUS," except that if any revised prospectus shall be
provided to you by the Company for use in connection with the offering of the
Underwritten Securities that differs from the Prospectus on file at the
Commission at the time the Registration Statement became effective (whether or
not such revised prospectus is required to be filed by the Company pursuant to
Rule 424(b) of the 1933 Act Regulations), the term "PROSPECTUS" shall refer to
each such revised prospectus from and after the time it is first provided to
you, for such use; and except further that a Prospectus Supplement shall be
deemed to have supplemented a Prospectus only with respect to the offering of
the Underwritten Securities. All references in this Agreement to financial
statements and schedules and other information that are "contained," "included"
or "stated" in the Registration Statement or a Prospectus (and all other
references of like import) shall be deemed to mean and include all such
financial statements and schedules and other information that are or are deemed
to be incorporated by reference in the Registration Statement or the Prospectus,
as the case may be; and all references in this Agreement to amendments or
supplements to the Registration Statement or a Prospectus shall be deemed to
mean and include the filing of any document under the 1934 Act that is or is
deemed to be incorporated by reference in the Registration Statement or the
Prospectus, as the case may be. If the Company elects to rely on Rule 434 under
the 1933 Act Regulations, all references to a Prospectus shall be deemed to
include, without limitation, the form of prospectus and the abbreviated term
sheet, taken together, provided by the Company in reliance on Rule 434 under the
1933 Act (the "RULE 434 PROSPECTUS").
SECTION 1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE OPERATING
PARTNERSHIP.
(a) The Company and Crescent Real Estate Equities Limited
Partnership, a Delaware limited partnership (the "OPERATING PARTNERSHIP"),
jointly and severally, represent and warrant to you as of the date hereof, as
follows:
(i) The Registration Statement and the Prospectus, at the time
the Registration Statement became effective and as of the date hereof,
complied, and at the Closing Time (as defined herein) or any Date of
Delivery (as defined herein) will comply, in all material respects, with
the requirements of the 1933 Act and the 1933 Act Regulations; the
Registration Statement, at the time the Registration Statement became
effective and as of the date hereof, did not contain an untrue statement
of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading. The Prospectus, as of the date hereof, does comply, and at
the Closing Time and any Date of Delivery will comply,
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in all material respects with the requirements of the 1933 Act and the
1933 Act Regulations, and as of the date hereof does not, and as of the
Closing Date will not, contain an untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made,
not misleading; provided, however, that the representations and
warranties in this paragraph shall not apply to statements in or
omissions from the Registration Statement or the Prospectus made in
reliance upon and in conformity with written information furnished to
the Company through you specifically for inclusion in the Registration
Statement or the Prospectus.
(ii) No stop order suspending the effectiveness of the
Registration Statement or any part thereof has been issued, and no
proceeding for that purpose has been instituted or, to the knowledge of
the Company or the Operating Partnership, threatened by the Commission
or by the state securities authority of any jurisdiction. No order
preventing or suspending the use of the Prospectus has been issued, and
no proceeding for that purpose has been instituted or, to the knowledge
of the Company or the Operating Partnership, threatened by the
Commission or by the state securities authority of any jurisdiction.
(iii) Each of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, the accounting firm whose report
on the financial statements and supporting schedule of the Company is
included in the Registration Statement, and any other accounting firm
whose report on financial statements is included in the Registration
Statement, is an independent public accountant as required by the 1933
Act and the 1933 Act Regulations.
(iv) The financial statements (including the notes thereto)
included in the Registration Statement and the Prospectus present fairly
the financial position of the respective entity or entities presented
therein at the respective dates indicated and the results of their
operations for the respective periods specified, and except as otherwise
stated in the Registration Statement, said financial statements have
been prepared in conformity with generally accepted accounting
principles applied on a consistent basis. The supporting schedule
included in the Registration Statement presents fairly the information
required to be stated therein. The financial information and data
included in the Registration Statement and the Prospectus present fairly
the information included therein and have been prepared on a basis
consistent with that of the financial statements included in the
Registration Statement and the Prospectus and the books and records of
the respective entities presented therein. The pro forma financial
information included in the Prospectus has been prepared in accordance
with the applicable requirements of Rules 11-01 and 11-02 of Regulation
S-X under the 1933 Act and other 1933 Act Regulations and American
Institute of Certified Public
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Accountants ("AICPA") guidelines with respect to pro forma financial
information and includes all adjustments necessary to present fairly the
pro forma financial position of the respective entity or entities
presented therein at the respective dates indicated and the results of
their operations for the respective periods specified. Other than the
historical and pro forma financial statements (and schedule) included
therein, no other historical or pro forma financial statements (or
schedules) are required by the 1933 Act or the 1933 Act Regulations to
be included in the Registration Statement. Except as reflected or
disclosed in the financial statements included in the Registration
Statement or otherwise set forth in the Prospectus, none of the Company,
the Operating Partnership, any of the Subsidiaries or the Residential
Development Corporations (as such terms are hereinafter defined) is
subject to any material indebtedness, obligation, or liability,
contingent or otherwise.
(v) Since the respective dates as of which information is given in
the Registration Statement and the Prospectus, except as otherwise
stated therein, (A) there has been no material adverse change in the
condition, financial or otherwise, or in the earnings, assets, business
affairs or business prospects of the Company, the Operating Partnership,
the Subsidiaries and the Residential Development Corporations,
considered as one enterprise, whether or not arising in the ordinary
course of business, (B) no material casualty loss or material
condemnation or other material adverse event with respect to any real
property or improvements thereon owned or leased by any of the Company,
the Operating Partnership, any of its Subsidiaries or any of the
Residential Development Corporations, including any property underlying
indebtedness held by the Company (each individually a "PROPERTY" and
collectively, the "PROPERTIES"), the Operating Partnership, any of the
Subsidiaries or any of the Residential Development Corporations, has
occurred that is material to the Company, the Operating Partnership, the
Subsidiaries and the Residential Development Corporations considered as
one enterprise, (C) there have been no acquisitions or other
transactions entered into by the Company, the Operating Partnership, any
Subsidiary or any Residential Development Corporation other than those
in the ordinary course of business that are material with respect to
such entities, considered as one enterprise, or would result in any
inaccuracy in the representations contained in Section 1(a)(iv) above,
(D) except as described in the Prospectus and except for regular
quarterly dividends or distributions on the Common Shares, there has
been no dividend or distribution of any kind declared, paid or made by
the Company, or by the Operating Partnership with respect to its
partnership interests, and (E) there has been no change in the capital
stock of the Company or its Subsidiaries or the Residential Development
Corporations or the partnership interests of the Operating Partnership,
or any increase in the indebtedness of the Company, the Operating
Partnership,
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the Subsidiaries or the Residential Development Corporations that is
material to such entities, considered as one enterprise.
(vi) The Company has been duly formed as a real estate investment
trust under the laws of the State of Texas with power and authority to
own, lease and operate its properties, to conduct the business in which
it is engaged or proposes to engage as described in the Prospectus and
to enter into and perform its obligations under this Agreement.
According to the County Clerk of Tarrant County, Texas, the Restated
Declaration of Trust of the Company is recorded in Volume 12645,
beginning at Page 1811, in the records of the County Clerk. The Restated
Declaration of Trust is in effect, and no dissolution, revocation or
forfeiture proceedings regarding the Company have been commenced. The
Company is duly qualified as a foreign organization to transact business
and is in good standing in each jurisdiction in which such qualification
is required, whether by reason of the ownership or leasing of property
or the conduct of business, except where the failure to so qualify would
not have a material adverse effect on the condition, financial or
otherwise, or the earnings, assets, business affairs or business
prospects of the Company, the Operating Partnership, the Subsidiaries
and the Residential Development Corporations considered as one
enterprise.
(vii) The Operating Partnership has been duly formed and is validly
existing as a limited partnership in good standing under the Delaware
Revised Uniform Limited Partnership Act (the "DELAWARE ACT") with
partnership power and authority to own, lease and operate its
properties, to conduct the business in which it is engaged or proposes
to engage as described in the Prospectus and to enter into and perform
its obligations under this Agreement. The Operating Partnership is duly
qualified or registered as a foreign partnership and is in good standing
in each jurisdiction in which such qualification or registration is
required, whether by reason of the ownership or leasing of property or
the conduct of business, except where the failure to so qualify or
register would not have a material adverse effect on the condition,
financial or otherwise, or the earnings, assets, business affairs or
business prospects of the Company, the Operating Partnership, the
Subsidiaries and the Residential Development Corporations considered as
one enterprise. The Second Amended and Restated Agreement of Limited
Partnership of the Operating Partnership (the "PARTNERSHIP AGREEMENT"),
is a valid and binding agreement enforceable in accordance with its
terms. At Closing Time (as hereinafter defined), Crescent Real Estate
Equities, Ltd., a Delaware corporation ("CGP, INC."), a wholly owned
subsidiary of the Company, will be the sole general partner of the
Operating Partnership and will be the holder of one percent (1%) of the
interests in the Operating Partnership. Entities in which the Company
directly or indirectly has a majority ownership interest are hereinafter
referred to as the "SUBSIDIARIES," and each, individually, as a
"SUBSIDIARY." Houston Area
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Development Corp., a Texas corporation, Mira Vista Development Corp., a
Texas corporation, Crescent Development Management Corp., a Delaware
corporation, Desert Mountain Development Corporation, a Delaware
corporation, and The Woodlands Land Company, Inc., a Texas corporation,
are referred to herein collectively as the "RESIDENTIAL DEVELOPMENT
CORPORATIONS."
(viii) Each of the Subsidiaries and the Residential Development
Corporations has been duly organized and is validly existing as a
corporation, limited partnership, or limited liability company, as the
case may be, in good standing under the laws of its respective state of
organization, with full power and authority to own, lease and operate
its properties, to conduct the business in which it is engaged or
proposes to engage as described in the Prospectus. Each of the
Subsidiaries and the Residential Development Corporations is duly
qualified as a foreign corporation, limited partnership, or limited
liability company, as the case may be, to transact business and is in
good standing in each jurisdiction in which such qualification is
required, whether by reason of the ownership or leasing of property or
the conduct of business, except where the failure to so qualify would
not have a material adverse effect on the condition, financial or
otherwise, or the earnings, assets, business affairs or business
prospects of the Company, the Operating Partnership, the Subsidiaries
and the Residential Development Corporations considered as one
enterprise. Each of the partnership agreements, limited liability
company agreements, or other, similar instruments to which the Company
or any of its Subsidiaries is a party has been duly authorized, executed
and delivered by the parties thereto and constitutes the valid agreement
thereof, enforceable in accordance with its terms. All of the issued and
outstanding shares of capital stock of each of the corporate
Subsidiaries and the Residential Development Corporations have been duly
authorized and validly issued and are fully paid and non-assessable. The
ownership by the Company, the Operating Partnership or the Subsidiaries
of the shares of capital stock or limited partnership or equity
interests, as the case may be, of each of the Subsidiaries and the
Residential Development Corporations is as described in the Prospectus
and all of such shares or limited partnership or equity interests, or
other, similar instruments owned by the Company, the Operating
Partnership or the Subsidiaries are free and clear of all liens, charges
and encumbrances.
