Exhibit 1
Conformed
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ Residential Realty, Inc.
Common Stock
(par value $.01 per share)
__________
Underwriting Agreement
▇▇▇▇▇▇▇, Sachs & Co.,
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ Securities
Corporation,
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, Incorporated,
Prudential Securities Incorporated,
c/o Goldman, Sachs & Co.,
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇.
February 12, 1997
Ladies and Gentlemen:
From time to time ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ Residential Realty, Inc., a Maryland
corporation (the "Company"), which is the general partner of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Residential Realty L.P., a Delaware limited partnership (the "Operating
Partnership"), and such Operating Partnership propose to enter into one or more
Pricing Agreements (each a "Pricing Agreement") in the form of Annex I hereto,
with such additions and deletions as the parties thereto may determine, and,
subject to the terms and conditions stated herein and therein, the Company
proposes to issue and sell to the firms named in Schedule I to the applicable
Pricing Agreement (such firms constituting the "Underwriters" with respect to
such Pricing Agreement and the securities specified therein) certain shares of
its Common Stock, par value $.01 per share (the "Shares"), specified in Schedule
II to such Pricing Agreement (with respect to such Pricing Agreement, the "Firm
Shares"). If specified in such Pricing Agreement, the Company may grant to the
Underwriters the right to purchase at their election an additional number of
shares, specified in such Pricing Agreement as provided in Section 3 hereof (the
"Optional Shares"). The Firm Shares and the Optional Shares, if any, which the
Underwriters elect to purchase pursuant to Section 3 hereof are herein
collectively called the "Designated Shares".
The terms and rights of any particular issuance of Designated Shares shall
be as specified in the Pricing Agreement relating thereto.
1. Particular sales of Designated Shares may be made from time to time to
the Underwriters of such Shares, for whom the firms designated as
representatives of the Underwriters of such Shares in the Pricing Agreement
relating thereto will act as representatives (the "Representatives"). The term
"Representatives" also refers to a single firm acting as sole representative of
the Underwriters and to Underwriters who act without any firm being designated
as their representative. This Underwriting Agreement shall not be construed as
an obligation of the Company to sell any of the Shares or as an obligation of
any of the Underwriters to purchase any of the Shares. The obligation of the
Company to issue and sell any of the Shares and the obligation of any of the
Underwriters to purchase any of the Shares shall be evidenced by the Pricing
Agreement with respect to the Designated Shares specified therein. Each Pricing
Agreement shall specify the aggregate number of the Firm Shares, the maximum
number of Optional Shares, if any, the initial public offering price of such
Firm and Optional Shares or the manner of determining such price, the purchase
price to the Underwriters of such Designated Shares, the names of the
Underwriters of such Designated Shares, the names of the Representatives of such
Underwriters, the number of such Designated Shares to be purchased by each
Underwriter and the commission, if any, payable to the Underwriters with respect
thereto and shall set forth the date, time and manner of delivery of such Firm
and Optional Shares, if any, and payment therefor. The Pricing Agreement shall
also specify (to the extent not set forth in the registration statement and
prospectus with respect thereto) the terms of such Designated Shares. A Pricing
Agreement shall be in the form of an executed writing (which may be in
counterparts), and may be evidenced by an exchange of telegraphic communications
or any other rapid transmission device designed to produce a written record of
communications transmitted. The obligations of the Underwriters under this
Agreement and each Pricing Agreement shall be several and not joint.
2. The Company and the Operating Partnership, jointly and severally,
represent and warrant to, and agree with, each of the Underwriters that:
(a) A registration statement on Form S-3 (File No. 333-340) in respect
of the Shares has been filed with the Securities and Exchange Commission
(the "Commission"); such registration statement and any post-effective
amendment thereto, each in the form heretofore delivered or to be delivered
to the Representatives and, excluding exhibits to such registration
statement, but including all documents incorporated by reference in the
prospectus included therein, to the Representatives for each of the other
Underwriters have been declared effective by the Commission in such form;
no other document with respect to such registration statement or document
incorporated by reference therein has heretofore been filed, or transmitted
for filing, with the Commission (other than prospectuses filed pursuant to
Rule 424(b) of the rules and regulations of the Commission under the
Securities Act of 1933, as amended (the "Act") each in the form heretofore
delivered to the Representatives); and no stop order suspending the
effectiveness of such registration statement has been issued and no
proceeding for that purpose has been initiated or, to the knowledge of the
Company or the Operating Partnership, threatened by the Commission (any
preliminary prospectus included in such registration statement or filed
with the Commission pursuant to Rule 424(a) under the Act, is hereinafter
called a "Preliminary Prospectus"; the various parts of such
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registration statement, including all exhibits thereto and the documents
incorporated by reference in the prospectus contained in the registration
statement at the time such part of the registration statement became
effective, each as amended at the time such part of the registration
statement became effective, are hereinafter collectively called the
"Registration Statement"; the prospectus relating to the Shares, in the
form in which it has most recently been filed, or transmitted for filing,
with the Commission on or prior to the date of this Agreement, is
hereinafter called the "Prospectus"; any reference herein to any
Preliminary Prospectus or the Prospectus shall be deemed to refer to and
include the documents incorporated by reference therein pursuant to the
applicable form under the Act, as of the date of such Preliminary
Prospectus or Prospectus, as the case may be; any reference to any
amendment or supplement to any Preliminary Prospectus or the Prospectus
shall be deemed to refer to and include any documents filed after the date
of such Preliminary Prospectus or Prospectus, as the case may be, under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and
incorporated by reference in such Preliminary Prospectus or Prospectus, as
the case may be; any reference to any amendment to the Registration
Statement shall be deemed to refer to and include any annual report of the
Company filed pursuant to Section 13(a) or 15(d) of the Exchange Act after
the effective date of the Registration Statement that is incorporated by
reference in the Registration Statement; and any reference to the
Prospectus as amended or supplemented shall be deemed to refer to the
Prospectus as amended or supplemented in relation to the applicable
Designated Shares in the form in which it is filed with the Commission
pursuant to Rule 424(b) under the Act in accordance with Section 5(a)
hereof, including any documents incorporated by reference therein as of the
date of such filing);
(b) The documents incorporated by reference in the Prospectus, when they
became effective or were filed with the Commission, as the case may be,
conformed in all material respects to the requirements of the Act or the
Exchange Act, as applicable, and the rules and regulations of the
Commission thereunder, and none of such documents 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; and any further documents so filed and incorporated by
reference in the Prospectus or any further amendment or supplement thereto,
when such documents become effective or are filed with the Commission, as
the case may be, will conform in all material respects to the requirements
of the Act or the Exchange Act, as applicable, and the rules and
regulations of the Commission thereunder 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; provided, however, that this representation and warranty shall
not apply to any statements or omissions made in reliance upon and in
conformity with information furnished in writing to the Company by an
Underwriter of Designated Shares through the Representatives expressly for
use in the Prospectus as amended or supplemented relating to such Shares;
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(c) The Registration Statement and the Prospectus conform, and any
further amendments or supplements to the Registration Statement or the
Prospectus will conform, in all material respects to the requirements of
the Act and the rules and regulations of the Commission thereunder and do
not and will not, as of the applicable effective date as to the
Registration Statement and any amendment thereto and as of the applicable
filing date as to the Prospectus and any amendment or supplement thereto,
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; provided, however, that this representation and
warranty shall not apply to any statements or omissions made in reliance
upon and in conformity with information furnished in writing to the Company
by an Underwriter of Designated Shares through the Representatives
expressly for use in the Prospectus as amended or supplemented relating to
such Shares;
(d) Neither the Company nor any of its subsidiaries ("subsidiaries", as
used herein, shall include the Operating Partnership and any other entities
in which the Company owns, directly or indirectly, any partnership or other
equity interest) has sustained since the date of the latest audited
financial statements included or incorporated by reference in the
Prospectus any material loss or interference with its business from fire,
explosion, flood or other calamity, whether or not covered by insurance, or
from any labor dispute or court or governmental action, order or decree,
otherwise than as set forth or contemplated in the Prospectus; and, since
the respective dates as of which information is given in the Registration
Statement and the Prospectus, there has not been any change in the capital
stock or long-term debt of the Company or any of its subsidiaries or any
material adverse change, or any development involving a prospective
material adverse change, in or affecting the general affairs, management,
financial position, stockholders' equity (or, with respect to partnership
subsidiaries, partnership capital), or results of operations of the Company
and its subsidiaries considered as one enterprise, otherwise than as set
forth or contemplated in the Prospectus;
(e) As of each Time of Delivery (as defined below), the Company and its
subsidiaries will have good and marketable title in fee simple to, or good
and marketable leasehold estates in (in each case as described in the
Prospectus), all real property described in the Prospectus as being owned
by them, and good and marketable title to all personal property owned by
them which is material to the business of the Company, in each case free
and clear of all liens, encumbrances and defects except such as are
described in the Prospectus or such as do not materially and adversely
affect the value of such property, and do not interfere with the use made
