1,200,000 Shares
REALTY INCOME CORPORATION
9 1/2% Class C Cumulative Redeemable Preferred Stock
(Par Value $1.00 Per Share)
(Liquidation Preference $25.00 Per Share)
PURCHASE AGREEMENT
July 27, 1999
Table of Contents
PAGE
SECTION 1. Representations and Warranties.........................................................................3
(A) REPRESENTATIONS AND WARRANTIES BY THE COMPANY...................................................3
(i) Compliance with Registration Requirements..............................................3
(ii) Incorporated Documents.................................................................4
(iii) Independent Accountants................................................................4
(iv) Financial Statements...................................................................5
(v) No Material Adverse Change in Business.................................................5
(vi) Good Standing of the Company...........................................................5
(vii) Good Standing of Subsidiaries..........................................................5
(viii) Capitalization.........................................................................6
(ix) Authorization of Agreement.............................................................6
(x) Authorization of Common Stock..........................................................6
(xi) Absence of Defaults and Conflicts......................................................6
(xii) Absence of Labor Dispute...............................................................7
(xiii) Absence of Proceedings.................................................................7
(xiv) Accuracy of Exhibits...................................................................8
(xv) Possession of Intellectual Property....................................................8
(xvi) Absence of Further Requirements........................................................8
(xvii) Possession of Licenses and Permits.....................................................8
(xviii) Investment Company Act.................................................................9
(xix) Partnership Agreements.................................................................9
(xx) Properties.............................................................................9
(xxi) Insurance.............................................................................10
(xxii) Environmental Matters.................................................................11
(xxiii) Qualification as a Real Estate Investment Trust.......................................12
(xxiv) Registration Rights...................................................................12
(xxv) Tax Treatment of Certain Entities.....................................................12
(xxvi) Securities............................................................................12
(xxvii) Ranking of Securities.................................................................13
(xxviii) Articles Supplementary................................................................13
(B) OFFICER'S CERTIFICATES.........................................................................13
SECTION 2. Sale and Delivery to Underwriters; Closing............................................................13
(A) INITIAL SECURITIES.............................................................................13
(B) OPTION SECURITIES..............................................................................13
(C) PAYMENT. 14
(D) DENOMINATIONS; REGISTRATION....................................................................14
SECTION 3. Covenants of the Company..............................................................................14
(A) COMPLIANCE WITH SECURITIES REGULATIONS AND COMMISSION REQUESTS.................................14
(B) FILING OF AMENDMENTS...........................................................................15
(C) RULE 434.......................................................................................15
(D) DELIVERY OF REGISTRATION STATEMENTS............................................................15
(E) DELIVERY OF PROSPECTUSES.......................................................................15
i
PAGE
(F) CONTINUED COMPLIANCE WITH SECURITIES LAWS......................................................16
(G) BLUE SKY QUALIFICATIONS........................................................................16
(H) RULE 158.......................................................................................16
(I) USE OF PROCEEDS................................................................................17
(J) LISTING........................................................................................17
(K) REPORTING REQUIREMENTS.........................................................................17
(L) RESTRICTION ON SALE OF SECURITIES..............................................................17
SECTION 4. Payment of Expenses...................................................................................17
(A) EXPENSES.......................................................................................17
(B) TERMINATION OF AGREEMENT.......................................................................18
SECTION 5. Conditions of Underwriters' Obligations...............................................................18
(A) EFFECTIVENESS OF REGISTRATION STATEMENTS.......................................................18
(B) OPINIONS OF COUNSEL FOR COMPANY................................................................18
(C) OPINION OF COUNSEL FOR UNDERWRITERS............................................................18
(D) OFFICERS' CERTIFICATE..........................................................................19
(E) ACCOUNTANT'S COMFORT LETTER....................................................................19
(F) BRING-DOWN COMFORT LETTER......................................................................19
(G) APPROVAL OF LISTING............................................................................19
(H) RATING REQUIREMENT.............................................................................19
(I) ARTICLES SUPPLEMENTARY.........................................................................20
(J) CONDITIONS TO PURCHASE OF OPTION SECURITIES....................................................20
(K) ADDITIONAL DOCUMENTS...........................................................................20
(L) TERMINATION OF AGREEMENT.......................................................................21
SECTION 6. Indemnification.......................................................................................21
(A) INDEMNIFICATION OF UNDERWRITERS................................................................21
(B) INDEMNIFICATION OF COMPANY, DIRECTORS AND OFFICERS.............................................22
(C) ACTIONS AGAINST PARTIES; NOTIFICATION..........................................................22
(D) SETTLEMENT WITHOUT CONSENT IF FAILURE TO REIMBURSE.............................................23
SECTION 7. Contribution..........................................................................................23
SECTION 8. Representations, Warranties and Agreements to Survive Delivery........................................24
SECTION 9. Termination of Agreement..............................................................................24
(A) TERMINATION; GENERAL...........................................................................24
(B) LIABILITIES....................................................................................25
ii
PAGE
SECTION 10. Default by One or More of the Underwriters...........................................................25
SECTION 11. Notices..............................................................................................26
SECTION 12. Parties..............................................................................................26
SECTION 13. GOVERNING LAW AND TIME...............................................................................26
SECTION 14. Effect of Headings and Table of Contents.............................................................26
iii
1,200,000 Shares
REALTY INCOME CORPORATION
(a Maryland corporation)
9 1/2% Class C Cumulative Redeemable Preferred Stock
(Par Value $1.00 Per Share)
(Liquidation Preference $25.00 Per Share)
PURCHASE AGREEMENT
July 27, 1999
▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
▇.▇. ▇▇▇▇▇▇▇ & Sons, Inc.
EVEREN Securities, Inc.
First Union Capital Markets Corp.
PaineWebber Incorporated
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Inc.
Sutro & Co. Incorporated
as Representatives of the several Underwriters
▇/▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
Realty Income Corporation, a Maryland corporation (the "Company"),
confirms its agreement with the Underwriters named in Schedule A hereto (the
"Underwriters" which term shall also include any underwriter substituted as
hereinafter provided in Section 10 hereof), for whom ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co.,
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated ("▇▇▇▇▇▇▇ ▇▇▇▇▇"), ▇.▇.
▇▇▇▇▇▇▇ & Sons, Inc., EVEREN Securities, Inc., First Union Capital Markets
Corp., PaineWebber Incorporated, ▇▇▇▇▇▇▇ ▇▇▇▇▇ Barney Inc. and Sutro & Co.
Incorporated are acting as representatives (the "Representatives"), with respect
to the sale by the Company and the purchase by the Underwriters, acting
severally and not jointly, of the respective numbers of shares of the Company's
Class C Cumulative Redeemable Preferred Stock, par value $1.00 per share (the
"Class C Preferred Stock"), set forth in said Schedule A, and with respect to
the grant by the Company to the Underwriters, acting severally and not jointly,
of the option described in Section 2(b) hereof to purchase all or any part of
180,000 additional shares of Preferred Stock to
cover over-allotments, if any. The aforesaid 1,200,000 shares of Class C
Preferred Stock (the "Initial Securities") to be purchased by the
Underwriters and all or any part of the 180,000 shares of Preferred Stock
subject to the option described in Section 2(b) hereof (the "Option
Securities") are hereinafter called, collectively, the "Securities." The
terms of the Securities will be set forth in articles supplementary (the
"Articles Supplementary") to be filed by the Company with the Maryland State
Department of Assessments and Taxation (the "SDAT").
The Company understands that the Underwriters propose to make a public
offering of the Securities as soon as the Representatives deem advisable
after this Agreement has been executed and delivered.
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-3 (No. 333-34311) (the
"First Registration Statement") and Amendment No. 1 thereto and a
registration statement on Form S-3 (No. 333-80821) (the "Second Registration
Statement") and Amendment No. 1 thereto covering the registration of, among
other things, the Securities under the Securities Act of 1933, as amended
(the "1933 Act"), in each case including the related preliminary prospectus
or prospectuses. Promptly after execution and delivery of this Agreement, the
Company will either (i) prepare and file a prospectus supplement and, if
required by Rule 424(b) (as defined below), a prospectus in accordance with
the provisions of Rule 415 ("Rule 415") of the rules and regulations of the
Commission under the 1933 Act (the "1933 Act Regulations") and paragraph (b)
of Rule 424 ("Rule 424(b)") of the 1933 Act Regulations or (ii) if the
Company has elected to rely upon Rule 434 ("Rule 434") of the 1933 Act
Regulations, prepare and file a term sheet (a "Term Sheet") in accordance
with the provisions of Rule 434 and Rule 424(b). The information included in
such Term Sheet that was omitted from the Second Registration Statement at
the time it became effective but that is deemed to be part of such
registration statement at the time the Term Sheet is filed with the
Commission pursuant to paragraph (d) of Rule 434 is referred to as "Rule 434
Information." Each prospectus, together with any related prospectus
supplement, relating to the Securities used before the Second Registration
Statement became effective, and each prospectus, together with the related
prospectus supplement, relating to the Securities that omitted the Rule 434
Information or that was captioned "Subject to Completion" that was used after
such effectiveness and prior to the execution and delivery of this Agreement,
is herein called, together with the documents incorporated by reference
therein pursuant to Item 12 of Form S-3 under the 1933 Act, a "preliminary
prospectus." The First Registration Statement as amended and including the
exhibits thereto, schedules, if any, and the documents incorporated by
reference therein pursuant to Item 12 of Form S-3 under the 1933 Act, at the
time that the First Registration Statement became effective, and the Second
Registration Statement, as amended and including the exhibits thereto,
schedules, if any, and the documents incorporated by reference therein
pursuant to Item 12 of Form S-3 under the 1933 Act, at the time the Second
Registration Statement became effective, and in each case including, if
applicable, the Rule 434 Information, are herein called, collectively, the
"Original Registration Statements" and, individually, an "Original
Registration Statement." Any registration statement filed pursuant to Rule
462(b) of the 1933 Act Regulations is herein referred to as the "Rule 462(b)
Registration Statement," and the Original Registration Statements and any
Rule 462(b) Registration Statement are herein referred to collectively as the
"Registration Statements" and, individually, a "Registration Statement." The
prospectus dated July 14, 1999 and the final prospectus supplement relating
to the offering of the Securities, including the documents incorporated by
2
reference therein pursuant to Item 12 of Form S-3 under the 1933 Act, in the
form first furnished to the Underwriter for use in connection with the
offering of the Securities are herein called, collectively, the "Prospectus."
If Rule 434 is relied on, the term "Prospectus" shall refer to the prospectus
dated July 14, 1999, the preliminary prospectus supplement dated July 1999
and the Term Sheet and all documents incorporated by reference therein
pursuant to Item 12 of Form S-3, and all references in this Agreement to the
date of the Prospectus shall mean the date of the Term Sheet. For purposes of
this Agreement, all references to any Registration Statement, any preliminary
prospectus, the Prospectus or any Term Sheet or any amendment or supplement
to any of the foregoing shall be deemed to include any copy filed with the
Commission pursuant to its Electronic Data Gathering, Analysis and Retrieval
system ("▇▇▇▇▇").
All references in this Agreement to financial statements and schedules
and other information which is "described," "disclosed," "contained,"
"included" or "stated" in any Registration Statement, any preliminary
prospectus or the Prospectus (or other references of like import) shall be
deemed to mean and include all such financial statements and schedules and
other information which is incorporated or deemed to be incorporated by
reference in such Registration Statement, such preliminary prospectus or the
Prospectus, as the case may be; and all references in this Agreement to
amendments or supplements to any Registration Statement, any preliminary
prospectus or the Prospectus shall be deemed to mean and include the filing
of any document under the Securities Exchange Act of 1934, as amended (the
"1934 Act"), which is incorporated or deemed to be incorporated by reference
in such Registration Statement, such preliminary prospectus or the
Prospectus, as the case may be.
All references in this Agreement to properties or improvements "owned
by" or "of" the Company or any of its subsidiaries shall be deemed to mean
and include all properties and improvements which are leased by the Company
or any of its subsidiaries, as lessee.
As used in this Agreement, the term "Consolidation" means the merger
of 25 limited partnerships and RIC Properties Ltd., a California limited
partnership, into the Company on August 15, 1994; and "Merger" means the
merger of R.I.C. Advisor, Inc., a California corporation (the "Advisor"),
into the Company on August 17, 1995.
SECTION 1. REPRESENTATIONS AND WARRANTIES.
