EXHIBIT 1
3,141,475 COMMON SHARES
of Beneficial Interest
GROVE PROPERTY TRUST
UNDERWRITING AGREEMENT
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November 19, 1997
▇▇▇▇▇ ▇▇▇▇▇▇ INC.
▇▇▇▇▇▇ BROTHERS INC.
As Representatives of the
Several Underwriters
c/o ▇▇▇▇▇ ▇▇▇▇▇▇ INC.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Dear Sirs:
Grove Property Trust, a Maryland real estate investment trust (the
"Company"), proposes to issue and sell an aggregate of 3,141,475 shares (the
"Firm Shares") of its Common Shares of Beneficial Interest, $0.01 par value per
share (the "Common Shares"), to the several underwriters listed on Schedule I
hereto (the "Underwriters"). The Company also proposes to sell to the
Underwriters, upon the terms and conditions set forth in Section 2 hereof, up to
an additional 675,000 Common Shares (the "Additional Shares"). The Firm Shares
and the Additional Shares are hereinafter collectively referred to as the
"Shares".
As used herein, the term "Properties" refers to the properties listed on
Schedule II hereto which represent, as of September 30, 1997, all of the real
property in which the Company, either directly or through the Operating
Partnership (as defined herein) or through ownership of interests in any
Subsidiary Partnership (as defined herein), owns an interest.
As used herein, the term "Concurrent Offering" means the offering by the
Company in a separate transaction at the public offering price per share to
certain investors of an aggregate of 1,358,525 Common Shares, and the term
"Concurrent Shares" means the Common Shares to be offered in the Concurrent
Offering.
The Company wishes to confirm as follows its agreement with you (the
"Representatives") and the other Underwriters on whose behalf you are acting in
connection with the several purchases of the Shares by the Underwriters.
1. Registration Statement and Prospectus. The Company has prepared and
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filed with the Securities and Exchange Commission (the "Commission") in
accordance with the provisions of the Securities Act of 1933, as amended, and
the rules and regulations of the Commission
thereunder (collectively, the "Act"), a registration statement on
Form S-2 (Reg. No. 333-38183) under the Act (the "registration statement"),
including a prospectus subject to completion relating to the Shares and the
Concurrent Shares. The term "Registration Statement" as used in this Agreement
means the registration statement (including all financial schedules and
exhibits), as amended at the time it becomes effective, or, if the registration
statement became effective prior to the execution of this Agreement, as
supplemented or amended on the date hereof. If it is contemplated, at the time
this Agreement is executed, that a post-effective amendment to the registration
statement will be filed and must be declared effective before the offering of
the Shares may commence, the term "Registration Statement" as used in this
Agreement means the registration statement as amended by said post-effective
amendment. If an abbreviated registration statement relating to the Common
Shares to be sold pursuant to this Agreement is prepared and filed with the
Commission in accordance with Rule 462(b) under the Act (an "Abbreviated
Registration Statement"), the term Registration Statement as used in this
Agreement includes the Abbreviated Registration Statement. The term
"Prospectus" as used in this Agreement means the prospectus in the form included
in the Registration Statement, or, if the prospectus included in the
Registration Statement omits information in reliance on Rule 430A under the Act
and such information is included in a prospectus filed with the Commission
pursuant to Rule 424(b) under the Act, the term "Prospectus" as used in this
Agreement means the prospectus in the form included in the Registration
Statement as supplemented by the addition of the Rule 430A information contained
in the prospectus filed with the Commission pursuant to Rule 424(b). The term
"Prepricing Prospectus" as used in this Agreement means the prospectus subject
to completion dated October 31, 1997 as such prospectus shall have been amended
from time to time prior to the date of the Prospectus. Any reference in this
Agreement to the registration statement, the Registration Statement, the
Prepricing Prospectus or the Prospectus shall be deemed to refer to and include
the documents incorporated by reference therein pursuant to Item 12 of Form S -2
under the Act, as of the date of the registration statement, the Registration
Statement, the Prepricing Prospectus or the Prospectus, as the case may be. As
used herein, the term "Incorporated Documents" means the documents which are
incorporated by reference into the registration statement, the Registration
Statement, the Prepricing Prospectus, the Prospectus, or any amendment or
supplement thereto.
2. Agreements to Sell and Purchase. The Company hereby agrees, subject to
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all the terms and conditions set forth herein, to issue and sell to the
Underwriters and, upon the basis of the representations, warranties and
agreements of the Company herein contained and subject to all the terms and
conditions set forth herein, each Underwriter agrees, severally and not jointly,
to purchase from the Company, at a purchase price of $______ per Share (the
"purchase price per share"), the number of Firm Shares set forth opposite the
name of such Underwriter in Schedule I hereto (or such increased number of Firm
Shares as set forth in Section 10 hereof).
The Company also agrees, subject to all the terms and conditions set forth
herein, to sell to the Underwriters, and, upon the basis of the representations,
warranties and agreements of the Company herein contained and subject to all the
terms and conditions set forth herein, the Underwriters shall have the right to
purchase from the Company, at the purchase price per share, pursuant to an
option (the "over-allotment option") which may be exercised by ▇▇▇▇▇ ▇▇▇▇▇▇ Inc.
on behalf of the Underwriters at any time and from time to time prior to 9:00
P.M., New York City time, on the 30th day after the date of the Prospectus (or,
if such 30th day shall be a
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Saturday or Sunday or a day on which the American Stock Exchange is not open for
trading, then on the next business day thereafter when the American Stock
Exchange is open for trading), up to an aggregate of 675,000 Additional Shares.
Additional Shares may be purchased only for the purpose of covering over-
allotments made in connection with the offering of the Firm Shares. Upon any
exercise of the over-allotment option, each Underwriter, severally and not
jointly, agrees to purchase from the Company the number of Additional Shares
(subject to such adjustments as you may determine in order to avoid fractional
shares) which bears the same proportion to the number of Additional Shares to be
purchased by the Underwriters as the number of Firm Shares set forth opposite
the name of such Underwriter in Schedule I hereto (or such number of Firm Shares
increased as set forth in Section 10 hereof) bears to the aggregate number of
Firm Shares.
3. Terms of Public Offering. The Company has been advised by you that the
------------------------
Underwriters propose to make a public offering of their respective portions of
the Shares as soon after the Registration Statement and this Agreement have
become effective as in your judgment is advisable and initially to offer the
Shares upon the terms set forth in the Prospectus.
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4. Delivery of the Shares and Payment Therefor. Delivery to the
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Underwriters of and payment for the Firm Shares shall be made at the office of
▇▇▇▇▇ ▇▇▇▇▇▇ Inc., ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, at 10:00 A.M., New
York City time, on November __, 1997 (the "Closing Date"). The place of closing
for the Firm Shares and the Closing Date may be varied by agreement between you
and the Company.
Delivery to the Underwriters of and payment for any Additional Shares to be
purchased by the Underwriters shall be made at the aforementioned office of
▇▇▇▇▇ ▇▇▇▇▇▇ Inc. Such delivery and payment shall take place on such date or
dates (each an "Option Closing Date") as shall be specified in written notices
from you to the Company of your determination to purchase a number, specified in
such notice, of Additional Shares. An Option Closing Date may be the same as
the Closing Date but shall in no event be earlier than the Closing Date nor
earlier than two nor later than ten business days after the giving of such
written notice. The place of closing for any Additional Shares and the Option
Closing Date for such Shares may be varied by agreement between you and the
Company.
Certificates for the Firm Shares and for any Additional Shares to be
purchased hereunder shall be registered in such names and in such denominations
as you shall request prior to 9:30 A.M., New York City time, on the second
business day preceding the Closing Date or any Option Closing Date, as the case
may be. Such certificates shall be made available to you in New York City for
inspection and packaging not later than 9:30 A.M., New York City time, on the
business day next preceding the Closing Date or the Option Closing Date, as the
case may be. The certificates evidencing the Firm Shares and any Additional
Shares to be purchased hereunder shall be delivered to you on the Closing Date
or the Option Closing Date, as the case may be, against payment of the purchase
price therefor in immediately available funds.
5. Agreements of the Company. The Company agrees with the several
-------------------------
Underwriters as follows:
(a) If, at the time this Agreement is executed and delivered, it is
necessary for the Registration Statement or a post-effective amendment thereto
to be declared effective before the offering of the Shares may commence, the
Company will endeavor to cause the Registration Statement or such post-effective
amendment to become effective as soon as possible and will advise you promptly
and, if requested by you, will confirm such advice in writing, when the
Registration Statement or such post-effective amendment has become effective.