(ix) The authorized, issued and outstanding beneficial interests in
the Company are as set forth in the Prospectus (except for subsequent
issuances, if any, pursuant to clauses (A) and (B) below); and all of
such beneficial interests have been duly authorized, are validly issued,
fully paid and non-assessable and have been offered and sold in
compliance with all applicable laws (including, without limitation,
federal securities laws). No shares of capital stock of the Company are
reserved for any purpose except in
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connection with: (A) the incentive compensation plans of the Company as
described in the Prospectus, (B) the possible issuance of Common Shares
upon the exchange of units of ownership interest in the Operating
Partnership (the "UNITS") pursuant to the Partnership Agreement, (C) the
possible issuance of Common Shares upon exercise of an existing option
to acquire up to 217,530 Common Shares and (D) the possible issuance of
up to 664,294 Common Shares upon the exchange of a portion of a
partnership interest in Desert Mountain Properties Limited Partnership,
for which sufficient Common Shares have been reserved for possible
future issuance. Except for (A) Units, (B) Common Shares issuable upon
the exercise of options (C) Common Shares issuable pursuant to the
Forward Stock Purchase Contract agreement, dated as of August 12, 1997
with an affiliate of Union Bank of Switzerland and (D) Common Shares
issuable pursuant to the Swap Agreement, dated as of December 12, 1997,
with an affiliate of ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., Inc., there are no outstanding
securities convertible into or exchangeable for any beneficial interests
in the Company and no outstanding options, rights (preemptive or
otherwise) or warrants to purchase or to subscribe for such interests or
any other securities of the Company.
(x) The Underwritten Securities have been duly authorized for
issuance and sale to you pursuant to this Agreement and, when issued and
delivered by the Company pursuant to such Agreement against payment of
the consideration set forth herein, will be validly issued, fully paid
and non-assessable. Upon payment of the purchase price and delivery of
the Underwritten Securities in accordance with this Agreement you will
receive good, valid and marketable title to the Underwritten Securities,
free and clear of all security interests, mortgages, pledges, liens,
encumbrances and claims. The Underwritten Securities will be offered and
sold at Closing Time or the Date of Delivery, as the case may be, in
compliance with all applicable laws (including, without limitation,
federal securities laws). The terms of the Series A Preferred Shares and
the Preferred Shares conform to all statements and descriptions related
thereto contained in the Prospectus. The form of the certificate used to
evidence the Underwritten Securities and the Common Shares into which
they may be converted are in due and proper form and comply with all
applicable legal requirements. The issuance of the Underwritten
Securities is not subject to any preemptive or other similar rights and,
except as summarized in the Prospectus and set forth in the Company's
Restated Declaration of Trust (the "DECLARATION OF TRUST") or the
Company's Amended and Restated Bylaws, as amended (the "BYLAWS"), there
are no restrictions on the voting or transfer of the Common Shares or
the Preferred Shares pursuant to the Company's Declaration of Trust or
Bylaws or any agreement or other instrument.
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(xi) The Common Shares issuable upon conversion of the Underwritten
Securities will have been duly and validly authorized and reserved for
issuance upon such conversion by all necessary corporate action and such
shares, when issued upon such conversion or exercise, will be duly
authorized and validly issued and will be fully paid and non-assessable,
and the issuance of such shares upon conversion will not be subject to
preemptive or other similar rights; the Common Shares issuable upon
conversion of the Underwritten Securities conform in all material
respects to all statements relating thereto contained in the Prospectus.
(xii) The authorized, issued and outstanding Units are as set forth
in the Prospectus except to the extent of changes due to the conversion
of Units to Common Shares or the exercise of existing options to acquire
Units. All of the Units outstanding at Closing Time were duly authorized
for issuance by the Operating Partnership and are validly issued and
fully paid. The Units were offered and sold in compliance with all
applicable laws (including, without limitation, federal and state
securities laws). Except as summarized in the Prospectus or set forth in
the Partnership Agreement, there are no preemptive or other rights to
subscribe for or to purchase, nor any restriction upon the voting or
transfer of, any Units pursuant to the Partnership Agreement or any
other instrument. The terms of the Units conform to all statements and
descriptions related thereto contained in the Prospectus.
(xiii) None of the Company, the Operating Partnership, any
Subsidiary or any Residential Development Corporation is in violation of
its declaration of trust, charter, by-laws, certificate of limited
partnership, partnership agreement, or limited liability company
agreement, as the case may be, and none of the Company, the Operating
Partnership, any Subsidiary or any Residential Development Corporation
is in default in the performance or observance of any obligation,
agreement, covenant or condition contained in any contract, indenture,
mortgage, loan agreement, note, lease or other instrument to which such
entity is a party or by which such entity may be bound, or to which any
of the property or assets of such entity is subject, except where a
default thereunder would not have a material adverse effect on the
condition, financial or otherwise, or the earnings, assets, business
affairs or business prospects of the Company, the Operating Partnership,
the Subsidiaries and the Residential Development Corporations considered
as one enterprise.
(xiv) The execution and delivery of this Agreement and the
performance of the obligations set forth herein, and the consummation of
the transactions contemplated hereby or in the Prospectus by the
Company, the Operating Partnership, the Subsidiaries and the Residential
Development Corporations, as applicable, will not conflict with or
constitute a breach or
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violation by such party of, or default under, (A) any material contract,
indenture, mortgage, loan agreement, note, lease, joint venture or
partnership agreement or other instrument or agreement to which the
Company, the Operating Partnership, any Subsidiary or any Residential
Development Corporation is a party or by which they, any of them, any of
their respective assets or any Property may be bound or subject; (B) the
declaration of trust, charter, by-laws, certificate of limited
partnership, partnership agreement, or limited liability company
agreement, as the case may be, of the Company, the Operating
Partnership, any Subsidiary or any Residential Development Corporation;
or (C) any applicable law, rule, order, administrative regulation or
administrative or court decree.
(xv) The Company has full right, power and authority under its
organizational documents to enter into this Agreement, and this
Agreement has been duly authorized, executed and delivered by the
Company
(xvi) The Operating Partnership has full right, power and authority
under its organizational documents to enter into this Agreement and this
Agreement has been duly authorized, executed and delivered by the
Operating Partnership.
(xvii) There is no action, suit or proceeding before or by any court
or governmental agency or body, domestic or foreign, now pending, or, to
the knowledge of the Company or the Operating Partnership, threatened
against or affecting the Company, the Operating Partnership, any
Subsidiary, any Residential Development Corporation, any Property, or
any property underlying indebtedness held by the Company, the Operating
Partnership, any of the Subsidiaries or any of the Residential
Development Corporations, or any officer or trust manager of the Company
that is required to be disclosed in the Registration Statement (other
than as disclosed therein) or that, if determined adversely to the
Company, the Operating Partnership, any Subsidiary, any Residential
Development Corporation, any Property, including any property underlying
indebtedness held by the Company, the Operating Partnership, any of the
Subsidiaries and any of the Residential Development Corporations, or any
such officer or trust manager, might (A) result in any material adverse
change in the condition, financial or otherwise, or in the earnings,
assets, business affairs or business prospects of the Company, the
Operating Partnership, the Subsidiaries and the Residential Development
Corporations considered as one enterprise or (B) materially and
adversely affect the consummation of the transactions contemplated by
this Agreement. There is no pending legal or governmental proceeding to
which the Company, the Operating Partnership, any Subsidiary or any
Residential Development Corporation is a party or of which any of their
respective properties or assets or any Property, including any property
underlying indebtedness held by the Company, the Operating Partnership,
any of the Subsidiaries or any of the Residential Development
Corporations, is the subject, including ordinary routine litigation
incidental to the business, that is, considered in the aggregate,
material to the condition, financial or otherwise, or the earnings,
assets, business affairs or business prospects of the Company, the
Operating
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Partnership, the Subsidiaries and the Residential Development
Corporations considered as one enterprise. There are no contracts or
documents that are required to be filed as exhibits to the Registration
Statement by the 1933 Act or by the 1933 Act Regulations which have not
been filed as exhibits to the Registration Statement or to a document
incorporated therein by reference.
(xviii) The Company qualified as a real estate investment trust
under the Internal Revenue Code of 1986, as amended (the "CODE"), with
respect to its taxable years ended December 31, 1994, December 31, 1995,
December 31, 1996 and December 31, 1997 and is organized in conformity
with the requirements for qualification as a real estate investment
trust, and its manner of operation has enabled it to meet the
requirements for qualification as a real estate investment trust as of
the date of the Prospectus, and its proposed manner of operation will
enable it to meet the requirements for qualification as a real estate
investment trust in the future.
(xix) None of the Company, the Operating Partnership, any Subsidiary
or any Residential Development Corporation is, or at Closing Time will
be, required to be registered under the Investment Company Act of 1940,
as amended (the "1940 ACT").
(xx) None of the Company, the Operating Partnership, any Subsidiary
or any Residential Development Corporation is required to own or possess
any trademarks, service marks, trade names or copyrights (collectively,
"PROPRIETARY RIGHTS") not now lawfully owned or possessed in order to
conduct the business now operated by such entity or as proposed to be
operated by it as described in the Prospectus and no such entity has
received any notice or is otherwise aware of any infringement of or
conflict with asserted rights of others with respect to any proprietary
rights.
(xxi) All authorizations, approvals and consents of any court or
governmental authority or agency that are necessary in connection with
the offering, issuance or sale of the Underwritten Securities hereunder
have been obtained, except such as may be required under the 1933 Act or
the 1933 Act Regulations or state securities or real estate syndication
laws.
(xxii) Each of the Company, the Operating Partnership, the
Subsidiaries and the Residential Development Corporations possesses such
certificates, authorizations or permits issued by the appropriate state,
federal or foreign regulatory agencies or bodies necessary to conduct
the business
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now conducted by it, or proposed to be conducted by it, as described in
the Prospectus, and none of the Company, the Operating Partnership, any
Subsidiary or any Residential Development Corporation has received any
notice of proceedings relating to the revocation or modification of any
such certificate, authorization or permit which, singly or in the
aggregate, if the subject of an unfavorable decision, ruling or finding,
would materially and adversely affect the condition, financial or
otherwise, or the earnings, assets, business affairs or business
prospects of the Company, the Operating Partnership, the Subsidiaries
and the Residential Development Corporations considered as one
enterprise.
(xxiii) The documents incorporated or deemed to be incorporated by
reference in the Prospectus, at the time it was or hereafter is filed
with the Commission, complied and will comply in all material respects
with the requirements of the 1934 Act and the rules and regulations of
the Commission under the 1934 Act (the "1934 ACT REGULATIONS"), and,
when read together with the other information in the Prospectus, at the
time the Registration Statement became effective, as of the date hereof
or during the period specified in Section 3(f) hereof, did not and will
not include 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.
(xxiv) No labor dispute with the employees of the Company, the
Operating Partnership, any Subsidiary or any Residential Development
Corporation exists or, to the knowledge of the Company or the Operating
Partnership, is imminent.