(a) REPRESENTATIONS AND WARRANTIES BY THE COMPANY. The Company
represents and warrants to each Underwriter as of the date hereof, as of the
Closing Time referred to in Section 2(c) hereof, and as of each Date of
Delivery (if any) referred to in Section 2(b) hereof, and agrees with each
Underwriter, as follows:
(i) COMPLIANCE WITH REGISTRATION REQUIREMENTS. The Company meets the
requirements for use of Form S-3 under the 1933 Act. Each of the
Original Registration Statements and any Rule 462(b) Registration
Statement have become effective under the 1933 Act and no stop order
suspending the effectiveness of any Original Registration Statement or
any Rule 462(b) Registration Statement has been issued under the 1933
Act and no proceedings for that purpose have been instituted or are
pending or, to the knowledge of the Company, are threatened by the
Commission, and any request on the part of the Commission for
additional information has been complied with.
3
At the respective times the Original Registration Statements, any
Rule 462(b) Registration Statement and any post-effective amendments
thereto became effective, at the date hereof and at the Closing Time (and,
if any Option Securities are purchased, at each Date of Delivery), the
Original Registration Statements, any Rule 462(b) Registration Statement
and any amendments and supplements thereto complied and will comply in all
material respects with the applicable requirements of the 1933 Act and the
1933 Act Regulations and the Trust Indenture Act of 1939, as amended (the
"1939 Act"), and the rules and regulations of the Commission under the 1939
Act (the "1939 Act Regulations"), and did not and will not contain an
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading, and, at the date hereof and at the Closing Time (and, if
any Option Securities are purchased, at each Date of Delivery), neither the
Prospectus nor any amendments or supplements thereto contained or will
contain any untrue statement of a material fact or omitted or will omit to
state a material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading;
PROVIDED, HOWEVER, that the representations and warranties in this
paragraph shall not apply to statements in or omissions from the
Registration Statements or Prospectus made in reliance upon and in
conformity with information furnished to the Company in writing by any
Underwriter through ▇▇▇▇▇▇▇ ▇▇▇▇▇ expressly for use in the Registration
Statements or Prospectus.
Each preliminary prospectus and Prospectus filed as part of any
Original Registration Statement as originally filed or as part of any
amendment thereto, or filed pursuant to Rule 424 under the 1933 Act,
complied when so filed in all material respects with the 1933 Act and the
1933 Act Regulations and, if applicable, each preliminary prospectus and
the Prospectus delivered to the Underwriter for use in connection with this
offering was identical to the electronically transmitted copies thereof
filed with the Commission pursuant to ▇▇▇▇▇ except to the extent permitted
by Regulation S-T.
(ii) INCORPORATED DOCUMENTS. The documents incorporated or deemed to
be incorporated by reference in the Registration Statements and the
Prospectus, at the time they were or hereafter are filed with the
Commission, complied and will comply in all material respects with the
requirements of the 1934 Act and the rules and regulations of the
Commission thereunder (the "1934 Act Regulations"), and, when read together
with the other information in the Prospectus, at the date hereof and at the
Closing Time (and, if any Option Securities are purchased, at each Date of
Delivery), did not and will not contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(iii) INDEPENDENT ACCOUNTANTS. The accountants who certified the
financial statements and supporting schedules included in the Registration
Statements are independent public accountants as required by the 1933 Act
and the 1933 Act Regulations.
(iv) FINANCIAL STATEMENTS. The consolidated financial statements of
the Company included in the Registration Statements and the Prospectus,
together with the
4
related schedule and notes, present fairly the financial position of
the Company and its subsidiaries at the dates indicated and the
consolidated statements of income, stockholders' equity and cash flows of
the Company and its subsidiaries for the periods specified; said
consolidated financial statements have been prepared in conformity with
generally accepted accounting principles ("GAAP") applied on a consistent
basis throughout the periods involved. The supporting schedules included in
the Registration Statements present fairly in accordance with GAAP the
information required to be stated therein. The selected financial data, if
any, and summary financial information, if any, included in the Prospectus
present fairly the information shown therein and have been compiled on a
basis consistent with that of the audited financial statements included in
the Registration Statements. The Company's ratios of earnings to fixed
charges and, if applicable, ratios of earnings to combined fixed charges
and preferred stock dividends (actual and, if any, pro forma) included in
the Prospectus have been calculated in compliance with Item 503(d) of
Regulation S-K of the Commission.
(v) NO MATERIAL ADVERSE CHANGE IN BUSINESS. Since the respective
dates as of which information is given in the Registration Statements and
the Prospectus, except as otherwise stated therein, (A) there has been no
material adverse change in the condition, financial or otherwise, or in the
earnings, business affairs or business prospects of the Company and its
subsidiaries considered as one enterprise (a "Material Adverse Effect"),
whether or not arising in the ordinary course of business, (B) there have
been no transactions entered into by the Company or any of its
subsidiaries, other than those in the ordinary course of business, which
are material with respect to the Company and its subsidiaries considered as
one enterprise, and (C) except for regular monthly distributions on the
Common Stock, par value $1.00 per share, of the Company (the "Common
Stock") in amounts per share that are consistent with past practice and
regular quarterly dividends on the Company's Class B Preferred Stock (as
defined below) at the rate of 9 3/8% per annum, there has been no dividend
or distribution of any kind declared, paid or made by the Company on any
class of its stock.
(vi) GOOD STANDING OF THE COMPANY. The Company is a corporation duly
organized and validly existing under the laws of the State of Maryland and
is in good standing with the State Department of Assessments and Taxation
of Maryland and has corporate power and authority to own, lease and operate
its properties and to conduct its business as described in the Prospectus
and to enter into and perform its obligations under this Agreement; and the
Company is duly qualified as a foreign corporation to transact business and
is in good standing in each other jurisdiction in which such qualification
is required, whether by reason of the ownership or leasing of property or
the conduct of business, except where the failure so to qualify or to be in
good standing would not result in a Material Adverse Effect.
(vii) GOOD STANDING OF SUBSIDIARIES. The only subsidiaries of the
Company are Realty Income Texas Properties, L.P., a Delaware limited
partnership, and Realty Income Texas Properties, Inc., a Delaware
corporation, and the Company does not hold any equity interest in
any corporation, limited liability company, partnership, joint venture or
entity other than such subsidiaries. Each subsidiary of the Company has
been duly organized and is validly existing as a partnership or
corporation, as the case may be, in
5
good standing under the laws of the state of its organization and has power
and authority as a partnership or corporation, as the case may be, to own,
lease and operate its properties and to conduct its business as described
in the Prospectus; each such subsidiary is duly qualified as a foreign
partnership or corporation, as the case may be, to transact business and is
in good standing in each other jurisdiction in which such qualification is
required, whether by reason of the ownership or leasing of property or the
conduct of business, except where the failure so to qualify or to be in
good standing would not result in a Material Adverse Effect; except as
otherwise disclosed in the Registration Statements, all of the issued and
outstanding partnership interests and shares of capital stock, as the case
may be, of each such subsidiary have been duly authorized (if applicable)
and validly issued and are fully paid and are non-assessable (except to the
extent that the general partners of subsidiaries which are partnerships may
be liable for the obligations of such partnerships) and are owned by the
Company, directly or through subsidiaries, free and clear of any security
interest, mortgage, pledge, lien, encumbrance, claim or equity; none of the
outstanding partnership interests or shares of capital stock, as the case
may be, of such subsidiaries were issued in violation of preemptive or
other similar rights arising by operation of law, under the partnership
agreement or charter or bylaws, as the case may be, of any such subsidiary
or under any agreement or instrument to which the Company or any such
subsidiary is a party.
(viii) CAPITALIZATION. The authorized stock of the Company and the
issued and outstanding stock of the Company are as set forth in the line
items "Preferred Stock" and "Common Stock" under the caption
"Capitalization" in the Prospectus (except for subsequent issuances, if
any, pursuant to this Agreement, pursuant to employee benefit plans
referred to in the Prospectus or pursuant to the exercise of options
referred to in the Prospectus).
(ix) AUTHORIZATION OF AGREEMENT. This Agreement has been duly
authorized, executed and delivered by the Company.
(x) AUTHORIZATION OF COMMON STOCK. The shares of issued and
outstanding Common Stock have been duly authorized and validly issued and
are fully paid and non-assessable; none of the outstanding shares of Common
Stock was issued in violation of preemptive or other similar rights arising
by operation of law, under the charter or bylaws of the Company, under any
agreement or instrument to which the Company or any of its subsidiaries is
a party or otherwise. The Common Stock, the Company's authorized but
unissued Class A Junior Participating Preferred Stock, par value $1.00 per
share (the "Class A Preferred Stock"), the Company's 9 3/8% Class B
Cumulative Redeemable Preferred Stock, par value $1.00 per share (the
"Class B Preferred Stock"), and the Rights Agreement dated as of
June 25, 1998 (the "Rights Agreement") between the Company and The Bank of
New York conform to all statements relating thereto contained or
incorporated by reference in the Prospectus and such statements conform
to the rights set forth in the instruments defining the same.
(xi) ABSENCE OF DEFAULTS AND CONFLICTS. Neither the Company nor any of
its subsidiaries is in violation of its charter or bylaws or its
partnership agreement, as the case may be, or in default in the performance
or observance of any obligation, agreement,
6
covenant or condition contained in any contract, indenture, mortgage, deed
of trust, loan or credit agreement, note, lease or other agreement or
instrument to which the Company or any of its subsidiaries is a party or by
which any of them may be bound, or to which any of the respective
properties or assets of the Company or any subsidiary is subject
(collectively, "Agreements and Instruments"), except for such defaults
that would not have a Material Adverse Effect; and the execution, delivery
and performance of this Agreement and the Articles Supplementary and the
consummation of the transactions contemplated herein and therein (including
the use of the proceeds from the sale of the Securities to repay borrowings
under the Amended and Restated Revolving Credit Agreement dated as of
December 30, 1997 among the Company, the banks named therein and The Bank
of New York, as agent and swing line bank and BNY Capital Markets, Inc.,
as arranger, as amended by that certain letter agreement dated as of
November 13, 1998 extending the termination date and increasing the
commitments for certain lenders therein (as so amended, the "Acquisition
Credit Agreement"), as described in the Prospectus under the caption "Use
of Proceeds") and compliance by the Company with its obligations hereunder
and thereunder have been duly authorized by all necessary corporate action
and do not and will not, whether with or without the giving of notice or
passage of time or both, conflict with or constitute a breach of, or
default or Repayment Event (as defined below) under, or result in the
creation or imposition of any lien, charge or encumbrance upon any
property or assets of the Company or any subsidiary pursuant to, any
Agreement or Instrument, except for such conflicts, breaches or defaults
or liens, charges or encumbrances that, individually or in the aggregate,
would not have a Material Adverse Effect, nor will such action result in
any violation of the provisions of the charter or bylaws of the Company or
any applicable law, rule, regulation, or governmental or court judgment,
order, writ or decree. As used herein, a "Repayment Event" means any event
or condition which gives the holder of any note, debenture or other
evidence of indebtedness (or any person acting on such holder's behalf) the
right to require the repurchase, redemption or repayment of all or a
portion of such indebtedness by the Company or any subsidiary of the
Company or any of its subsidiaries.
(xii) ABSENCE OF LABOR DISPUTE. No labor dispute with the employees
of the Company or any subsidiary of the Company exists or, to the best
knowledge of the Company, is imminent; and the Company is not aware of
any existing or imminent labor disturbance by the employees of any of
its or any subsidiary's tenants, which, in either case, could
reasonably be expected, individually or in the aggregate, to result in
a Material Adverse Effect.
(xiii) ABSENCE OF PROCEEDINGS. The Company has not received any notice
of any action, suit, proceeding, inquiry or investigation before or by any
court or governmental agency or body, domestic or foreign, and, to the best
knowledge of the Company, there is no such proceeding now pending or
threatened, against or affecting the Company or any of its subsidiaries,
which is required to be disclosed in the Registration Statements (other
than as disclosed therein), or which could reasonably be expected to result
in a Material Adverse Effect, or which could reasonably be expected to
materially and adversely affect the consummation of this Agreement or the
performance by the Company of its obligations under this Agreement or the
Articles Supplementary; the aggregate of all pending legal or governmental
proceedings to which the Company or any
7
subsidiary is a party or of which any of their respective property or
assets is the subject which are not described in the Registration
Statements, including ordinary routine litigation incidental to the
business, could not reasonably be expected to result in a Material
Adverse Effect.