(b) The Company will advise you promptly and, if requested by you, will
confirm such advice in writing: (i) of any request by the Commission for an
amendment of or a supplement to the Registration Statement, the Prepricing
Prospectus or the Prospectus or for additional information; (ii) of the issuance
by the Commission of any stop order suspending the effectiveness of the
Registration Statement or of the suspension of qualification of the Shares for
offering or sale in any jurisdiction or the initiation of any proceeding for
such purpose; and (iii) within the period of time referred to in the first
sentence of paragraph (f) below, of any change in the Company's condition
(financial or other), business, prospects, properties, net worth or results of
operations, or of the happening of any event, which makes any statement of a
material fact made in the Registration Statement or the Prospectus (as then
amended or supplemented) untrue
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or which requires the making of any additions to or changes in the Registration
Statement or the Prospectus (as then amended or supplemented) in order to state
a material fact required by the Act to be stated therein or necessary in order
to make the statements therein not misleading, or of the necessity to amend or
supplement the Prospectus (as then amended or supplemented) to comply with the
Act or any other law. If at any time the Commission shall issue any stop order
suspending the effectiveness of the Registration Statement, the Company will
make every reasonable effort to obtain the withdrawal of such order at the
earliest possible time.
(c) The Company will furnish to you, without charge (i) two signed copies
of the registration statement as originally filed with the Commission and of
each amendment thereto, including financial statements and all exhibits to the
registration statement, (ii) such number of conformed copies of the registration
statement as originally filed and of each amendment thereto, but without
exhibits, as you may reasonably request, (iii) such number of copies of the
Incorporated Documents, without exhibits, as you may reasonably request, and
(iv) two copies of the exhibits to the Incorporated Documents.
(d) The Company will not (i) file any amendment to the Registration
Statement or make any amendment or supplement to the Prospectus of which you
shall not previously have been advised or to which, after you shall have
received a copy of the document proposed to be filed, you shall reasonably
object or (ii) so long as, in the opinion of counsel for the Underwriters, a
Prospectus is required to be delivered in connection with sales by any
Underwriter or dealer, file any information, documents or reports pursuant to
the Securities Exchange Act of 1934, as amended (the "Exchange Act") without
delivering a copy of such information, documents or reports to you, as
Representatives of the Underwriters, prior to or concurrently with such filing.
(e) The Company will use its best efforts to continue to meet the
requirements to qualify as a real estate investment trust (a "REIT") under the
Internal Revenue Code of 1986, as amended (the "Code") for the taxable year in
which sales of Shares hereunder occur.
(f) As soon after the execution and delivery of this Agreement as possible
and thereafter from time to time for such period as in the opinion of counsel
for the Underwriters a prospectus is required by the Act to be delivered in
connection with sales by the Underwriters or any dealer, the Company will
expeditiously deliver to each Underwriter, without charge, as many copies of the
Prospectus (and of any amendment or supplement thereto) as you may reasonably
request. The Company consents to the use of the Prospectus (and of any
amendment or supplement thereto) in accordance with the provisions of the Act
and with the securities or Blue Sky laws of the jurisdictions in the United
States in which the Shares are offered by the several Underwriters and by all
dealers to whom Shares may be sold, both in connection with the offering and
sale of the Shares and for such period of time thereafter as the Prospectus is
required by the Act to be delivered in connection with sales by any Underwriters
or dealer. If during such period of time any event shall occur that in the
judgment of the Company or in the reasonable opinion of counsel for the
Underwriters is required to be set forth in the Prospectus (as then amended or
supplemented) or should be set forth therein in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, or if it is necessary to supplement or amend the Prospectus (or to
file under the Exchange Act any
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document which, upon filing, becomes an Incorporated Document) in order to
comply with the Act or any other law, the Company will promptly prepare and,
subject to the provisions of paragraph (d) above, file with the Commission an
appropriate supplement or amendment thereto (or to such document), and will
promptly furnish to each Underwriter a reasonable number of copies thereof. In
the event that the Company and you agree that the Prospectus should be amended
or supplemented, the Company, if requested by you, will promptly issue a press
release announcing or disclosing the matters to be covered by the proposed
amendment or supplement.
(g) The Company will cooperate with you and your counsel in connection with
the registration or qualification of the Shares for offering and sale by the
several Underwriters and by any dealers under the securities or Blue Sky laws of
such jurisdictions in the United States as you may designate and will file such
consents to service of process or other documents necessary or appropriate in
order to effect such registration or qualification; provided that in no event
shall the Company be obligated to qualify to do business in any jurisdiction
where it is not now so qualified or to take any action which would subject it to
service of process in suits, other than those arising out of the offering or
sale of the Shares, in any jurisdiction where it is not now so subject.
(h) The Company will make generally available to its security holders a
consolidated earnings statement, which need not be audited, covering a twelve-
month period commencing after the effective date of the Registration Statement
and ending not later than 15 months thereafter, as soon as practicable after the
end of such period, which consolidated earnings statement shall satisfy the
provisions of Section 11(a) of the Act.
(i) During the period of two years hereafter, the Company will furnish to
you (i) as soon as available, a copy of each report of the Company mailed to
stockholders generally or filed with the Commission, and (ii) from time to time
such other information concerning the Company as you may reasonably request.
(j) If this Agreement shall terminate or shall be terminated after
execution pursuant to any provisions hereof (otherwise than by notice given by
you terminating this Agreement pursuant to Section 10 or Section 11 hereof) or
if this Agreement shall be terminated by the Underwriters because of any failure
or refusal on the part of the Company to comply with the terms or fulfill any of
the conditions of this Agreement, the Company agrees to reimburse you for all
out-of-pocket expenses (including fees and expenses of your counsel) incurred by
you in connection herewith.
(k) The Company will apply the net proceeds from the sale of the Shares and
the Concurrent Shares substantially in accordance with the description set forth
in the Prospectus.
(l) If Rule 430A of the Act is utilized, the Company will prepare and
timely file with the Commission under Rule 424(b) under the Act a Prospectus
containing information previously omitted at the time of effectiveness of the
Registration Statement.
(m) Except as provided in this Agreement, the Company will not sell,
contract to sell or otherwise dispose of any Common Shares or any securities
convertible into or exercisable or
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exchangeable for Common Shares, or grant any options or warrants to purchase
Common Shares, for a period of 180 days after the date of the Prospectus,
without the prior written consent of ▇▇▇▇▇ ▇▇▇▇▇▇ Inc., except for (i) options
or Common Shares issued pursuant to stock option or stock purchase plans as
described in the Registration Statement, the Prospectus or the Incorporated
Documents, (ii) Common Shares issuable upon exercise of the option for 50,000
Common Shares held by a consultant to the Company and upon exercise of the
warrant for 47,248 Common Shares originally issued to Barclays Investments,
Inc., each described in the Prospectus, (iii) Common Shares issued upon
redemption of units of partnership interest ("Common Units") outstanding as of
the date hereof in Grove Operating, L.P., a Delaware limited partnership (the
"Operating Partnership") and the entity through which the Company owns and
operates the Properties and (iv) Common Units issued in connection with the
acquisition of additional properties by the Operating Partnership.
(n) The Company has furnished to you "lock-up" letters in the form attached
hereto as Annex B, signed by each of its current executive officers and Trust
Managers and each purchaser of Common Shares (assignee thereof) in the
Concurrent Offering.
(o) Except as stated in this Agreement and in the Prospectus, the Company
has not taken, nor will it take, directly or indirectly, any action designed to
or that might reasonably be expected to cause or result in stabilization or
manipulation of the price of the Common Shares to facilitate the sale or resale
of the Shares.
(p) The Company has made and will make such filings with, and has provided
and will provide such notices to, the American Stock Exchange ("AMEX") so that
the Shares will be listed on AMEX on or prior to the Closing Date.
6. Representations and Warranties of the Company and the Operating
Partnership. The Company and the Operating Partnership represent and warrant to
each Underwriter that:
(a) The Prepricing Prospectus complied when so filed in all material
respects with the provisions of the Act. The Commission has not issued any
order preventing or suspending the use of the Prepricing Prospectus.
(b) The Company and the transactions contemplated by this Agreement meet
the requirements for using Form S-2 under the Act. The registration statement
in the form in which it became or becomes effective and also in such form as it
may be when any post-effective amendment thereto shall become effective and the
Prospectus and any supplement or amendment thereto when filed with the
Commission under Rule 424(b) under the Act, complied or will comply in all
material respects with the provisions of the Act and will not at any such times
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, except that this representation and warranty does not apply to
statements in or omissions from the registration statement or the Prospectus and
any supplement or amendment thereto made in reliance upon and in conformity with
information relating to any Underwriter furnished to the Company in writing by
or on behalf of any Underwriter through you expressly for use therein (such
information is listed in Section 12 hereof).
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(c) The Incorporated Documents heretofore filed, when they were filed (or,
if any amendment with respect to any such document was filed, as amended by such
amendment), conformed in all material respects with the requirements of the
Exchange Act and the rules and regulations thereunder; and no such document when
it was filed (or, if an amendment with respect to any such document was filed,
as amended by such amendment) contained an untrue statement of a material fact
or omitted to state a material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances under
which they were made, not misleading.