(xxv) Except as otherwise described in the Prospectus, (A) each of
the Company, the Operating Partnership, the Subsidiaries, and each
Residential Development Corporation, as the case may be, has good and
marketable title in fee simple to all real property owned by such entity
and good and marketable title to the improvements, if any, thereon and
all other assets that are required for the effective operation of such
real property in the manner in which they currently are operated except
where the failure to own real property or improvements thereon in fee
simple would not have a material adverse effect on the condition,
financial or otherwise, or on the earnings, assets, business affairs or
business prospects of or with respect to the Company, the Operating
Partnership, the Subsidiaries and the Residential Development
Corporations considered as one enterprise; (B) any real property and
buildings held under lease by the Company, the Operating Partnership,
any Subsidiary or any Residential Development Corporation are in full
force and effect, and such entity is not in default in respect of any of
the terms or provisions of such leases and such entity has not received
notice of the assertion of any claim by anyone adverse to the Operating
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Partnership's rights as lessee under such leases, or affecting or
questioning the Operating Partnership's right to the continued
possession or use of the real property and buildings held under such
leases or of a default under such leases, in each case with such
exceptions as would not have a material adverse impact on the condition,
financial or otherwise, or on the earnings, assets, business affairs or
business prospects of or with respect to the Company, the Operating
Partnership, the Subsidiaries and the Residential Development
Corporations considered as one enterprise; (C) all liens, charges,
encumbrances, claims, or restrictions on or affecting any of the
Properties, including any property underlying indebtedness held by the
Company, the Operating Partnership, any of the Subsidiaries or any of
the Residential Development Corporations, and the assets of the Company,
the Operating Partnership, any Subsidiary or any Residential Development
Corporation which are required to be disclosed in the Prospectus are
disclosed therein; (D) none of the Company, the Operating Partnership,
any of the Subsidiaries, any of the Residential Development Corporations
or any tenant of any of the Properties is in default under any of the
leases pursuant to which the Operating Partnership, as lessor, leases
its Property (and neither the Company nor the Operating Partnership
knows of any event which, but for the passage of time or the giving of
notice, or both, would constitute a default under any of such leases)
other than such defaults that would not have a material adverse effect
on the condition, financial or otherwise, or on the earnings, assets,
business affairs or business prospects of or with respect to the
Operating Partnership, any Subsidiary or any Residential Development
Corporation or any Property; (E) except as described in the Prospectus,
no person has an option or right of first refusal to purchase all or
part of any Property or any interest therein, other than such options or
rights of first refusal which would not have a material adverse effect
on the condition, financial or otherwise, or on the earnings, assets,
business affairs or business prospects of or with respect to the
Company, the Operating Partnership, the Subsidiaries and the Residential
Development Corporations, considered as one enterprise; (F) each of the
Properties complies with all applicable codes, laws and regulations
(including, without limitation, building and zoning codes, laws and
regulations and laws relating to access to the Properties), except if
and to the extent disclosed in the Prospectus and except for such
failures to comply that would not individually or in the aggregate have
a material adverse impact on the condition, financial or otherwise, or
on the earnings, assets, business affairs or business prospects of such
Property or the Operating Partnership; (G) there are in effect for the
Properties, including, to the knowledge of the Company, any property
underlying indebtedness held by the Company, the Operating Partnership,
any of the Subsidiaries and any of the Residential Development
Corporations, and the other assets of the Company, the Operating
Partnership, the Subsidiaries and the Residential Development
Corporations, insurance policies covering risks and in amounts that are
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commercially reasonable for the assets owned by them and that are
consistent with the types and amounts of insurance typically maintained
by present owners of similar types of properties; and (H) neither the
Company nor the Operating Partnership has knowledge of any pending or
threatened condemnation proceedings, zoning change, or other proceeding
or action that will in any manner affect the size of, use of,
improvements on, construction on or access to the Properties, including
any property underlying indebtedness held by the Company, the Operating
Partnership, any of the Subsidiaries or any Residential Development
Corporation, except such proceedings or actions that would not have a
material adverse effect on the condition, financial or otherwise, or on
the earnings, assets, business affairs or business prospects of the
Operating Partnership or with respect to such Property, including any
property underlying indebtedness held by the Company, the Operating
Partnership, any of the Subsidiaries or any Residential Development
Corporation.
(xxvi) Except as disclosed in the Prospectus, (A) each Property,
including, without limitation, the Environment (as defined below)
associated with such Property, is free of any Hazardous Substance (as
defined below), except for Hazardous Substances that would not have a
material adverse effect on the condition, financial or otherwise, or on
the earnings, assets, business affairs or business prospects of or with
respect to the Company, the Operating Partnership, the Subsidiaries and
the Residential Development Corporations considered as one enterprise;
(B) none of the Company, the Operating Partnership, any Subsidiary or
any Residential Development Corporation has caused or suffered to occur
any Release (as defined below) of any Hazardous Substance into the
Environment on, in, under or from any Property, and no condition exists
on, in, under or, to the knowledge of the Company and the Operating
Partnership, adjacent to any Property that is reasonably likely to
result in the incurrence of material liabilities or any material
violations of any Environmental Law (as defined below), give rise to the
imposition of any Lien (as defined below) under any Environmental Law,
or cause or constitute a health, safety or environmental hazard to any
property, person or entity; (C) none of the Company, the Operating
Partnership, any Subsidiary or any Residential Development Corporation
intends to use the properties or assets described in the Prospectus or
any other real property for the purpose of handling, burying, storing,
retaining, refining, transporting, processing, manufacturing,
generating, producing, spilling, seeping, leaking, escaping, leaching,
pumping, pouring, emitting, emptying, discharging, injecting, dumping,
transferring or otherwise disposing of or dealing with a Hazardous
Substance, except for materials utilized in the ordinary course of
business of the properties, provided such use would not, in the ordinary
course of business, give rise to liability under any Environmental Law;
(D) none of the Company, the Operating Partnership, any Subsidiary or
any Residential Development Corporation
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has received any notice of a claim under or pursuant to any
Environmental Law or under common law pertaining to Hazardous Substances
on or originating from any Property; (E) none of the Company, the
Operating Partnership, any Subsidiary or any Residential Development
Corporation has received any notice from any Governmental Authority (as
defined below) claiming any violation of any Environmental Law; (F) no
Property is included or, to the knowledge of the Company and the
Operating Partnership, proposed for inclusion on the National Priorities
List issued pursuant to CERCLA (as defined below) by the United States
Environmental Protection Agency (the "EPA") or on the Comprehensive
Environmental Response, Compensation, and Liability Information System
database maintained by the EPA, and has not otherwise been identified by
the EPA as a potential CERCLA removal, remedial or response site or
included or, to the knowledge of the Company and the Operating
Partnership, proposed for inclusion on, any similar list of potentially
contaminated sites pursuant to any other Environmental Law and (G) there
are no underground storage tanks located on or in any Property except
where the presence thereof would not have a material adverse effect on
the condition, financial or otherwise, or the earnings, assets or
business affairs or business prospects of the Company, the Operating
Partnership, the Subsidiaries and the Residential Development
Corporations considered as one enterprise.
As used herein, "HAZARDOUS SUBSTANCE" shall include, without
limitation, any hazardous substance, hazardous waste, toxic substance,
pollutant, solid waste or similarly designated materials, including,
without limitation, oil, petroleum or any petroleum-derived substance or
waste, asbestos or asbestos-containing materials, PCBs, pesticides,
explosives, radioactive materials, dioxins, urea formaldehyde insulation
or any constituent of any such substance, pollutant or waste, including
any such substance, pollutant or waste identified or regulated under any
Environmental Law (including, without limitation, materials listed in
the United States Department of Transportation Optional Hazardous
Material Table, 49 C.F.R. ss. 172.101, as the same may now or hereafter
be amended, or in the EPA's List of Hazardous Substances and Reportable
Quantities, 40 C.F.R. Part 302, as the same may now or hereafter be
amended); "ENVIRONMENT" shall mean any surface water, drinking water,
ground water, land surface, subsurface strata, river sediment,
buildings, structures, and ambient, workplace and indoor air;
"ENVIRONMENTAL LAW" shall mean the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended (42 U.S.C. ss. 9601
et seq.) ("CERCLA"), the Resource Conservation and Recovery Act of 1976,
as amended (42 U.S.C. ss. 6901 et seq.), the Clean Air Act, as amended
(42 U.S.C. ss. 7401 et seq.), the Clean Water Act, as amended (33 U.S.C.
ss. 1251 et seq.), the Toxic Substances Control Act, as amended (15
U.S.C. ss. 2601 et seq.), the Occupational Safety and Health Act of
1970, as amended (29 U.S.C. ss. 651 et seq.), the Hazardous
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Materials Transportation Act, as amended (49 U.S.C. ss. 1801 et seq.),
and all other federal, state and local laws, ordinances, regulations,
rules, orders, decisions and permits relating to the protection of the
environment or of human health from environmental effects; "GOVERNMENTAL
AUTHORITY" shall mean any federal, state or local governmental office,
agency or authority having the duty or authority to promulgate,
implement or enforce any Environmental Law; "LIEN" shall mean, with
respect to any Property, any mortgage, deed of trust, pledge, security
interest, lien, encumbrance, penalty, fine, charge, assessment, judgment
or other liability in, on or affecting such Property; and "RELEASE"
shall mean any spilling, leaking, pumping, pouring, emitting, emptying,
discharging, injecting, escaping, leaching, dumping, emanating or
disposing of any Hazardous Substance into the Environment, including,
without limitation, the abandonment or discard of barrels, containers,
tanks (including, without limitation, underground storage tanks) or
other receptacles containing or previously containing any Hazardous
Substance or any release, emission, discharge or similar term, as those
terms are defined or used in any Environmental Law.
(xxvii) Each of the Company, the Operating Partnership, the
Subsidiaries and the Residential Development Corporations has filed all
federal, state, local and foreign income tax returns which have been
required to be filed (except in any case in which the failure to so file
would not have a material adverse effect on the condition, financial or
otherwise, or the earnings, assets, business affairs or business
prospects of such entities considered as one enterprise) and has paid
all taxes required to be paid and any other assessment, fine or penalty
levied against it, to the extent that any of the foregoing is due and
payable, except, in all cases, for any such tax, assessment, fine or
penalty that is being contested in good faith.
(xxviii) None of the Company, the Subsidiaries, the Residential
Development Corporations or the Operating Partnership, nor any of their
trust managers, directors, officers or controlling persons, has taken or
will take, directly or indirectly, any action resulting in a violation
of Regulation M under the 1934 Act, or designed to cause or result under
the 1934 Act or otherwise in, or which has constituted or which
reasonably might be expected to constitute, the unlawful stabilization
or manipulation of the price of any security of the Company or
facilitation of the sale or resale of the Underwritten Securities.
(b) Any certificate signed by any officer of the Company or the
Operating Partnership and delivered to you or to your counsel shall be deemed a
representation and warranty by such entity to you as to the matters covered
thereby.
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SECTION 2. PURCHASE AND SALE.
(a) On the basis of the representations, warranties, covenants and
agreements herein contained, and subject to the terms and conditions herein set
forth, the Company agrees to sell to you, and you agree to purchase from the
Company, the Initial Shares on the terms and at the price set forth on Schedule
A attached hereto and made a part hereof.
(b) In addition, on the basis of the representations and warranties
herein contained, and subject to the terms and conditions herein set forth, the
Company hereby grants you an option to purchase up to 1,200,000 Option Shares at
the same price per share and on the same terms as is applicable to the Initial
Shares. Such option will expire 30 days after the date hereof, and may be
exercised in whole or in part from time to time only for the purpose of covering
over-allotments which may be made in connection with the offering and
distribution of the Initial Shares upon notice by you to the Company setting
forth the number of Option Shares as to which you are then exercising the option
and the time and date of payment and delivery for such Option Shares. Any such
time and date of delivery (a "DATE OF DELIVERY") shall be determined by you, but
shall not be later than seven full business days and not be earlier than two
full business days after the exercise of said option, unless otherwise agreed
upon by you and the Company.