(xiv) ACCURACY OF EXHIBITS. There are no contracts or documents which
are required to be described in the Registration Statements, the Prospectus
or the documents incorporated by reference therein or to be filed as
exhibits thereto which have not been so described and filed as required.
(xv) POSSESSION OF INTELLECTUAL PROPERTY. The Company and its
subsidiaries own or possess, or can acquire on reasonable terms, adequate
patents, patent rights, licenses, inventions, copyrights, know-how
(including trade secrets and other unpatented and/or unpatentable
proprietary or confidential information, systems or procedures),
trademarks, service marks, trade names or other intellectual property
(collectively, "Intellectual Property") necessary to carry on the business
now operated by them, and neither the Company nor any of its subsidiaries
has received any notice or is otherwise aware of any infringement of or
conflict with asserted rights of others with respect to any Intellectual
Property or of any facts or circumstances which would render any
Intellectual Property invalid or inadequate to protect the interest of the
Company or any of its subsidiaries therein, and which infringement or
conflict (if the subject of any unfavorable decision, ruling or finding) or
invalidity or inadequacy, singly or in the aggregate, would result in a
Material Adverse Effect.
(xvi) ABSENCE OF FURTHER REQUIREMENTS. No filing with, or
authorization, approval, consent, license, order, registration,
qualification or decree of, any court or governmental authority or agency
is necessary or required for the performance by the Company of its
obligations under this Agreement or the Articles Supplementary, in
connection with the offering, issuance or sale of the Securities hereunder
or the consummation of the other transactions contemplated by this
Agreement or the Articles Supplementary, except such as have been already
made or obtained under the 1933 Act or the 1933 Act Regulations or as may
be required under state securities laws and except for the filing of the
Articles Supplementary with SDAT.
(xvii) POSSESSION OF LICENSES AND PERMITS. The Company and its
subsidiaries possess such permits, licenses, approvals, consents and other
authorizations (collectively, "Governmental Licenses") issued by the
appropriate federal, state, local or foreign regulatory agencies or bodies
necessary to conduct the business now operated by them and the Company and
its subsidiaries are in compliance with the terms and conditions of all
such Governmental Licenses, except where the failure so to possess or
comply would not, singly or in the aggregate, have a Material Adverse
Effect; all of the Governmental Licenses are valid and in full force and
effect, except where the invalidity of such Governmental Licenses or the
failure of such Governmental Licenses to be in full force and effect would
not, singly or in the aggregate, have a Material Adverse Effect; and
neither the Company nor any of its subsidiaries has received any notice of
proceedings relating to the revocation or modification of any such
Governmental Licenses which,
8
singly or in the aggregate, if the subject of an unfavorable decision,
ruling or finding, would result in a Material Adverse Effect.
(xviii) INVESTMENT COMPANY ACT. The Company is not, and upon the
issuance and sale of the Securities as herein contemplated and the
application of the net proceeds therefrom as described in the Prospectus
will not be, an "investment company" as such term is defined in the
Investment Company Act of 1940, as amended (the "1940 Act").
(xix) PARTNERSHIP AGREEMENTS. Each of the partnership and, if
applicable, joint venture agreements to which the Company or any of its
subsidiaries is a party has been duly authorized, executed and delivered by
the Company or the relevant subsidiary, as the case may be, and constitutes
the valid and binding agreement of the Company or such subsidiary, as the
case may be, enforceable in accordance with its terms, except as the
enforcement thereof may be limited by (A) the effect of bankruptcy,
insolvency or other similar laws now or hereafter in effect relating to or
affecting creditors' rights generally or (B) the effect of general
principles of equity, and the execution, delivery and performance of such
agreements did not, at the time of execution and delivery, and does not
constitute a breach of or default under the charter or bylaws or
partnership agreement, as the case may be, of the Company or any of its
subsidiaries or any of the Agreements and Instruments or any law,
administrative regulation or administrative or court order or decree.
(xx) PROPERTIES. Except as otherwise disclosed in the Prospectus: (i)
the Company and its subsidiaries have good and marketable title (either in
fee simple or pursuant to a valid leasehold interest) to all properties and
assets described in the Prospectus as being owned or leased, as the case
may be, by them and to all properties reflected in the Company's most
recent consolidated financial statements included in the Prospectus, and
neither the Company nor any of its subsidiaries has received notice of any
claim that has been or may be asserted by anyone adverse to the rights of
the Company or any subsidiary with respect to any such properties or assets
(or any such lease) or affecting or questioning the rights of the Company
or any such subsidiary to the continued ownership, lease, possession or
occupancy of such property or assets, except for such claims that would
not, singly or in the aggregate, have a Material Adverse Effect; (ii) all
liens, charges, encumbrances, claims or restrictions on or affecting the
properties and assets of the Company or any of its subsidiaries which are
required to be disclosed in any Registration Statement or the Prospectus
are disclosed therein, and all such liens, charges, encumbrances, claims or
restrictions which are not disclosed in the Prospectus could not reasonably
be expected, singly or in the aggregate, to have a Material Adverse Effect;
(iii) no person or entity, including, without limitation, any tenant under
any of the leases pursuant to which the Company or any of its subsidiaries
leases (as lessor) any of its properties (whether directly or indirectly
through other partnerships, joint ventures or otherwise) has an option or
right of first refusal or any other right to purchase any of such
properties, except for such options, rights of first refusal or other
rights to purchase which, individually or in the aggregate, are not
material with respect to the Company and its subsidiaries considered as one
enterprise; (iv) to the Company's best knowledge, each of the properties of
the Company or any of its subsidiaries has access to public rights of way,
either directly or through insured easements,
9
except where the failure to have such access would not, singly or in the
aggregate, have a Material Adverse Effect; (v) to the Company's best
knowledge, each of the properties of the Company or any of its subsidiaries
is served by all public utilities necessary for the current operations on
such property in sufficient quantities for such operations, except where
the failure to have such public utilities would not, singly or in the
aggregate, have a Material Adverse Effect; (vi) to the best knowledge of
the Company, each of the properties of the Company or any of its
subsidiaries complies with all applicable codes and zoning and subdivision
laws and regulations, except for such failures to comply which would not,
either individually or in the aggregate, have a Material Adverse Effect;
(vii) all of the leases under which the Company or any of its subsidiaries
holds or uses any real property or improvements or any equipment relating
to such real property or improvements are in full force and effect, except
where the failure to be in full force and effect would not, singly or in
the aggregate, have a Material Adverse Effect, and neither the Company nor
any of its subsidiaries is in default in the payment of any amounts due
under any such leases or in any other default thereunder and the Company
knows of no event which, with the passage of time or the giving of notice
or both, would constitute a default under any such lease, except such
defaults that would not, individually or in the aggregate, have a Material
Adverse Effect; (viii) to the best knowledge of the Company, there is no
pending or threatened condemnation, zoning change, or other proceeding or
action that could in any manner affect the size of, use of, improvements
on, construction on or access to the properties of the Company or any of
its subsidiaries, except such proceedings or actions that, either singly or
in the aggregate, would not have a Material Adverse Effect; and (ix)
neither the Company nor any of its subsidiaries nor any lessee of any of
the real property or improvements of the Company or any of its subsidiaries
is in default in the payment of any amounts due or in any other default
under any of the leases pursuant to which the Company or any of its
subsidiaries leases (as lessor) any of its real property or improvements
(whether directly or indirectly through partnerships, joint ventures or
otherwise), and the Company knows of no event which, with the passage of
time or the giving of notice or both, would constitute such a default under
any of such leases, except such defaults as would not, individually or in
the aggregate, have a Material Adverse Effect.
(xxi) INSURANCE. With such exceptions as would not, individually or in
the aggregate, have a Material Adverse Effect, the Company and its
subsidiaries have title insurance on all real property and improvements
described in the Prospectus as being owned or leased under a ground lease,
as the case may be, by them and to all real property and improvements
reflected in the Company's most recent consolidated financial statements
included in the Prospectus in an amount at least equal to the original cost
of acquisition and the Company and its subsidiaries are entitled to all
benefits of the insured thereunder, and each such property is insured by
extended coverage hazard and casualty insurance in amounts and on such
terms as are customarily carried by lessors of properties similar to those
owned by the Company and its subsidiaries (in the markets in which the
Company's and subsidiaries' respective properties are located), and the
Company and its subsidiaries carry comprehensive general liability
insurance and such other insurance as is customarily carried by lessors of
properties similar to those owned by the Company and its subsidiaries in
amounts and on such terms as are customarily carried by lessors of
properties similar to those owned by the Company and its
10
subsidiaries (in the markets in which the Company's and its subsidiaries'
respective properties are located) and the Company or one of its
subsidiaries is named as an additional insured on all policies required
under the leases for such properties.
(xxii) ENVIRONMENTAL MATTERS. Except as otherwise disclosed in the
Prospectus: (i) all real property and improvements owned or leased by the
Company or any of its subsidiaries, including, without limitation, the
Environment (as defined below) associated with such real property and
improvements, is free of any Contaminant (as defined below), except such
Contaminants which, individually or in the aggregate, would not have a
Material Adverse Effect; (ii) neither the Company, nor any of its
subsidiaries nor any Partnership has caused or suffered to exist or occur
any Release (as defined below) of any Contaminant into the Environment or
any other condition that, individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect or could result in
any violation of any Environmental Laws (as defined below) or constitute a
health, safety or environmental hazard to any person or property except for
such violations or hazards that could not reasonably be expected to have a
Material Adverse Effect; (iii) neither the Company nor any of its
subsidiaries is aware of any notice from any governmental body claiming any
violation of any Environmental Laws or requiring or calling attention to
the need for any work, repairs, construction, alterations, removal or
remedial action or installation on or in connection with such real property
or improvements, whether in connection with the presence of
asbestos-containing materials in such properties or otherwise, except for
such violations, work, repairs, construction, alterations, removal or
remedial actions or installations as would not, individually or in the
aggregate, have a Material Adverse Effect; (iv) any such work, repairs,
construction, alterations, removal or remedial action or installation, if
required, would not result in the incurrence of liabilities, which,
individually or in the aggregate, would have a Material Adverse Effect;
(v) neither the Company nor any of its subsidiaries has caused or suffered
to exist or occur any condition on any of the properties or improvements
of the Company or any of its subsidiaries that could give rise to the
imposition of any Lien (as defined below) under any Environmental Laws,
except such Liens which, individually or in the aggregate, would not have
a Material Adverse Effect; and (vi) to the Company's best knowledge, no
real property or improvements owned or leased by the Company or any of
its subsidiaries is being used or has been used for manufacturing or for
any other operations that involve or involved the use, handling,
transportation, storage, treatment or disposal of any Contaminant, where
such operations require or required permits or are or were otherwise
regulated pursuant to the Environmental Laws and where such permits have
not been or were not obtained or such regulations are not being or were
not complied with, except in all instances where any failure to obtain a
permit or comply with any regulation could not reasonably be expected,
singly or in the aggregate, to have a Material Adverse Effect.
"Contaminant" means any pollutant, hazardous substance, toxic substance,
hazardous waste, special waste, petroleum or petroleum-derived substance or
waste, asbestos or asbestos-containing materials, PCBs, lead, pesticides or
radioactive materials or any constituent of any such substance or waste,
including any such substance identified or regulated under any
Environmental Law. "Environmental Laws" means the Comprehensive
Environmental Response, Compensation and Liability Act, 42 U.S.C. 9601 ET
SEQ., the Resource Conservation and Recovery Act, 42 U.S.C. 6901, ET SEQ.,
the Clean Air Act, 42 U.S.C. 7401, ET SEQ., the Clean Water Act, 33 U.S.C.
1251, ET SEQ., the
11
Toxic Substances Control Act, 15 U.S.C. 2601, ET SEQ.,
the Occupational Safety and Health Act, 29 U.S.C. 651, ET SEQ., and all
other federal, state and local laws, ordinances, regulations, rules,
orders, decisions, permits, and the like, which are directed at the
protection of human health or the Environment. "Lien" means, with respect
to any asset, any mortgage, deed of trust, lien, pledge, encumbrance,
charge or security interest in or on such asset. "Environment" means any
surface water, drinking water, ground water, land surface, subsurface
strata, river sediment, buildings, structures, and ambient, workplace and
indoor air. "Release" means any spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching, dumping,
emanating or disposing of any Contaminant into the Environment, including,
without limitation, the abandonment or discard of barrels, containers,
tanks or other receptacles containing or previously containing any
Contaminant or any release, emission or discharge as those terms are
defined or used in any Environmental Law.