and proposed to be made of such property by the Company and its
subsidiaries; and any real property and buildings held under lease by the
Company and its subsidiaries are held by them under valid and subsisting
leases with such exceptions as are not material and do not interfere with
the use made and proposed to be made of such property and buildings by the
Company and its subsidiaries, in each case except as set forth in or
contemplated by the Prospectus;
(f) The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of Maryland, with corporate
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power and authority under its Articles of Incorporation and the Maryland
General Corporation Law, as amended, to own its properties and conduct its
business as described in the Prospectus and has been duly qualified as a
foreign corporation for the transaction of business and is in good standing
(to the extent the concept of good standing applies in any such
jurisdiction) under the laws of each other jurisdiction in which it owns or
leases properties, or conducts any business, so as to require such
qualification, or is subject to no material disability by reason of the
failure to be so qualified or in good standing in any such jurisdiction;
and each subsidiary of the Company has been duly organized and is validly
existing as a partnership or corporation and is in good standing under the
laws of its jurisdiction of organization;
(g) The Company has an authorized capitalization as set forth in the
Prospectus, and all of the issued shares of capital stock of the Company
have been duly and validly authorized and issued, are fully paid and non-
assessable and conform to the description of the capital stock contained in
the Prospectus; the First Amended and Restated Agreement of Limited
Partnership of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ Residential Realty L.P., as amended (the
"Operating Partnership Agreement"), and the partnership agreement of each
partnership subsidiary of the Company have been duly authorized, executed
and delivered by the Company or the subsidiary of the Company that is the
partner thereto and are valid and binding agreements, enforceable in
accordance with their terms; the Company is the sole general partner of the
Operating Partnership and has an ownership interest in the Operating
Partnership as set forth in the Prospectus as amended or supplemented; all
of the other partnership interests owned by the Company in each subsidiary
of the Company have been duly and validly authorized and issued and are
owned directly or indirectly by the Company or the Operating Partnership
free and clear of all liens, encumbrances, equities or claims; all of the
issued shares of capital stock of the corporate subsidiaries of the Company
shall have been duly and validly authorized and issued, shall be fully paid
and non-assessable and (except for directors' qualifying shares and except
as set forth in the Prospectus), to the extent owned by the Company, shall
be owned directly or indirectly by the Company or the Operating
Partnership, as applicable, free and clear of all liens, encumbrances,
equities or claims;
(h) The Shares have been duly and validly authorized, and, when the Firm
Shares are issued and delivered pursuant to this Agreement and the Pricing
Agreement with respect to such Firm Shares and, in the case of any Optional
Shares, pursuant to Over-allotment Options (as defined in Section 3 hereof)
with respect to such Optional Shares, such Designated Shares will be duly
and validly issued and fully paid and non-assessable; the Shares conform to
the description thereof contained in the Registration Statement and the
Designated Shares will conform to the description thereof contained in the
Prospectus as amended or supplemented with respect to such Designated
Shares;
(i) The issue and sale of the Shares by the Company and the compliance
by the Company and the Operating Partnership with all of the provisions of
this Agreement, any Pricing Agreement and each Over-allotment Option, if
any, and the consummation of the transactions contemplated herein and
therein will not conflict with or constitute a breach or violation by such
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party of any of the terms or provisions of, or constitute a default under,
any indenture, mortgage, deed of trust, loan agreement or other agreement
or instrument to which the Company or any of its subsidiaries is a party or
by which the Company or any of its subsidiaries is bound or to which any of
the property or assets of the Company or any of its subsidiaries is subject
which conflict, breach, violation or default would have a material adverse
effect on the management, consolidated financial position, prospects,
shareholders' equity (or, with respect to partnership subsidiaries,
partnership capital) or results of operations of the Company and its
subsidiaries, considered as one enterprise, nor will such action result in
any violation by such party of the provisions of the Articles of
Incorporation or By-laws of the Company or the Certificate of Limited
Partnership of the Operating Partnership or the Operating Partnership
Agreement or any statute or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over the Company or any of
its subsidiaries or any of their properties; and no consent, approval,
authorization, order, registration or qualification of or with any such
court or governmental agency or body is required for the issue and sale of
the Shares by the Company or the consummation by the Company and the
Operating Partnership of the transactions contemplated by this Agreement or
any Pricing Agreement or any Over-allotment Option, except such as have
been, or will have been prior to each Time of Delivery (as defined in
Section 4 hereof), obtained under the Act and such consents, approvals,
authorizations, registrations or qualifications as may be required under
state securities or Blue Sky laws in connection with the purchase and
distribution of the Shares by the Underwriters;
(j) Other than as set forth in the Prospectus, there are no legal or
governmental proceedings pending to which the Company or any of its
subsidiaries is a party or of which any property of the Company or any of
its subsidiaries is the subject, which, if determined adversely to the
Company or any of its subsidiaries, would individually or in the aggregate
have a material adverse effect on the current or, to the Company's
knowledge, the future consolidated financial position, stockholders' equity
(or, with respect to partnership subsidiaries, partnership capital) or
results of operations of the Company and its subsidiaries; and, to the best
knowledge of the Company or the Operating Partnership, no such proceedings
are threatened or contemplated by governmental authorities or threatened by
others;
(k) Neither the Company nor any of its corporate subsidiaries are in
violation of their respective certificates of incorporation or by-laws and
neither the Operating Partnership nor any of the Company's partnership
subsidiaries are in violation of their respective partnership agreements or any
relevant certificate of limited partnership, nor is the Company or any of its
subsidiaries in default in any material respect in the performance or observance
of any obligation, agreement, covenant or condition contained in any indenture,
mortgage, deed of trust, loan agreement, lease or other agreement or instrument
to which it is a party or by which it or any of its properties may be bound,
which default individually or in the aggregate would have a material adverse
effect on the management, consolidated financial position, prospects,
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shareholders' equity (or, with respect to partnership subsidiaries, partnership
capital) of the Company and its subsidiaries, considered as one enterprise;
(l) The statements set forth in the Prospectus under the captions
"Description of Preferred Stock", "Description of Common Stock" and
"Description of Common Stock Warrants", insofar as they purport to
constitute a summary of the terms of the stock, and under the caption
"Federal Income Tax Considerations" and under the caption "Underwriting",
insofar as they purport to describe the provisions of the laws and
documents referred to therein, are accurate, complete and fair;
(m) ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, who have certified certain financial
statements of the Company and its subsidiaries, are independent public
accountants as required by the Act and the rules and regulations of the
Commission thereunder;
(n) Neither the Company nor any of its subsidiaries, is or, after
giving effect to the transactions herein contemplated, will be an
"investment company" or an entity "controlled" by an "investment company"
within the meaning of the Investment Company Act of 1940, as amended (the
"Investment Company Act");
(o) No preemptive rights of stockholders exist with respect to any of
the Shares; and no person or entity holds the rights to require or
participate in the registration under the Act of the Shares pursuant to the
Registration Statement; and
(p) Neither the Company nor any of its affiliates does business with
the government of Cuba or with any person or affiliate located in Cuba
within the meaning of Section 517.075, Florida Statutes.
3. Upon the execution of the Pricing Agreement applicable to any
Designated Shares and authorization by the Representatives of the release of the
Firm Shares, the several Underwriters propose to offer the Firm Shares for sale
upon the terms and conditions set forth in the Prospectus as amended or
supplemented.
The Company may specify in the Pricing Agreement applicable to any Firm
Shares that the Company thereby grants to the Underwriters the right (an "Over-
allotment Option") to purchase at their election up to the number of Optional
Shares set forth in such Pricing Agreement, on the terms set forth in the
paragraph above, for the sole purpose of covering over-allotments in the sale of
the Firm Shares. Any such election to purchase Optional Shares may be exercised
by written notice from the Representatives to the Company, given within a period
specified in the Pricing Agreement, setting forth the aggregate number of
Optional Shares to be purchased and the date on which such Optional Shares are
to be delivered, as determined by the Representatives but in no event earlier
than the First Time of Delivery (as defined in Section 4 hereof) or, unless the
Representatives and the Company otherwise agree in writing, earlier than or
later than the respective number of business days after the date of such notice
set forth in such Pricing Agreement.
The number of Optional Shares to be added to the number of Firm Shares to be
purchased by each Underwriter as set forth in Schedule I to the Pricing
Agreement applicable to such Designated Shares shall be, in each case, the
number of Optional Shares which the Company has been advised by the
Representatives have been attributed to such Underwriter; provided that, if the
Company has not been so advised, the number of Optional Shares to be so added
shall be, in each case, that proportion of Optional Shares which the number of
Firm Shares to be purchased by such Underwriter
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under such Pricing Agreement bears to the aggregate number of Firm Shares
(rounded as the Representatives may determine to the nearest 100 shares). The
total number of Designated Shares to be purchased by all the Underwriters
pursuant to such Pricing Agreement shall be the aggregate number of Firm Shares
set forth in Schedule I to such Pricing Agreement plus the aggregate number of
Optional Shares which the Underwriters elect to purchase.