(c) Payment of the purchase price for, and delivery of, the
Underwritten Securities to be purchased by you shall be made at the offices of
▇▇▇▇▇ & ▇▇▇▇▇▇▇ L.L.P., Columbia Square, ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.,
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇-▇▇▇▇, or at such other place as shall be agreed upon by
you and the Company, at 9:00 A.M., New York City time, on the third business day
following the date of this Agreement or, if pricing takes place after 4:30 P.M.
New York City time on the date of this Agreement, on the fourth business day
following the date of this Agreement, or at such other time as shall be agreed
upon by you and the Company (such time and date being referred to as the
"CLOSING TIME"). In addition, if any or all of the Option Shares are purchased
by you, payment of the purchase price for, and delivery of certificates
representing, such Option Shares shall be made at the above-mentioned offices of
▇▇▇▇▇ & ▇▇▇▇▇▇▇ L.L.P., or at such other place as shall be agreed upon by you
and the Company, on each Date of Delivery as specified in the notice from you to
the Company. Unless otherwise agreed upon by the parties to this Agreement,
payment shall be made to the Company by wire transfer or by certified or
official bank check or checks in federal or similar same-day funds payable to
the order of the Company against delivery to you for your account. The
Underwritten Securities shall be in such authorized denominations and registered
in such names as you may request in writing at least two business days prior to
the Closing Time. The Underwritten Securities, which may be in temporary form,
will be made available for examination and packaging by you on or before the
first business day prior to the Closing Time.
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SECTION 3. COVENANTS OF THE COMPANY AND THE OPERATING PARTNERSHIP.
Each of the Company and the Operating Partnership covenants with you
as follows:
(a) Immediately following the execution of this Agreement, the
Company will prepare a Prospectus Supplement setting forth the number of
Underwritten Securities covered thereby and their terms not otherwise specified
in the Prospectus pursuant to which the Underwritten Securities are being
issued, your name as an underwriter in the offering, the price at which the
Underwritten Securities are to be purchased by you from the Company, the initial
public offering price, if any, the selling concession and reallowance, if any,
any delayed delivery arrangements, and such other information as you and the
Company deem appropriate in connection with the offering of the Underwritten
Securities; and the Company will promptly transmit copies of the Prospectus
Supplement to the Commission for filing pursuant to Rule 424(b) of the 1933 Act
Regulations within the time period required by such Rule and will furnish to you
as many copies of the Prospectus and such Prospectus Supplement as you shall
reasonably request. If the Company elects to rely on Rule 434 under the 1933 Act
Regulations, the Company will prepare an abbreviated term sheet that complies
with the requirements of Rule 434 under the 1933 Act Regulations and will
provide you with copies of the form of Rule 434 Prospectus, in such number as
you may reasonably request, and file or transmit for filing with the Commission
the form of Prospectus complying with Rule 434(c)(2) of the 1933 Act Regulations
in accordance with Rule 424(b) of the 1933 Act Regulations by the close of
business in New York on the business day immediately succeeding the date of this
Agreement.
(b) The Company will notify you immediately, and confirm such notice
in writing, of (i) the effectiveness of any amendment to the Registration
Statement relating to or affecting the offering of the Underwritten Securities,
(ii) the transmittal to the Commission for filing of any Prospectus Supplement
or other supplement or amendment to the Prospectus or any document to be filed
pursuant to the 1934 Act relating to or affecting the offering of the
Underwritten Securities, (iii) the receipt of any comments from the Commission
relating to or affecting the offering of the Underwritten Securities, (iv) any
request by the Commission for any amendment to the Registration Statement or any
amendment or supplement to the Prospectus or for additional information relating
to or affecting the offering of the Underwritten Securities, and (v) the
issuance by the Commission of any stop order suspending the effectiveness of the
Registration Statement relating to or affecting the offering of the Underwritten
Securities or the initiation of any proceedings for that purpose; and the
Company will make every reasonable effort to prevent the issuance of any such
stop order and, if any stop order is issued, to obtain the lifting thereof at
the earliest possible moment.
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(c) At any time when the Prospectus is required to be delivered
under the 1933 Act or the 1934 Act in connection with sales of the Underwritten
Securities, the Company will give you notice of its intention to file or prepare
any amendment to the Registration Statement or any amendment or supplement to
the Prospectus (including any revised prospectus which the Company proposes for
use by you in connection with the offering of Underwritten Securities which
differs from the prospectus on file at the Commission at the time the
Registration Statement became effective, whether or not such revised prospectus
is required to be filed pursuant to Rule 424(b) of the 1933 Act Regulations),
whether pursuant to the 1933 Act, 1934 Act or otherwise, and will furnish you
with copies of any such amendment or supplement a reasonable amount of time
prior to such proposed filing or preparation, as the case may be, and will not
file or prepare any such amendment or supplement or other documents in a form to
which you or your counsel shall reasonably object.
(d) The Company will deliver to you, as soon as available, as many
signed and conformed copies of the Registration Statement as originally filed
and of each amendment thereto (including exhibits filed therewith or
incorporated by reference therein) as you may reasonably request.
(e) The Company will furnish to you, from time to time during the
period when the Prospectus is required to be delivered under the 1933 Act or the
Exchange Act, such number of copies of the Prospectus (as amended or
supplemented) as you may reasonably request for the purposes contemplated by the
1933 Act or the 1934 Act or the respective applicable rules and regulations of
the Commission thereunder.
(f) If any event shall occur as a result of which it is necessary,
in the opinion of your counsel or counsel for the Company, to amend or
supplement the Prospectus in order to make the Prospectus 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 existing at
the time it is delivered to a purchaser, not misleading, or if it shall be
necessary, in the opinion of either such counsel, at any such time to amend or
supplement the Registration Statement or the Prospectus in order to comply with
the 1933 Act or the 1934 Act, the Company will forthwith prepare an amendment of
or supplement to the Registration Statement or the Prospectus (in form and
substance satisfactory to your counsel), whether by filing documents pursuant to
the 1933 Act, the 1934 Act or otherwise, which will amend or supplement the
Prospectus so that it will not contain an untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements therein,
in the light of the circumstances existing at the time it is delivered to a
purchaser, not misleading, or to make the Registration Statement and Prospectus
comply with such requirements, and the Company will furnish to you a reasonable
number of copies of such amendment or supplement.
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(g) The Company will endeavor, in cooperation with you, to qualify
the Underwritten Securities and the Common Shares issuable upon conversion
thereof for offering and sale under the applicable securities laws and real
estate syndication laws of such states and other jurisdictions of the United
States as you may designate. In each jurisdiction in which the Underwritten
Securities and such Common Shares have been so qualified, the Company will file
such statements and reports as may be required by the laws of such jurisdiction
to continue such qualification in effect for a period of not less than one year
from the effective date of the Registration Statement.
(h) With respect to the sale of Underwritten Securities pursuant to
this Agreement, the Company will make generally available to its security
holders as soon as practicable, but not later than 90 days after the close of
the period covered thereby, an earnings statement (in form complying with the
provisions of Rule 158 of the 1933 Act Regulations) covering a 12-month period
beginning not later than the first day of the Company's fiscal quarter next
following the "effective date of the registration statement" (as defined in such
Rule 158).
(i) The Company, during the period when the Prospectus is required
to be delivered under the 1933 Act or the 1934 Act in connection with sales of
the Underwritten Securities, will file all documents required to be filed with
the Commission pursuant to Section 13, 14 or 15 of the 1934 Act within the time
periods prescribed by the 1934 Act and the 1934 Act Regulations.
(j) If applicable, the Company will use the net proceeds received by
it from the sale of the Underwritten Securities in the manner specified in the
Prospectus under the caption "Use of Proceeds."
(k) The Company will use its best efforts to effect the listing of
the Underwritten Securities and the Common Shares issuable upon conversion
thereof on the New York Stock Exchange.
(l) During the period from the date hereof until 90 days after
Closing time, the Company and the Operating Partnership will not, without your
prior written consent, directly or indirectly, sell, offer to sell, grant any
option for the sale of, or otherwise dispose of, any Common Shares, Preferred
Shares or Units or any other security convertible into or exchangeable into or
exercisable for the Common Shares, otherwise than in accordance with this
Agreement or as contemplated in the Prospectus except for (i) options granted
under the incentive plans of the Company, (ii) Common Shares issued in exchange
for Units and (iii) Common Shares or Units issued in connection with the
acquisition of real property or interests therein.
(m) The Company will use its best efforts to meet the requirements
to continue to qualify as a "real estate investment trust" under the Code.
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(n) The Company and the Operating Partnership will cause, or have
caused, the officers and trust managers of the Company to enter into lock-up
agreements in form and substance reasonably satisfactory to you and each of the
Company and the Operating Partnership acknowledges that you are or will be
intended third party beneficiaries of such agreements.
(o) The Company will reserve and keep available at all times, free
of preemptive or other similar rights, a sufficient number of Common Shares for
the purpose of enabling the Company to satisfy any obligations to issue such
shares upon conversion of such Preferred Shares.
(p) Except for the authorization of actions permitted to be taken by
you as contemplated herein or in the Prospectus, neither the Company nor the
Operating Partnership will (i) take, directly or indirectly, any action designed
to cause or to result in, or that might reasonably be expected to constitute,
the stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of the Underwritten Securities, (ii) sell, bid for
or purchase the Underwritten Securities or pay any person any compensation for
soliciting purchases of the Underwritten Securities or (iii) pay or agree to pay
to any person any compensation for soliciting another to purchase any other
securities of the Company.
(q) During the period from Closing Time until five years after
Closing Time, the Company will deliver to you, (i) promptly upon their becoming
available, copies of all current, regular and periodic reports of the Company
mailed to its stockholders or filed with any securities exchange or with the
Commission or any governmental authority succeeding to any of the Commission's
functions, and (ii) such other information concerning the Company, the Operating
Partnership, any Subsidiary or any Residential Development Corporation as you
may reasonably request.
(r) Prior to Closing Time and if not described in the Prospectus,
the Company and the Operating Partnership will notify you in writing immediately
if any event occurs that renders any of the representations and warranties of
the Company and the Operating Partnership contained herein inaccurate or
incomplete in any respect.
(s) If at any time during the 25-day period after any amendment to
the Registration Statement becomes effective or during the period prior to the
final Date of Delivery, any rumor, publication or event relating to or affecting
the Company shall occur as a result of which in your opinion the market price of
the Underwritten Securities has been or is likely to be materially affected
(regardless of whether such rumor, publication or event necessitates supplements
to or amendments of the Prospectuses), the Company will, after written notice
from you advising the Company to that effect, promptly prepare, consult with you
concerning
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the substance of, and disseminate a press release or other public
statement, reasonably satisfactory to you, responding to or commenting on such
rumor, publication or event.
(t) From the date hereof until notice of termination pursuant to
Section 9(a) hereof is received by you, the Company shall furnish to you and
your counsel, within two days after filing, copies of any document filed by the
Company with the Commission pursuant to Section 13, 14 or 15 of the 1934 Act.
SECTION 4. PAYMENT OF FEES AND EXPENSES.
