EXHIBIT 1.1
XXXXXX REALTY CORPORATION
11,300,000 Shares/1/
Common Stock
UNDERWRITING AGREEMENT
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________ ___, 1997
PRUDENTIAL SECURITIES INCORPORATED
XXXXXXXXX, LUFKIN & XXXXXXXX
SECURITIES CORPORATION
X.X. XXXXXX SECURITIES INC.
XXXXX XXXXXX INC.
As Representatives of the several Underwriters
c/o Prudential Securities Incorporated
Xxx Xxx Xxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
Xxxxxx Realty Corporation, a Maryland corporation (the "Company"), and
Xxxxxx Realty, L.P., a Delaware limited partnership (the "Operating
Partnership"), each hereby confirms its agreement with the several underwriters
named in Schedule 1 hereto (the "Underwriters"), for whom you have been duly
authorized to act as representatives (in such capacities, the
"Representatives"), as set forth below. If you are the only Underwriters, all
references herein to the Representatives shall be deemed to be to the
Underwriters.
1. Securities. Subject to the terms and conditions herein contained, the
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Company proposes to issue and sell to the several Underwriters an aggregate of
11,300,000 shares (the "Firm Securities") of the Company's common stock, par
value $.01 per share ("Common Stock"). The Company also proposes to issue and
sell to the several Underwriters not more than 1,695,000 additional shares of
Common Stock if requested by the Representatives as provided in Section 3 of
this Agreement. Any and all shares of Common Stock to be purchased by the
Underwriters pursuant to such option are referred to herein as the "Option
Securities", and the Firm Securities and any Option Securities are collectively
referred to herein as the "Securities".
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/1/ Plus an option to purchase from Xxxxxx Realty Corporation up to 1,695,000
additional shares to cover over-allotments.
2. Representations and Warranties of the Company and the Operating
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Partnership. The Company and the Operating Partnership, jointly and severally,
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represent and warrant to, and agree with, each of the several Underwriters that:
(a) A registration statement on Form S-11 (File No. 333-15553) with
respect to the Securities, including a prospectus subject to completion, has
been filed by the Company with the Securities and Exchange Commission (the
"Commission") under the Securities Act of 1933, as amended (the "Act"), and one
or more amendments to such registration statement may have been so filed. After
the execution of this Agreement, the Company will file with the Commission
either (i) if such registration statement, as it may have been amended, has been
declared by the Commission to be effective under the Act, either (A) if the
Company relies on Rule 434 under the Act, a Term Sheet (as hereinafter defined)
relating to the Securities, that shall identify the Preliminary Prospectus (as
hereinafter defined) that it supplements containing such information as is
required or permitted by Rules 434, 430A and 424(b) under the Act or (B) if the
Company does not rely on Rule 434 under the Act, a prospectus in the form most
recently included in an amendment to such registration statement (or, if no such
amendment shall have been filed, in such registration statement), with such
changes or insertions as are required by Rule 430A under the Act or permitted by
Rule 424(b) under the Act, and in the case of either clause (i)(A) or (i)(B) of
this sentence as have been provided to and approved by the Representatives prior
to the execution of this Agreement, or (ii) if such registration statement, as
it may have been amended, has not been declared by the Commission to be
effective under the Act, an amendment to such registration statement, including
a form of prospectus, a copy of which amendment has been furnished to and
approved by the Representatives prior to the execution of this Agreement. The
Company may also file a related registration statement with the Commission
pursuant to Rule 462(b) under the Act for the purpose of registering certain
additional Securities, which registration, assuming compliance with the
requirements of Rule 462(b), shall be effective upon filing with the Commission.