(d) All the outstanding Common Shares have been duly authorized and validly
issued, are fully paid and nonassessable and are free of any preemptive or
similar rights (except that the Common Shares held by MSGI and ABKB/LaSalle, as
defined in the Prospectus, have preemptive rights which will be extinguished
upon completion of the Offerings); the Shares and the Concurrent Shares have
been duly authorized and, when issued and delivered to the Underwriters against
payment therefor in accordance with the terms hereof, or the purchasers of the
Concurrent Shares, as the case may be, will be validly issued, fully paid and
nonassessable and free of any preemptive or similar rights; and the
capitalization and the capital shares of the Company conform to the descriptions
thereof in the Registration Statement and the Prospectus.
(e) All offers and sales of the Common Shares of the Company and the Common
Units of the Operating Partnership prior to the date hereof were at all relevant
times duly registered under the Act or exempt from the registration requirements
of the Act pursuant to Section 3(b), 4(2) or 4(6) thereof and were duly
registered pursuant to, or were issued pursuant to an available exemption from,
the registration requirements of the various state securities or Blue Sky laws.
(f) The Company is a REIT duly formed and validly existing in good standing
under the laws of the State of Maryland, with full power and authority to own,
lease and operate its properties and to conduct its business as described in the
Registration Statement and the Prospectus, and is duly registered and qualified
to conduct its business and is in good standing in each jurisdiction or place
where the nature of its properties or the conduct of its business requires such
registration or qualification, except where the failure so to register or
qualify could not reasonably be expected to have a material adverse effect on
the condition (financial or other), business, properties, net worth or results
of operations of the Company and the Subsidiaries (as hereinafter defined) taken
as a whole.
(g) The Company has no significant subsidiaries (as such term is defined in
Regulation S-X of the Commission) other than the Operating Partnership. The
Company is the sole general partner of the Operating Partnership, owns __% of
the partnership interests in the Operating Partnership and upon completion of
the transactions contemplated hereby will own __% of such interests. The Company
also owns the Subsidiary Partnerships through ownership of general partner
interests and, through the Operating Partnership, limited partner interests.
Each of the Operating Partnership and the Subsidiary Partnerships identified as
such on Schedule II hereto (the "Subsidiary Partnerships" and, together with the
Operating Partnership, the "Subsidiaries") is a limited partnership duly
organized and legally existing
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under the laws of its jurisdiction of organization, with full power and
authority to own, lease and operate its properties and to conduct its business
as described in the Registration Statement and the Prospectus and is duly
registered and qualified to conduct its business and is in good standing in each
jurisdiction or place where the nature of its properties or the conduct of its
business requires such registration or qualification, except where the failure
so to register or qualify could not reasonably be expected to have a material
adverse effect on the condition (financial or other), business, properties, net
worth or results of operations of the Company and the Subsidiaries taken as a
whole. All partnership interests in the Subsidiaries have been duly authorized
and validly issued, are fully paid and nonassessable. All of the interests owned
or held by the Company, directly or indirectly, in any Subsidiary are free and
clear of any lien, adverse claim, security interest, equity or other
encumbrance, except for such as could not reasonably be expected to have a
material adverse effect on the condition (financial or other), business,
properties, net worth or results of operations of the Company and the
Subsidiaries, taken as a whole.
(h) The agreement of limited partnership of each of the Subsidiaries has
been duly authorized, executed and delivered by the parties thereto and
constitutes a valid and binding agreement, enforceable in accordance with its
respective terms, except as rights to indemnity and contribution thereunder may
be limited by federal or state securities laws.
(i) There are no legal or governmental proceedings pending or, to the
knowledge of the Company, threatened, against the Company or any Subsidiary, or
to which any of them or any of their respective properties is subject, that are
required to be described in the Registration Statement or the Prospectus but are
not described as required, and there are no agreements, contracts, indentures,
leases or other instruments that are required to be described in the
Registration Statement or the Prospectus or to be filed as an exhibit to the
Registration Statement or any Incorporated Document that are not described or
filed as required by the Act or the Exchange Act.
(j) Neither the Company nor any Subsidiary is in violation of its
declaration of trust, partnership agreement, by-laws or any other organizational
document, or of any law, ordinance, administrative or governmental rule or
regulation applicable thereto or of any decree of any court or governmental
agency or body having jurisdiction over any of them, or in default in any
material respect in the performance of any obligation, agreement or condition
contained in any bond, debenture, note or any other evidence of indebtedness or
in any material agreement, indenture, lease or other instrument to which the
Company or any Subsidiary is a party or by which any of them or any of their
respective properties may be bound, except for such violations or defaults
which, individually or in the aggregate, could not reasonably be expected to
have a material adverse effect on the condition (financial or other), business,
properties, net worth or results of operations of the Company and the
Subsidiaries, taken as a whole.
(k) Neither the issuance and sale of the Shares or the Concurrent Shares,
the execution, delivery or performance of this Agreement by the Company nor the
consummation by the Company of the transactions contemplated hereby (i)
conflicts or will conflict with or constitutes or will constitute a breach of,
or a default under, any agreement, indenture, lease or
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other instrument to which the Company or any Subsidiary is a party or by which
any of them or any of their respective properties may be bound, or violates or
will violate any statute, law, regulation or judgment, injunction, order or
decree applicable to the Company or any Subsidiary or any of their respective
properties, or will result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Company or any Subsidiary
pursuant to the terms of any agreement or instrument to which any of them is a
party or by which any of them may be bound or to which any of the property or
assets of any of them is subject, except for such breaches, defaults, conflicts,
violations or creations or impositions which, individually or in the aggregate,
could not reasonably be expected to have a material adverse effect on the
condition (financial or other), business, properties, net worth or results of
operations of the Company and the Subsidiaries, taken as a whole, or (ii)
requires any consent, approval, authorization or other order of or registration
or filing with, any court, regulatory body, administrative agency or other
governmental body, agency or official (except such as may be required for the
registration of the Shares under the Act and the Exchange Act, all of which have
been or will be effected in accordance with this Agreement, and compliance with
the securities or Blue Sky laws of various jurisdictions) or conflicts or will
conflict with or constitutes or will constitute a breach of, or a default under,
the Declaration of Trust, partnership agreement, bylaws, or other organizational
documents of the Company or any Subsidiary.
(l) Ernst & Young LLP, who have certified or shall certify the financial
statements included or incorporated by reference in the Registration Statement
and the Prospectus (or any amendment or supplement to the Registration Statement
or the Prospectus) are independent public accountants as required by the Act.
(m) (i) The financial statements of the Company or its predecessors,
together with related schedules and notes, included or incorporated by reference
in the Registration Statement and the Prospectus (and any amendment or
supplement to the Registration Statement or the Prospectus), present fairly the
consolidated financial position, results of operations and changes in financial
position of the Company on the basis stated in the Registration Statement at the
respective dates or for the respective periods to which they apply; such
statements and related schedules and notes have been prepared in accordance with
generally accepted accounting principles consistently applied throughout the
periods involved, except as disclosed therein; and the other financial and
statistical information and data included or incorporated by reference in the
Registration Statement and the Prospectus (and any amendment or supplement to
the Registration Statement or the Prospectus) are fairly presented and prepared
on a basis consistent with such financial statements and the books and records
of the Company and the Subsidiaries.
(ii) To the best of the Company's knowledge, the financial statements of
each other entity included in the Prospectus, together with related schedules
and notes, included or incorporated by reference in the Registration Statement
and the Prospectus (and any amendment or supplement to the Registration
Statement or the Prospectus), present fairly the consolidated financial
position, results of operations and changes in financial position of such entity
on the basis stated in the Registration Statement at the respective dates or for
the respective periods to which they apply; such statements and related
schedules and notes have been prepared in accordance with generally accepted
accounting principles consistently applied throughout the periods involved,
except as disclosed therein; and the other financial and statistical information
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and data included or incorporated by reference in the Registration Statement and
the Prospectus (and any amendment or supplement to the Registration Statement or
the Prospectus) are fairly presented and prepared on a basis consistent with
such financial statements and the books and records of the Company and the
Subsidiaries.
(iii) The pro forma financial statements included in the Registration
Statement and the Prospectus comply in all material respects with the applicable
requirements of Rule 11-02 of Regulation S-X of the Commission, the Company
believes that the assumptions underlying the pro forma adjustments are
reasonable, and all pro forma adjustments have been properly applied to the
historical amounts in the compilation of such statements. No other financial
statements or schedules of the Company are required by the Act to be included or
incorporated by reference in the Registration Statement or the Prospectus.
(n) Each of the Company and the Operating Partnership has full legal right,
power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery by the Company and
the Operating Partnership of, and the performance by the Company of its
obligations under, this Agreement have been duly and validly authorized by the
Company and the Operating Partnership, and this Agreement has been duly executed
and delivered by the Company and the Operating Partnership and constitutes the
valid and legally binding agreement of the Company and the Operating
Partnership, enforceable against them in accordance with its terms, except as
rights to indemnity and contribution hereunder may be limited by federal or
state securities laws.