The Company will pay all expenses incident to the performance of its
obligations under this Agreement, including (i) the printing and filing of the
Registration Statement as originally filed and of each amendment thereto, (ii)
the printing of this Agreement and other documents related hereto, (iii) the
preparation, issuance and delivery of the certificates for the Underwritten
Securities to you, (iv) the fees and other charges of the Company's counsel and
accountants, (v) the qualification of the Underwritten Securities and Common
Shares issuable upon conversion thereof under securities laws and real estate
syndication laws in accordance with the provisions of Section 3(g) hereof,
including filing fees and the fees and other charges of your counsel in
connection therewith and in connection with the preparation of a blue sky
memorandum (the "BLUE SKY MEMORANDUM"), (vi) the printing and delivery to you of
copies of the Registration Statement as originally filed and of each amendment
thereto, of the preliminary prospectus, and of the Prospectus and any amendments
or supplements thereto, (vii) the printing (and reproduction) and delivery to
you of copies of the Blue Sky Memorandum, and (viii) the fees and expenses, if
any, incurred with respect to the listing of the Underwritten Securities and the
Common Shares issuable upon conversion thereof on any national securities
exchange.
If this Agreement is canceled or terminated by you in accordance
with the provisions of Section 5 or Section 9 hereof, the Company also shall
reimburse you for all of your out-of-pocket expenses, including the reasonable
fees and other charges of your counsel.
SECTION 5. CONDITIONS OF UNDERWRITER'S OBLIGATIONS.
Your obligations hereunder are subject to the accuracy, as of the
date hereof and at Closing Time, of the representations and warranties of the
Company and the Operating Partnership herein contained, to the performance by
the Company and the Operating Partnership of their respective obligations
hereunder, and to the following further conditions:
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(a) At the applicable Closing Time (i) no stop order suspending the
effectiveness of the Registration Statement shall have been issued under the
1933 Act or proceedings therefor initiated or threatened by the Commission, (ii)
the rating assigned by any nationally recognized statistical rating organization
to any Preferred Shares of the Company and any indebtedness of the Company or
the Operating Partnership as of the date of this Agreement shall not have been
lowered since such date nor shall any such rating organization have publicly
announced that it has placed any Preferred Shares of the Company and any
indebtedness of the Company or the Operating Partnership on what is commonly
termed a "watch list" for possible downgrading, and (iii) there shall not have
come to your attention any facts that would cause you to believe that the
Prospectus, together with the Prospectus Supplement, at the time it was required
to be delivered to purchasers of the Underwritten Securities, included an untrue
statement of a material fact or omitted to state a material fact necessary in
order to make the statements therein, in light of the circumstances existing at
such time, not misleading.
(b) At Closing Time, you shall have received:
(i) The favorable opinions, dated as of Closing Time, of Shaw,
Pittman, ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇, counsel for each of the Company, the Operating
Partnership and the Significant Subsidiaries, and ▇▇▇▇▇ ▇▇▇▇▇▇▇ Rain
▇▇▇▇▇▇▇ (A Professional Corporation), special Texas tax counsel for the
Subsidiaries that are Texas entities (collectively with the Residential
Development Corporations which are Texas entities, the "TEXAS ENTITIES"),
each in form and substance satisfactory to your counsel, to the effect
that:
(A) The Company has been duly formed as a real estate investment
trust under the laws of the State of Texas. The Company has power and
authority to own, lease and operate its properties, to conduct the
business in which it is engaged or proposes to engage as described in
the Prospectus, and to enter into and perform its obligations under
this Agreement and the Partnership Agreement (together, the "LISTED
AGREEMENTS"). According to the County Clerk of Tarrant County, Texas,
the Restated Declaration of Trust of the Company is recorded in Volume
12645, beginning at Page 1811, in the records of the County Clerk. The
Restated Declaration of Trust is in effect, and no dissolution,
revocation or forfeiture proceedings regarding the Company have been
commenced. The Company is duly qualified as a foreign organization to
transact business and is in good standing in each jurisdiction in
which such qualification is required, whether by reason of the
ownership or leasing of property or the conduct of business, except
where the failure to so qualify would not have a material adverse
effect on the condition, financial or otherwise, or the earnings,
assets, business affairs or business prospects of the
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Company, the Operating Partnership, the Subsidiaries and the
Residential Development Corporations considered as one enterprise.
(B) The Operating Partnership has been duly formed and is validly
existing as a limited partnership in good standing under the Delaware
Act. The Operating Partnership has full partnership power and
authority to own, lease and operate its properties, to conduct the
business in which it is engaged or proposes to engage as described in
the Prospectus and to enter into and perform its obligations under
this Agreement and the Listed Agreements to which it is a party. The
Operating Partnership is duly qualified or registered as a foreign
partnership and is in good standing in Texas, Colorado, California,
Florida, Arizona, New Mexico, Louisiana, Nebraska and each other
jurisdiction in which such qualification or registration is required,
whether by reason of the ownership or leasing of property or the
conduct of business, except where the failure to so qualify or
register would not have a material adverse effect on the condition,
financial or otherwise, or the earnings, assets, business affairs or
business prospects of the Company, the Operating Partnership, the
Subsidiaries and the Residential Development Corporations considered
as one enterprise. CGP, Inc., a wholly owned subsidiary of the
Company, is the sole general partner of the Operating Partnership.
(C) Each of Crescent Real Estate Funding I, L.P., Crescent Real
Estate Funding II, L.P., Crescent Real Estate Funding VII, L.P. and
any other Subsidiary that would be considered a "Significant
Subsidiary" as defined in Article 1, Rule 1--02 of Regulation S-X
promulgated pursuant to the 1933 Act (collectively, the "Significant
Subsidiaries") has been organized and is validly existing as a
corporation, limited partnership or limited liability company, as the
case may be, in good standing under the laws of its respective state
of organization, with full corporate, partnership or limited liability
company (as the case may be) power and authority to own, lease and
operate its properties, to conduct the business in which it is engaged
or proposes to engage as described in the Prospectus, and to enter
into and perform its obligations under any Listed Agreements to which
it is a party. Each of the Significant Subsidiaries and the
Residential Development Corporations is duly qualified as a foreign
corporation, limited partnership or limited liability company, as the
case may be, to transact business and is in good standing in each
jurisdiction in which such qualification is required, whether by
reason of the ownership or leasing of property or the conduct of
business, except where the failure to so qualify would not have a
material adverse effect on the condition, financial or otherwise, or
the earnings, assets, business affairs or business prospects of the
Company, the Operating Partnership, the
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Significant Subsidiaries and the Residential Development Corporations
considered as one enterprise. All of the issued and outstanding shares
of capital stock of each of the corporate Significant Subsidiaries
have been duly authorized and validly issued and are fully paid and
non-assessable. The ownership by the Company, the Operating
Partnership and the Significant Subsidiaries of the shares of capital
stock or limited partnership or equity interests, as the case may be,
of each of the Significant Subsidiaries is as described in the
Prospectus, and such ownership is free and clear of any security
interest, mortgage, pledge, lien, encumbrance, claim or equity.
(D) The authorized, issued and outstanding shares of beneficial
interest of the Company are as set forth in the Prospectus, except to
the extent of changes due to either the conversion of Units to Common
Shares or the exercise of existing options to acquire Common Shares.
All of such shares of beneficial interest are validly issued, fully
paid and non-assessable and have been offered and sold in compliance
with all applicable laws (including, without limitation, federal
securities laws). No shares of beneficial interest of the Company are
reserved for any purpose except in connection with (i) the option
plans of the Company as described in the Prospectus, (ii) the possible
issuance of Common Shares upon the exchange of Units pursuant to the
Partnership Agreement, (iii) the possible issuance of Common Shares
upon exercise of an existing option to acquire up to 217,530 Common
Shares, and (iv) the possible issuance of up to 664,294 Common Shares
upon the exchange of a portion of partnership interest in Desert
Mountain Properties Limited Partnership. Except for (i) Units, (ii)
Common Shares issuable upon the exercise of options, (iii) Units
issuable upon the exercise of options, (iv) Common Shares issuable
pursuant to the Forward Stock Purchase Contract agreement, dated as of
August 12, 1997 with an affiliate of Union Bank of Switzerland and (v)
Common Shares issuable pursuant to the Swap Agreement, dated as of
December 12, 1997, with an affiliate of ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co, Inc.,
there are no outstanding securities convertible into or exchangeable
for any shares of beneficial interest of the Company and no
outstanding options, rights (preemptive or other similar rights under
the Texas REIT Act, the Declaration of Trust, or to the knowledge of
such counsel, any other document) or warrants to purchase or to
subscribe for shares of beneficial interest or any other securities
of the Company.
(E) The Underwritten Securities have been duly authorized for
issuance and sale to you pursuant to this Agreement and, when issued
and delivered by the Company pursuant hereto against payment of the
consideration set forth herein, will be validly issued, fully paid and
non-assessable. Upon payment of the purchase price and delivery of the
Underwritten Securities in accordance herewith
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you are receiving good, valid and marketable title to the Underwritten
Securities, free and clear of all security interests, mortgages,
pledges, liens, encumbrances and claims. The Underwritten Securities
will be offered and sold at Closing Time or the Date of Delivery, as
the case may be, in compliance with all applicable laws (including,
without limitation, federal securities laws). The terms of the
Underwritten Securities, the Preferred Shares and the Common Shares
conform to all statements and descriptions related thereto contained
in the Prospectus. The form of stock certificate evidencing the
Underwritten Securities and the Common Shares is in due and proper
form and complies with all applicable legal requirements. The issuance
of the Underwritten Securities is not subject to any preemptive or
other similar rights under the Texas REIT Act, the Declaration of
Trust, or to the knowledge of such counsel, any other document and,
except as set forth in the Prospectus, there are no restrictions on
the voting or transfer of Preferred Shares or Common Shares pursuant
to the Company's Declaration of Trust or Bylaws or any agreement or
other instrument known to such counsel.
(F) At Closing Time, the number of authorized, issued and
outstanding Units will be as set forth in the Prospectus, except to
the extent of changes due to either the conversion of Units to Common
Shares or the exercise of existing options to acquire Units. All of
the Units outstanding at Closing Time were duly authorized for
issuance by the Operating Partnership and are validly issued and fully
paid. To our knowledge, the Units were offered and sold in compliance
with all applicable laws (including, without limitation, federal
securities laws). Except as summarized in the Prospectus or as set
forth in the Partnership Agreement, there are no preemptive or other
rights to subscribe for or to purchase, or any restriction upon the
voting or transfer of, any Units pursuant to the Partnership Agreement
or any other instrument known to such counsel. The terms of the Units
conform to all statements and descriptions related thereto contained
in the Prospectus, including all documents incorporated therein by
reference.
(G) The Common Shares issuable upon conversion of the
Underwritten Securities have been duly authorized and reserved for
issuance upon such conversion by all necessary action on the part of
the Company and such Common Shares, when issued and declared upon such
conversion in accordance with the Declaration of Trust will be validly
issued, fully paid and non-assessable. The issuance of such Common
Shares upon such conversion will not be subject to preemptive or other
similar rights under the Texas REIT Act, the
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Declaration of Trust, or to the knowledge of such counsel, any other
document.
(H) The relative rights, preferences, interests and powers of the
Underwritten Securities are as set forth in a statement of designation
filed for record with the County Clerk of Tarrant County, Texas and
all such provisions are valid under Texas law.