As used in this Agreement, the term "Original Registration Statement" means the
registration statement initially filed relating to the Securities, as amended at
the time when it was or is declared effective, including all financial schedules
and exhibits thereto and including any information omitted therefrom pursuant to
Rule 430A under the Act and included in the Prospectus (as hereinafter defined);
the term "Rule 462(b) Registration Statement" means any registration statement
filed with the Commission pursuant to Rule 462(b) under the Act (including the
Registration Statement and any Preliminary Prospectus or Prospectus incorporated
therein at the time such Registration Statement becomes effective); the term
"Registration Statement" includes both the Original Registration Statement and
any Rule 462(b) Registration Statement; the term "Preliminary Prospectus" means
each prospectus subject to completion filed with such registration statement and
any amendment or supplement thereto (including the prospectus subject to
completion, if any, included in the Registration Statement or any amendment
thereto at the time it was or is declared effective); the term "Prospectus"
means:
(A) if the Company relies on Rule 434 under the Act, the Term Sheet
relating to the Securities that is first filed pursuant to Rule 424(b)(7)
under the Act, together with the Preliminary Prospectus identified therein
that such Term Sheet supplements;
(B) if the Company does not rely on Rule 434 under the Act, the
prospectus first filed with the Commission pursuant to Rule 424(b) under
the Act; or
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(C) if the Company does not rely on Rule 434 under the Act and if no
prospectus is required to be filed pursuant to Rule 424(b) under the Act,
the prospectus included in the Registration Statement;
and the term "Term Sheet" means any term sheet that satisfies the requirements
of Rule 434 under the Act. Any reference herein to the "date" of a Prospectus
that includes a Term Sheet shall mean the date of such Term Sheet.
(b) The Commission has not issued any order preventing or suspending
use of any Preliminary Prospectus. Each Preliminary Prospectus provided to
Underwriters for use in connection with the issuance and sale of the Securities
(i) contained all statements required to be stated therein in accordance with,
and complied in all material respects with the requirements of, the Act and the
rules and regulations of the Commission thereunder and (ii) did not include any
untrue statement of a material fact or omit to state any material fact necessary
in order to make the statements therein, in the light of the circumstances under
which they were made, not misleading. When the Registration Statement or any
amendment thereto was or is declared effective, it (i) contained or will contain
all statements required to be stated therein in accordance with, and complied or
will comply in all material respects with the requirements of, the Act and the
rules and regulations of the Commission thereunder and (ii) did not or will not
include any untrue statement of a material fact or omit to state any material
fact necessary to make the statements therein not misleading. When the
Prospectus or any Term Sheet that is a part thereof or any amendment or
supplement to the Prospectus is filed with the Commission pursuant to Rule
424(b) (or, if the Prospectus or part thereof or such amendment or supplement is
not required to be so filed, when the Registration Statement or the amendment
thereto containing such amendment or supplement to the Prospectus was or is
declared effective) and on the Firm Closing Date and any Option Closing Date
(both as hereinafter defined), the Prospectus, as amended or supplemented at any
such time, (i) contained or will contain all statements required to be stated
therein in accordance with, and complied or will comply in all material respects
with the requirements of, the Act and the rules and regulations of the
Commission thereunder and (ii) did not or will not include any untrue statement
of a material fact or omit to state any material fact necessary in order to make
the statements therein, in the light of the circumstances under which they were
made, not misleading. The foregoing provisions of this paragraph (b) do not
apply to statements or omissions made in any Preliminary Prospectus, the
Registration Statement or any amendment thereto or the Prospectus or any
amendment or supplement thereto in reliance upon and in conformity with written
information furnished to the Company by any Underwriter through the
Representatives specifically for use therein.
(c) If the Company has elected to rely on Rule 462(b) and the Rule
462(b) Registration Statement has not been declared effective (i) the Company
has filed a Rule 462(b) Registration Statement in compliance with and that,
assuming compliance with Rule 462(b), is effective upon filing with the
Commission and has received confirmation of its receipt and (ii) the Company has
given irrevocable instructions for transmission of the applicable filing fee in
connection with the filing of the Rule 462(b) Registration Statement, in
compliance with Rule 111 promulgated under the Act or the Commission has
received payment of such filing fee.
(d) The Company and each of its subsidiaries (which are corporations)
have been duly organized and are validly existing as corporations in good
standing under the laws of their respective jurisdictions of incorporation and
are duly qualified to transact business as foreign corporations and are in good
standing under the laws of all other jurisdictions where the ownership
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or leasing of their respective properties or the conduct of their respective
businesses requires such qualification, except where the failure to be so
qualified does not amount to a material liability or disability to the Company
and its subsidiaries, taken as a whole.
(e) The Company and each of its subsidiaries have full power
(corporate or other) to own or lease their respective properties and conduct
their respective businesses as described in the Registration Statement and the
Prospectus or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus; and each of the Company and the Operating Partnership
has full power (corporate or other) to enter into this Agreement and to carry
out all the terms and provisions hereof to be carried out by it.