(o) Except as disclosed in the Registration Statement and the Prospectus
(or any amendment or supplement thereto), subsequent to the respective dates as
of which such information is given in the Registration Statement and the
Prospectus (or any amendment or supplement thereto), neither the Company nor any
Subsidiary has incurred any liability or obligation, direct or contingent, or
entered into any transaction, not in the ordinary course of business, that is
material to the Company and the Subsidiaries taken as a whole, and there has not
been any change in the capital stock, or material increase in the short-term
debt or long-term debt, of the Company and the Subsidiaries taken as a whole
other than as a result of borrowings made by the Company under its credit
facility in the ordinary course of business, or any material adverse change, or
any development involving or which may reasonably be expected to involve, a
prospective material adverse change, in the condition (financial or other),
business, net worth or results of operations of the Company and the Subsidiaries
taken as a whole.
(p) (i) The Company has good and marketable fee simple title to all of the
Properties listed under the caption "Apartment Communities Owned by the
Operating Partnership" on Schedule II hereto, has good title to its interests in
the Subsidiary Partnerships, and has good title to the other assets reflected
in the financial statements described above (or as described in or incorporated
by reference into the Registration Statement or Prospectus), subject to no lien,
mortgage, pledge, charge or encumbrance of any kind except those reflected in
such financial statements (or as described in or incorporated by reference into
the Registration Statement or Prospectus) or which are not material in amount;
(ii) the Company occupies its leased properties under valid and binding leases
conforming, to the extent such leases are described therein, to the description
thereof set forth in or incorporated by reference into the Registration
Statement or
11
Prospectus; (iii) no tenant of any of the Properties is in default under any of
the leases pursuant to which any property is leased (and the Company does not
know 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 could not reasonably be expected to have a material adverse effect
on the condition, financial or otherwise, or on the earnings, assets or
business of the Company and the Subsidiaries taken as a whole; (iv) no person
has an option to purchase all or part of any Property or any interest therein;
(v) 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) and with all
agreements between the Company and third parties relating to the ownership or
use of any Property by the Company, except if and to the extent disclosed in the
Registration Statement or the Prospectus and except for such failures to comply
that could not reasonably be expected to have a material adverse effect on the
condition, financial or otherwise, or on the earnings, assets or business of
the Company and the Subsidiaries taken as a whole; (vi) there is in effect for
the assets of the Company and the Properties insurance coverages that are
commercially reasonable and that are consistent with the types and amounts of
insurance typically maintained by prudent owners of similar assets, and the
Company has not received from any insurance company notice of any material
defects or deficiencies affecting the insurability of any such assets; and (vii)
the Company does not have any knowledge of any pending or threatened
condemnation proceedings, zoning change, or other similar proceeding or action
that will in any material respect affect the size of, use of, improvements on,
construction on or access to the Properties as operated on the date hereof,
except for such proceedings or actions that could not reasonably be expected to
have a material adverse effect on the condition (financial or other), business,
properties, net worth or results of operations of the Company and the
Subsidiaries, taken as a whole.
(q) The Company has title policies in effect or binding commitments from
title insurance companies for the issuance of title insurance on each of the
Properties, except where the failure to have such title insurance could not
reasonably be expected to have a material adverse effect on the condition
(financial or other), business, properties, net worth or results of operations
of the Company and the Subsidiaries, taken as a whole.
(r) The Company has not distributed and, prior to the later to occur of (i)
the Closing Date and (ii) completion of the distribution of the Shares, will not
distribute any offering material in connection with the offering and sale of the
Shares or the Concurrent Shares other than the Registration Statement, the
Prepricing Prospectus, the Prospectus or other materials, if any, permitted by
the Act.
(s) The Company and each of the Subsidiaries have such permits, licenses,
franchises and authorizations of governmental or regulatory authorities
("permits") and agreements with third parties relating to ownership or use of
any Property by the Company as are necessary to own its respective properties
and to conduct its business in the manner described in the Prospectus, subject
to such qualifications as may be set forth in the Prospectus and except where
the omission to have such permits and agreements could not reasonably be
expected to have a material adverse effect on the condition (financial or
other), business, properties, net worth or results of operations of the Company
and the Subsidiaries, taken as a whole; the Company and each of the Subsidiaries
has fulfilled and performed all its material obligations with respect to
12
such permits and agreements and no event has occurred which allows, or after
notice or lapse of time would allow, revocation or termination thereof or
results in any other material impairment of the rights of the holder of any such
permit or agreement, subject in each case to such qualification as may be set
forth in the Prospectus; and, except as described in the Prospectus, none of
such permits or agreements contains any restriction that would have a material
adverse effect on the condition (financial or other), business, properties, net
worth or results of operations of the Company and the Subsidiaries, taken as a
whole.
(t) The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurances that (i) transactions are executed
in accordance with management's general or specific authorization; (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain accountability for assets; (iii) access to assets is permitted only in
accordance with management's general or specific authorization; and (iv) the
recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(u) To the knowledge of the Company's executive officers, neither the
Company nor any of its Subsidiaries nor any employee or agent of the Company or
any Subsidiary has made any payment of funds of the Company or any Subsidiary or
received or retained any funds in violation of any law, rule or regulation,
which payment, receipt or retention of funds is of a character required to be
disclosed in the Prospectus.
(v) The Company and each of the Subsidiaries have filed all federal, state
and foreign tax returns required to be filed, which returns are complete and
correct, and neither the Company nor any Subsidiary is in default in the payment
of any taxes which were payable pursuant to said returns or any assessments with
respect thereto, except where such failure to file or default in payment could
not reasonably be expected to have a material adverse effect on the condition
(financial or other), business, properties, net worth or results of operations
of the Company and the Subsidiaries, taken as a whole.
(w) No holder of any security of the Company has any right that has not
been effectively exercised or waived to require registration of Common Shares
or any other security of the Company because of the filing of the registration
statement or consummation of the transactions contemplated by this Agreement.
(x) Except as otherwise disclosed in the Prospectus, the Company has not
authorized or conducted and does not have knowledge of the generation,
transportation, storage, presence, use, treatment, disposal, release, or other
handling of any hazardous substance, hazardous waste, hazardous material,
hazardous constituent, toxic substance, pollutant, contaminant, asbestos, radon,
polychlorinated biphenyls ("PCBs"), petroleum product or waste (including crude
oil or any fraction thereof), natural gas, liquefied gas, synthetic gas or other
material defined, regulated, controlled or potentially subject to any
remediation requirement under any environmental law (collectively, "Hazardous
Materials"), on, in, under or affecting any real property currently leased or
owned or by any means controlled by the Company, including the Properties (the
"Real Property") except as in material compliance with applicable laws; to the
knowledge of the
13
executive officers of the Company, the Real Property and the Company's
operations with respect to the Real Property are in compliance with all federal,
state and local laws, ordinances, rules, regulations and other governmental
requirements relating to pollution, control of chemicals, management of waste,
discharges of materials into the environment, health, safety, natural resources,
and the environment (collectively, "Environmental Laws"), and the Company has,
and is in compliance with, all licenses, permits, registrations and government
authorizations necessary to operate under all applicable Environmental Laws,
except where the failure to have or comply with such license, permit,
registration or authorization could not reasonably be expected to have a
material adverse effect on the condition (financial or other), business,
properties, net worth or results of operations of the Company and the
Subsidiaries, taken as a whole. Except as otherwise disclosed in the
Prospectus, the Company has not received any written or oral notice from any
governmental entity or any other person and to the knowledge of the executive
officers of the Company there is no pending or threatened claim, litigation or
any administrative agency proceeding that: alleges a violation of any
Environmental Laws by the Company; alleges that the Company is a liable party or
a potentially responsible party under the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. (S) 9601, et seq., or any state
superfund law; has resulted in or could reasonably be expected to result in the
attachment of an environmental lien on any of the Real Property; or alleges that
the Company is liable for any contamination of the environment, contamination of
the Real Property, damage to natural resources, property damage, or personal
injury based on their activities or the activities of their predecessors or
third parties (whether at the Real Property or elsewhere) involving Hazardous
Materials, whether arising under the Environmental Laws, common law principles,
or other legal standards.
(y) The Company was organized and has operated in conformity with the
requirements for qualification and taxation as a REIT under Sections 856 through
860 of the Code for each of the taxable years ended December 31, 1994, December
31, 1995 and December 31, 1996; the Company's current organization and method of
operations will enable the Company to continue to meet the requirements for
qualification and taxation as a REIT. The Operating Partnership and each of the
Subsidiary Partnerships are properly classified as partnerships, and not as
corporations, associations taxable as corporations or "publicly traded
partnerships" under Section 7704 of the Code, for federal income tax purposes
throughout the period from April 4, 1994, the date on which the Company elected
to be taxed as a REIT, through the date hereof, or in the case of any Subsidiary
Partnerships that have terminated, through the date of termination of such
Subsidiary Partnerships.