(xxiii) QUALIFICATION AS A REAL ESTATE INVESTMENT TRUST. The
Company was and is organized in conformity with the requirements for
qualification and taxation as a "real estate investment trust" under the
Internal Revenue Code of 1986, as amended (the "Code"); the Company at
all times has met and continues to meet all the requirements of the Code
for qualification and taxation as a "real estate investment trust"; the
Company's method of operation will enable it to meet the requirements
for qualification and taxation as a "real estate investment trust" under
the Code; and the Company is qualified as a "real estate investment
trust" under the Code and will be so qualified for the taxable year in
which sales of the Securities occur.
(xxiv) REGISTRATION RIGHTS. There are no persons with
registration or other similar rights to have any securities registered
pursuant to any Registration Statement or otherwise registered by the
Company under the 1933 Act, or included in the offering contemplated
hereby.
(xxv) TAX TREATMENT OF CERTAIN ENTITIES. Each of R.I.C. Trade
Center, Ltd., Empire Business Center, Ltd., and Silverton Business
Center, Ltd., each a California limited partnership (the "Sub-Limited
Partnerships"), was, from the time of the Consolidation through and
including the time of its merger into the Company, treated as a
partnership (rather than as an association taxable as a corporation) for
federal income tax purposes. The Company's ownership interests in three
properties held through tenancies in common with unrelated third parties
(which are the only properties which, since the Consolidation, have been
held in tenancies in common with unrelated third parties) have not been,
since the Consolidation, and will not be treated as ownership interests
in associations taxable as corporations for federal income tax purposes.
Realty Income Texas Properties, L.P., a Delaware limited partnership, is
not and has never been treated as an association taxable as a
corporation for federal income tax purposes. Realty Income Texas
Properties, Inc., a Delaware corporation, is and has been at all times
treated as a "qualified REIT subsidiary" within the meaning of Section
856(i) of the Code and is not required to be qualified as a foreign
corporation in the State of Texas.
(xxvi) SECURITIES. The Securities have been duly authorized for
issuance and sale to the Underwriters pursuant to this Agreement and,
when issued and delivered by the
12
Company pursuant to this Agreement against payment of the consideration
therefor set forth in this Agreement, will be validly issued, fully paid
and non-assessable; the Securities will conform to the statements
relating thereto contained in the Prospectus and such statements will
conform to the rights set forth in the instruments defining the same;
and the issuance of the Securities is not subject to preemptive or other
similar rights arising by operation of law, under the charter or bylaws
of the Company, under any agreement or instrument to which the Company
or any of its subsidiaries is a party or otherwise.
(xxvii) RANKING OF SECURITIES. The Securities will rank, with
respect to the payment of dividends and the distribution of assets upon
liquidation, dissolution, and winding up of the Company, senior to the
Common Stock and the Class A Preferred Stock, and on a parity with the
Class B Preferred Stock.
(xxviii) ARTICLES SUPPLEMENTARY. The Articles Supplementary will
have been duly filed with SDAT prior to the Closing Time.
(b) OFFICER'S CERTIFICATES. Any certificate signed by any officer of the
Company and delivered to the Representatives or to counsel for the
Underwriters shall be deemed a representation and warranty by the Company to
each Underwriter as to the matters covered thereby.
SECTION 2. SALE AND DELIVERY TO UNDERWRITERS; CLOSING.
(a) INITIAL SECURITIES. On the basis of the representations and
warranties herein contained and subject to the terms and conditions herein
set forth, the Company agrees to sell to each Underwriter, severally and not
jointly, and each Underwriter, severally and not jointly, agrees to purchase
from the Company, at the price set forth in Schedule B, the aggregate number
of Initial Securities set forth in Schedule A opposite the name of such
Underwriter, plus any additional number of Initial Securities which such
Underwriter may become obligated to purchase pursuant to the provisions of
Section 10 hereof.
(b) OPTION SECURITIES. In addition, on the basis of the representations
and warranties herein contained and subject to the terms and conditions
herein set forth, the Company hereby grants an option to the Underwriters,
severally and not jointly, to purchase up to an additional 180,000 shares of
Class C Preferred Stock at the price set forth in Schedule B. The option
hereby granted may be exercised through and including the 30th day after the
date hereof and may be exercised in whole or in part from time to time only
for the purpose of covering over-allotments which may be made in connection
with the offering and distribution of the Initial Securities upon notice by
the Representatives to the Company setting forth the number of Option
Securities as to which the several Underwriters are then exercising the
option and the time and date of payment and delivery for such Option
Securities. Any such time and date of delivery (a "Date of Delivery") shall
be determined by the Representatives, but shall not be later than seven full
business days after the exercise of said option, nor in any event prior to
the Closing Time. If the option is exercised as to all or any portion of the
Option Securities, each of the Underwriters, acting severally and not
jointly, will purchase that proportion of the total number of Option
Securities then being purchased which the aggregate number of Initial
Securities set forth in Schedule A opposite the name of such Underwriter
bears to the aggregate number of all of the
13
Initial Securities, subject in each case to such adjustments as the
Representatives in their discretion shall make to eliminate any sales or
purchases of fractional shares.
(c) PAYMENT. Payment of the purchase price for, and delivery of
certificates for, the Initial Securities shall be made at the office of
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇-▇▇▇▇, or at such other place as shall be agreed upon by the
Representatives and the Company, at 6:00 A.M. (California time) on the third
(fourth, if the pricing occurs after 4:30 P.M. New York City time, on any
given day) business day after the date hereof (unless postponed in accordance
with the provisions of Section 10), or such other time not later than ten
business days after such date as shall be agreed upon by the Representatives
and the Company (such time and date of payment and delivery being herein
called "Closing Time").
In addition, in the event that any or all of the Option Securities
are purchased by the Underwriters, payment of the purchase price for, and
delivery of certificates for, such Option Securities shall be made at the
above-mentioned offices, or at such other place as shall be agreed upon by
the Representatives and the Company, on each Date of Delivery as specified in
the notice from the Representatives to the Company.
Payment shall be made to the Company by wire transfer of immediately
available funds to an account at a bank designated by the Company, against
delivery to the Representatives for the respective accounts of the
Underwriters of certificates for the Securities to be purchased by them. It
is understood that each Underwriter has authorized the Representatives, for
its account, to accept delivery of, receipt for, and make payment of the
purchase price for, the Initial Securities and the Option Securities, if any,
which it has agreed to purchase. ▇▇▇▇▇▇▇ ▇▇▇▇▇, individually and not as
representative of the Underwriters, may (but shall not be obligated to) make
payment of the purchase price for the Initial Securities and the Option
Securities, if any, to be purchased by any Underwriter whose payment therefor
has not been received by the Closing Time or the relevant Date of Delivery,
as the case may be, but such payment shall not relieve such Underwriter from
its obligations hereunder.
(d) DENOMINATIONS; REGISTRATION. Certificates for the Initial Securities
and the Option Securities, if any, shall be in such denominations and
registered in such names as the Representatives may request in writing at
least one full business day before the Closing Time or the relevant Date of
Delivery, as the case may be. The certificates for the Initial Securities and
the Option Securities, if any, will be made available for examination and
packaging by the Representatives in The City of New York not later than 2:00
P.M. (New York City time) on the business day prior to the Closing Time or
the relevant Date of Delivery, as the case may be.
SECTION 3. COVENANTS OF THE COMPANY. The Company covenants with each
Underwriter as follows:
(a) COMPLIANCE WITH SECURITIES REGULATIONS AND COMMISSION
REQUESTS. The Company, subject to Section 3(b), will notify the
Representatives immediately, and confirm the notice in writing, (i) when
any post-effective amendment to any Original Registration Statement or
any Rule 462(b) Registration Statement shall become effective or any
supplement to the Prospectus, any Term Sheet or any amended Prospectus
shall have been filed, (ii) of the receipt of any comments from the
Commission, (iii) of any
14
request by the Commission for any amendment to any Original Registration
Statement or any Rule 462(b) Registration Statement or any amendment or
supplement to the Prospectus or for additional information, and (iv) of
the issuance by the Commission of any stop order suspending the
effectiveness of any Original Registration Statement or any Rule 462(b)
Registration Statement or of any order preventing or suspending the use
of any preliminary prospectus, or of the suspension of the qualification
of the Securities for offering or sale in any jurisdiction, or of the
initiation or threatening of any proceedings for any of such purposes.
The Company will promptly effect the filings necessary pursuant to Rule
424(b) and, if applicable, will take such steps as it deems necessary to
ascertain promptly whether the form of prospectus supplement, prospectus
or term sheet transmitted for filing under Rule 424(b) was received for
filing by the Commission and, in the event that it was not, it will
promptly file such prospectus supplement, prospectus or term sheet, as
the case may be. The Company will make every reasonable effort to
prevent the issuance of any stop order and, if any stop order is issued,
to obtain the lifting thereof at the earliest possible moment.
(b) FILING OF AMENDMENTS. The Company will give the
Representatives notice of its intention to file or prepare any amendment
to any Registration Statement (including any filing under Rule 462(b)),
any Term Sheet or any amendment, supplement or revision to either the
prospectus included in any Registration Statement at the time it became
effective or to the Prospectus, whether pursuant to the 1933 Act, the
1934 Act or otherwise, will furnish the Representatives with copies of
any such documents a reasonable amount of time prior to such proposed
filing or use, as the case may be, and will not file or use any such
document to which the Representatives or counsel for the Underwriters
shall object.
(c) RULE 434. If the Company uses Rule 434, it will comply with the
requirements of such Rule.
(d) DELIVERY OF REGISTRATION STATEMENTS. The Company has furnished
or will deliver to the Representatives and counsel for the Underwriters,
without charge, as many signed and conformed copies of the Registration
Statements as originally filed and of each amendment thereto (including
exhibits filed therewith or incorporated by reference therein and
documents incorporated or deemed to be incorporated by reference
therein) as the Representatives and counsel for the Underwriters may
reasonably request. The copies of the Registration Statements and each
amendment thereto furnished to the Underwriters will be identical to the
electronically transmitted copies thereof filed with the Commission
pursuant to ▇▇▇▇▇, if any, except to the extent permitted by Regulation
S-T.
(e) DELIVERY OF PROSPECTUSES. The Company has delivered to each
Underwriter, without charge, as many copies of each preliminary
prospectus as such Underwriter reasonably requested, and the Company
hereby consents to the use of such copies for purposes permitted by the
1933 Act. The Company will furnish to each Underwriter, without charge,
during the period when the Prospectus is required to be delivered under
the 1933 Act or the 1934 Act, such number of copies of the Prospectus
(as amended or supplemented) as such Underwriter may reasonably request.
The Prospectus and any
15
amendments or supplements thereto furnished to the Underwriters will be
identical to the electronically transmitted copies thereof filed with
the Commission pursuant to ▇▇▇▇▇, if any, except to the extent permitted
by Regulation S-T.
(f) CONTINUED COMPLIANCE WITH SECURITIES LAWS. The Company will
comply with the 1933 Act and the 1933 Act Regulations and the 1934 Act
and the 1934 Act Regulations so as to permit the completion of the
distribution of the Securities as contemplated in this Agreement and in
the Prospectus. If at any time when a prospectus is required by the 1933
Act to be delivered in connection with sales of the Securities, any
event shall occur or condition shall exist as a result of which it is
necessary, in the opinion of counsel for the Underwriters or for the
Company, to amend any Registration Statement or amend or supplement the
Prospectus in order that the Prospectus will not include any untrue
statements of a material fact or omit to state a material fact necessary
in order to make the statements therein not misleading in the light of
the circumstances existing at the time it is delivered to a purchaser,
or if it shall be necessary, in the opinion of any such counsel, at any
such time to amend any Registration Statement or amend or supplement the
Prospectus in order to comply with the requirements of the 1933 Act or
the 1933 Act Regulations, the Company will promptly prepare and file
with the Commission, subject to Section 3(b), such amendment or
supplement as may be necessary to correct such statement or omission or
to make such Registration Statement or the Prospectus comply with such
requirements, and the Company will furnish to the Underwriters such
number of copies of such amendment or supplement as the Underwriters may
reasonably request.