(I) This Agreement has been duly authorized, executed and
delivered by each of the Company and the Operating Partnership.
(J) None of the Company, the Operating Partnership or any
Significant Subsidiary is in violation of its declaration of trust,
charter, by-laws, certificate of limited partnership, partnership
agreement, limited liability company agreement or similar instrument,
as the case may be, and, to the knowledge of counsel, none of the
Company, the Operating Partnership or any Significant Subsidiary is in
default in the performance or observance of any obligation, agreement,
covenant or condition contained in any contract, indenture, mortgage,
loan agreement, note, lease or other instrument filed as an exhibit to
the Registration Statement or any document incorporated therein by
reference or as otherwise identified by the Company as material in an
officer's certificate to which such entity is a party or by which such
entity is bound, or to which any of the property or assets of such
entity is subject, except where a default thereunder would not have a
material adverse effect on the condition, financial or otherwise, or
the earnings, assets, business affairs or business prospects of the
Company, the Operating Partnership, the Subsidiaries and the
Residential Development Corporations considered as one enterprise.
(K) Each of the Listed Agreements was duly and validly
authorized, executed and delivered by the Company and the Operating
Partnership, as applicable, and, assuming due authorization, execution
and delivery by any other party thereto, is a valid and binding
agreement, enforceable in accordance with its terms, except as such
enforceability may be (1) limited by bankruptcy, insolvency,
reorganization, liquidation, moratorium and other similar laws
affecting the rights and remedies of creditors generally and (2)
subject to general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
(L) The execution and delivery of the Listed Agreements, the
performance of the obligations set forth in each of the Listed
Agreements, and the consummation of the transactions contemplated
thereby or in the Prospectus by the Company, the Operating
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Partnership and the Significant Subsidiaries as applicable, will not
conflict with or constitute a breach or violation of, or default
under: (1) to the knowledge of counsel, any material contract,
indenture, mortgage, loan agreement, note, lease, joint venture or
partnership agreement or other instrument or agreement filed as an
exhibit to the Registration Statement or any document incorporated
therein by reference or as otherwise identified by the Company as
material in an officer's certificate to which the Company, the
Operating Partnership or any Significant Subsidiary is a party or by
which they or any of them or any of their respective properties or
other assets or any Property may be bound or subject; (2) the
declaration of trust, charter, by-laws, certificate of limited
partnership, partnership agreement, or limited liability company
agreement, or similar instrument, as the case may be, of the Company,
the Operating Partnership or any Significant Subsidiary; or (3) any
federal or Texas law or the Delaware Act. The descriptions of the
Listed Agreements, if any, contained in the Prospectus are correct and
complete in all material respects.
(M) To the knowledge of counsel, there is no action, suit or
proceeding before or by any court or governmental agency or body,
domestic or foreign, now pending or threatened against or affecting
the Company, the Operating Partnership or any Significant Subsidiary,
any Property, any property underlying indebtedness held by the
Company, the Operating Partnership or any of the Significant
Subsidiaries or any officer or trust manager of the Company that is
required to be disclosed in the Registration Statement (other than as
disclosed therein or that, if determined adversely to the Company, the
Operating Partnership, any Significant Subsidiary, any Property,
including any property underlying indebtedness held by the Company,
the Operating Partnership, any of the Significant Subsidiaries or any
such officer or trust manager, would reasonably be expected to (1)
result in any material adverse change in the condition, financial or
otherwise, or in the earnings, assets, business affairs or business
prospects of the Company, the Operating Partnership, the Subsidiaries
and the Residential Development Corporations, considered as one
enterprise, or (2) materially and adversely affect the consummation of
the transactions contemplated by this Agreement. To the knowledge of
counsel, there is no pending legal or governmental proceeding to which
the Company, the Operating Partnership or any Significant Subsidiary
is a party or of which any of their respective properties or assets or
any Property, including any property underlying indebtedness held by
the Company, the Operating Partnership, or any of the Significant
Subsidiaries is the subject, including ordinary routine litigation
incidental to the business, that is, considered in the aggregate,
material to the condition, financial or otherwise, or the earnings,
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assets, business affairs or business prospects of the Company, the
Operating Partnership, the Subsidiaries and the Residential
Development Corporations, considered as one enterprise. To the
knowledge of counsel, there are no contracts or documents of the
Company, the Operating Partnership, or the Significant Subsidiaries
which are required to be filed as exhibits to the Registration
Statement by the 1933 Act or by the 1933 Act Regulations which have
not been filed or incorporated by reference as exhibits to the
Registration Statement.
(N) The Company qualified as a real estate investment trust under
the Code with respect to its taxable years ending on or before
December 31, 1997 and is organized in conformity with the requirements
for qualification as a real estate investment trust, its manner of
operation has enabled it to meet the requirements for qualification as
a real estate investment trust as of the date of the Prospectus
Supplement, and its proposed manner of operation will enable it to
meet the requirements for qualification as a real estate investment
trust in the future. In connection therewith, you are entitled to rely
on the opinions of Shaw, Pittman, ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇ filed as Exhibit
8.01 to the Registration Statement, the opinions attached to such
opinions as exhibits thereto, and any other opinions rendered to the
Company with respect to tax matters and described in the Prospectus,
all as if rendered to you on the Closing Date.
(O) None of the Company, the Operating Partnership or any
Significant Subsidiary is required to be registered under the 1940
Act.
(P) All authorizations, approvals and consents of any court or
governmental authority or agency that are necessary in connection with
the offering, issuance or sale of the Underwritten Securities under
this Agreement have been obtained, except such as may be required
under the 1933 Act or the 1933 Act Regulations or the securities and
real estate syndication laws of any U.S. state or other jurisdiction
with respect to the Securities.
(Q) The Registration Statement has been declared effective under
the 1933 Act and, to the knowledge of counsel, no stop order
suspending the effectiveness of the Registration Statement has been
issued under the 1933 Act or proceedings therefor initiated or
threatened by the Commission.
(R) The Registration Statement and the Prospectus (other than the
financial statements and supporting schedules included therein, as to
which no opinion need be rendered) as of their respective
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29
effective or issue dates and on the date hereof complied as to
form in all material respects with the requirements of the 1933
Act and the 1933 Act Regulations. Each document filed pursuant to
the 1934 Act (other than the financial statements and supporting
schedules, included therein as to which no opinion need be
rendered) and incorporated or deemed to be incorporated by
reference in the Prospectus complied when so filed or
incorporated or deemed to be incorporated as to form in all
material respects with the 1934 Act and the 1934 Act Regulations.
(S) The information in the Registration Statement under the
captions "Description of Series A Preferred Shares," "Description
of Preferred Shares," "Description of Common Shares," "Certain
Provisions of the Declaration of Trust, Bylaws and Texas Law" and
"ERISA Considerations," to the extent applicable to the offering
of the Underwritten Securities and to the extent that it
constitutes matters of law or legal conclusions, has been
reviewed by such counsel, is correct and presents fairly the
information required to be disclosed therein.
(T) The information in the Prospectus Supplement under the
caption "Federal Income Tax Considerations" and in the Prospectus
under the caption "Risks Relating to Qualification and Operation
as a REIT" fairly summarizes the federal income tax
considerations that are likely to be material to a holder of
Underwritten Securities and, to the extent that they constitute
matters of law or legal conclusions, they have been reviewed by
such counsel, they are correct and present fairly the information
required to be disclosed therein.
In giving the opinions required by this Section 5(b)(i),
such counsel shall in addition provide the opinions referenced in
the Prospectus under the caption "Federal Income Tax
Consequences."
In giving the opinions required by this Section 5(b)(i),
such counsel shall additionally state (which shall not constitute
an opinion) that nothing has come to the attention of such
counsel that causes it to believe that the Registration Statement
or any post-effective amendment thereto (except for financial
statements and schedules and other financial data included
therein or omitted therefrom, as to which counsel need make no
statement), at the time such Registration Statement became
effective under the 1933 Act or at the time an Annual Report on
Form 10-K or the latest Quarterly Report on Form 10-Q was filed
by the Company with the Commission (whichever is later) or at the
date of this Agreement, or as of the date such opinions are
given, contained an untrue statement of a material fact or
omitted
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30
to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, or the
Prospectus or any Prospectus Supplement (except for financial
statements and schedules and other financial data included
therein, as to which counsel need make no statement), as of the
date of this Agreement, or as of the date of such opinion,
included an untrue statement of a material fact or omitted to
state a material fact necessary in order to make the statements
therein, in light of the circumstances under which they were
made, not misleading.
In giving the opinions required by this Section 5(b)(i),
Shaw, Pittman, ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇ Rain ▇▇▇▇▇▇▇
(A Professional Corporation) may rely, (A) as to all matters of
fact, upon certificates and written statements of officers and
employees of and accountants for each of the Company, the
Operating Partnership, the Subsidiaries or the Residential
Development Corporations; (B) as to the continued existence of
the Company, upon a certificate of an officer of the Company, and
as to the qualification and good standing of each of the
Operating Partnership or a Significant Subsidiary to do business
in any jurisdiction, upon certificates of appropriate government
officials or opinions of counsel in such jurisdictions; and (C)
as to all Texas franchise tax matters, upon the opinion, dated as
of Closing Time, of ▇▇▇▇▇ ▇▇▇▇▇▇▇ Rain ▇▇▇▇▇▇▇ (A Professional
Corporation).
The opinion of ▇▇▇▇▇ ▇▇▇▇▇▇▇ Rain ▇▇▇▇▇▇▇ (A Professional
Corporation) shall be limited to the laws of the State of Texas.
(ii) The favorable opinion, dated as of Closing Time, of ▇▇▇▇▇
▇▇▇▇▇▇▇ Rain ▇▇▇▇▇▇▇ (A Professional Corporation), counsel to each of
the Company and the Operating Partnership, that it has reviewed the
discussion in the Prospectus under the caption "Federal Income Tax
Considerations - State and Local Taxes" with respect to Texas
franchise matters and is of the opinion that it accurately summarizes
the Texas franchise tax matters expressly described therein.
(iii) The favorable opinion, dated as of Closing Time, of
▇▇▇▇▇ & ▇▇▇▇▇▇▇ L.L.P., your counsel, with respect to the matters set
forth in (A) (first sentence only), (B) (first sentence only), (E)
(first and fourth sentences only), (G)(first sentence only), (H), (I),
(Q) and (R) (first sentence only) of Section 5(b)(i) and a statement
(which shall not constitute an opinion) similar to the statement
referred to in the third to last paragraph of Section 5(b)(i) above. In
giving its opinion, ▇▇▇▇▇ & ▇▇▇▇▇▇▇ L.L.P. may rely, (A) as to all
matters of fact, upon certificates and written statements of officers
and employees of and accountants for each of the Company, the Operating
Partnership, the Subsidiaries or the Residential Development
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31
Corporations, (B) as to the qualification and good standing of each of
the Company, the Operating Partnership, or the Significant Subsidiaries
to do business in any state or jurisdiction, upon certificates of
appropriate government officials or opinions of counsel in such
jurisdictions, which opinions shall be in form and substance
satisfactory to your counsel, and (C) as to certain matters of law,
upon the opinion of Shaw, Pittman, ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇ given pursuant to
Section 5(b)(i) above.