(z) None of the Subsidiary Partnerships is currently prohibited, directly
or indirectly, from making distributions to the Operating Partnership, and the
Operating Partnership is not currently prohibited, directly or indirectly, from
making distributions to the Company.
(aa) Neither the Company nor any Subsidiary is or will become as a result
of the transactions contemplated hereby, or will conduct its business in a
manner in which it would become, an "investment company," or a company
"controlled" by an "investment company," within the meaning of the Investment
Company Act of 1940, as amended.
14
(bb) The statements set forth in the Prospectus under the caption "Certain
Federal Income Tax Considerations," insofar as they purport to describe the
provisions of the laws and documents referred to therein, are accurate and
complete.
7. Indemnification and Contribution.
--------------------------------
(a) The Company and the Operating Partnership, jointly and severally, agree
to indemnify and hold harmless each of you and each person, if any, who controls
the Underwriters within the meaning of Section 15 of the Act or Section 20 of
the Exchange Act from and against any and all losses, claims, damages,
liabilities and expenses (including reasonable costs of investigation) arising
out of or based upon any untrue statement or alleged untrue statement of a
material fact contained in the Prepricing Prospectus or in the Registration
Statement or the Prospectus or in any amendment or supplement thereto, or
arising out of or based upon any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, except insofar as such losses, claims, damages,
liabilities or expenses arise out of or are based upon any untrue statement or
omission or alleged untrue statement or omission which has been made therein or
omitted therefrom in reliance upon and in conformity with the information
relating to the Underwriters furnished in writing to the Company by or on behalf
of the Underwriters through you expressly for use in connection therewith (such
information is listed in Section 12 hereof); provided, however, that the
indemnification contained in this paragraph (a) with respect to the Prepricing
Prospectus shall not inure to the benefit of the Underwriters (or to the benefit
of any person controlling the Underwriters) on account of any such loss, claim,
damage, liability or expense arising from the sale of the Shares by the
Underwriters to any person if a copy of the Prospectus shall not have been
delivered or sent to such person within the time required by the Act, and the
untrue statement or alleged untrue statement or omission or alleged omission of
a material fact contained in the Prepricing Prospectus was corrected in the
Prospectus, provided that the Company has delivered the Prospectus to the
Underwriters in requisite quantity on a timely basis to permit such delivery or
sending. The foregoing indemnity agreement shall be in addition to any liability
which the Company and the Operating Partnership may otherwise have.
(b) If any action, suit or proceeding shall be brought against the
Underwriters or any person controlling the Underwriters in respect of which
indemnity may be sought against the Company and the Operating Partnership, the
Underwriters or such controlling person shall promptly notify the Company and
the Operating Partnership and the Company and the Operating Partnership shall
assume the defense thereof, including the employment of counsel and payment of
all fees and expenses. The Underwriters or any such controlling person shall
have the right to employ separate counsel in any such action, suit or proceeding
and to participate in the defense thereof, but the fees and expenses of such
counsel shall be at the expense of the Underwriters or such controlling person
unless (i) the Company and the Operating Partnership have agreed in writing to
pay such fees and expenses, (ii) the Company and the Operating Partnership have
failed to assume the defense and employ counsel, or (iii) the named parties to
any such action, suit or proceeding (including any impleaded parties) include
both the Underwriters or such controlling person and the Company and the
Operating Partnership and the Underwriters or such controlling person shall have
been advised by its counsel that representation of such indemnified
15
party and the Company and the Operating Partnership by the same counsel would be
inappropriate under applicable standards of professional conduct (whether or not
such representation by the same counsel has been proposed) due to actual or
potential differing interests between them (in which case the Company and the
Operating Partnership shall not have the right to assume the defense of such
action, suit or proceeding on behalf of the Underwriters or such controlling
person). It is understood, however, that the Company and the Operating
Partnership shall, in connection with any one such action, suit or proceeding or
separate but substantially similar or related actions, suits or proceedings in
the same jurisdiction arising out of the same general allegations or
circumstances, be liable for the reasonable fees and expenses of only one
separate firm of attorneys (in addition to any local counsel) at any time for
the Underwriters and controlling persons not having actual or potential
differing interests with you or among themselves, which firm shall be designated
in writing by ▇▇▇▇▇ ▇▇▇▇▇▇ Inc., and that all such fees and expenses shall be
reimbursed as they are incurred. The Company and the Operating Partnership
shall not be liable for any settlement of any such action, suit or proceeding
effected without its written consent, but if settled with such written consent,
or if there be a final judgment for the plaintiff in any such action, suit or
proceeding, the Company and the Operating Partnership agree to indemnify and
hold harmless the Underwriters, to the extent provided in the preceding
paragraph, and any such controlling person from and against any loss, claim,
damage, liability or expense by reason of such settlement or judgment.
(c) The Underwriters agree to indemnify and hold harmless the Company and
the Operating Partnership, the Company's trust managers and its officers who
sign the Registration Statement, and any person who controls the Company or the
Operating Partnership within the meaning of Section 15 of the Act or Section 20
of the Exchange Act, to the same extent as the foregoing indemnity from the
Company and the Operating Partnership to the Underwriters, but only with respect
to information relating to the Underwriters furnished in writing by or on behalf
of the Underwriters through you expressly for use in the Registration Statement,
the Prospectus or the Prepricing Prospectus, or any amendment or supplement
thereto. If any action, suit or proceeding shall be brought against the Company
or the Operating Partnership, any such trust manager, any such officer, or any
such controlling person based on the Registration Statement, the Prospectus or
the Prepricing Prospectus, or any amendment or supplement thereto, and in
respect of which indemnity may be sought against the Underwriters pursuant to
this paragraph (c), the Underwriters shall have the rights and duties given to
the Company and the Operating Partnership by paragraph (b) above (except that if
the Company and the Operating Partnership shall have assumed the defense thereof
the Underwriters shall not be required to do so, but may employ separate counsel
therein and participate in the defense thereof, but the fees and expenses of
such counsel shall be at the Underwriters' expense), and the Company, the
Operating Partnership, any such trust manager, any such officer, and any such
controlling person shall have the rights and duties given to the Underwriters by
paragraph (b) above. The foregoing indemnity agreement shall be in addition to
any liability which the Underwriters may otherwise have.
(d) If the indemnification provided for in this Section 7 is unavailable to
an indemnified party under paragraphs (a) or (c) hereof in respect of any
losses, claims, damages, liabilities or expenses referred to therein, then an
indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages, liabilities or expenses (i) in such proportion
as is
16
appropriate to reflect the relative benefits received by the Company on the one
hand and the Underwriters on the other hand from the offering of the Shares, or
(ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
the Company and the Operating Partnership on the one hand and the Underwriters
on the other in connection with the statements or omissions that resulted in
such losses, claims, damages, liabilities or expenses, as well as any other
relevant equitable considerations. The relative benefits received by the
Company and the Operating Partnership on the one hand and the Underwriters on
the other shall be deemed to be in the same proportion as the total net proceeds
from the offering (before deducting expenses) received by the Company bear to
the total underwriting discounts and commissions received by the Underwriters,
in each case as set forth in the table on the cover page of the Prospectus. The
relative fault of the Company and the Operating Partnership on the one hand and
the Underwriters on the other hand shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by the Company or the Operating Partnership on the one hand
or by the Underwriters on the other hand and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
(e) The Company, the Operating Partnership and the Underwriters agree that
it would not be just and equitable if contribution pursuant to this Section 7
were determined by a pro rata allocation or by any other method of allocation
that does not take account of the equitable considerations referred to in
paragraph (d) above. The amount paid or payable by an indemnified party as a
result of the losses, claims, damages, liabilities and expenses referred to in
paragraph (d) above shall be deemed to include, subject to the limitations set
forth above, any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating any claim or defending any such action,
suit or proceeding. Notwithstanding the provisions of this Section 7, the
Underwriters shall not be required to contribute any amount in excess of the
amount by which the total price of the Shares underwritten by it and distributed
to the public exceeds the amount of any damages which the Underwriters has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation.
(f) No indemnifying party shall, without the prior written consent of the
indemnified party, effect any settlement of any pending or threatened action,
suit or proceeding in respect of which any indemnified party is or could have
been a party and indemnity could have been sought hereunder by such indemnified
party, unless such settlement includes an unconditional release of such
indemnified party from all liability on claims that are the subject matter of
such action, suit or proceeding.