(g) BLUE SKY QUALIFICATIONS. The Company will use its best
efforts, in cooperation with the Underwriters, to qualify the Securities
for offering and sale under the applicable securities laws of such
states and other jurisdictions of the United States as the
Representatives may designate and to maintain such qualifications in
effect for a period of not less than one year from the date hereof;
PROVIDED, HOWEVER, that the Company shall not be obligated to file any
general consent to service of process or to qualify as a foreign
corporation or as a dealer in securities in any jurisdiction in which it
is not so qualified or to subject itself to taxation in respect of doing
business in any jurisdiction in which it is not otherwise so subject. In
each jurisdiction in which the Securities have been so qualified, the
Company will file such statements and reports as may be required by the
laws of such jurisdiction to continue such qualification in effect for a
period of not less than one year from the date hereof.
(h) RULE 158. The Company will timely file such reports pursuant
to the 1934 Act as are necessary in order to make generally available to
its security holders as soon as practicable an earning statement for the
purposes of, and to provide the benefits contemplated by, the last
paragraph of Section 11(a) of the 1933 Act.
(i) USE OF PROCEEDS. The Company will use the net proceeds
received by it from the sale of the Securities in the manner specified
in the Prospectus under "Use of Proceeds."
16
(j) LISTING. The Company will use its best efforts to effect the
listing of the Securities in the New York Stock Exchange.
(k) REPORTING REQUIREMENTS. The Company, during the period when
the Prospectus is required to be delivered under the 1933 Act or the
1934 Act, will file all documents required to be filed with the
Commission pursuant to the 1934 Act within the time periods required by
the 1934 Act and the 1934 Act Regulations.
(l) RESTRICTION ON SALE OF SECURITIES. During the period from the
date of this Agreement through and including the Closing Time, the
Company will not, without the prior written consent of ▇▇▇▇▇▇▇ ▇▇▇▇▇,
directly or indirectly, (i) offer, pledge, sell, contract to sell, sell
any option or contract to purchase, purchase any option or contract to
sell, grant any option, right or warrant to purchase, or otherwise
transfer or dispose of, directly or indirectly, any Securities, any
other shares of the Company's preferred stock, par value $1.00 per share
("Preferred Stock"), any securities of the Company substantially similar
to the Securities or any depositary shares or depositary receipts
representing or evidencing any of the foregoing or any securities
convertible into, or exercisable or exchangeable for, any of the
foregoing, or file any registration statement under the 1933 Act with
respect to any of the foregoing, or (ii) enter into any swap or any
other agreement or transaction that transfers, in whole or in part,
directly or indirectly, the economic consequence of ownership of any
Securities, Preferred Stock, other securities, depositary shares or
depositary receipts referred to clause (i) above, whether any such swap,
agreement or transaction described in clause (i) or (ii) above is to be
settled by delivery of Securities, other securities, in cash or
otherwise, other than the Securities sold to the Underwriters pursuant
to this Agreement.
SECTION 4. PAYMENT OF EXPENSES
(a) EXPENSES. The Company will pay all expenses incident to the
performance of its obligations under this Agreement, including (i) the word
processing, printing and filing of the Registration Statements (including
financial statements and exhibits) as originally filed and of each amendment
thereto, (ii) the printing and delivery to the Underwriters of this Agreement
and such other documents as may be required in connection with the offering,
purchase, sale, issuance or delivery of the Securities, (iii) the
preparation, issuance and delivery of the certificates for the Securities to
the Underwriters, including any transfer taxes or other duties payable upon
the sale of the Securities to the Underwriters, (iv) the fees and
disbursements of the Company's counsel, accountants and other advisors, (v)
the qualification of the Securities under securities laws in accordance with
the provisions of Section 3(g) hereof, including filing fees and the
reasonable fees and disbursements of counsel for the Underwriters in
connection therewith and in connection with the preparation of the Blue Sky
Survey and any supplement thereto, (vi) the printing and delivery to the
Underwriters of copies of each preliminary prospectus, any Term Sheet and the
Prospectus and any amendments or supplements thereto, (vii) the preparation,
printing and delivery to the Underwriters of copies of the Blue Sky Survey
and any supplement thereto, (viii) the fees and expenses of any transfer
agent or registrar for the Securities, (ix) if required, the filing fees
incident to, and the reasonable fees and disbursements of counsel to the
Underwriters (such fees and disbursements not to exceed $10,000) in
connection with, the review, if any, by the National Association of
Securities Dealers, Inc. (the
17
"NASD") of the terms of the sale of the Securities, and (x) any fees payable
in connection with the rating of the Securities and the fees payable in
connection with the listing of the Securities on the New York Stock Exchange
(the "NYSE").
(b) TERMINATION OF AGREEMENT. If this Agreement is terminated by the
Representatives in accordance with the provisions of Section 5 or Section
9(a)(i) or 9(a)(v) hereof, the Company shall reimburse the Underwriters for
all of their out-of-pocket expenses, including the reasonable fees and
disbursements of counsel for the Underwriters.
SECTION 5. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The obligations of
the several Underwriters hereunder are subject to the accuracy of the
representations and warranties of the Company contained in Section 1 hereof
or in certificates of any officer of the Company or any subsidiary of the
Company delivered pursuant to the provisions hereof, to the performance by
the Company of its covenants and other obligations hereunder, and to the
following further conditions:
(a) EFFECTIVENESS OF REGISTRATION STATEMENTS. The Registration
Statements, including any Rule 462(b) Registration Statement, have
become effective not later than 5:30 P.M. on the date hereof and at
Closing Time (and, if any Option Securities are purchased, at the
relevant Date of Delivery) no stop order suspending the effectiveness of
any Original Registration Statement or any Rule 462(b) Registration
Statement shall have been issued under the 1933 Act or proceedings
therefor initiated or threatened by the Commission, and any request on
the part of the Commission for additional information shall have been
complied with to the reasonable satisfaction of counsel to the
Underwriters. If required by the 1933 Act or the 1933 Act Regulations,
the Prospectus shall have been filed with the Commission in accordance
with Rule 424(b) and, if the Company has elected to rely upon Rule 434,
a Term Sheet shall have been filed with the Commission in accordance
with Rule 434 and Rule 424(b).
(b) OPINIONS OF COUNSEL FOR COMPANY. At Closing Time, the
Representatives shall have received the favorable opinions, dated as of
Closing Time, of ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, counsel for the Company, ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇, Senior Vice President, General Counsel and Secretary of the
Company, and ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, LLP, special Maryland
counsel to the Company, each in form and substance satisfactory to
counsel for the Underwriters, to the effect set forth in Exhibits A, B
and C hereto, respectively, and to such further effect as counsel to the
Underwriters may reasonably request pursuant to Section 5(k).
(c) OPINION OF COUNSEL FOR UNDERWRITERS. At Closing Time, the
Representatives shall have received the favorable opinion, dated as of
Closing Time, of ▇▇▇▇▇ & Wood LLP, counsel for the Underwriters, with
respect to the matters set forth in clauses (vi) and (vii) and the
antepenultimate paragraph of Exhibit A and the first sentence of clause
(i) and clauses (iii)(A), (iv), (v) and (vii) (solely as to the
statements under the captions "Description of Class C Preferred Stock"
and "Description of Preferred Stock") of Exhibit C. In giving such
opinion such counsel may rely, as to all matters arising under or
governed by the laws of the State of Maryland, upon the opinion of
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, LLP delivered pursuant to Section
5(b) and, as to all matters
18
governed by the laws of other jurisdictions (other than the law of the
State of New York and the federal law of the United States) upon the
opinions of counsel satisfactory to the Representatives.
(d) OFFICERS' CERTIFICATE. At Closing Time, there shall not have
been, since the date hereof or since the respective dates as of which
information is given in the Prospectus, any material adverse change in
the condition, financial or otherwise, or in the earnings, business
affairs or business prospects of the Company and its subsidiaries
considered as one enterprise, whether or not arising in the ordinary
course of business, and the Representatives shall have received a
certificate of the Chairman or the President of the Company and of the
chief financial or chief accounting officer of the Company, dated as of
Closing Time, to the effect that (i) there has been no such material
adverse change, (ii) the representations and warranties in Section 1
hereof are true and correct with the same force and effect as though
expressly made at and as of Closing Time, (iii) the Company has complied
with all agreements and satisfied all conditions on its part to be
performed or satisfied at or prior to Closing Time, and (iv) no stop
order suspending the effectiveness of either Original Registration
Statement or any Rule 462(b) Registration Statement has been issued and
no proceedings for that purpose have been initiated or, to the best of
their knowledge, threatened by the Commission.
(e) ACCOUNTANT'S COMFORT LETTER. At the time of the execution of
this Agreement, the Representatives shall have received from KPMG LLP a
letter dated such date, in form and substance satisfactory to the
Representatives, together with signed or reproduced copies of such
letter for each of the Underwriters, containing statements and
information of the type ordinarily included in accountants' "comfort
letters" to underwriters with respect to the financial statements and
certain financial information contained in the Registration Statements
and the Prospectus.
(f) BRING-DOWN COMFORT LETTER. At Closing Time, the
Representatives shall have received from KPMG LLP a letter, dated as of
the Closing Time, to the effect that they reaffirm the statements made
in the letter furnished pursuant to subsection (e) of this Section,
except that the specified date referred to shall be a date not more than
three business days prior to the Closing Time.
(g) APPROVAL OF LISTING. At the Closing Time, the Securities shall
have been approved for listing on the NYSE, subject only to official
notice of issuance.
(h) RATING REQUIREMENT. At the date of this Agreement and at the
Closing Time, the Securities shall be rated at least "ba1" by ▇▇▇▇▇'▇
Investor's Service Inc. ("▇▇▇▇▇'▇"), "BB+" by Standard & Poor's
Corporation ("S&P") and "BBB-" by Duff & ▇▇▇▇▇▇ ("D&P"), and the Company
shall have delivered to the Representative a letter, dated the Closing
Time, from each such rating agency, or other evidence satisfactory to
the Representative, confirming that the Securities have such ratings.
(i) ARTICLES SUPPLEMENTARY. At the Closing Time, the
Representatives shall have received evidence, in form and substance
satisfactory to them, that the Articles Supplementary shall have been
duly filed with, and accepted for record by, SDAT.
19
(j) CONDITIONS TO PURCHASE OF OPTION SECURITIES. In the
event that the Underwriters exercise their option provided in Section
2(b) hereof to purchase all or any portion of the Option Securities, the
representations and warranties of the Company contained herein and the
statements in any certificates furnished by the Company hereunder shall
be true and correct as of each Date of Delivery and, at the relevant
Date of Delivery, the Representatives shall have received:
(i) OFFICERS' CERTIFICATE. A certificate, dated such Date
of Delivery, of the Chairman or President of the Company and of the
chief financial or chief accounting officer of the Company
confirming that the certificate delivered at the Closing Time
pursuant to Section 5(d) hereof remains true and correct as of such
Date of Delivery.
(ii) OPINIONS OF COUNSEL FOR COMPANY. The favorable opinions
of ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, counsel for the Company, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇,
Senior Vice President, General Counsel and Secretary of the
Company, and ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, LLP, special
Maryland counsel to the Company, each in form and substance
satisfactory to counsel for the Underwriters, dated such Date of
Delivery, relating to the Option Securities to be purchased on such
Date of Delivery and otherwise to the same effect as the respective
opinions required by Section 5(b) hereof.
(iii) OPINION OF COUNSEL FOR UNDERWRITERS. The favorable
opinion of ▇▇▇▇▇ & Wood LLP, counsel for the Underwriters, dated
such Date of Delivery, relating to the Option Securities to be
purchased on such Date of Delivery and otherwise to the same effect
as the opinion required by Section 5(c) hereof.
(iv) BRING-DOWN COMFORT LETTER. A letter from KPMG LLP, in
form and substance satisfactory to the Representatives and dated
such Date of Delivery, substantially in the same form and substance
as the letter furnished to the Representatives pursuant to Section
5(f) hereof, except that the specified date referred to shall be a
date not more than three business days prior to such Date of
Delivery.
(v) APPROVAL OF LISTING. At such Date of Delivery, the
Option Securities shall have been approved for listing on the NYSE.
(vi) RATING REQUIREMENT. At such Date of Delivery, the
Securities shall have been rated at least "ba1" by ▇▇▇▇▇'▇, at
least "BB+" by S&P and at least "BBB-" by D&P.