4. Certificates for the Firm Shares and the Optional Shares to be
purchased by each Underwriter pursuant to the Pricing Agreement relating
thereto, in the form specified in such Pricing Agreement and in such authorized
denominations and registered in such names as the Representatives may request
upon at least forty-eight hours' prior notice to the Company, shall be delivered
by or on behalf of the Company to the Representatives for the account of such
Underwriter, against payment by such Underwriter or on its behalf of the
purchase price therefor by certified or official bank check or checks, payable
to the order of the Company in the funds specified in such Pricing Agreement,
(i) with respect to the Firm Shares, all in the manner and at the place and time
and date specified in such Pricing Agreement or at such other place and time and
date as the Representatives and the Company may agree upon in writing, such time
and date being herein called the "First Time of Delivery" and (ii) with respect
to the Optional Shares, if any, in the manner and at the time and date specified
by the Representatives in the written notice given by the Representatives of the
Underwriters' election to purchase such Optional Shares, or at such other time
and date as the Representatives and the Company may agree upon in writing, such
time and date, if not the First Time of Delivery, herein called the "Second Time
of Delivery". Each such time and date for delivery is herein called a "Time of
Delivery".
5. The Company and the Operating Partnership agree with each of the
Underwriters of any Designated Shares:
(a) To prepare the Prospectus as amended and supplemented in relation to
the applicable Designated Shares in a form approved by the Representatives
and to file such Prospectus pursuant to Rule 424(b) under the Act not later
than the Commission's close of business on the second business day
following the execution and delivery of the Pricing Agreement relating to
the applicable Designated Shares or, if applicable, such earlier time as
may be required by Rule 424(b); to make no further amendment or any
supplement to the Registration Statement or Prospectus as amended or
supplemented after the date of the Pricing Agreement relating to such
Designated Shares and prior to any Time of Delivery for such Shares which
shall be disapproved by the Representatives for such Shares promptly after
reasonable notice thereof; to advise the Representatives promptly of any
such amendment or supplement after any Time of Delivery for such Shares and
furnish the Representatives with copies thereof; to file promptly all
reports and any definitive proxy or information statements required to be
filed by the Company with the Commission pursuant to Sections 13(a), 13(c),
14 or 15(d) of the Exchange Act for so long as the delivery of a prospectus
is required in connection with the offering or sale of such Shares, and
during such same period to advise the Representatives, promptly after it
receives notice thereof, of the time when any amendment to the Registration
Statement has been filed or becomes effective or any supplement to the
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Prospectus or any amended Prospectus has been filed with the Commission, of
the issuance by the Commission of any stop order or of any order preventing
or suspending the use of any prospectus relating to the Shares, of the
suspension of the qualification of such Shares for offering or sale in any
jurisdiction, of the initiation or threatening of any proceeding for any
such purpose, or of any request by the Commission for the amending or
supplementing of the Registration Statement or Prospectus or for additional
information relating to the Registration Statement or the Prospectus or any
document incorporated therein by reference; and, in the event of the
issuance of any such stop order or of any such order preventing or
suspending the use of any prospectus relating to the Shares or suspending
any such qualification, promptly to use its best efforts to obtain the
withdrawal of such order;
(b) Promptly from time to time to take such action as the
Representatives may reasonably request to qualify such Shares for offering
and sale under the securities laws of such jurisdictions as the
Representatives may reasonably request and to comply with such laws so as
to permit the continuance of sales and dealings therein in such
jurisdictions for as long as may be necessary to complete the distribution
of such Shares, provided that in connection therewith the Company shall not
be required to qualify as a foreign corporation or to file a general
consent to service of process in any jurisdiction;
(c) To furnish the Underwriters with copies of the Prospectus as amended
or supplemented in such quantities as the Representatives may from time to
time reasonably request, and, if the delivery of a prospectus is required
at any time in connection with the offering or sale of the Shares and if at
such time any event shall have occurred as a result of which the Prospectus
as then amended or supplemented would include an untrue statement of a
material fact or omit to state any material fact necessary in order to make
the statements therein, in the light of the circumstances under which they
were made when such Prospectus is delivered, not misleading, or, if for any
other reason it shall be necessary during such same period to amend or
supplement the Prospectus or to file under the Exchange Act any document
incorporated by reference in the Prospectus in order to comply with the Act
or the Exchange Act, to notify the Representatives and upon their request
to file such document and to prepare and furnish without charge to each
Underwriter and to any dealer in securities as many copies as the
Representatives may from time to time reasonably request of an amended
Prospectus or a supplement to the Prospectus which will correct such
statement or omission or effect such compliance;
(d) To make generally available to its security holders as soon as
practicable, but in any event not later than eighteen months after the
effective date of the Registration Statement (as defined in Rule 158(c)
under the Act), an earnings statement of the Company and its consolidated
subsidiaries (which need not be audited) complying with Section 11(a) of
the Act and the rules and regulations of the Commission thereunder
(including, at the option of the Company, Rule 158);
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(e) During the period beginning from the date of the Pricing Agreement
for such Designated Shares and continuing to and including the date that is
90 days (or such other period as may be specified in such Pricing
Agreement) after the last Time of Delivery for such Designated Shares, not
to offer, sell, contract to sell or otherwise dispose of, except as
provided hereunder, any Shares or any securities of the Company that are
substantially similar to the Shares, or any other securities that are
convertible into or exchangeable for, or that represent the right to
receive, Shares or any such similar securities, except for (i) Shares
issuable pursuant to employee stock option and award or dividend
reinvestment plans existing on, or upon the conversion of convertible or
exchangeable securities outstanding as of, the date of the Pricing
Agreement for such Designated Shares or (ii) Shares issuable upon the
exchange of securities of the Operating Partnership or for the issuance of
securities of the Operating Partnership (which may be exchangeable for
Shares no earlier than 90 days after the date of the Pricing Agreement for
such Designated Shares), without the prior consent of the Representatives;
(f) To furnish to its stockholders as soon as practicable after the end
of each fiscal year an annual report (including a balance sheet and
statements of income, stockholders' equity and cash flow of the Company and
its consolidated subsidiaries certified by independent public accountants)
and, as soon as practicable after the end of each of the first three
quarters of each fiscal year (beginning with the fiscal quarter ending
after the effective date of the Registration Statement), unaudited
consolidated summary financial information of the Company and its
subsidiaries for such quarter in reasonable detail;
(g) During a period of three years from the effective date of the
Registration Statement, to furnish to the Representatives copies of all
reports or other communications (financial or other) furnished to
stockholders generally, and deliver to the Representatives (i) as soon as
they are publicly available, copies of any reports and financial statements
furnished to or filed with the Commission or any national securities
exchange on which any class of securities of the Company is listed; and
(ii) such additional information concerning the business and financial
condition of the Company as the Representatives may from time to time
reasonably request, subject in the case of confidential information to
mutually agreed upon confidentiality arrangements (such financial
statements to be on a consolidated basis to the extent the accounts of the
Company and its subsidiaries are consolidated in reports furnished to its
stockholders generally or to the Commission);
(h) To use the net proceeds received by the Company from the sale of
the Designated Shares pursuant to this Agreement in the manner specified in
the Prospectus under the caption "Use of Proceeds";
(i) To make the elections and take the procedural steps described in
the Prospectus under the caption "Federal Income Tax Considerations" in a
timely fashion, and to otherwise use its best efforts to meet the
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requirements to qualify, for its taxable year ended December 31, 1997 and
for subsequent years, as a real estate investment trust ("REIT") under the
Internal Revenue Code of 1986, as amended (the "Code"); and
(j) To use its best efforts to supplementally list, subject to notice
of issuance, the Designated Shares on the New York Stock Exchange.
6. The Company and the Operating Partnership covenant and agree with the
several Underwriters that the Company and the Operating Partnership will pay or
cause to be paid the following: (i) the fees, disbursements and expenses of the
Company's counsel and accountants in connection with the registration of the
Shares under the Act and all other expenses in connection with the preparation,
printing and filing of the Registration Statement, any Preliminary Prospectus
and the Prospectus and amendments and supplements thereto and the mailing and
delivering of copies thereof to the Underwriters and dealers; (ii) the cost of
printing or producing any Agreement among Underwriters, this Agreement, any
Pricing Agreement, any Blue Sky Memorandum, closing documents (including
compilations thereof) and any other documents in connection with the offering,
purchase, sale and delivery of the Shares; (iii) all expenses in connection with
the qualification of the Shares for offering and sale under state securities
laws as provided in Section 5(b) hereof, including the fees and disbursements of
counsel for the Underwriters in connection with such qualification and in
connection with the Blue Sky survey(s); (iv) the filing fees incident to, and
the fees and disbursements of counsel for the Underwriters in connection with,
any required reviews by the National Association of Securities Dealers, Inc. of
the terms of the sale of the Shares; (v) the cost of preparing certificates for
the Shares; (vi) the cost and charges of any transfer agent or registrar or
dividend disbursing agent; and (vii) all other costs and expenses incident to
the performance of its obligations hereunder and under any Over-allotment
Options which are not otherwise specifically provided for in this Section. It is
understood, however, that, except as provided in this Section, and Sections 8
and 11 hereof, the Underwriters will pay all of their own costs and expenses,
including the fees of their counsel, transfer taxes on resale of any of the
Shares by them, and any advertising expenses connected with any offers they may
make.