(g) Any losses, claims, damages, liabilities or expenses for which an
indemnified party is entitled to indemnification or contribution under this
Section 7 shall be paid by the indemnifying party to the indemnified party as
such losses, claims, damages, liabilities or expenses are incurred. The
indemnity and contribution agreements contained in this Section 7 and the
representations and warranties of the Company and the Operating Partnership set
forth in
17
this Agreement shall remain operative and in full force and effect, regardless
of (i) any investigation made by or on behalf of the Underwriters or any person
controlling the Underwriters, the Company, its trust managers or officers, or
any person controlling the Company, (ii) acceptance of any Shares and payment
therefor hereunder, and (iii) any termination of this Agreement. A successor to
the Underwriters or any person controlling the Underwriters, or to the Company,
its trust managers or officers, or any person controlling the Company, shall be
entitled to the benefits of the indemnity, contribution and reimbursement
agreements contained in this Section 7.
8. Conditions of Underwriters' Obligations. The obligations of the
---------------------------------------
Underwriters to purchase the Firm Shares hereunder are subject to the following
conditions:
(a) If, at the time this Agreement is executed and delivered, it is
necessary for a post-effective amendment to the registration statement to be
declared effective before the offering of the Shares may commence, the
registration statement or such post-effective amendment shall have become
effective not later than 5:30 P.M., New York City time, on the date hereof, or
at such later date and time as shall be consented to in writing by you, and all
filings, if any, required by Rules 424 and 430A under the Act shall have been
timely made; no stop order suspending the effectiveness of the registration
statement shall have been issued and no proceeding for that purpose shall have
been instituted or, to the knowledge of the Company or the Underwriters,
threatened by the Commission, and any request of the Commission for additional
information (to be included in the registration statement or the Prospectus or
otherwise) shall have been complied with to your satisfaction.
(b) Subsequent to the effective date of this Agreement, there shall not
have occurred (i) any change, or any development involving a prospective change,
in or affecting the condition (financial or other), business, properties, net
worth, or results of operations of the Company not contemplated by the
Prospectus, which in your opinion would materially, adversely affect the market
for the Shares, or (ii) any event or development relating to or involving the
Company or any officer or director of the Company which makes any statement made
in the Prospectus untrue in any material respect or which, in the opinion of the
Company and its counsel or the Underwriters and its counsel, requires the making
of any addition to or change in the Prospectus in order to state a material fact
required by the Act or any other law to be stated therein or necessary in order
to make the statements therein not misleading, if amending or supplementing the
Prospectus to reflect such event or development would in your opinion materially
adversely affect the market for the Shares.
(c) You shall have received on the Closing Date, opinions of ▇▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇, counsel for the Company, and Piper & Marbury, L.L.P., Maryland counsel
for the Company, dated the Closing Date and addressed to you substantially in
the form of Annex A hereto. In rendering their opinion as aforesaid, counsel
may rely upon an opinion or opinions, each dated the Closing Date, of other
counsel retained by them or the Company as to the laws of the State of Maryland
or the State of Delaware, provided that (1) each such local counsel is
acceptable to you, (2) such reliance is expressly authorized by each opinion so
relied upon and a copy of each such opinion is delivered to you, and (3) counsel
shall state in their opinion that they believe that they and the Underwriters
are justified in relying thereon.
18
(d) You shall have received on the Closing Date an opinion of King &
Spalding, counsel for the Underwriters, dated the Closing Date and addressed to
you with respect to the matters referred to in clauses (v), (viii), (ix), (xiii)
(excluding documents incorporated by reference) and (xviii) of Annex A hereto
and such other related matters as you may request.
(e) You shall have received letters addressed to you and dated the date
hereof and the Closing Date from Ernst & Young LLP, independent certified public
accountants, substantially in the forms heretofore approved by you.
(f) (i) No stop order suspending the effectiveness of the Registration
Statement shall have been issued and no proceedings for that purpose shall have
been taken or, to the knowledge of the Company, shall be contemplated by the
Commission at or prior to the Closing Date; (ii) there shall not have been any
change in the capital stock of the Company nor any material increase in the
short-term or long-term debt of the Company (other than in the ordinary course
of business) from that set forth or contemplated in the Registration Statement
or the Prospectus (or any amendment or Supplement thereto); (iii) there shall
not have been, since the respective dates as of which information is given in
the Registration Statement and the Prospectus (or any amendment or supplement
thereto), except as may otherwise be stated in the Registration Statement and
Prospectus (or any amendment or supplement thereto), any material adverse change
in the condition (financial or other), business, prospects, properties, net
worth or results of operations of the Company and the Subsidiaries taken as a
whole; (iv) the Company and the Subsidiaries shall not have any liabilities or
obligations, direct or contingent (whether or not in the ordinary course of
business), that are material to the Company and the Subsidiaries, taken as a
whole, other than those reflected in the Registration Statement or the
Prospectus (or any amendment or supplement thereto); and (v) all the
representations and warranties of the Company contained in this Agreement shall
be true and correct on and as of the date hereof and on and as of the Closing
Date as if made on and as of the Closing Date, and you shall have received a
certificate, dated the Closing Date and signed on behalf of the Company by the
chief executive officer and the chief financial officer of the Company (or such
other officers as are acceptable to you), to the effect set forth in this
Section 8(f) and in Section 8(g) hereof.
(g) The Company shall not have failed at or prior to the Closing Date to
have performed or complied with any of its agreements herein contained and
required to be performed or complied with by it hereunder at or prior to the
Closing Date.
(h) Prior to the Closing Date the Shares, the Concurrent Shares and all
other Common Shares of the Company shall have been listed, subject to notice of
issuance, on the American Stock Exchange (Regular List).
(i) The Company shall have furnished or caused to be furnished to you such
further certificates and documents as you shall have requested.
All such opinions, certificates, letters and other documents will be in
compliance with the provisions hereof only if they are satisfactory in form and
substance to you and your counsel.
19
Any certificate or document signed by any officer of the Company and
delivered to you or to your counsel shall be deemed a representation and
warranty by the Company to the Underwriters as to the statements made therein.
The obligations of the Underwriters to purchase Additional Shares hereunder
are subject to the satisfaction on and as of any Option Closing Date of the
conditions set forth in this Section 8, except that, if any Option Closing Date
is other than the Closing Date, the certificates, opinions and letters referred
to in paragraphs (c) through (f) shall be dated the Option Closing Date in
question and the opinions called for by paragraphs (c) and (d) shall be revised
to reflect the sale of Additional Shares.
9. Expenses. The Company agrees to pay the following costs and expenses
--------
and all other costs and expenses incident to the performance by it of its
obligations hereunder: (i) the preparation, printing or reproduction, and filing
with the Commission of the Registration Statement (including financial
statements and exhibits thereto), the Prospectus, the Prepricing Prospectus and
each amendment or supplement to any of them; (ii) the printing (or reproduction)
and delivery (including postage, air freight charges and charges for counting
and packaging) of such copies of the Registration Statement, the Prospectus, the
Incorporated Documents, and all amendments or supplements to any of them, as may
be reasonably requested for use in connection with the offering and sale of the
Shares; (iii) the preparation, printing, authentication, issuance and delivery
of certificates for the Shares, including any stamp taxes in connection with the
original issuance and sale of the Shares; (iv) the filing with the Commission of
this Agreement and the printing of the Blue Sky Memorandum and all other
agreements or documents printed (or reproduced) and delivered in connection with
the offering of the Shares; (v) the listing of the Shares on the AMEX; (vi) the
registration or qualification of the Shares for offer and sale under the
securities or Blue Sky laws of the several states as provided in Section 5(g)
hereof (including the reasonable fees, expenses and disbursements of counsel for
the Underwriters relating to the preparation, printing or reproduction, and
delivery of the Blue Sky Memorandum and such registration and qualification),
provided, however, that expenses under this item (vi) shall not exceed $5,000;
(vii) the filing fees in connection with any filings required to be made with
the National Association of Securities Dealers, Inc.; (viii) the transportation
and other expenses incurred by or on behalf of Company representatives in
connection with presentations to prospective purchasers of the Shares; and (ix)
the fees and expenses of the Company's accountants and the fees and expenses of
counsel (including local and special counsel) for the Company.
10. Effective Date of Agreement. This Agreement shall become effective:
---------------------------
(i) upon the execution and delivery hereof by the parties hereto; or (ii) if, at
the time this Agreement is executed and delivered, it is necessary for a post-
effective amendment to the Registration Statement to be declared effective
before the offering of the Shares may commence, when notification of the
effectiveness of the registration statement or such post-effective amendment has
been released by the Commission. Until such time as this Agreement shall have
become effective, it may be terminated by the Company, by notifying you, or by
you by notifying the Company.