(k) ADDITIONAL DOCUMENTS. At the Closing Time and at each Date
of Delivery, counsel for the Underwriters shall have been furnished with
such documents and opinions as they may reasonably require for the
purpose of enabling them to pass upon the issuance and sale of the
Securities as herein contemplated, or in order to evidence the accuracy
of any of the representations or warranties, or the fulfillment of any
of the conditions, herein contained; and all proceedings taken by the
Company in connection
20
with the issuance and sale of the Securities as herein contemplated
shall be satisfactory in form and substance to the Representatives and
counsel for the Underwriters.
(l) TERMINATION OF AGREEMENT. If any condition specified in this
Section shall not have been fulfilled when and as required to be
fulfilled, this Agreement, or, in the case of any condition to the
purchase of Option Securities on a Date of Delivery which occurs after
the Closing Time, the obligations of the several Underwriters to
purchase the relevant Option Securities, may be terminated by the
Representatives by notice to the Company at any time at or prior to
Closing Time or such Date of Delivery, as the case may be, and such
termination shall be without liability of any party to any other party
except as provided in Section 4 and except that Sections 6 and 7 shall
survive any such termination and remain in full force and effect.
SECTION 6. INDEMNIFICATION.
(a) INDEMNIFICATION OF UNDERWRITERS. The Company agrees to indemnify and
hold harmless each Underwriter and each person, if any, who controls any
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act as follows:
(i) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of any untrue statement or alleged
untrue statement of a material fact contained in any Registration
Statement (or any amendment thereto), including the Rule 434
Information, if applicable, or the omission or alleged omission
therefrom of a material fact required to be stated therein or necessary
to make the statements therein not misleading or arising out of any
untrue statement or alleged untrue statement of a material fact included
in any preliminary prospectus or the Prospectus (or any amendment or
supplement thereto), or the omission or alleged omission therefrom of a
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the aggregate amount
paid in settlement of any litigation, or any investigation or proceeding
by any governmental agency or body, commenced or threatened, or of any
claim whatsoever based upon any such untrue statement or omission, or
any such alleged untrue statement or omission, provided that (subject to
Section 6(d) below) any such settlement is effected with the written
consent of the Company; and
(iii) against any and all expense whatsoever, as incurred
(including the fees and disbursements of counsel chosen by ▇▇▇▇▇▇▇
▇▇▇▇▇), reasonably incurred in investigating, preparing or defending
against any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission, to the extent that any such
expense is not paid under (i) or (ii) above;
PROVIDED, HOWEVER, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue
21
statement or omission made in reliance upon and in conformity with written
information furnished to the Company by any Underwriter through ▇▇▇▇▇▇▇ ▇▇▇▇▇
expressly for use in the Registration Statements (or any amendment thereto)
or any preliminary prospectus or the Prospectus (or any amendment or
supplement thereto); and PROVIDED FURTHER that this indemnity agreement with
respect to any preliminary prospectus shall not inure to the benefit of any
Underwriter, or any person controlling such Underwriter, if a copy of the
Prospectus (as then amended or supplemented if the Company shall have
furnished any such amendments or supplements thereto, but excluding documents
incorporated or deemed to be incorporated by reference therein) was not sent
or given by or on behalf of such Underwriter to such person, if such is
required by law, at or prior to the written confirmation of the sale of such
Securities to such person and if the Prospectus (as so amended or
supplemented, if applicable) would have corrected the defect giving rise to
such loss, liability, claim, damage or expense, except that this proviso
shall not be applicable if such defect shall have been corrected in a
document which is incorporated or deemed to be incorporated by reference in
the Prospectus.
(b) INDEMNIFICATION OF COMPANY, DIRECTORS AND OFFICERS. Each Underwriter
severally agrees to indemnify and hold harmless the Company, its directors,
each of its officers who signed the Registration Statements, and each person,
if any, who controls the Company within the meaning of Section 15 of the 1933
Act or Section 20 of the 1934 Act against any and all loss, liability, claim,
damage and expense described in the indemnity contained in subsection (a) of
this Section, as incurred, but only with respect to untrue statements or
omissions, or alleged untrue statements or omissions, made in any
Registration Statement (or any amendment thereto), including the Rule 434
Information, if applicable, or any preliminary prospectus or the Prospectus
(or any amendment or supplement thereto) in reliance upon and in conformity
with written information furnished to the Company by such Underwriter through
▇▇▇▇▇▇▇ ▇▇▇▇▇ expressly for use in the Registration Statements (or any
amendment thereto) or such preliminary prospectus or the Prospectus (or any
amendment or supplement thereto).
(c) ACTIONS AGAINST PARTIES; NOTIFICATION. Each indemnified party shall
give notice as promptly as reasonably practicable to each indemnifying party
of any action commenced against it in respect of which indemnity may be
sought hereunder, but failure to so notify an indemnifying party shall not
relieve such indemnifying party from any liability hereunder to the extent it
is not materially prejudiced as a result thereof and in any event shall not
relieve it from any liability which it may have otherwise than on account of
this indemnity agreement. In the case of parties indemnified pursuant to
Section 6(a) above, counsel to the indemnified parties shall be selected by
▇▇▇▇▇▇▇ ▇▇▇▇▇, and, in the case of parties indemnified pursuant to Section
6(b) above, counsel to the indemnified parties shall be selected by the
Company. An indemnifying party may participate at its own expense in the
defense of any such action; PROVIDED, HOWEVER, that counsel to the
indemnifying party shall not (except with the consent of the indemnified
party) also be counsel to the indemnified party. In no event shall the
indemnifying parties be liable for fees and expenses of more than one counsel
(in addition to any local counsel) separate from their own counsel for all
indemnified parties in connection with any one action or separate but similar
or related actions in the same jurisdiction arising out of the same general
allegations or circumstances. No indemnifying party shall, without the prior
written consent of the indemnified parties, settle or compromise or consent
to the entry of any judgment with respect to any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever in respect of which indemnification or
contribution could
22
be sought under this Section 6 or Section 7 hereof (whether or not the
indemnified parties are actual or potential parties thereto), unless such
settlement, compromise or consent (i) includes an unconditional release of
each indemnified party from all liability arising out of such litigation,
investigation, proceeding or claim and (ii) does not include a statement as
to or an admission of fault, culpability or a failure to act by or on behalf
of any indemnified party.
(d) SETTLEMENT WITHOUT CONSENT IF FAILURE TO REIMBURSE. If at any time
an indemnified party shall have requested an indemnifying party to reimburse
the indemnified party for fees and expenses of counsel, such indemnifying
party agrees that it shall be liable for any settlement of the nature
contemplated by Section 6(a)(ii) effected without its written consent if (i)
such settlement is entered into more than 60 days after receipt by such
indemnifying party of the aforesaid request, (ii) such indemnifying party
shall have received notice of the terms of such settlement at least 45 days
prior to such settlement being entered into and (iii) such indemnifying party
shall not have reimbursed such indemnified party in accordance with such
request prior to the date of such settlement.
SECTION 7. CONTRIBUTION. If the indemnification provided for in Section
6 hereof is for any reason unavailable to or insufficient to hold harmless an
indemnified party in respect of any losses, liabilities, claims, damages or
expenses referred to therein, then each indemnifying party shall contribute
to the aggregate amount of such losses, liabilities, claims, damages and
expenses incurred by such indemnified party, as incurred, (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company on the one hand and the Underwriters on the other hand from the
offering of the Securities pursuant to this Agreement or (ii) if the
allocation provided by clause (i) is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Company on
the one hand and of the Underwriters on the other hand in connection with the
statements or omissions which resulted in such losses, liabilities, claims,
damages or expenses, as well as any other relevant equitable considerations.
The relative benefits received by the Company on the one hand and the
Underwriters on the other hand in connection with the offering of the
Securities pursuant to this Agreement shall be deemed to be in the same
respective proportions as the total net proceeds from the offering of the
Securities pursuant to this Agreement (before deducting expenses) received by
the Company and the total underwriting discount received by the Underwriters,
in each case as set forth on the cover of the Prospectus (or, if Rule 434 is
used, the corresponding location on the Term Sheet) bear to the aggregate
initial public offering price of the Securities as set forth on such cover
(or corresponding location on the Term Sheet, as the case may be).
The relative fault of the Company on the one hand and the Underwriters
on the other hand shall be determined by reference to, among other things,
whether any such untrue or alleged untrue statement of a material fact or
omission or alleged omission to state a material fact relates to information
supplied by the Company or by the Underwriters and the parties' relative
intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.
The Company and the Underwriters agree that it would not be just and
equitable if contribution pursuant to this Section 7 were determined by pro
rata allocation (even if the
23
Underwriters were treated as one entity for such purpose) or by any other
method of allocation which does not take account of the equitable
considerations referred to above in this Section 7. The aggregate amount of
losses, liabilities, claims, damages and expenses incurred by an indemnified
party and referred to above in this Section 7 shall be deemed to include any
legal or other expenses reasonably incurred by such indemnified party in
investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue or alleged
untrue statement or omission or alleged omission.
Notwithstanding the provisions of this Section 7, no Underwriter shall
be required to contribute any amount in excess of the amount by which the
total price at which the Securities underwritten by it and distributed to the
public were offered to the public exceeds the amount of any damages which
such Underwriter has otherwise been required to pay by reason of any such
untrue or alleged untrue statement or omission or alleged omission.
No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the ▇▇▇▇ ▇▇▇) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 7, each person, if any, who controls an
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act shall have the same rights to contribution as such Underwriter,
and each director of the Company, each officer of the Company who signed the
Registration Statements, and each person, if any, who controls the Company
within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934
Act shall have the same rights to contribution as the Company. The
Underwriters' respective obligations to contribute pursuant to this Section 7
are several in proportion to the number of Initial Securities set forth
opposite their respective names in Schedule A hereto and not joint.
SECTION 8. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE
DELIVERY. All representations, warranties and agreements contained in this
Agreement or in certificates of officers of the Company submitted pursuant
hereto shall remain operative and in full force and effect, regardless of any
investigation made by or on behalf of any Underwriter or controlling person,
or by or on behalf of the Company, and shall survive delivery of the
Securities to the Underwriters.
SECTION 9. TERMINATION OF AGREEMENT.
(a) TERMINATION; GENERAL. The Representatives may terminate this
Agreement, by notice to the Company, at any time at or prior to Closing Time
(and, if any Option Securities are purchased, at any time at or prior to the
relevant Date of Delivery, with respect to the obligation of the Underwriters
to purchase such Option Securities) (i) if there has been, since the time of
execution of this Agreement or since the respective dates as of which
information is given in the Prospectus, any material adverse change in the
condition, financial or otherwise, or in the earnings, business affairs or
business prospects of the Company and its subsidiaries considered as one
enterprise, whether or not arising in the ordinary course of business, or
(ii) if there has occurred any material adverse change in the financial
markets in the United States or the international financial markets, any
outbreak of hostilities or escalation thereof or other calamity
24
or crisis or any change or development involving a prospective change in
national or international political, financial or economic conditions, in
each case the effect of which is such as to make it, in the judgment of the
Representatives, impracticable to market the Securities or to enforce
contracts for the sale of the Securities, or (iii) if trading in any
securities of the Company has been suspended or limited by the Commission,
the New York Stock Exchange or the Nasdaq National Market, or if trading
generally on the American Stock Exchange or the New York Stock Exchange or in
the Nasdaq National Market has been suspended or limited, or minimum or
maximum prices for trading have been fixed, or maximum ranges for prices have
been required, by any of said exchanges or by such system or by order of the
Commission, the National Association of Securities Dealers, Inc. or any other
governmental authority, or (iv) if a banking moratorium has been declared by
either Federal, California or New York authorities, or (v) if since the date
of this Agreement, there has occurred a downgrading in the rating assigned to
the Securities or any of the Company's debt securities by any nationally
recognized securities rating agency, or any such securities rating agency has
publicly announced that it has under surveillance or review, with possible
negative implications or without indicating the direction of the possible
change, its rating of the Securities or any of the Company's debt securities.
(b) LIABILITIES. If this Agreement is terminated pursuant to this
Section, such termination shall be without liability of any party to any
other party except as provided in Section 4 hereof, and provided further that
Sections 6 and 7 shall survive such termination and remain in full force and
effect.