7. The obligations of the Underwriters of any Designated Shares under the
Pricing Agreement relating to such Designated Shares shall be subject, in the
discretion of the Representatives, to the condition that all representations and
warranties and other statements of the Company and the Operating Partnership in
or incorporated by reference in the Pricing Agreement relating to such
Designated Shares are, at and as of each Time of Delivery for such Designated
Shares, true and correct, the condition that the Company and the Operating
Partnership shall have performed all of their obligations hereunder theretofore
to be performed, and the following additional conditions:
(a) The Prospectus as amended or supplemented in relation to such
Designated Shares shall have been filed with the Commission pursuant to
Rule 424(b) within the applicable time period prescribed for such filing by
the rules and regulations under the Act and in accordance with Section 5(a)
hereof; no stop order suspending the effectiveness of the Registration
Statement or any part thereof shall have been issued and no proceeding for
that purpose shall have been initiated or threatened by the Commission; and
11
all requests for additional information on the part of the Commission shall
have been complied with to the Representatives' reasonable satisfaction;
(b) ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, counsel for the Underwriters, shall have
furnished to the Representatives such opinion or opinions, dated each Time
of Delivery for such Designated Shares, with respect to the incorporation
of the Company, this Agreement and the Pricing Agreement with respect to
the Designated Shares, the validity of the Designated Shares, the
Registration Statement, the Prospectus, and such other related matters as
the Representatives may reasonably request, and such counsel shall have
received such papers and information as they may reasonably request to
enable them to pass upon such matters;
(c)(I) ▇▇▇▇▇ & ▇▇▇▇▇▇▇ L.L.P., counsel for the Company, shall have
furnished to the Representatives their written opinion, dated each Time of
Delivery for such Designated Shares, respectively, in form and substance
satisfactory to the Representatives, with appropriate qualifications and
limitations satisfactory to the Representatives, to the effect that:
(i) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of Maryland,
with corporate power and corporate authority under its articles of
incorporation and the Maryland General Corporation Law, as amended, to
own its properties and conduct its business as described in the
Prospectus as amended or supplemented;
(ii) The Company has authorized capital stock as set forth in the
Prospectus as amended or supplemented, and the Designated Shares being
delivered at such Time of Delivery have been duly and validly
authorized and issued and are fully paid and nonassessable under the
Maryland General Corporation Law, as amended; and the Shares conform
as to legal matters to the description thereof contained in the
Prospectus as amended or supplemented under the caption "Description
of Common Stock";
(iii) Each of the Company, the Operating Partnership and the
Company's other subsidiaries is authorized to transact business as a
foreign corporation or partnership in each jurisdiction where such
entity maintains an office or owns or manages properties;
(iv) The Operating Partnership has been formed and is validly
existing as a limited partnership in good standing under the Delaware
Revised Uniform Limited Partnership Act, as amended; the Operating
Partnership Agreement has been duly authorized, executed and delivered
by the respective general partner(s) thereto and constitutes the valid
and binding obligations of such general partner(s), enforceable
against such general partner(s) in accordance with their terms, except
as may be limited by bankruptcy, insolvency, reorganization,
moratorium or other laws affecting creditors' rights (including,
without limitation, the effect of statutory and other law regarding
fraudulent conveyances, fraudulent transfers and preferential
transfers) and except as may be limited by the exercise of judicial
12
discretion in applying principles of equity (regardless of whether
such agreements are considered in a proceeding in equity or at law);
and except as described in the Prospectus as amended or supplemented,
all of the partnership interests in the Operating Partnership that are
owned of record by the Company are owned, to the knowledge of such
counsel after such inquiry as such counsel deems appropriate, free and
clear of all liens, charges or encumbrances;
(v) This Agreement and the Pricing Agreement with respect to the
Designated Securities has been duly authorized, executed and delivered
by the Company and the Operating Partnership;
(vi) The issue and sale of the Designated Shares being delivered
at such Time of Delivery by the Company, the compliance by the Company
and the Operating Partnership with all of the provisions of this
Agreement and the Pricing Agreement with respect to the Designated
Shares and the consummation by the Company and the Operating
Partnership of the transactions herein and therein contemplated will
not result in any violation of the provisions of the Articles of
Incorporation or By-laws of the Company, the Operating Partnership
Agreement or any statute or any order, rule or regulation known to
such counsel of any court or governmental agency or body having
jurisdiction over the Company, the Operating Partnership or any of the
Company's other subsidiaries or any of their properties;
(vii) No consent, approval, authorization, order, registration
or qualification of or with any federal or District of Columbia,
Maryland, Virginia or Delaware state court or governmental agency or
body is required for the issue and sale of the Shares or the
consummation by the Company or the Operating Partnership of the
transactions contemplated by this Agreement or any Pricing Agreement
or any Over-allotment Option, except such as have been, or will have
been prior to each Time of Delivery (as defined in Section 4 hereof),
obtained under the Act and such consents, approvals, authorizations,
registrations or qualifications as may be required under state
securities (including insurance securities) or Blue Sky laws in
connection with the purchase and distribution of the Shares by the
Underwriters (as to which excepted matters such counsel need not
express any opinion);
(viii) The statements made in the Prospectus as supplemented or
amended under the captions "Description of Preferred Stock",
"Description of Common Stock", "Description of Common Stock Warrants"
and "Underwriting", to the extent they constitute or describe matters
of law or legal conclusions, or constitute summaries of documents
described therein, are correct in all material respects;
(ix) The statements made in the Prospectus as supplemented or
amended under the caption "Federal Income Tax Considerations", to the
extent they constitute or describe matters of law or legal
conclusions, or constitute summaries of documents described therein,
are correct in all material respects;
13
(x) Neither the Company nor any of its subsidiaries is or, after
giving effect to the transactions herein contemplated, will be an
"investment company" or an entity "controlled" by an "investment
company", as such terms are defined in the Investment Company Act;
(xi) Commencing with the Company's taxable year ending December
31, 1994, the Company is organized in conformity with the requirements
for qualification as a REIT, and its proposed assets, organization and
method of operation will enable it to meet the requirements for
qualification and taxation as a REIT under the Code;
(xii) The documents incorporated by reference in the Prospectus
as amended or supplemented (other than the financial statements and
related schedules therein, as to which such counsel need express no
opinion), when such documents became effective or were filed with the
Commission, as the case may be, complied as to form in all material
respects with the requirements of the Act or the Exchange Act, as
applicable, and the rules and regulations of the Commission
thereunder; and
(xiii) The Registration Statement and the Prospectus as amended
or supplemented, and any further amendments and supplements thereto
made by the Company prior to such Time of Delivery (other than the
financial statements and related schedules therein, as to which such
counsel need express no opinion), as of their respective effective or
issue dates complied, and as of the date of such opinion comply as to
form in all material respects with the requirements of the Act and the
rules and regulations thereunder.
In rendering such opinion, such counsel may state that its
opinion is based as to matters of law solely upon the (i) federal
securities laws of the United States, (ii) to the extent set forth in
paragraph (ix) above and under the captions "Risk Factors--Certain Tax
Risks" and "Federal Income Tax Considerations" in the Prospectus, federal
income tax laws; (iii) the laws of the Commonwealth of Virginia, the State
of Maryland and the District of Columbia; and (iv) the General Corporation
Law, as amended, of each of the State of Delaware and the State of Maryland
and the Revised Uniform Limited Partnership Act, as amended, of the State
of Delaware (but not including any statutes, ordinances, administrative
decisions, rule or regulations of any political subdivision of Maryland,
Virginia or Delaware) and that such counsel expresses no opinion as to any
other laws, statutes, ordinances, rules or regulations, including without
limitation, any state securities or tax laws or regulations, or as to any
federal or state antitrust or unfair competition laws or regulations. In
rendering such opinion, such counsel may rely in respect of matters of fact
upon certificates of officers of the Company, the Operating Partnership and
the Company's subsidiaries. In rendering such opinion, such counsel may
rely as to qualification and good standing of each of the Company and its
subsidiaries, including the Operating Partnership to do business in any
jurisdiction, upon certificates of appropriate government officials in such
jurisdictions.
14
Such counsel shall also state that no facts have come to its
attention which cause it to believe (i) that any of the documents
incorporated by reference in the Prospectus as amended or supplemented,
when they became effective or were filed with the Commission, as the case
may be (other than the financial statements and related schedules and other
financial information and data included therein or omitted therefrom, as to
which such counsel need express no views), contained, in the case of a
registration statement which became effective under the Act, 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, in the case of other documents which were filed under the
Act or the Exchange Act with the Commission, an untrue statement of a
material fact or omitted to state a material fact necessary in order to
make the statements therein, in the light of the circumstances under which
they were made when such documents were so filed, not misleading; (ii)
that, as of its effective date, the Registration Statement or any further
amendment thereto made by the Company prior to such Time of Delivery (other
than the financial statements and related schedules and other financial
information and data included therein or omitted therefrom, as to which
such counsel need express no views) 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, as of its date, the Prospectus or any further amendment or supplement
thereto made by the Company prior to such Time of Delivery (other than the
financial statements and related schedules and other financial information
and data included therein or omitted therefrom, as to which such counsel
need express no views) contained an untrue statement of a material fact or
omitted to state a material fact necessary to make the statements therein,
in light of the circumstances in which they were made, not misleading, or
that, as of such Time of Delivery, the Prospectus or any further amendment
or supplement thereto made by the Company prior to such Time of Delivery
(other than the financial statements and related schedules and other
financial information and data included therein or omitted therefrom, as to
which such counsel need express no views) contains an untrue statement of a
material fact or omits to state a material fact necessary to make the
statements therein, in light of the circumstances in which they were made,
not misleading; (iii) that there are any contracts or other documents
required to be filed as an exhibit to the Registration Statement or
required to be described in the Registration Statement or the Prospectus
which are not filed or described as required; or (iv) that, other than as
set forth in the Prospectus, there are any legal or governmental
proceedings pending to which the Company or any of its subsidiaries is a
party or of which any property of the Company or any of its subsidiaries is
the subject which, if determined adversely to the Company or any of its
subsidiaries, would individually or in the aggregate reasonably be expected
to have a material adverse effect on the consolidated financial position,
shareholders' equity or results of operations of the Company and its
subsidiaries, or that any such proceedings are threatened or contemplated
by governmental authorities or threatened by others.