20
If any one or more of the Underwriters shall fail or refuse to purchase
Shares which it or they are obligated to purchase hereunder on the Closing Date,
and the aggregate number of Shares which such defaulting Underwriter or
Underwriters are obligated but fail or refuse to purchase is not more than one-
tenth of the aggregate number of Shares which the Underwriters are obligated to
purchase on the Closing Date, each non-defaulting Underwriter shall be
obligated, severally, in the proportion which the number of Firm Shares set
forth opposite its name in Schedule I hereto bears to the aggregate number of
Firm Shares set forth opposite the names of all non-defaulting Underwriters or
in such other proportion as you may specify in accordance with Section 20 of the
Master Agreement Among Underwriters of ▇▇▇▇▇ ▇▇▇▇▇▇ Inc., to purchase the Shares
which such defaulting Underwriter or Underwriters are obligated, but fail or
refuse, to purchase. If any one or more of the Underwriters shall fail or
refuse to purchase Shares which it or they are obligated to purchase on the
Closing Date and the aggregate number of Shares with respect to which such
default occurs is more than one-tenth of the aggregate number of Shares which
the Underwriters are obligated to purchase on the Closing Date and arrangements
satisfactory to you and the Company for the purchase of such Shares by one or
more non-defaulting Underwriters or other party or parties approved by you and
the Company are not made within 36 hours after such default, this Agreement will
terminate without liability on the part of any non-defaulting Underwriter or the
Company. In any such case which does not result in termination of this
Agreement, either you or the Company shall have the right to postpone the
Closing Date, but in no event for longer than seven days, in order that the
required changes, if any, in the Registration Statement and the Prospectus or
any other documents or arrangements may be effected. Any action taken under
this paragraph shall not relieve any defaulting Underwriter from liability in
respect of any such default of any such Underwriter under this Agreement. The
term "Underwriter" as used in this Agreement includes, for all purposes of this
Agreement, any party not listed in Schedule I hereto who, with your approval and
the approval of the Company, purchases Shares which a defaulting Underwriter is
obligated, but fails or refuses, to purchase.
Any notice under this Section 10 may be given by telegram, telecopy or
telephone but shall be subsequently confirmed by letter.
11. Termination of Agreement. This Agreement shall be subject to
------------------------
termination in your absolute discretion, without liability on the part of the
Underwriters to the Company by notice to the Company, if prior to the Closing
Date or any Option Closing Date (if different from the Closing Date and then
only as to the Additional Shares), as the case may be, (i) trading in securities
generally on the New York Stock Exchange, the American Stock Exchange or the
Nasdaq National Market shall have been suspended or materially limited, (ii) a
general moratorium on commercial banking activities in the States of New York or
Connecticut shall have been declared by either federal or state authorities, or
(iii) there shall have occurred any outbreak or escalation of hostilities or
other international or domestic calamity, crisis or change in political,
financial or economic conditions, the effect of which on the financial markets
of the United States is such as to make it, in your judgment, impracticable or
inadvisable to commence or continue the offering of the Shares at the offering
price to the public set forth on the cover page of the Prospectus or to enforce
contracts for the resale of the Shares by the Underwriters. Notice of such
termination may be given to the Company by telegram, telecopy or telephone and
shall be subsequently confirmed by letter.
21
12. Information Furnished by the Underwriters. The statements set forth
-----------------------------------------
in the last paragraph on the cover page, the stabilization legend on the inside
front cover, and the list of underwriters and numbers of Firm Shares to be
purchased by each and the statements in the first, third and sixth paragraphs
under the caption "Underwriting" in the Prospectus, constitute the only
information furnished by or on behalf of the Underwriters through you as such
information is referred to in Sections 6(b) and 7 hereof.
13. Miscellaneous. Except as otherwise provided in Sections 5, 10 and 11
-------------
hereof, notice given pursuant to any provision of this Agreement shall be in
writing and shall be delivered (i) if to the Company, at the office of the
Company at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attn: Chief Executive Officer
and Chief Financial Officer; or (ii) if to you, c/o ▇▇▇▇▇ ▇▇▇▇▇▇ Inc. at ▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Manager, Investment
Banking Division.
This Agreement has been and is made solely for the benefit of the
Underwriters, the Company, its directors and officers, and the other controlling
persons referred to in Section 7 hereof and their respective successors and
assigns, to the extent provided herein, and no other person shall acquire or
have any right under or by virtue of this Agreement. Neither the term
"successor" nor the term "successors and assigns" as used in this Agreement
shall include a purchaser from the Underwriters of any of the Shares in his
status as such purchaser.
14. Applicable Law; Counterparts. This Agreement shall be governed by and
----------------------------
construed in accordance with the laws of the State of New York applicable to
contracts made and to be performed within the State of New York, without regard
to the conflicts of laws principles of any jurisdiction.
This Agreement may be signed in various counterparts which together
constitute one and the same instrument. If signed in counterparts, this
Agreement shall not become effective unless at least one counterpart hereof
shall have been executed and delivered on behalf of each party hereto.
Please confirm that the foregoing correctly sets forth the agreement
between the Company and the Underwriters.
Very truly yours,
GROVE PROPERTY TRUST
By:___________________________
Name:
Title:
GROVE OPERATING, L.P.
22
By: Grove Property Trust,
General Partner
By:___________________________
Name:
Title:
Confirmed as of the date first
above mentioned.
▇▇▇▇▇ ▇▇▇▇▇▇ INC.
▇▇▇▇▇▇ BROTHERS INC.
As Representatives of the
Several Underwriters
By: ▇▇▇▇▇ ▇▇▇▇▇▇ INC.
By: ___________________________
Managing Director
23
SCHEDULE I
UNDERWRITERS
No. of Common
Underwriter Shares Purchased
----------- ----------------
▇▇▇▇▇ ▇▇▇▇▇▇ Inc.............................................
▇▇▇▇▇▇ Brothers Inc..........................................
Total..................................................... 3,141,475
=========
24
SCHEDULE II
LIST OF SUBSIDIARIES AND PROPERTIES
Apartment Communities
Owned by the Operating Partnership Legal Name of Partnership
Apartment Communities
Owned by Subsidiary Partnerships
Retail Properties Owned by
the Operating Partnership
25
ANNEX A
The Company is a real estate investment trust duly formed and validly
existing in good standing under the laws of the State of Maryland, with full
power and authority to own, lease and operate its properties and to conduct its
business as described in the Registration Statement and the Prospectus, and is
duly registered and qualified to conduct its business and is in good standing in
each jurisdiction or place where the nature of its properties or the conduct of
its business requires such registration or qualification, except where the
failure so to register or qualify could not reasonably be expected to have a
material adverse effect on the condition (financial or other), business,
properties, net worth or results of operations of the Company and the
Subsidiaries, taken as a whole.
Each of the Subsidiaries is a limited partnership or a limited liability
company duly organized, legally existing under the laws of its jurisdiction of
organization, with full power and authority under the laws governing such
limited partnerships or limited liability companies and under such entities'
respective organizational documents to own, lease and operate its properties
and to conduct its business as described in the Registration Statement and the
Prospectus, and is duly registered and qualified to conduct its business and is
in good standing in each jurisdiction or place where the nature of its
properties or the conduct of its business requires such registration or
qualification, except where the failure so to register or qualify could not
reasonably be expected to have a material adverse effect on the condition
(financial or other), business, properties, net worth or results of operations
of the Company and the Subsidiaries taken as a whole. The Company is the sole
general partner of the Operating Partnership. Either the Company or the
Operating Partnership or a wholly owned subsidiary thereof is the sole general
partner of each of the Subsidiary Partnerships. The Company's partnership
interests in the Operating Partnership and each Subsidiary Partnership are, to
the knowledge of such counsel, owned free and clear of any lien, adverse claim,
security interest, equity or other encumbrance, except for such as could not
reasonably be expected to have a material adverse effect on the condition
(financial or other), business properties, net worth or results of operations of
the Company and the Subsidiaries, taken as a whole.
The authorized capital stock of the Company is as set forth under the
caption "Description of Shares of Beneficial Interest" in the Prospectus; the
authorized capital stock of the Company conforms in all material respects as to
legal matters to the description thereof contained in such section in the
Prospectus;.
All the shares of capital stock of the Company outstanding prior to the
issuance of the Shares have been duly authorized and validly issued, and are
fully paid and nonassessable.
26
The Shares and the Concurrent Shares have been duly authorized and, when
issued and delivered to the Underwriters against payment therefor in accordance
with the terms hereof, will be validly issued, fully paid and nonassessable and,
to the best knowledge of such counsel, free of any rights similar to preemptive
rights under the Declaration of Trust or By-laws of the Company or under
Maryland law that will entitle any person to acquire any Shares upon the
issuance thereof by the Company.
To the knowledge of such counsel, the Shares and the Concurrent Shares,
when issued and delivered to the Underwriters against payment therefor in
accordance with the terms hereof, will be free of any preemptive rights or
similar rights.
No registration under the Act or the Investment Company Act and no consent,
approval, authorization, order, registration or qualification of or with any
governmental agency or body (A) was required for the issuance of _______ Common
Units of the Operating Partnership on March 14, 1997, or (B) was required for
the Company's issuance of 3,333,333 Common Shares on March 14, 1997.