SECTION 10. DEFAULT BY ONE OR MORE OF THE UNDERWRITERS. If one or more
of the Underwriters shall fail at the Closing Time or a Date of Delivery to
purchase the Securities which it or they are obligated to purchase under this
Agreement on such date (the "Defaulted Securities"), the Representatives
shall have the right, within 24 hours thereafter, to make arrangements for
one or more of the non-defaulting Underwriters, or any other underwriters, to
purchase all, but not less than all, of the Defaulted Securities in such
amounts as may be agreed upon and upon the terms herein set forth; if,
however, the Representatives shall not have completed such arrangements
within such 24-hour period, then:
(a) if the number of Defaulted Securities does not exceed 10% of
the total number of Securities to be purchased on such date, each of the
non-defaulting Underwriters shall be obligated, severally and not
jointly, to purchase the full amount thereof in the proportions that
their respective underwriting obligations hereunder bear to the
underwriting obligations of all non-defaulting Underwriters, or
(b) if the number of Defaulted Securities exceeds 10% of the total
number of Securities to be purchased on such date, this Agreement or,
with respect to any Date of Delivery which occurs after the Closing
Time, the obligations of the Underwriters to purchase and of the and of
the Company to sell the Option Securities to be purchased and sold on
such Date of Delivery shall terminate without liability on the part of
any non-defaulting Underwriter.
No action taken pursuant to this Section shall relieve any defaulting
Underwriter from liability in respect of its default.
25
In the event of any such default which does not result in a termination
of this Agreement or, in the case of a Date of Delivery which is after the
Closing Time, which does not result in a termination of the obligations of
the Underwriters to purchase and the Company to sell the relevant Option
Securities, as the case may be, either the Representatives or the Company
shall have the right to postpone the Closing Time or the relevant Date of
Delivery, as the case may be, for a period not exceeding seven days in order
to effect any required changes in the Registration Statements or Prospectus
or in any other documents or arrangements. As used herein, the term
"Underwriter" includes any person substituted for an Underwriter under this
Section 10.
SECTION 11. NOTICES. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the
Underwriters shall be directed to the Representatives at ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention of ▇▇▇▇ ▇.
▇▇▇▇▇▇; and notices to the Company shall be directed to it at Realty Income
Corporation, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇,
attention of Legal Department.
SECTION 12. PARTIES. This Agreement shall inure to the benefit of and be
binding upon the Underwriters and the Company and their respective
successors. Nothing expressed or mentioned in this Agreement is intended or
shall be construed to give any person, firm or corporation, other than the
Underwriters and the Company and their respective successors and the
controlling persons and officers and directors referred to in Sections 6 and
7 and their heirs and legal representatives, any legal or equitable right,
remedy or claim under or in respect of this Agreement or any provision herein
contained. This Agreement and all conditions and provisions hereof are
intended to be for the sole and exclusive benefit of the Underwriters and the
Company and their respective successors, and said controlling persons and
officers and directors and their heirs and legal representatives, and for the
benefit of no other person, firm or corporation. No purchaser of Securities
from any Underwriter shall be deemed to be a successor by reason merely of
such purchase.
SECTION 13. GOVERNING LAW AND TIME. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE
TO AGREEMENTS MADE AND TO BE PERFORMED IN SAID STATE. EXCEPT AS OTHERWISE SET
FORTH HEREIN, SPECIFIED TIMES OF DAY REFER TO NEW YORK CITY TIME.
SECTION 14. EFFECT OF HEADINGS AND TABLE OF CONTENTS. The Article and
Section headings herein and the Table of Contents are for convenience only
and shall not affect the construction hereof.
26
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company a counterpart hereof,
whereupon this instrument, along with all counterparts, will become a binding
agreement between the Underwriters and the Company in accordance with its
terms.
Very truly yours,
REALTY INCOME CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Senior Vice President, General Counsel
and Secretary
CONFIRMED AND ACCEPTED,
as of the date first above written:
▇▇▇▇▇▇▇ LYNCH, PIERCE, ▇▇▇▇▇▇ & ▇▇▇▇▇
INCORPORATED
▇.▇. ▇▇▇▇▇▇▇ & SONS, INC.
EVEREN SECURITIES, INC.
FIRST UNION CAPITAL MARKETS CORP.
PAINEWEBBER INCORPORATED
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ INC.
SUTRO & CO. INCORPORATED
By: ▇▇▇▇▇▇▇ LYNCH, PIERCE, ▇▇▇▇▇▇ & ▇▇▇▇▇
INCORPORATED
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------
Authorized Signatory
For themselves and as Representatives of the
other Underwriters named in Schedule A hereto.
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SCHEDULE A
NUMBER OF
INITIAL
NAME OF UNDERWRITER SECURITIES
-------------------------- --------------
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated............................. 180,000
▇.▇. ▇▇▇▇▇▇▇ & Sons, Inc............................. 170,000
Everen Securities, Inc............................... 170,000
First Union Capital Markets Corp..................... 170,000
PaineWebber Incorporated............................. 170,000
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Inc. 170,000
Sutro & Co. Incorporated............................. 170,000
==============
Total:...................................... 1,200,000
==============
Sch A-1
SCHEDULE B
PRICE SCHEDULE
1. The initial public offering price per share for the Securities
shall be $25.00 (the "Public Offering Price"), plus accrued dividends from July
30, 1999.
2. The purchase price per share for the Securities to be paid by
the several Underwriters shall be $24.2125 (being an amount equal to the Public
Offering Price set forth above less $0.7875 per share), plus, solely in the case
of any Option Securities which are purchased on a Date of Delivery after the
Closing Time, an amount equal to accrued and unpaid dividends on such Option
Securities to but excluding such Date of Delivery unless such Date of Delivery
is after a record date for the Class C Preferred Stock and on or prior to the
corresponding dividend payment date, in which case no additional amount will be
payable by the Underwriters in respect of accrued and unpaid dividends on such
Option Securities.
Sch B-1
Exhibit A
FORM OF OPINION OF ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
TO BE DELIVERED PURSUANT TO SECTION 5(b)
(i) Based solely on certificates from public officials, the Company is duly
qualified as a foreign corporation to transact business and is in good standing
in the State of California.
(ii) Realty Income Texas Properties, Inc. has been duly incorporated
under the laws of the State of Delaware and is validly existing as a
corporation and is, based solely on certificates from public officials, in
good standing under the laws of the State of Delaware and, Realty Income
Texas Properties, Inc. has power and authority as a corporation to own, lease
and operate its properties and to conduct its business as described in the
Registration Statements; and all of the issued and outstanding shares of
capital stock of Realty Income Texas Properties, Inc. have been duly
authorized and validly issued, are fully paid and non-assessable and, to the
best of our knowledge and information, are owned by the Company, directly or
through subsidiaries, free and clear of any security interest, mortgage,
pledge, lien, encumbrance, claim or equity.
(iii) Realty Income Texas Properties, L.P. has been duly formed and is
validly existing as a limited partnership under the laws of the State of
Delaware and is, based solely on certificates from public officials, in good
standing under the laws of the States of Delaware and Texas; Realty Income
Texas Properties, L.P. has power and authority as a limited partnership to
own, lease and operate its properties and to conduct its business as
described in the Registration Statements; and all of the issued and
outstanding partnership interests of Realty Income Texas Properties, L.P.
have been validly issued, are fully paid and non-assessable (except to the
extent that the general partners of Realty Income Texas Properties, L.P. may
be liable for the obligations of such partnership) and, to the best of our
knowledge and information, are owned by the Company, directly or through
subsidiaries, free and clear of any security interest, mortgage, pledge,
lien, encumbrance, claim or equity.
(iv) None of the outstanding shares of Common Stock of the Company was
issued, to the best of our knowledge and information, in violation of
preemptive rights or other similar rights arising under any agreement or
instrument to which the Company or any of its subsidiaries is a party.
(v) The issuance of the Securities is not subject, to the best of our
knowledge and information, to preemptive or other similar rights arising
under any agreement or instrument to which the Company or any of its
subsidiaries is a party.
(vi) Each of the Original Registration Statements and any Rule 462(b)
Registration Statement has been declared effective under the 1933 Act; to the
best of our knowledge and information, the Prospectus has been filed pursuant
to Rule 424(b) under the 1933 Act in the manner and within the time period
required by Rule 424(b); and, to the best of our knowledge and information,
no stop order suspending the effectiveness of either of the Original
Registration Statements or any Rule 462(b) Registration Statement has been
issued under the 1933 Act or proceedings therefor initiated or threatened by
the Commission.
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(vii) Each of the Original Registration Statements, any Rule 462(b)
Registration Statement and the Prospectus (in each case excluding the
documents incorporated or deemed to be incorporated by reference therein and
the financial statements, supporting schedules and other financial data
included or incorporated by reference therein and excluding any Statement of
Eligibility on Form T-1 (a "Form T-1"), as to which we express no opinion),
as of their respective effective or issue dates, complied as to form in all
material respects with the applicable requirements of the 1933 Act and the
1933 Act Regulations.
(viii) The documents incorporated or deemed to be incorporated by
reference in the Prospectus (other than the financial statements, supporting
schedules and other financial data therein, as to which we express no
opinion), when they were filed with the Commission, complied as to form in
all material respects with the applicable requirements of the 1934 Act and
the 1934 Act Regulations.
(ix) The information in the Prospectus under "Risk Factors--Adverse
Impact of Failure to Qualify as a REIT," "Risk Factors--Effect of
Distribution Requirements," "Material Federal Income Tax Considerations to
Holders of Class C Preferred Stock" and "Material Federal Income Tax
Considerations to Realty Income Corporation" and the information in the
Company's Annual Report on Form 10-K for the fiscal year ended December 31,
1998 under "Business--Other Items--Taxation of the Company" and
"Business--Other Items--Effect of Distribution Requirements," in each case to
the extent that it constitutes matters of law, summaries of legal matters or
legal conclusions, has been reviewed by us and is correct in all material
respects.
(x) No authorization, approval, consent or order of any federal or
California state governmental authority or agency (other than under the 1933
Act, the 1933 Act Regulations, the 1939 Act and the 1939 Act Regulations,
which have been obtained, or as may be required under the securities or blue
sky laws of the various states, as to which we express no opinion) is
required in connection with the due authorization, execution or delivery of
the Purchase Agreement or for the offering, issuance or sale of the
Securities;
(xi) The execution, delivery and performance on or prior to the date
hereof of the Purchase Agreement and the Articles Supplementary by the
Company (including the issuance and sale of the Securities to the
Underwriters and the use of the proceeds from the sale of the Securities as
described in the Prospectus under the caption "Use of Proceeds") will not,
whether with or without the giving of notice or lapse of time or both,
constitute a breach or violation of, or default or Repayment Event under, or
result in the creation or imposition of any lien, charge or encumbrance upon
any property or assets of the Company or any of its subsidiaries pursuant to,
the Acquisition Credit Agreement, the indenture dated as of May 6, 1997
between the Company and the Bank of New York ("BONY"), as trustee (the "1997
Indenture"), the indenture dated October 28, 1998 between the Company and
BONY, as trustee (the "1998 Indenture") or any securities outstanding under
the 1997 Indenture or the 1998 Indenture, nor to the best of our knowledge
and information, any applicable provision of any federal or State of
California law, statute, administrative regulation or administrative or court
decree applicable to the Company.
(xii) The Company is not an "investment company" as such term is defined
in the 1940 Act.
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(xiii) Commencing with the Company's taxable year ended December 31,
1994, the Company has been organized in conformity with the requirements for
qualification and taxation as a real estate investment trust under the Code
and its proposed method of operation will enable the Company to meet the
requirements for qualification and taxation as a real estate investment trust
under the Code.
(xiv) Realty Income Texas Properties, L.P., a Delaware limited
partnership, is not and has never been treated as an association taxable as a
corporation for federal income tax purposes. Realty Income Texas Properties,
Inc., a Delaware corporation, is and has, at all times during its existence,
been treated as a "qualified REIT subsidiary" within the meaning of Section
856(i) of the Code.