(f) The issued shares of capital stock of each of the Company's
subsidiaries (which are corporations) have been duly authorized and validly
issued, are fully paid and nonassessable and, except as otherwise set forth in
the Prospectus or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus, are owned beneficially by the Company free and clear of
any security interests, liens, encumbrances, equities or claims.
(g) The Operating Partnership has been duly organized and is validly
existing as a limited partnership in good standing under the laws of its
jurisdiction of organization and is duly qualified to transact business as a
foreign limited partnership and is in good standing under the laws of all other
jurisdictions where the ownership or leasing of its properties or the conduct of
its business requires such qualification, except where the failure to be so
qualified does not amount to a material liability or disability to the Company
and its subsidiaries, taken as a whole. As of the Firm Closing Date, the
Company and the limited partners of the Operating Partnership will enter into an
Amended and Restated Agreement of Limited Partnership of the Operating
Partnership, substantially in the form of Exhibit 10.1 to the Registration
Statement, with such other nonmaterial changes and revisions as are acceptable
to the Representatives (the "Operating Partnership Agreement"), which agreement
will be in full force and effect as of the Firm Closing Date. All of the
partnership interests in the Operating Partnership (the "Units") to be issued in
connection with the Formation Transactions (as defined in the Registration
Statement and the Prospectus, or if the Prospectus is not in existence, the most
recent Preliminary Prospectus) have been duly authorized for issuance by the
Operating Partnership to the holders or prospective holders thereof, and, at the
Firm Closing Date, against the payment of consideration therefor in accordance
with the Operating Partnership Agreement, will be validly issued, fully paid and
owned in the amounts set forth on Schedule 2 hereto, and, in the case of the
Units to be issued to the Company, free and clear of any security interests,
liens, encumbrances, equities or claims. Immediately after the Firm Closing
Date, 2,692,374 Units will be issued and outstanding. The Units conform in all
material respects to the description thereof contained in the Prospectus or, if
the Prospectus is not in existence, the most recent Preliminary Prospectus. The
Company is, and immediately after the Firm Closing Date will be, the sole
general partner of the Operating Partnership.
(h) The Company has an authorized, issued and outstanding
capitalization as set forth in the Prospectus or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus. All of the issued shares of
capital stock of the Company have been duly authorized and validly issued and
are fully paid and nonassessable. The Firm Securities and the Option Securities
have been duly authorized and at the Firm Closing Date or the related Option
Closing Date (as the case may be), after payment therefor in accordance
herewith, will be validly issued, fully paid and nonassessable. No holders of
outstanding shares of capital stock of the Company are entitled as such to any
preemptive or other rights to subscribe for any of the Securities, and no
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holder of securities of the Company has any right which has not been fully
exercised or waived to require the Company to register the offer or sale of any
securities owned by such holder under the Act in the public offering
contemplated by this agreement.
(i) The capital stock of the Company conforms to the description
thereof contained in the Prospectus or, if the Prospectus is not in existence,
the most recent Preliminary Prospectus.
(j) All of the issued and outstanding shares of capital stock of the
Company have been offered and sold in compliance with all applicable laws
(including, without limitation, federal and state securities laws). Except as
described in the Prospectus (or, if the Prospectus does not exist, the most
recent Preliminary Prospectus) and 50 shares of Common Stock issued to Xxxx X.
Xxxxxx, Xx. (which will be repurchased on the Closing Date), the Company has not
issued or sold any shares of its capital stock during the six-month period
preceding the initial filing date of the Registration Statement including any
sales pursuant to Rule 144A under, or Regulation D or S of, the Securities Act.
(k) Except as disclosed in the Prospectus (or, if the Prospectus is
not in existence, the most recent Preliminary Prospectus), there are no
outstanding (A) securities, equity interests or obligations of the Company or
any of its subsidiaries convertible into or exchangeable for any capital stock
or equity interests (as the case may be) of the Company or any such subsidiary,
(B) warrants, rights or options to subscribe for or purchase from the Company or
any such subsidiary any such capital stock or equity interests or any such
convertible or exchangeable securities, equity interests or obligations, or (C)
obligations of the Company or any such subsidiary to issue any shares of capital
stock, equity interests, any such convertible or exchangeable securities, equity
interests or obligations, or any such warrants, rights or options.