(c) At Closing Time, (i) there shall not have been, since the respective
dates as of which information is given in the Registration Statement and the
Prospectus, any material adverse change in the condition, financial or
otherwise, or in the earnings, assets, business affairs or business prospects of
the Company, the Operating Partnership, the Subsidiaries, the Residential
Development Corporations and the Properties considered as one enterprise,
whether or not arising in the ordinary course of business, (ii) no proceedings
shall be pending or, to the knowledge of the Company or the Operating
Partnership, threatened against such entity before or by any federal, state or
other commission, board or administrative agency wherein an unfavorable
decision, ruling or finding might result in a material adverse change in the
condition, financial or otherwise, or in the earnings, assets, business affairs
or business prospects of the Company, the Operating Partnership, the
Subsidiaries, the Residential Development Corporations and the Properties
considered as one enterprise other than as set forth in the Prospectus, (iii) no
stop order suspending the effectiveness of the Registration Statement or any
part thereof shall have been issued and no proceedings for that purpose shall
have been instituted or, to the knowledge of the Company or the Operating
Partnership, threatened by the Commission or by the state securities authority
of any jurisdiction, and (iv) you shall have received, at Closing Time, a
Certificate of the Chief Executive Officer or any Senior Vice President of the
Company and CGP, Inc., on behalf of the Operating Partnership, and the chief
financial or chief accounting officer of each such entity, dated as of Closing
Time, evidencing compliance with the provisions of this subsection (c), stating
that the representations and warranties set forth in Section 1(a) hereof are
accurate as though expressly made at and as of Closing Time, and stating that
the conditions precedent set forth in this Section 5 have been satisfied or
waived. As used in this Section 5(c), the term "Prospectus" means the Prospectus
in the form first used to confirm sales of the Underwritten Securities.
(d) At the time of execution of this Agreement, you shall have received
from ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP a letter dated such date, in form and substance
satisfactory to you, to the effect that: (i) they are independent public
accountants with respect to the Company and the Rainwater Property Group (as
defined in the financial statements included in the Registration Statement) as
required by the 1933 Act and the 1933 Act Regulations; (ii) it is their opinion
that the financial statements and supporting schedule included in the
Registration Statement and
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32
covered by their opinions therein comply as to form in all material respects
with the applicable accounting requirements of the 1933 Act and the 1933 Act
Regulations; (iii) they have performed limited procedures, not constituting an
audit, including a reading of the latest available consolidated interim
financial statements of the Company, a reading of the minute books of the
Company, inquiries of officials of the Company responsible for financial and
accounting matters and such other inquiries and procedures as may be specified
in such letter, and on the basis of such limited review and procedures nothing
came to their attention that caused them to believe that (A) the unaudited
financial statements and supporting schedules of the Rainwater Property Group
included in the Registration Statement do not comply as to form in all material
respects with the applicable accounting requirements of the 1933 Act and the
1933 Act Regulations or are not in conformity with generally accepted accounting
principles applied on a basis substantially consistent with that of the audited
financial statements included in the Registration Statement, (B) the unaudited
operating data and balance sheet data of the Company set forth in the Prospectus
under the caption "Selected Financial Information" were not determined on a
basis substantially consistent with that used in determining the corresponding
amounts in the audited financial statements included in the Registration
Statement (C) the pro forma financial information included in the Registration
Statement was not prepared in accordance with the applicable accounting
requirements of the 1933 Act and the 1933 Act Regulations with respect to pro
forma financial information or was not determined on a basis substantially
consistent with that of the audited financial statements included in the
Registration Statement or (D) at a specified date not more than three days prior
to the date of this Agreement, there has been any change in the shareholders'
equity or debt of the Company or any increase in the debt of the Company or any
decrease in the net assets of the Company, as compared with the amounts shown in
the most recent consolidated balance sheet of the Company included in the
Registration Statement or, during the period from most recent consolidated
statement of operations included in the Registration Statement to a specified
date not more than three days prior to the date of this Agreement, there were
any decreases, as compared with the corresponding period in the preceding year,
in revenues, net income or funds from operations of the Company, except in all
instances for changes, increases or decreases which the Registration Statement
and the Prospectus disclose have occurred or may occur; and (iv) in addition to
the examination referred to in their opinions and the limited procedures
referred to in clause (iii) above, they have carried out certain specified
procedures, not constituting an audit, with respect to certain amounts,
percentages and financial and statistical information which are included in the
Registration Statement and Prospectus (including the documents incorporated
therein by reference), and which are specified by you, and have found such
amounts, percentages and financial and statistical information to be in
agreement with the relevant accounting, financial and other records of the
Company identified in such letter.
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33
(e) At Closing Time, you shall have received from ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP a
letter dated as of Closing Time to the effect that they reaffirm the statements
made in the letter furnished pursuant to subsection (d) of this Section 5,
except that the "specified date" referred to shall be a date not more than three
days prior to Closing Time and, if the Company has elected to rely upon Rule
430A of the 1933 Act Regulations, to the further effect that they have carried
out procedures as specified in clause (iv) of subsection (d) of this Section 5
with respect to certain amounts, percentages and financial information specified
by you and deemed to be a part of the Registration Statement pursuant to Rule
430A(b) and have found such amounts, percentages and financial information to be
in agreement with the records specified in such clause (iv).
(f) At Closing Time, your counsel shall have been furnished with such
documents and opinions as they may reasonably require for the purpose of
enabling them to pass upon the issuance and sale of the Underwritten Securities
as herein contemplated and related proceedings, or in order to evidence the
accuracy of any of the representations or warranties, or the fulfillment of any
of the conditions, herein contained, and all proceedings taken by the Company in
connection with the issuance and sale of the Underwritten Securities as
contemplated herein shall be satisfactory in form and substance to you and your
counsel.
(g) In the event you exercise your option set forth in Section 2(b) hereof
to purchase all or any portion of the Option Shares, the representations and
warranties of the Company and the Operating Partnership contained herein and the
statements in any certificates furnished by the Company and CGP, Inc., on behalf
of the Operating Partnership hereunder shall be true and correct as of each Date
of Delivery, and you shall have received:
(i) A certificate of the Chief Executive Officer or any Senior Vice
President of the Company and CGP, Inc., on behalf of the Operating
Partnership and the chief financial or chief accounting officer of each
such entity, dated such Date of Delivery, confirming that the certificate
delivered at Closing Time pursuant to Section 5(c) hereof remains true and
correct as of such Date of Delivery.
(ii) The favorable opinions of Shaw, Pittman, ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇,
counsel for each of the Company, the Operating Partnership and the
Significant Subsidiaries and ▇▇▇▇▇ ▇▇▇▇▇▇▇ Rain ▇▇▇▇▇▇▇ (A Professional
Corporation), special counsel for the Texas Entities, each in form and
substance satisfactory to your counsel, dated such Date of Delivery,
relating to the Option Shares and otherwise to the same effect as the
opinion and statement required by Section 5(b)(i) hereof.
(iii) The favorable opinion of ▇▇▇▇▇ ▇▇▇▇▇▇▇ Rain ▇▇▇▇▇▇▇ (A
Professional Corporation), counsel to each of the Company and the Operating
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Partnership, dated such Date of Delivery, with respect to all Texas
franchise tax matters and otherwise to the same effect as the opinion
required by Section 5(b)(ii) hereof.
(iv) The favorable opinion of ▇▇▇▇▇ & ▇▇▇▇▇▇▇ L.L.P., your counsel,
dated such Date of Delivery, relating to the Option Shares and otherwise to
the same effect as the opinion and statement required by Section 5(b)(iii)
hereof.
(v) A letter from ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, in form and substance
satisfactory to you, dated such Date of Delivery, substantially the same in
scope and substance as the letter furnished to you pursuant to Section 5(e)
hereof, except that the "specified date" in the letter furnished pursuant
to this Section 5(g)(iv) shall be a date not more than three days prior to
such Date of Delivery.
If any condition specified in this Section 5 shall not have been
fulfilled when and as required to be fulfilled, this Agreement may be terminated
by you by notice to the Company at any time at or prior to Closing Time, and
such termination shall be without liability of any party to any other party,
except as provided in Section 4 hereof.
SECTION 6. INDEMNIFICATION.
(a) Each of the Company and the Operating Partnership agrees, jointly
and severally, to indemnify and hold harmless you and each person, if any, who
controls you within the meaning of section 15 of the 1933 Act, and any of your
directors, officers, employees or affiliates as follows:
(i) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement
(or any amendment thereto), including the information deemed to be part of
the Registration Statement pursuant to Rule 430A(b) of the 1933 Act
Regulations, if applicable, or the omission or alleged omission therefrom
of a material fact required to be stated therein or necessary to make the
statements therein not misleading or arising out of any untrue statement or
alleged untrue statement of a material fact contained in any preliminary
prospectus or the Prospectus or the omission or alleged omission therefrom
of a material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading;
provided, however, that neither the Company nor the Operating Partnership
shall be required under this subsection (i) to indemnify you with respect
to
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35
any loss, liability, claim, damage or expense to the extent such loss,
liability, claim, damage or expense arises out of any untrue statement or
omission or alleged untrue statement or omission made in reliance upon and
in conformity with written information furnished to the Company by you
specifically for inclusion in the Registration Statement or the Prospectus;
(ii) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation or of any investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever for which indemnification is provided under subsection (i)
above, if such settlement is effected with the written consent of the
Company and the Operating Partnership; and
(iii) against any and all expense whatsoever (including, without
limitation, the fees and other charges of counsel chosen by you) reasonably
incurred in investigating, preparing or defending against any litigation,
or any investigation or proceedings by any governmental agency or body,
commenced or threatened, or any claim whatsoever for which indemnification
is provided under subsection (i) above, to the extent that any such expense
is not paid under subsection (i) or (ii) above.
(b) You agree to indemnify and hold harmless the Company and the
Operating Partnership, and each person, if any, who controls the Company or the
Operating Partnership within the meaning of Section 15 of the 1933 Act, and any
trust manager, director, officer, employee or affiliate thereof, against any and
all loss, liability, claim, damage and expense described in the indemnity
contained in subsection (a) of this Section 6, as incurred, but only with
respect to untrue statements or omissions, or alleged untrue statements or
omissions, made in the Registration Statement (or any amendment thereto) or any
preliminary prospectus or the Prospectus (or any amendment or supplement
thereto) in reliance upon and in conformity with written information furnished
to the Company by you specifically for inclusion in the Registration Statement
or the Prospectus.
(c) Each indemnified party shall give notice as promptly as reasonably
practicable to each indemnifying party of any action commenced against it in
respect of which indemnity may be sought hereunder, but failure to so notify an
indemnifying party shall not relieve such indemnifying party from any liability
hereunder to the extent it is not materially prejudiced as a result thereof and
in any event shall not relieve it from any liability which it may have otherwise
than on account of this indemnity agreement. An indemnifying party may
participate at its own expense in the defense of such action. If it so elects
within a reasonable time after receipt of such notice, an indemnifying party,
jointly with any other indemnifying parties receiving such notice, may assume
the defense of such action
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with counsel chosen by it and approved by the indemnified parties defendant in
such action, unless such indemnified parties reasonably object to such
assumption on the ground that the named parties to any such action (including
any impleaded parties) include both such indemnified parties and an indemnifying
party, and such indemnified parties reasonably believe that there may be legal
defenses available to them which are different from or in addition to those
available to such indemnifying party. If an indemnifying party assumes the
defense of such action, the indemnifying parties shall not be liable for any
fees and expenses of counsel for the indemnified parties incurred thereafter in
connection with such action. In no event shall the indemnifying parties be
liable for fees and expenses of more than one counsel (in addition to any local
counsel) separate from their own counsel for all indemnified parties in
connection with any one action or separate but similar or related actions in the
same jurisdiction arising out of the same general allegations or circumstances.