(c)(I) ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Senior Vice President, General Counsel and
Secretary of the Company, shall have furnished to you his written opinion,
15
dated each Time of Delivery for such Designated Shares, respectively, in
form and substance satisfactory to the Representatives, to the effect that:
(i) The Company has authorized capital stock as set forth in the
Prospectus as amended or supplemented, and all of the issued shares of
capital stock of the Company (including the Designated Shares being
delivered at such Time of Delivery) have been duly and validly
authorized and issued and are fully paid and nonassessable under the
Maryland General Corporation Law, as amended;
(ii) Each corporate subsidiary of the Company has been duly
incorporated and is validly existing as a corporation in good standing
under the law of its jurisdiction of incorporation; all of the issued
shares of capital stock of each such corporate subsidiary have been
duly and validly authorized and issued and are fully paid and non-
assessable under the law of its jurisdiction of incorporation; and the
ownership by the Company, the Operating Partnership and their
respective subsidiaries of shares of capital stock of each corporate
subsidiary is as described in the schedule attached to such opinion,
to the knowledge of such counsel after such inquiry as such counsel
deems appropriate, free and clear of all liens, charges or
encumbrances;
(iii) Each limited partnership subsidiary of the Company (other
than the Operating Partnership) has been formed and is validly
existing as a limited partnership in good standing under the Delaware
Revised Uniform Limited Partnership Act, as amended; the partnership
agreement of each other partnership subsidiary of the Company, the
Operating Partnership or any subsidiary (partnership or otherwise) of
the Company, the Operating Partnership or any such subsidiary has been
duly authorized, executed and delivered by the respective general
partner(s) thereto and constitutes the valid and binding obligations
of such general partner(s), enforceable against such general
partner(s) in accordance with their terms, except as may be limited by
bankruptcy, insolvency, reorganization, moratorium or other laws
affecting creditors' rights (including, without limitation, the effect
of statutory and other law regarding fraudulent conveyances,
fraudulent transfers and preferential transfers) and except as may be
limited by the exercise of judicial discretion in applying principles
of equity (regardless of whether such agreements are considered in a
proceeding in equity or at law); and except as described in the
Prospectus as amended or supplemented, all of the partnership
interests in the Operating Partnership and each other partnership
subsidiary of the Company are owned of record by the Company or the
Operating Partnership, to the knowledge of such counsel after such
inquiry as such counsel deems appropriate, free and clear of all
liens, charges or encumbrances;
(iv) The issue and sale of the Designated Shares being delivered
at such Time of Delivery by the Company, the compliance by the Company
and the Operating Partnership with all of the provisions of this
16
Agreement and the Pricing Agreement with respect to the Designated
Shares and the consummation by the Company and the Operating
Partnership of the transactions herein and therein contemplated will
not constitute a breach or violation of any of the terms or provisions
of, or constitute a default under, any agreement the form of which has
been filed as an exhibit to the Registration Statement, nor will such
action result in any violation of the provisions of the organizational
documents of any subsidiary of the Company;
(v) To such counsel's knowledge, (a) neither the Company nor any
of its corporate subsidiaries are in violation of their respective
Certificates of Incorporation or By-laws and (b) neither the Operating
Partnership nor any of the Company's partnership subsidiaries are in
violation of their respective partnership agreements or any relevant
certificate of limited partnership; and
(vi) To such counsel's knowledge and other than as set forth in
the Prospectus as amended or supplemented, there are no legal or
governmental proceedings pending to which the Company or any of its
subsidiaries is a party or of which any property of the Company or any
of its subsidiaries is the subject which, if determined adversely to
the Company or any of its subsidiaries, would individually or in the
aggregate reasonably be expected to have a material adverse effect on
the consolidated financial position, shareholders' equity or results
of operations of the Company and its subsidiaries considered as one
enterprise; and, to such counsel's knowledge, no such proceedings are
threatened or contemplated by governmental authorities or threatened
by others;
(d) On the date of the Pricing Agreement for such Designated Shares and
at each Time of Delivery for such Designated Shares, the independent
accountants of the Company who have certified the financial statements of
the Company and its subsidiaries included or incorporated by reference in
the Registration Statement shall have furnished to the Representatives a
letter, dated the effective date of the Registration Statement or the date
of the most recent report filed with the Commission containing financial
statements and incorporated by reference in the Registration Statement, if
the date of such report is later than such effective date, and a letter
dated such Time of Delivery, respectively, to the effect set forth in Annex
II hereto, and with respect to such letter dated such Time of Delivery, as
to such other matters as the Representatives may reasonably request and in
form and substance satisfactory to the Representatives;
(e) (i) Neither the Company nor any of its subsidiaries shall have
sustained since the date of the latest audited financial statements
included or incorporated by reference in the Prospectus as amended prior to
the date of the Pricing Agreement relating to the Designated Shares any
loss or interference with its business from fire, explosion, flood or other
calamity, whether or not covered by insurance, or from any labor dispute or
court or governmental action, order or decree, otherwise than as set forth
or contemplated in the Prospectus as amended prior to the date of the
17
Pricing Agreement relating to the Designated Shares, and (ii) since the
respective dates as of which information is given in the Prospectus as
amended prior to the date of the Pricing Agreement relating to the
Designated Shares there shall not have been any change in the capital stock
or long-term debt of the Company or any of its subsidiaries or any change,
or any development involving a prospective change, in or affecting the
general affairs, management, financial position, stockholders' equity (or,
with respect to partnership subsidiaries, partnership capital) or results
of operations of the Company and its subsidiaries, otherwise than as set
forth or contemplated in the Prospectus as amended prior to the date of the
Pricing Agreement relating to the Designated Shares, the effect of which,
in any such case described in Clause (i) or (ii), is in the judgment of the
Representatives so material and adverse as to make it impracticable or
inadvisable to proceed with the public offering or the delivery of the
Designated Shares on the terms and in the manner contemplated in the
Prospectus as amended relating to the Designated Shares;
(f) On or after the date of the Pricing Agreement relating to the
Designated Shares (i) no downgrading shall have occurred in the rating
accorded the Company's debt securities or preferred stock, if any, by any
"nationally recognized statistical rating organization", as that term is
defined by the Commission for purposes of Rule 436(g)(2) under the Act, and
(ii) no such organization shall have publicly announced that it has under
surveillance or review, with possible negative implications, its rating of
any of the Company's debt securities or preferred stock, if any;
(g) On or after the date of the Pricing Agreement relating to the
Designated Shares there shall not have occurred any of the following: (i) a
suspension or material limitation in trading in securities generally on the
New York Stock Exchange; (ii) a suspension or material limitation in
trading in the Company's securities on the New York Stock Exchange; (iii) a
general moratorium on commercial banking activities declared by either
Federal or New York State authorities; or (iv) the outbreak or escalation
of hostilities involving the United States or the declaration by the United
States of a national emergency or war, if the effect of any such event
specified in this Clause (iv) in the judgment of the Representatives makes
it impracticable or inadvisable to proceed with the public offering or the
delivery of the Firm Shares or Optional Shares or both on the terms and in
the manner contemplated in the Prospectus as first amended or supplemented
relating to the Designated Shares;
(h) The Designated Shares at each Time of Delivery shall have been duly
listed on the New York Stock Exchange; and
(i) The Company shall have furnished or caused to be furnished to the
Representatives at each Time of Delivery for the Designated Shares
certificates of officers of the Company satisfactory to the Representatives
as to the accuracy of the representations and warranties of the Company
herein at and as of such Time of Delivery, as to the performance by the
18
Company of all of its obligations hereunder to be performed at or prior to
such Time of Delivery, as to the matters set forth in subsections (a) and
(e) of this Section and as to such other matters as the Representatives may
reasonably request.
8. (a) The Company and the Operating Partnership will, jointly and
severally, indemnify and hold harmless each Underwriter against any losses,
claims, damages or liabilities, joint or several, to which such Underwriter may
become subject, under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon an untrue statement or alleged untrue statement of a material fact
contained in any Preliminary Prospectus, any preliminary prospectus supplement,
the Registration Statement, the Prospectus as amended or supplemented and any
other prospectus relating to the Shares, or any amendment or supplement thereto,
or arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, and will reimburse each Underwriter for any
legal or other expenses reasonably incurred by such Underwriter in connection
with investigating or defending any such action or claim as such expenses are
incurred; provided, however, that neither the Company nor the Operating
Partnership shall be liable in any such case to the extent that any such loss,
claim, damage or liability arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in any Preliminary
Prospectus, any preliminary prospectus supplement, the Registration Statement,
the Prospectus as amended or supplemented and any other prospectus relating to
the Shares, or any such amendment or supplement in reliance upon and in
conformity with written information furnished to the Company by any Underwriter
of Designated Shares through the Representatives expressly for use in the
Prospectus as amended or supplemented relating to such Shares.