(l) The offer, issuance and exchange of the Units in connection with
the Formation Transactions were or will be exempt from the registration
requirements of the Act and applicable state securities and blue sky laws. The
Company and the Operating Partnership reasonably believe that all persons and
entities to whom such Units have been issued or will be issued on the Firm
Closing Date were or will be at the time of issuance "accredited investors" as
that term is defined in Rule 501(a) under the Act.
(m) The balance sheet of the Company (including the notes thereto)
included in the Registration Statement and the Prospectus (or, if the Prospectus
is not in existence, the most recent Preliminary Prospectus) fairly presents the
financial position of the Company at the date therein specified. The combined
financial statements (including the notes thereto) of the Xxxxxx Group (as
defined in the notes thereto) and schedule of the Xxxxxx Group included in the
Registration Statement and the Prospectus (or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus) fairly present the financial
position, the results of operations and cash flows and changes in financial
condition of the Xxxxxx Group, at the date and for the periods therein
specified. The combined historical summaries of certain revenues and certain
expenses (including the notes thereto) of the Acquisition Properties (as defined
in the notes thereto) included in the Registration Statement and the Prospectus
(or, if the Prospectus is not in existence, the most recent Preliminary
Prospectus) fairly present the combined certain revenues and certain expenses of
the Acquisition Properties for the periods therein specified. All of the
foregoing financial statements (including the notes thereto) and schedules have
been prepared in accordance with generally accepted accounting principles
consistently applied for each of the periods presented.
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The selected financial data set forth under the caption "Selected Financial
Data" in the Prospectus (or, if the Prospectus is not in existence, the most
recent Preliminary Prospectus) fairly present, on the basis stated in the
Prospectus (or such Preliminary Prospectus), the information included therein.
(n) The pro forma consolidated financial statements (including the
notes thereto) of the Company included in the Registration Statement and the
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus) comply in all material respects with the applicable
requirements of Rule 11-02 of Regulation S-X of the Commission and the pro forma
adjustments have been properly applied to the historical amounts in the
compilation of such information and the assumptions used in the preparation
thereof are, in the opinion of the Company, reasonable. Other than the
historical and pro forma financial statements (and schedules) included therein,
no other historical or pro forma financial statements (or schedules) are
required to be included in the Registration Statement or Prospectus.
(o) Deloitte & Touche LLP, who have certified certain financial
statements and schedules, and delivered their reports with respect to the
audited financial statements and schedules, included in the Registration
Statement and the Prospectus (or, if the Prospectus is not in existence, the
most recent Preliminary Prospectus), are independent public accountants as
required by the Act and the applicable rules and regulations thereunder.
(p) The adjustments made to the Company's pro forma Funds from
Operations for the 12 months ending September 30, 1996 fairly reflect (A) the
net increase in contractual rental income for the 12 months ending January 31,
1998 (over actual rental revenue included in pro forma Funds from Operations for
the 12 months ended September 30, 1996); (B) the net increase in revenue from
new executed leases commencing after September 30, 1995 for the 12 months ending
January 31, 1998; (C) the net effect of lease expirations for leases which
expired between September 30, 1995 and September 30, 1996 and leases which will
expire between October 1, 1996 and January 31, 1998 for that portion of the 12-
month period ending January 31, 1998 that such leases are no longer in effect;
(D) the effect of adjusting straight-line rental income and expense from an
accrual basis under generally accepted accounting principles to a cash basis;
and (E) the estimated interest earned at 5% per annum on excess cash proceeds of
$20,444,000. The assumptions made by the Company disclosed in the Prospectus
(or, if the Prospectus is not in existence, the most recent Preliminary
Prospectus), under the caption "Distribution Policy" are reasonable in light of
the expected and intended method of operation of the Company and the Operating
Partnership.
(q) The execution and delivery of this Agreement have been duly
authorized by the Company and the Operating Partnership and this Agreement has
been duly executed and delivered by the Company and the Operating Partnership,
and is the valid and binding agreement of each of the Company and the Operating
Partnership, enforceable against the Company and the Operating Partnership in
accordance with its terms, subject to the effect of bankruptcy, insolvency,
moratorium, fraudulent conveyance, reorganization and similar laws relating to
creditors' rights generally and to the application of equitable principles in
any proceeding, whether at law or in equity.