The form of certificates for the Shares conforms to the requirements of
Maryland law.
The Registration Statement and all post-effective amendments, if any, have
become effective under the Act and, to the knowledge of such counsel, no stop
order suspending the effectiveness of the Registration Statement has been issued
and no proceedings for that purpose are pending before or contemplated by the
Commission; and any required filing of the Prospectus pursuant to Rule 424(b)
has been made in accordance with Rule 424(b).
The Company has the power and authority to enter into this Agreement and to
issue, sell and deliver the Shares to the Underwriters as provided herein, and
this Agreement has been duly authorized, executed and delivered by the Company.
The Operating Partnership has the power and authority to enter into this
Agreement and this Agreement has been duly authorized, executed and delivered by
the Operating Partnership.
To the knowledge of such counsel, neither the Company nor any of the
Subsidiaries is in violation of its respective organizational documents or its
respective bylaws, or other organizational documents, and, to the best knowledge
of such counsel, is not in default in the performance of any material
obligation, agreement or condition contained in any bond, debenture, note or
other evidence of indebtedness that is listed as an exhibit to the Registration
Statement or to any Incorporated Document, where such default, individually or
in the aggregate, has had or is reasonably likely to have a material adverse
effect on the condition (financial or otherwise), business, properties, net
worth or results of operations of the Company and the Subsidiaries, taken as a
whole, except as may be disclosed in the Prospectus.Neither the offer, sale or
delivery of the Shares, the execution, delivery or performance of this
Agreement, compliance by the Company with the provisions hereof nor consummation
by the Company of the transactions contemplated hereby conflicts or will
conflict with or constitutes or will constitute a breach of, or a default under,
the charter or bylaws, or other organizational documents, of the Company or any
of the Subsidiaries or any agreement, indenture, lease or other instrument to
which the Company or any of the Subsidiaries is a party or by which any of
27
them or any of their respective properties is bound that is an exhibit to the
Registration Statement or to any Incorporated Document, or will, to the
knowledge of such counsel, result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of the Company or any of the
Subsidiaries, nor will any such action result in any violation of any existing
law, regulation, ruling (assuming compliance with all applicable state
securities and Blue Sky laws), judgment, injunction, order or decree known to
such counsel, applicable to the Company, the Subsidiaries or any of their
respective properties, except for such breaches, defaults or violations that
have not had and could not reasonably be expected to have a material adverse
effect on the condition (financial or otherwise), business, properties, net
worth or results of operations of the Company and the Subsidiaries, taken as a
whole.
No consent, approval, authorization or other order of, or registration or
filing with, any court, regulatory body, administrative agency or other
governmental body, agency, or official is required on the part of the Company
(except as has been obtained under the Act and the Exchange Act or such as may
be required under state securities or Blue Sky laws governing the purchase and
distribution of the Shares) for the valid issuance and sale of the Shares to the
Underwriters as contemplated by this Agreement.
The Registration Statement and the Prospectus and any supplements or
amendments thereto (except for the financial statements and the notes thereto
and the schedules and other financial and statistical data included therein, as
to which such counsel need not express any opinion) comply as to form in all
material respects with the requirements of the Act; and the Company's Quarterly
Reports on Form 10-Q for the quarters ended June 30, 1997 and September 30, 1997
(except for the financial statements and the notes thereto and the schedules and
other financial and statistical data included therein, as to which counsel need
not express any opinion) comply as to form in all material respects with the
Exchange Act and the rules and regulations of the Commission thereunder.
To the knowledge of such counsel, (A) other than as described or
contemplated in the Prospectus (or any supplement thereto), the Registration
Statement or any Incorporated Document, there are no legal or governmental
proceedings pending or threatened against the Company or any of the
Subsidiaries, or to which the Company or any of the Subsidiaries, or any of
their property, is subject, which are required to be described in the
Registration Statement or Prospectus (or any amendment or supplement thereto)
and (B) there are no agreements, contracts, indentures, leases or other
instruments, that are required to be described in the Registration Statement or
the Prospectus (or any amendment or supplement thereto) or to be filed as an
exhibit to the Registration Statement or any Incorporated Document that are not
described or filed as required, as the case may be.
The statements in the Registration Statement and Prospectus under the
captions "Description of Shares of Beneficial Interest," "Certain Relationships
and Transactions," "Certain Provisions of Maryland Law and the Company's Charter
and Bylaws," "The Operating Partnership Agreement" and, under the caption "Risk
Factors," the subheadings "Adverse Tax Consequences of Failure to Qualify as a
REIT," "Possible Environmental Liabilities," "Limits on Changes in Control" and
"Changes in Investment and Financing Practices Without Shareholder Approval,"
insofar as they are descriptions of contracts, agreements or other legal
documents, or
28
refer to statements of law or legal conclusions, are accurate and present fairly
the information required to be shown.
The Company was organized and has operated in conformity with the
requirements for qualification and taxation as a REIT under Sections 856 through
860 of the Code for each of the taxable years ended December 31, 1994, December
31, 1995 and December 31, 1996; the Company's current organization and method of
operations will enable the Company to continue to meet the requirements for
qualification and taxation as a REIT. The discussion in the Prospectus under
the caption "Certain Federal Income Tax Considerations" is accurate and fairly
summarizes the federal income tax considerations that would be material to a
holder of Shares 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.
The Operating Partnership and each of the Subsidiary Partnerships are
properly classified as partnerships, and not as corporations, associations
taxable as corporations or "publicly traded partnerships" under Section 7704 of
the Code, for federal income tax purposes throughout the period from April 4,
1994, the date on which the Company elected to be taxed as a REIT, through the
date of such opinion, or in the case of any Subsidiary Partnerships that have
terminated, through the date of termination of such Subsidiary Partnerships.
None of the Company nor any Subsidiary is, or solely as a result of the
consummation of the transactions contemplated hereby, will become, an
"investment company," or a company "controlled" by an "investment company,"
within the meaning of the Investment Company Act of 1940, as amended.
Although such counsel has not undertaken to determine independently, and
does not assume any responsibility for, the accuracy or completeness of the
statements in the Registration Statement, such counsel has participated in the
preparation of the Registration Statement and the Prospectus, including review
and discussion of the contents thereof, and nothing has come to the attention
of such counsel that has caused them to believe that the Registration Statement
(including the Incorporated Documents) at the time the Registration Statement
became effective, or the Prospectus, as of its date and as of the Closing Date,
contained an untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading or that any amendment or supplement to the Prospectus, as of its
respective date, and as of the Closing Date, contained any untrue statement of a
material fact or omitted 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 (it being understood that such counsel need express no
opinion with respect to the financial statements and the notes thereto and the
schedules and other financial and statistical data included in the Registration
Statement or the Prospectus or any Incorporated Document).
29
ANNEX B
Grove Property Trust
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ Inc.
▇▇▇▇▇▇ Brothers Inc.
as representatives of the several underwriters
c/o ▇▇▇▇▇ ▇▇▇▇▇▇ Inc.,
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Re: Lockup Agreement
Ladies and Gentlemen:
The undersigned understands that you and certain other firms propose to
enter into an Underwriting Agreement (the "Underwriting Agreement") providing
for the purchase by you and such other firms (the "Underwriters") of Common
Shares of Beneficial Interest, par value $.01 per share (the "Shares") of Grove
Property Trust, a Maryland real estate investment trust (the "Company") and that
the Underwriters propose to reoffer the Shares to the public.
As an inducement to the Underwriters to execute the Underwriting Agreement,
the undersigned irrevocably hereby agrees that, for a period of 180 days after
the date of the Prospectus (as defined in the Underwriting Agreement), the
undersigned will not offer, sell, contract to sell, announce the intention to
sell, pledge or otherwise dispose of, directly or indirectly, any Shares, or
securities convertible into or exchangeable or exercisable for Shares
(collectively, "Securities"), without the prior written consent of ▇▇▇▇▇ ▇▇▇▇▇▇
Inc. Prior to the expiration of such period, the undersigned will not announce
or disclose any intention to do anything after the expiration of such period
which the undersigned is prohibited, as provided in the preceding sentence, from
doing during such period.
30
In furtherance of the foregoing, the Company and its transfer agent and
registrar are hereby authorized to decline to make any transfer of Securities if
such transfer would constitute a violation or breach of this Agreement. This
Agreement shall be binding on the undersigned and the respective successors,
heirs, personal representatives and assigns of the undersigned. It is
understood that, if the Underwriting Agreement does not become effective, or if
the Underwriting Agreement (other than the provisions thereof which survive
termination) shall terminate or be terminated prior to payment for and delivery
of the Shares, you will release the undersigned from the obligations under this
letter agreement.
Very truly yours,
Signature:_______________________________
Print Name:________________________________
cc: BankBoston, N.A., as Transfer Agent
31