(b) Each Underwriter will indemnify and hold harmless the Company and the
Operating Partnership against any losses, claims, damages or liabilities to
which the Company or the Operating Partnership may become subject, under the Act
or otherwise, insofar as such losses, claims, damages or liabilities (or actions
in respect thereof) arise out of or are based upon an untrue statement or
alleged untrue statement of a material fact contained in any Preliminary
Prospectus, any preliminary prospectus supplement, the Registration Statement,
the Prospectus as amended or supplemented and any other prospectus relating to
the Shares, or any amendment or supplement thereto, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
in each case to the extent, but only to the extent, that such untrue statement
or alleged untrue statement or omission or alleged omission was made in any
Preliminary Prospectus, any preliminary prospectus supplement, the Registration
Statement, the Prospectus as amended or supplemented and any other prospectus
relating to the Shares, or any such amendment or supplement in reliance upon and
in conformity with written information furnished to the Company by such
Underwriter through the Representatives expressly for use therein; and will
reimburse the Company or the Operating Partnership for any legal or other
expenses reasonably incurred by the Company or the Operating Partnership in
connection with investigating or defending any such action or claim as such
expenses are incurred.
(c) Promptly after receipt by an indemnified party under subsection (a) or
(b) above of notice of the commencement of any action, such indemnified party
shall, if a claim in respect thereof is to be made against the indemnifying
19
party under such subsection, notify the indemnifying party in writing of the
commencement thereof; but the omission so to notify the indemnifying party shall
not relieve it from any liability which it may have to any indemnified party
otherwise than under such subsection. In case any such action shall be brought
against any indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate
therein and, to the extent that it shall wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with
counsel satisfactory to such indemnified party (who shall not, except with the
consent of the indemnified party, be counsel to the indemnifying party), and,
after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party shall not be
liable to such indemnified party under such subsection for any legal expenses of
other counsel or any other expenses, in each case subsequently incurred by such
indemnified party, in connection with the defense thereof other than reasonable
costs of investigation. No indemnifying party shall, without the written consent
of the indemnified party, effect the settlement or compromise of, or consent to
the entry of any judgment with respect to, any pending or threatened action or
claim in respect of which indemnification or contribution may be sought
hereunder (whether or not the indemnified party is an actual or potential party
to such action or claim) unless such settlement, compromise or judgment (i)
includes an unconditional release of the indemnified party from all liability
arising out of such action or claim and (ii) does not include any statement as
to or an admission of fault, culpability or a failure to act, by or on behalf of
any indemnified party.
(d) If the indemnification provided for in this Section 8 is unavailable to
or insufficient to hold harmless an indemnified party under subsection (a) or
(b) above in respect of any losses, claims, damages or liabilities (or actions
in respect thereof) referred to therein, then each indemnifying party shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages or liabilities (or actions in respect thereof)
in such proportion as is appropriate to reflect the relative benefits received
by the Company and the Operating Partnership on the one hand and the
Underwriters of the Designated Shares on the other from the offering of the
Designated Shares to which such loss, claim, damage or liability (or action in
respect thereof) relates. If, however, the allocation provided by the
immediately preceding sentence is not permitted by applicable law or if the
indemnified party failed to give the notice required under subsection (c) above,
then each indemnifying party shall contribute to such amount paid or payable by
such indemnified party in such proportion as is appropriate to reflect not only
such relative benefits but also the relative fault of the Company and the
Operating Partnership on the one hand and the Underwriters of the Designated
Shares on the other in connection with the statements or omissions which
resulted in such losses, claims, damages or liabilities (or actions in respect
thereof), as well as any other relevant equitable considerations. The relative
benefits received by the Company and the Operating Partnership on the one hand
and such Underwriters on the other shall be deemed to be in the same proportion
as the total net proceeds from such offering (before deducting expenses)
received by the Company and the Operating Partnership bear to the total
underwriting discounts and commissions received by such Underwriters. The
relative fault shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by the
20
Company and the Operating Partnership on the one hand or such Underwriters on
the other and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The Company, the
Operating Partnership and the Underwriters agree that it would not be just and
equitable if contributions pursuant to this subsection (d) were determined by
pro rata allocation (even if the 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 subsection (d). The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages or liabilities (or actions in respect thereof) referred to above
in this subsection (d) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
subsection (d), no Underwriter shall be required to contribute any amount in
excess of the amount by which the total price at which the applicable Designated
Shares 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 such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The obligations of the Underwriters of Designated Shares in
this subsection (d) to contribute are several in proportion to their respective
underwriting obligations with respect to such Shares and not joint.
(e) The obligations of the Company and the Operating Partnership under this
Section 8 shall be in addition to any liability which the Company or the
Operating Partnership may otherwise have and shall extend, upon the same terms
and conditions, to each person, if any, who controls any Underwriter within the
meaning of the Act; and the obligations of the Underwriters under this Section 8
shall be in addition to any liability which the respective Underwriters may
otherwise have and shall extend, upon the same terms and conditions, to each
officer and director of the Company and to each person, if any, who controls the
Company or the Operating Partnership within the meaning of the Act.
9. (a) If any Underwriter shall default in its obligation to purchase
the Firm Shares or Optional Shares which it has agreed to purchase under the
Pricing Agreement relating to such Shares, the Representatives may in their
discretion arrange for themselves or another party or other parties to purchase
such Shares on the terms contained herein. If within thirty-six hours after
such default by any Underwriter the Representatives do not arrange for the
purchase of such Firm Shares or Optional Shares, as the case may be, then the
Company shall be entitled to a further period of thirty-six hours within which
to procure another party or other parties satisfactory to the Representatives to
purchase such Shares on such terms. In the event that, within the respective
prescribed period, the Representatives notify the Company that they have so
arranged for the purchase of such Shares, or the Company notifies the
21
Representatives that it has so arranged for the purchase of such Shares, the
Representatives or the Company shall have the right to postpone a Time of
Delivery for such Shares for a period of not more than seven days, in order to
effect whatever changes may thereby be made necessary in the Registration
Statement or the Prospectus as amended or supplemented, or in any other
documents or arrangements, and the Company agrees to file promptly any
amendments or supplements to the Registration Statement or the Prospectus which
in the opinion of the Representatives may thereby be made necessary. The term
"Underwriter" as used in this Agreement shall include any person substituted
under this Section with like effect as if such person had originally been a
party to the Pricing Agreement with respect to such Designated Shares.
(b) If, after giving effect to any arrangements for the purchase of the Firm
Shares or Optional Shares, as the case may be, of a defaulting Underwriter or
Underwriters by the Representatives and the Company as provided in subsection
(a) above, the aggregate number of such Shares which remains unpurchased does
not exceed one-eleventh of the aggregate number of the Firm Shares or Optional
Shares, as the case may be, to be purchased at the respective Time of Delivery,
then the Company shall have the right to require each non-defaulting Underwriter
to purchase the number of Firm Shares or Optional Shares, as the case may be,
which such Underwriter agreed to purchase under the Pricing Agreement relating
to such Designated Shares and, in addition, to require each non-defaulting
Underwriter to purchase its pro rata share (based on the number of Firm Shares
or Optional Shares, as the case may be, which such Underwriter agreed to
purchase under such Pricing Agreement) of the Firm Shares or Optional Shares, as
the case may be, of such defaulting Underwriter or Underwriters for which such
arrangements have not been made; but nothing herein shall relieve a defaulting
Underwriter from liability for its default.
(c) If, after giving effect to any arrangements for the purchase of the Firm
Shares or Optional Shares, as the case may be, of a defaulting Underwriter or
Underwriters by the Representatives and the Company as provided in subsection
(a) above, the aggregate number of Firm Shares or Optional Shares, as the case
may be, which remains unpurchased exceeds one-eleventh of the aggregate number
of the Firm Shares or Optional Shares, as the case may be, to be purchased at
the respective Time of Delivery, as referred to in subsection (b) above, or if
the Company shall not exercise the right described in subsection (b) above to
require non-defaulting Underwriters to purchase Firm Shares or Optional Shares,
as the case may be, of a defaulting Underwriter or Underwriters, then the
Pricing Agreement relating to such Firm Shares or the Over-allotment Option
relating to such Optional Shares, as the case may be, shall thereupon terminate,
without liability on the part of any non-defaulting Underwriter or the Company,
except for the expenses to be borne by the Company and the Underwriters as
provided in Section 6 hereof and the indemnity and contribution agreements in
Section 8 hereof; but nothing herein shall relieve a defaulting Underwriter from
liability for its default.