No indemnifying party shall, without the prior written consent of the
indemnified parties, settle or compromise or consent to the entry of any
judgment with respect to any litigation, or any investigation or proceeding by
any governmental agency or body, commenced or threatened, or any claim
whatsoever in respect of which indemnification or contribution could be sought
under this Section 6 or Section 7 hereof (whether or not the indemnified parties
are actual or potential parties thereto), unless such settlement, compromise or
consent (i) includes an unconditional release of each indemnified party from all
liability arising out of such litigation, investigation, proceeding or claim and
(ii) does not include a statement as to or an admission of fault, culpability or
a failure to act by or on behalf of any indemnified party.
(d) If at any time an indemnified party shall have requested an
indemnifying party to reimburse the indemnified party for fees and expenses of
counsel, such indemnifying party agrees that it shall be liable for any
settlement of the nature contemplated by Section 6(a)(ii) effected without its
written consent if (i) such settlement is entered into more than 45 days after
receipt by such indemnifying party of the aforesaid request, (ii) such
indemnifying party shall have received notice of the terms of such settlement at
least 30 days prior to such settlement being entered into and (iii) such
indemnifying party shall not have reimbursed such indemnified party in
accordance with such request prior to the date of such settlement.
SECTION 7. CONTRIBUTION.
If the indemnification provided for in Section 6 hereof is for any
reason unavailable to or insufficient to hold harmless an indemnified party in
respect of any losses, liabilities, claims, damages or expenses referred to
therein, then each indemnifying party shall contribute to the aggregate amount
of such losses, liabilities, claims, damages and expenses incurred by such
indemnified party, as incurred, (i) in such proportion as is appropriate to
reflect the relative benefits received by the Company, on the one hand, and you,
on the other hand, from the
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offering of the Underwritten Securities pursuant to this Agreement or (ii) if
the allocation provided by clause (i) is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Company, on
the one hand, and of you, on the other hand, in connection with the statements
or omissions which resulted in such losses, liabilities, claims, damages or
expenses, as well as any other relevant equitable considerations.
The relative benefits received by the Company, on the one hand, and by
you, on the other hand, in connection with the offering of the Underwritten
Securities pursuant to this Agreement shall be deemed to be in the same
respective proportions as the total net proceeds from the offering of such
Underwritten Securities (before deducting expenses) received by the Company and
the total underwriting discount received by you, in each case as set forth on
the cover of the Prospectus, or, if Rule 434 is used, the corresponding location
on the Term Sheet bear to the aggregate initial public offering price of such
Underwritten Securities as set forth on such cover.
The relative fault of the Company, on the one hand, and you on the other
hand, shall be determined by reference to, among other things, whether any such
untrue statement of a material fact or omission or alleged omission to state a
material fact relates to information and opportunity to correct or prevent such
statement or omission.
The Company and you agree that it would not be just and equitable if
contribution pursuant to this Section 7 were determined by pro rata allocation
or by any other method of allocation which does not take account of the
equitable considerations referred to above in this Section 7. The aggregate
amount of losses, liabilities, claims, damages and expenses incurred by an
indemnified party and referred to above in this Section 7 shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue or alleged untrue
statement or omission or alleged omission.
Notwithstanding the provisions of this Section 7, you shall not be
required to contribute any amount in excess of the amount by which the total
price at which the Underwritten Securities underwritten by you and distributed
to the public were offered to the public exceeds the amount of any damages which
you otherwise have been required to pay by reason of any such untrue or alleged
untrue statement or omission or alleged omission.
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No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the ▇▇▇▇ ▇▇▇) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 7, each person, if any, who controls you
within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act
shall have the same rights to contribution as you, and each director of the
Company, each officer of the Company who signed the Registration Statement, and
each person, if any, who controls the Company within the meaning of Section 15
of the 1933 Act or Section 20 of the 1934 Act shall have the same rights to
contribution as the Company.
SECTION 8. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE DELIVERY.
All representations, warranties and agreements contained in this
Agreement, or contained in certificates of officers of the Company or CGP, Inc.
on behalf of the Operating Partnership submitted pursuant hereto, shall remain
operative and in full force and effect, regardless of any investigation made by
you or on your behalf or by any controlling person, or by or on behalf of the
Company or the Operating Partnership or any controlling persons, and shall
survive delivery of the Underwritten Securities to you.
SECTION 9. TERMINATION OF AGREEMENT.
(a) This Agreement may be terminated for any reason at any time by the
Company or by you upon the giving of 30 days' written notice of such termination
to the other party hereto, provided that the continued effectiveness of this
Agreement shall not in any way limit or prohibit the Company's right to offer
any or all of the Securities through any other underwriter or pursuant to any
other selling arrangement.
(b) You may also terminate this Agreement, by notice to the Company, at
any time at or prior to Closing Time, (i) if there has been, since the date of
this Agreement or since the date as of which information is given in the
Prospectus, any material adverse change in the condition, financial or
otherwise, or in the earnings, assets, business affairs or business prospects of
the Company, the Operating Partnership, the Subsidiaries and the Residential
Development Corporations considered as one enterprise, whether or not arising in
the ordinary course of business, (ii) if there has occurred any material adverse
change in the financial markets in the United States or any outbreak of
hostilities or other calamity or crisis or escalation of any existing
hostilities, or any change
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or development involving a prospective change in national or international
political, financial or economic conditions, in each case the effect of which is
such as to make it, in your judgment, impracticable to market the Underwritten
Securities or enforce contracts for the sale of the Underwritten Securities,
(iii) if trading in any of the securities of the Company has been suspended or
limited by the Commission or on any exchange or any over-the-counter market, or
if trading generally on either the New York Stock Exchange or the American Stock
Exchange or in the NASDAQ Stock Market's National Market has been suspended or
limited, or minimum or maximum prices for trading have been fixed, or maximum
ranges for prices for securities have been required, by either of said exchanges
or by order of the Commission or any other governmental authority, or if a
banking moratorium has been declared by federal or New York authorities, (iv) if
the rating assigned by any nationally recognized statistical rating organization
to any Preferred Shares of the Company or any indebtedness of the Company or the
Operating Partnership as of this Agreement shall have been lowered since such
date or if any such rating organization shall have publicly announced that it
has placed any Preferred Shares of the Company or any indebtedness of the
Company or the Operating Partnership on what is commonly termed a "watch list"
for possible downgrading, (v) a banking moratorium has been declared by either
Federal or New York authorities, or (vi) pursuant to Section 10(b) below. As
used in this Section 9(b), the term "Prospectus" means the Prospectus in the
form first used to confirm sales of the Underwritten Securities.
(c) In the event of any such termination, (x) the covenants set forth in
Section 3 hereof with respect to any offering of Underwritten Securities shall
remain in effect so long as you own any such Underwritten Securities purchased
from the Company pursuant to this Agreement and (y) the covenant set forth in
Section 3(h) hereof, the provisions of Section 4 hereof, the indemnity and
contribution agreements set forth in Sections 6 and 7 hereof, and the provisions
of Sections 8 and 12 hereof shall remain in effect.
SECTION 10. NOTICES.
All notices and other communications hereunder shall be in writing and
shall be deemed to have been duly given if mailed or transmitted by any standard
form of telecommunication. Notice to you shall be directed to ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇,
Managing Director, ▇▇▇▇▇ ▇▇▇▇▇▇ Inc., ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇; notices to either the Company or the Operating Partnership shall be
directed to each of them, c/o the Operating Partnership at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇, attention of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Chief
Executive Officer of Crescent and CGP, Inc.
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SECTION 11. PARTIES.
This Agreement shall inure to the benefit of and be binding upon the
parties hereto and thereto and their respective successors. Nothing expressed or
mentioned in this Agreement is intended or shall be construed to give any
person, firm or corporation, other than those referred to in Sections 6 and 7
hereof and their successors, heirs and legal representatives, any legal or
equitable right, remedy or claim under or in respect of this Agreement or any
provision herein or therein contained. This Agreement and all conditions and
provisions hereof and thereof are intended to be for the sole and exclusive
benefit of the parties hereto and thereto and their respective successors and
said controlling persons and officers, directors and trust managers and their
heirs and legal representatives, and for the benefit of no other person, firm or
corporation. No purchaser of Underwritten Securities from you shall be deemed to
be a successor merely by reason of such purchase.
SECTION 12. GOVERNING LAW AND TIME.
This Agreement shall be governed by and construed in accordance with the
laws of the State of New York applicable to agreements made and to be performed
in said State. Specified times of day refer to New York City time.
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If the foregoing is in accordance with your understanding of our
agreement please sign and return to the Company a counterpart hereof, whereupon
this instrument, along with all counterparts, will become a binding agreement
among the Underwriter, the Company and the Operating Partnership in accordance
with its terms.
Very truly yours,
CRESCENT REAL ESTATE EQUITIES COMPANY
By: /s/
---------------------------------------
CRESCENT REAL ESTATE EQUITIES
LIMITED PARTNERSHIP
By: Crescent Real Estate Equities, Ltd.
General Partner
By: /s/
----------------------------------
Name:
Title:
CONFIRMED AND ACCEPTED,
as of the date first above written:
▇▇▇▇▇ ▇▇▇▇▇▇ INC.
By: /s/
-------------------------------
Name:
Title:
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SCHEDULE A
The Underwritten Securities shall have the following
terms:
Title of Securities: 6.75% Series A Convertible Cumulative Preferred Shares
Number of Shares: 8,000,000
Dividend Rate: 6.75 %, Payable: quarterly, in arrears on or about the 15th day
of February, May, August and November of each year, beginning May 15, 1998.
Stated Value: $25.00
Liquidation Preference: $25.00
Public offering price per share: $25.00, plus accumulated distributions, if any,
from February 18, 1998.
Purchase price per share: $24.00, plus accumulated distributions, if any, from
February 18, 1998.
Conversion provisions: Convertible at any time, unless previously redeemed into
common shares of beneficial interest of the Company, par value $.01 per share
(the "Common Shares"), at a conversion price of $40.86, subject to adjustment in
certain circumstances, as described in the Prospectus Supplement.
Redemption provisions: On and after February 18, 2003, the Underwritten
Securities are redeemable at the option of the Company, in whole or in part, at
a redemption price of $25.00, plus distributions accrued and unpaid to the
redemption date.
Sinking fund requirements: None
Number of Option Shares, if any, that may be purchased: 1,200,000
Delayed Delivery Contracts: not authorized
Additional co-managers, if any: N/A
Other terms: Voting Rights: If distributions on the Underwritten Securities are
in arrears for six or more quarterly periods, holders voting separately as a
class with all other series of preferred shares upon which like voting rights
have been conferred and are exercisable, will be entitled to vote for the
election of two additional Trust Managers, to serve on the Board of Trust
Managers until all distribution arrearages are eliminated.
Closing date and location: February 19, 1997 at the offices of ▇▇▇▇▇ & ▇▇▇▇▇▇▇
L.L.P., ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇-▇▇▇▇.