Although we are not passing upon, and do not assume any responsibility
for, the accuracy, completeness or fairness of the statements contained in the
Registration Statements or the Prospectus and have not made any independent
judgment, check or verification thereof (except with respect to the opinion set
forth in paragraphs (ix), (xiii) and (xiv) hereof), we have, however,
participated in conferences with certain officers and other representatives of
the Company, representatives of KPMG LLP and your representatives at which the
Original Registration Statements, any Rule 462(b) Registration Statement and the
Prospectus (including, in each case, the documents incorporated or deemed to be
incorporated by reference therein) and any amendments or supplements to any of
the foregoing and related matters were discussed, and in the course of such
conferences (relying in connection with questions of materiality on
representations of factual matters of officers and other representatives of the
Company), nothing has come to our attention which has led us to believe that
either Original Registration Statement, any Rule 462(b) Registration Statement
or any amendment thereto (except for the financial statements, supporting
schedules and other financial data included therein and any Form T-1, as to
which we express no belief), as of the time such Original Registration
Statement, any such Rule 462(b) Registration Statement or any such
post-effective or other amendment thereto became effective, 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 the Prospectus or any amendment or supplement thereto (except for the
financial statements, supporting schedules and other financial data included
therein, as to which we express no belief), as of July 27, 1999 or as of the
date of this opinion, contained or contains an untrue statement of a material
fact or omitted or omits 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.
In rendering such opinion, such counsel may rely insofar as such
opinion involves factual matters, to the extent they deem proper, on
certificates of responsible officers of the Company and public officials. Such
opinion shall not state that it is to be governed or qualified by, or that it is
otherwise subject to, any treatise, written policy or other document relating to
legal opinions, including, without limitation, the Legal Opinion Accord of the
ABA Section of Business Law (1991).
The matters set forth in (ix) (with respect to the information under
the captions "Risk Factors--Adverse Impact of Failure to Qualify as a REIT,"
"Risk Factors--Effect of Distribution Requirements," "Material Federal Income
Tax Considerations to Holders of Class C
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Preferred Stock" and "Material Federal Income Tax Considerations to Realty
Income Corporation"), (xiii) and (xiv) above may be covered in one or more
separate legal opinions, which may be subject to such assumptions,
limitations and qualifications as shall be satisfactory to counsel for the
Underwriters. In particular, the opinions set forth in paragraphs (viii)
(with respect to the information under the captions referred to above), (xii)
and (xiii) above (the "Tax Opinions") may be conditioned upon certain
representations made by the Company as to factual matters through a
certificate of an officer of the Company (the "Officer's Certificate"). In
addition, the Tax Opinions may be based upon the factual representations of
the Company concerning its business and properties as set forth in the
Original Registration Statements and Prospectus. The Tax Opinions may state
that they relate only to the federal income tax laws of the United States and
such counsel need not express any opinion with respect to the applicability
thereto, or the effect thereon, of other federal laws, the laws of any state
or other jurisdiction or as to any matters of municipal law or the laws of
any other local agencies within any state. The Tax Opinions may state that
they are based on various statutory provisions, regulations promulgated
thereunder and interpretations thereof by the Internal Revenue Service and
the courts having jurisdiction over such matters, all of which are subject to
change either prospectively or retroactively, that any such change may affect
the conclusions stated therein, and that any variation or difference in the
facts from those set forth in the Original Registration Statements, the
Prospectus or the Officer's Certificate may affect the conclusions stated
therein. Moreover, the Tax Opinions may state that the Company's
qualification and taxation as a real estate investment trust depends upon the
Company's ability to meet (through actual annual operating results, asset
diversification, distribution levels and diversity of stock ownership) the
various qualification tests imposed under the Code, the results of which have
not been and will not be reviewed by such counsel, and, accordingly, no
assurance can be given that the actual results of the Company's operation for
any one taxable year will satisfy such requirements.
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Exhibit B
FORM OF OPINION OF ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
TO BE DELIVERED PURSUANT TO SECTION 5(b)
(i) The Company is duly qualified as a foreign corporation to transact
business and is in good standing in each jurisdiction in which such
qualification is required, whether by reason of the ownership or leasing of
property or the conduct of business, except where the failure so to qualify
or to be in good standing would not have a Material Adverse Effect.
(ii) Realty Income Texas Properties, L.P. is not required to qualify as
a foreign partnership to transact business in any jurisdiction other than the
State of Texas and is not required to be in good standing in any jurisdiction
other than the States of Delaware and Texas; and Realty Income Texas
Properties, Inc. is not required to qualify as a foreign corporation to
transact business in any jurisdiction and is not required to be in good
standing in any jurisdiction other than the State of Delaware.
(iii) The information in the Prospectus under "Risk
Factors--Environmental Liabilities," "Risk Factors--Uninsured Loss" and "Risk
Factors--Compliance With Americans With Disabilities Act and Fire and Safety
Regulations" and in the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1998 under "Business--Other Items--Environmental
Liabilities," to the extent that it constitutes matters of law, summaries of
legal matters, instruments or agreements or legal proceedings, or legal
conclusions, has been reviewed by me and is correct in all material respects.
(iv) To the best of my knowledge and information, there is not pending
or threatened any action, suit, proceeding, inquiry or investigation to which
the Company or any subsidiary is a party, or to which the property of the
Company or any subsidiary is subject, before or brought by any court or
governmental agency or authority, which could reasonably be expected to
result in a Material Adverse Effect, or which could reasonably be expected to
materially and adversely affect the properties or assets thereof or the
consummation of the Purchase Agreement or the performance by the Company of
its obligations under the Purchase Agreement or the Articles Supplementary.
(v) All descriptions in the Prospectus of leases, contracts and other
documents to which the Company or any subsidiary is a party are accurate in
all material respects.
(vi) To the best of my knowledge and information, there are no
franchises, contracts, indentures, mortgages, loan agreements, notes, leases
or other instruments required to be described in the Registration Statements
or to be filed as exhibits thereto other than those described therein or
filed or incorporated by reference as exhibits thereto, and the descriptions
thereof or references thereto are correct in all material respects.
(vii) To the best of my knowledge and information, neither the Company
nor any of its subsidiaries is in violation of its charter or bylaws or its
partnership agreement, as applicable, and no default by the Company or any of
its subsidiaries exists in the due performance or
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observance of any material obligation, agreement, covenant or condition
contained in any contract, indenture, mortgage, loan agreement, note, lease
or other agreement or instrument that is described or referred to in any
Registration Statement or the Prospectus or filed or incorporated by
reference as an exhibit to any Registration Statement.
(viii) The execution, delivery and performance of the Purchase Agreement
and the Articles Supplementary by the Company (including the issuance and
sale of the Securities to the Underwriters and the use of the proceeds from
the sale of the Securities as described in the Prospectus under the caption
"Use of Proceeds") and compliance by the Company with its obligations under
the Purchase Agreement and the Articles Supplementary will not, whether with
or without the giving of notice or lapse of time or both, constitute a breach
or violation of, or default or Repayment Event under, or result in the
creation or imposition of any lien, charge or encumbrance upon any property
or assets of the Company or any of its subsidiaries pursuant to, any
contract, indenture, mortgage, deed of trust, loan or credit agreement, note,
lease or any other agreement or instrument, known to me, to which the Company
or any of its subsidiaries is a party or by which it or any of them may be
bound or to which any of the property or assets of the Company or any of its
subsidiaries is subject, except for such breaches, violations or defaults or
liens, charges or encumbrances that, individually or in the aggregate, would
not have a Material Adverse Effect, nor will such action result in any
violation of the provisions of the charter or bylaws of the Company or the
partnership agreement or charter or bylaws, as the case may be, of any of its
subsidiaries, or, to the best of my knowledge and information, any applicable
provision of any law, statute or administrative regulation of the State of
California, or, to the best of my knowledge and information, any judgment,
order, writ or decree of any government instrumentality or court, domestic or
foreign, applicable to the Company or any of its subsidiaries or any of their
respective properties, assets or operations.
In rendering such opinion, such counsel may rely as to matters of fact
(but not as to legal conclusions), to the extent he deems proper, on
certificates of responsible officers of the Company and public officials.
Such opinion shall not state that it is to be governed or qualified by, or
that it is otherwise subject to, any treatise, written policy or other
document relating to legal opinions, including, without limitation, the Legal
Opinion Accord of the ABA Section of Business Law (1991). Such opinion shall
state that, insofar as it concerns the Articles Supplementary, such counsel
has assumed that the Articles Supplementary are governed by the laws of the
State of California.
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Exhibit C
FORM OF OPINION OF ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, LLP
TO BE DELIVERED PURSUANT TO SECTION 5(b)
(i) The Company has been duly incorporated and is validly existing under
the laws of the State of Maryland and is in good standing with the State
Department of Assessments and Taxation of Maryland (the "SDAT"). The Company
has the corporate power to own, lease and operate its current properties and
to conduct its business as described in the Prospectus under the caption
"Business and Properties" and to enter into and perform its obligations under
the Purchase Agreement.
(ii) The authorized, issued and outstanding stock of the Company is as
set forth in the line items "Preferred Stock" and "Common Stock" under the
caption "Capitalization" in the Prospectus (except for subsequent issuances
pursuant to the Purchase Agreement or pursuant to employee benefit plans or
the exercise of options referred to in the Prospectus). The shares of issued
and outstanding Common Stock (the "Outstanding Shares") have been duly
authorized and validly issued and are fully paid and non-assessable and none
of the Outstanding Shares was issued in violation of preemptive rights
arising under the Maryland General Corporation Law (the "MGCL") or the
charter or bylaws of the Company.
(iii) (A) The Securities have been duly authorized by all necessary
corporate action on the part of the Company for issuance and sale to the
Underwriters pursuant to the Purchase Agreement and, when issued and
delivered by the Company pursuant to the Purchase Agreement against payment
of the purchase price therefor specified in the Purchase Agreement, will be
validly issued, fully paid and non-assessable; and (B) the preferences,
rights, voting powers, restrictions, limitations as to dividends,
qualifications and terms and conditions of redemption of the Securities are
as set forth in the Articles Supplementary and none of such provisions is
prohibited by the laws of the State of Maryland or conflicts with the
Company's charter or bylaws.
(iv) The issuance of the Securities is not subject to preemptive rights
arising by operation of the laws of the State of Maryland or under the
charter or bylaws of the Company.
(v) The Purchase Agreement has been duly authorized, executed and, so
far as is known to us, delivered by the Company.
(vi) The form of certificate used to represent the Securities complies
in all material respects with the applicable requirements of the laws of the
State of Maryland and the charter and bylaws of the Company.
(vii) We have reviewed the information in the Prospectus under the
captions "Description of Class C Preferred Stock," "Description of Common
Stock," "Description of Preferred Stock" and "Restrictions on Ownership and
Transfers of Capital Stock", and in each case to the extent that such
information constitutes matters of Maryland law, summaries of Maryland legal
matters, summaries of certain provisions of the Company's charter or bylaws,
the Articles Supplementary, the Securities or other instruments or agreements
governed by Maryland
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law, or legal conclusions with respect to matters of Maryland law, such
information is correct in all material respects.
(viii) No authorization, approval, consent or order of any Maryland
state government authority or agency (other than as may be required under
Maryland securities or blue sky laws) is required in connection with the due
authorization, execution or delivery of the Purchase Agreement or the
Articles Supplementary or for the offering, issuance or sale of the
Securities, except for the filing of the Articles Supplementary with, and
acceptance thereof for record by, the SDAT (which filing has been made with
and accepted for record by the SDAT in accordance with the MGCL).
(ix) The execution, delivery and performance of the Purchase Agreement
and the execution and filing of the Articles Supplementary by the Company
(including the issuance and sale of the Securities to the Underwriters and
the use of the proceeds from the sale of the Securities as described in the
Prospectus under the caption "Use of Proceeds") do not result in any
violation of the provisions of the charter or bylaws of the Company or, so
far as is known to us, any applicable provision of any Maryland law, statute,
administrative regulation or administrative or court decree applicable to the
Company.
In rendering such opinion, such counsel shall state that each of ▇▇▇▇▇▇
& ▇▇▇▇▇▇▇ and ▇▇▇▇▇ & ▇▇▇▇ LLP, in rendering their opinions pursuant to the
Purchase Agreement, may rely upon such opinion of special Maryland counsel as
to all matters arising under or governed by the laws of the State of
Maryland. In addition, in rendering such opinion, such counsel may rely
insofar as such opinion involves factual matters, to the extent they deem
proper, on certificates of responsible officers of the Company and public
officials. Such opinion shall not state that it is to be governed or
qualified by, or that it is otherwise subject to, any treatise, written
policy or other document relating to legal opinions, including, without
limitation, the Legal Opinion Accord of the ABA Section of Business Law
(1991).
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