10. The respective indemnities, agreements, representations, warranties
and other statements of the Company, the Operating Partnership and the several
Underwriters, as set forth in this Agreement or made by or on behalf of them,
respectively, pursuant to this Agreement, shall remain in full force and effect,
regardless of any investigation (or any statement as to the results thereof)
made by or on behalf of any Underwriter or any controlling person of any
Underwriter, the Company or the Operating Partnership, or any officer or
director or controlling person of the Company or the Operating Partnership, and
shall survive delivery of and payment for the Shares.
11. If any Pricing Agreement or Over-allotment Option shall be terminated
pursuant to Section 9 hereof, neither the Operating Partnership nor the Company
shall then be under any liability to any Underwriter with respect to the Firm
22
Shares or Optional Shares with respect to which such Pricing Agreement shall
have been terminated except as provided in Sections 6 and 8 hereof; but, if for
any other reason, Designated Shares are not delivered by or on behalf of the
Company as provided herein, the Company and the Operating Partnership will
reimburse the Underwriters through the Representatives for all out-of-pocket
expenses approved in writing by the Representatives, including fees and
disbursements of counsel, reasonably incurred by the Underwriters in making
preparations for the purchase, sale and delivery of such Designated Shares, but
the Company and the Operating Partnership shall then be under no further
liability to any Underwriter with respect to such Designated Shares except as
provided in Sections 6 and 8 hereof.
12. In all dealings hereunder, the Representatives of the Underwriters of
Designated Shares shall act on behalf of each of such Underwriters, and the
parties hereto shall be entitled to act and rely upon any statement, request,
notice or agreement on behalf of any Underwriter made or given by such
Representatives jointly or by such of the Representatives, if any, as may be
designated for such purpose in the Pricing Agreement.
All statements, requests, notices and agreements hereunder shall be in
writing, and if to the Underwriters shall be delivered or sent by mail, telex or
facsimile transmission to the address of the Representatives as set forth in the
Pricing Agreement; and if to the Company shall be delivered or sent by mail,
telex or facsimile transmission to the address of the Company set forth in the
Registration Statement, Attention: Secretary; provided, however, that any notice
to an Underwriter pursuant to Section 8(c) hereof shall be delivered or sent by
mail, telex or facsimile transmission to such Underwriter at its address set
forth in its Underwriters' Questionnaire, or telex constituting such
Questionnaire, which address will be supplied to the Company by the
Representatives upon request. Any such statements, requests, notices or
agreements shall take effect upon receipt thereof.
13. This Agreement and each Pricing Agreement shall be binding upon, and
inure solely to the benefit of the Underwriters, the Company, the Operating
Partnership and, to the extent provided in Sections 8 and 10 hereof, the
officers and directors of the Company and each person who controls the Company,
the Operating Partnership or any Underwriter, and their respective heirs,
executors, administrators, successors and assigns, and no other person shall
acquire or have any right under or by virtue of this Agreement or any such
Pricing Agreement. No purchaser of any of the Shares from any Underwriter shall
be deemed a successor or assign by reason merely of such purchase.
14. Time shall be of the essence of each Pricing Agreement. As used
herein, the term "business day" shall mean any day when the Commission's office
in Washington, D.C. is open for business.
15. THIS AGREEMENT AND EACH PRICING AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
16. This Agreement and each Pricing Agreement may be executed by any one
or more of the parties hereto and thereto in any number of counterparts, each of
which shall be deemed to be an original, but all such respective counterparts
shall together constitute one and the same instrument.
23
If the foregoing is in accordance with your understanding, please sign and
return to us six (6) counterparts hereof, and upon the acceptance hereof by you,
on behalf of each of the Underwriters, this letter and such acceptance hereof
shall constitute a binding agreement between each of the Underwriters, the
Company and the Operating Partnership.
Very truly yours,
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ Residential Realty, Inc.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇.
----------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
Title: President
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ Residential Realty L.P.
By: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ Residential Realty, Inc.
General Partner
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇.
----------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
Title: President
Accepted as of the date hereof:
▇▇▇▇▇▇▇, Sachs & Co.
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
Securities Corporation
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, Incorporated
Prudential Securities Incorporated
By: /s/ ▇▇▇▇▇▇▇, SACHS & CO.
-----------------------------------
(▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co.)
On behalf of each of the Underwriters
24
ANNEX I
PRICING AGREEMENT
-----------------
__________, 19__
Ladies and Gentlemen:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ Residential Realty, Inc., a Maryland corporation (the
"Company") which is the general partner of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ Residential Realty
L.P., a Delaware limited partnership (the "Operating Partnership"), and such
Operating Partnership propose, subject to the terms and conditions stated herein
and in the Underwriting Agreement, dated February __, 1997 (the "Underwriting
Agreement"), between the Company and the Operating Partnership on the one hand
and [ ] on the other hand to issue and sell to the Underwriters named in
Schedule I hereto (the "Underwriters") the Shares specified in Schedule II
hereto (the "Designated Shares") consisting of Firm Shares and any Optional
Shares the Underwriters may elect to purchase. Each of the provisions of the
Underwriting Agreement is incorporated herein by reference in its entirety, and
shall be deemed to be a part of this Agreement to the same extent as if such
provisions had been set forth in full herein; and each of the representations
and warranties set forth therein shall be deemed to have been made at and as of
the date of this Pricing Agreement, except that each representation and warranty
which refers to the Prospectus in Section 2 of the Underwriting Agreement shall
be deemed to be a representation or warranty as of the date of the Underwriting
Agreement in relation to the Prospectus (as therein defined), and also a
representation and warranty as of the date of this Pricing Agreement in relation
to the Prospectus as amended or supplemented relating to the Designated Shares
which are the subject of this Pricing Agreement. Each reference to the
Representatives herein and in the provisions of the Underwriting Agreement so
incorporated by reference shall be deemed to refer to you. Unless otherwise
defined herein, terms defined in the Underwriting Agreement are used herein as
therein defined. The Representatives designated to act on behalf of the
Representatives and on behalf of each of the Underwriters of the Designated
Shares pursuant to Section 12 of the Underwriting Agreement and the address of
the Representatives referred to in such Section 12 are set forth in Schedule II
hereto.
An amendment to the Registration Statement, or a supplement to the
Prospectus, as the case may be, relating to the Designated Shares, in the form
heretofore delivered to you is now proposed to be filed with the Commission.
Subject to the terms and conditions set forth herein and in the Underwriting
Agreement incorporated herein by reference, [(a)] the Company agrees to issue
and sell to each of the Underwriters, and each of the Underwriters agrees,
severally and not jointly, to purchase from the Company, at the time and place
and at the purchase price to the Underwriters set forth in Schedule II hereto,
the number of Firm Shares set forth opposite the name of such Underwriter in
Schedule I hereto [and, (b) in the event and to the extent that the Underwriters
shall exercise the election to purchase Optional Shares, as provided below, the
Company agrees to issue and sell to each of the Underwriters, and each of the
Underwriters agrees, severally and not jointly, to purchase from the Company at
the purchase price to the Underwriters set forth in Schedule II hereto that
portion of the number of Optional Shares as to which such election shall have
been exercised].
1
[The Company hereby grants to each of the Underwriters the right to purchase
at their election up to the number of Optional Shares set forth opposite the
name of such Underwriter in Schedule I hereto on the terms referred to in the
paragraph above for the sole purpose of covering over-allotments in the sale of
the Firm Shares. Any such election to purchase Optional Shares may be exercised
by written notice from the Representatives to the Company given within a period
of 30 calendar days after the date of this Pricing Agreement, setting forth the
aggregate number of Optional Shares to be purchased and the date on which such
Optional Shares are to be delivered, as determined by the Representatives, but
in no event earlier than the First Time of Delivery or, unless the
Representatives and the Company otherwise agree in writing, no earlier than two
or later than ten business days after the date of such notice].
If the foregoing is in accordance with your understanding, please sign and
return to us [one for the Company and one for each of the Representatives plus
one for each counsel] counterparts hereof, and upon acceptance hereof by you, on
behalf of each of the Underwriters, this letter and such acceptance hereof,
including the provisions of the Underwriting Agreement incorporated herein by
reference, shall constitute a binding agreement between each of the Underwriters
and the Company and the Operating Partnership. It is understood that your
acceptance of this letter on behalf of each of the Underwriters is or will be
pursuant to the authority set forth in a form of Agreement among Underwriters,
the form of which shall be submitted to the Company for examination, upon
request, but without warranty on the part of the Representatives as to the
authority of the signers thereof.
Very truly yours,
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ Residential Realty, Inc.
By:
---------------------------------------------------
Name:
Title:
2
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ Residential Realty L.P.
By: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ Residential Realty, Inc.
General Partner
By:
---------------------------------------------
Name:
Title:
Accepted as of the date hereof:
▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co.
▇▇▇▇▇▇▇▇▇, Lufkin & ▇▇▇▇▇▇▇▇
Securities Corporation
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, Incorporated
Prudential Securities Incorporated
By:
-------------------------------------------
(▇▇▇▇▇▇▇, Sachs & Co.)
On behalf of each of the Underwriters
3
SCHEDULE I
[MAXIMUM NUMBER
OF OPTIONAL
NUMBER OF SHARES WHICH
[FIRM] SHARES MAY BE
UNDERWRITER TO BE PURCHASED PURCHASED]
----------- --------------- ---------------
[▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co.]................................
[▇▇▇▇▇▇▇▇▇ Lufkin & ▇▇▇▇▇▇▇▇ Securities Corporation]
[▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, Incorporated]
[Prudential Securities Incorporated]
Total
4
SCHEDULE II
TITLE OF DESIGNATED SHARES:
NUMBER OF DESIGNATED SHARES:
Number of Firm Shares:
Maximum Number of Optional Shares:
INITIAL OFFERING PRICE TO PUBLIC:
[$........ per Share] [Formula]
PURCHASE PRICE BY UNDERWRITERS:
[$........ per Share] [Formula]
[COMMISSION PAYABLE TO UNDERWRITERS:
$........ per Share in [specify same form of funds as in Specified Funds below]]
FORM OF DESIGNATED SHARES:
Definitive form, to be made available for checking [and packaging] at least
twenty-four hours prior to the Time of Delivery at the office of [The Depository
Trust Company or its designated custodian] [the Representatives]
Specified Funds for Payment of Purchase Price:
[New York] Clearing House (next day) funds
[DESCRIBE ANY BLACKOUT PROVISIONS WITH RESPECT TO THE DESIGNATED SHARES]
TIME OF DELIVERY:
......... a.m. (New York City time), .................., 19..
CLOSING LOCATION:
NAMES AND ADDRESSES OF REPRESENTATIVES:
Designated Representatives:
Address for Notices, etc.:
[OTHER TERMS]*:
(*) A description of particular tax, accounting or other unusual features
(including any event risk provisions) of the Designated Shares should be set
forth, or referenced to an attached or accompanying description, if necessary,
to ensure agreement as to the terms of the Designated Shares to be purchased and
sold. Such a description might appropriately be in the form in which such
features will be described in the Prospectus Supplement for the offering.
Pursuant to Section 7(d) of the Underwriting Agreement, the accountants
shall furnish letters to the Underwriters to the effect that:
(i) They are independent certified public accountants with respect to the
Company and its subsidiaries within the meaning of the Act and the applicable
published rules and regulations thereunder;
(ii) In their opinion, the financial statements and any supplementary
financial information and schedules (and, if applicable, financial forecasts
and/or pro forma financial information) examined by them and included or
incorporated by reference in the Registration Statement or the Prospectus comply
as to form in all material respects with the applicable accounting requirements
of the Act or the Exchange Act, as applicable, and the related published rules
and regulations thereunder; and, if applicable, they have made a review in
accordance with standards established by the American Institute of Certified
Public Accountants of the consolidated interim financial statements, selected
financial data, pro forma financial information, financial forecasts and/or
condensed financial statements derived from audited financial statements of the
Company for the periods specified in such letter, as indicated in their reports
thereon, copies of which have been furnished to the representatives of the
Underwriters (the "Representatives") and are attached hereto;
(iii) They have made a review in accordance with standards established by
the American Institute of Certified Public Accountants of the unaudited
condensed consolidated statements of income, consolidated balance sheets and
consolidated statements of cash flows included in the Prospectus and/or included
in the Company's quarterly reports on Form 10-Q incorporated by reference into
the Prospectus as indicated in their reports thereon copies of which are
attached thereto; and on the basis of specified procedures including inquiries
of officials of the Company who have responsibility for financial and accounting
matters regarding whether the unaudited condensed consolidated financial
statements referred to in paragraph (vi)(A)(i) below comply as to form in all
material respects with the applicable accounting requirements of the Act and the
Exchange Act and the related published rules and regulations, nothing came to
their attention that caused them to believe that the unaudited condensed
consolidated financial statements do not comply as to form in all material
respects with the applicable accounting requirements of the Act and the Exchange
Act and the related published rules and regulations;
(iv) The unaudited selected financial information with respect to the
consolidated results of operations and financial position of the Company for the
five most recent fiscal years included in the Prospectus and included or
incorporated by reference in Item 6 of the Company's Annual Report on Form 10-K
for the most recent fiscal year agrees with the corresponding amounts (after
restatement where applicable) in the audited consolidated financial statements
for such five fiscal years which were included or incorporated by reference in
the Company's Annual Reports on Form 10-K for such fiscal years;
(v) They have compared the information in the Prospectus under selected
captions with the disclosure requirements of Regulation S-K and on the basis of
limited procedures specified in such letter nothing came to their attention as a
result of the foregoing procedures that caused them to believe that this
information does not conform in all material respects with the disclosure
requirements of items 301, 302, 402 and 503(d), respectively, of Regulation
S-K;
(vi) On the basis of limited procedures, not constituting an examination
in accordance with generally accepted auditing standards, consisting of a
reading of the unaudited financial statements and other information referred to
2
below, a reading of the latest available interim financial statements of the
Company and its subsidiaries, inspection of the minute books of the Company and
its subsidiaries since the date of the latest audited financial statements
included or incorporated by reference in the Prospectus, inquiries of officials
of the Company and its subsidiaries responsible for financial and accounting
matters and such other inquiries and procedures as may be specified in such
letter, nothing came to their attention that caused them to believe that:
(A) (i) the unaudited condensed consolidated statements of income,
consolidated balance sheets and consolidated statements of cash flows
included in the Prospectus and/or included or incorporated by reference in
the Company's Quarterly Reports on Form 10-Q incorporated by reference in the
Prospectus do not comply as to form in all material respects with the
applicable accounting requirements of the Exchange Act and the related
published rules and regulations, or (ii) any material modifications should be
made to the unaudited condensed consolidated statements of income,
consolidated balance sheets and consolidated statements of cash flows
included in the Prospectus or included in the Company's Quarterly Reports on
Form 10-Q incorporated by reference in the Prospectus, for them to be in
conformity with generally accepted accounting principles;
(B) any other unaudited income statement data and balance sheet items
included in the Prospectus do not agree with the corresponding items in the
unaudited consolidated financial statements from which such data and items
were derived, and any such unaudited data and items were not determined on a
basis substantially consistent with the basis for the corresponding amounts
in the audited consolidated financial statements included or incorporated by
reference in the Company's Annual Report on Form 10-K for the most recent
fiscal year;
(C) the unaudited financial statements which were not included in the
Prospectus but from which were derived the unaudited condensed financial
statements referred to in clause (A) and any unaudited income statement data
and balance sheet items included in the Prospectus and referred to in Clause
(B) were not determined on a basis substantially consistent with the basis
for the audited financial statements included or incorporated by reference in
the Company's Annual Report on Form 10-K for the most recent fiscal year;
(D) any unaudited pro forma consolidated condensed financial statements
included or incorporated by reference in the Prospectus do not comply as to
form in all material respects with the applicable accounting requirements of
the Act and the published rules and regulations thereunder or the pro forma
adjustments have not been properly applied to the historical amounts in the
compilation of those statements;
(E) as of a specified date not more than five days prior to the date of
such letter, there have been any changes in the consolidated capital stock
(other than issuances of capital stock upon exercise of options and stock
appreciation rights, upon earn-outs of performance shares and upon
conversions of convertible securities, in each case which were outstanding on
the date of the latest balance sheet included or incorporated by reference in
the Prospectus) or any increase in the consolidated long-term debt of the
Company and its subsidiaries, or any decreases in consolidated net current
assets or stockholders' equity or other items specified by the
Representatives, or any increases in any items specified by the
Representatives, in each case as compared with amounts shown in the latest
balance sheet included or incorporated by reference in the Prospectus, except
in each case for changes, increases or decreases which the Prospectus
discloses have occurred or may occur or which are described in such letter;
and
3
(F) for the period from the date of the latest financial statements
included or incorporated by reference in the Prospectus to the specified
date referred to in Clause (E) there were any decreases in consolidated
net revenues or operating profit or the total or per share amounts of
consolidated net income or other items specified by the Representatives,
or any increases in any items specified by the Representatives, in each
case as compared with the comparable period of the preceding year and with
any other period of corresponding length specified by the Representatives,
except in each case for increases or decreases which the Prospectus
discloses have occurred or may occur or which are described in such
letter; and
(vii) In addition to the examination referred to in their report(s)
included or incorporated by reference in the Prospectus and the limited
procedures, inspection of minute books, inquiries and other procedures
referred to in paragraphs (iii) and (vi) above, they have carried out certain
specified procedures, not constituting an examination in accordance with
generally accepted auditing standards, with respect to certain amounts,
percentages and financial information specified by the Representatives which
are derived from the general accounting records of the Company and its
subsidiaries, which appear in the Prospectus (excluding documents
incorporated by reference), or in Part II of, or in exhibits and schedules
to, the Registration Statement specified by the Representatives or in
documents incorporated by reference in the Prospectus specified by the
Representatives, and have compared certain of such amounts, percentages and
financial information with the accounting records of the Company and its
subsidiaries and have found them to be in agreement.
All references in this Annex II to the Prospectus shall be deemed to refer
to the Prospectus (including the documents incorporated by reference therein) as
defined in the Underwriting Agreement as of the date of the letter delivered on
the date of the Pricing Agreement for purposes of such letter and to the
Prospectus as amended or supplemented (including the documents incorporated by
reference therein) in relation to the applicable Designated Shares for purposes
of the letter delivered at the Time of Delivery for such Designated Shares.
4