(r) No legal or governmental proceedings are pending to which the
Company or any of its subsidiaries is a party or to which the property of the
Company or any of its subsidiaries is subject that are required to be described
in the Registration Statement or the
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Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus) and are not described therein, and no such proceedings
have been threatened against the Company or any of its subsidiaries or with
respect to any of their respective properties; and no contract or other document
is required to be described in the Registration Statement or the Prospectus or
to be filed as an exhibit to the Registration Statement that is not described
therein (or, if the Prospectus is not in existence, the most recent Preliminary
Prospectus) or filed as required.
(s) The issuance, offering and sale of the Securities to the
Underwriters by the Company pursuant to this Agreement, the compliance by the
Company and the Operating Partnership with the other provisions of this
Agreement and the consummation of the other transactions herein contemplated do
not (i) require the consent, approval, authorization, registration or
qualification of or with any governmental authority, except such as have been
obtained, such as may be required under state securities or blue sky laws and,
if the registration statement filed with respect to the Securities (as amended)
is not effective under the Act as of the time of execution hereof, such as may
be required (and shall be obtained as provided in this Agreement) under the Act,
or (ii) conflict with or result in a breach or violation of any of the terms and
provisions of, or constitute a default under, any indenture, mortgage, deed of
trust, lease 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 or
any of their respective properties are bound, or the charter documents or by-
laws or certificate of limited partnership or partnership agreement (as the case
may be) of the Company or any of its subsidiaries, or any statute or any
judgment, decree, order, rule or regulation of any court or other governmental
authority or any arbitrator applicable to the Company or any of its
subsidiaries.
(t) Each of the Company and its subsidiaries has full power (corporate
or other) to enter into and deliver (as applicable) the agreements set forth on
Schedule 3 hereto and all other agreements and other documents related to the
Formation Transactions (collectively, the "Transaction Documents") to which each
is party and to carry out all the terms and provisions thereof to be carried out
by each, respectively. The execution and delivery of the Transaction Documents
have been duly authorized by the Company and its subsidiaries (as applicable)
and the Transaction Documents have been or will be on the Firm Closing Date duly
executed and delivered by the Company and its subsidiaries (as applicable), and
each is the valid and binding agreement of the Company and its subsidiaries (as
applicable), enforceable against the Company and its subsidiaries (as
applicable) in accordance with its terms, subject to the effect of bankruptcy,
insolvency, moratorium, fraudulent conveyance, reorganization and similar laws
relating to creditors' rights generally and to the application of equitable
principles in any proceeding, whether at law or in equity.
(u) The execution and delivery of the Transaction Documents, the
compliance by the Company and its subsidiaries (as applicable) with their
respective obligations under the Transaction Documents and the consummation of
the Formation Transactions do not (i) require the consent, approval,
authorization, registration or qualification of or with any governmental
authority, except such as have been obtained, such as may be required under
state securities or blue sky laws and, if the registration statement filed with
respect to the Securities (as amended) is not effective under the Act as of the
time of execution hereof, such as may be required (and shall be obtained as
provided in this Agreement) under the Act, or (ii) conflict with or result in a
breach or violation of any of the terms and provisions of, or constitute a
default under, any indenture, mortgage, deed of trust, lease 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 or any of their
7
respective properties are bound, or the charter documents or by-laws or
certificate of limited partnership or partnership agreement (as the case may be)
of the Company or any of its subsidiaries, or any statute or any judgment,
decree, order, rule or regulation of any court or other governmental authority
or any arbitrator applicable to the Company or any of its subsidiaries.
(v) Subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus (or, if the Prospectus is
not in existence, the most recent Preliminary Prospectus), neither the Company
nor any of its subsidiaries has sustained any material loss or interference with
their respective businesses or properties from fire, flood, hurricane, accident
or other calamity, whether or not covered by insurance, or from any labor
dispute or any legal or governmental proceeding and there has not been any
material adverse change, or any development involving a prospective material
adverse change, in the condition (financial or otherwise), management, business
prospects, net worth, or results of operations of the Company and its
subsidiaries, taken as a whole, except in each case as described in or
contemplated by the Registration Statement and the Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary Prospectus).
(w) The Company has not, directly or indirectly, (i) taken any action
designed to cause or to result in, or that has constituted or which might
reasonably be expected to constitute, the stabilization or manipulation of the
price of any security of the Company to facilitate the sale or resale of the
Securities or (ii) since the filing of the Registration Statement (A) sold, bid
for, purchased, or paid anyone any compensation for soliciting purchases of, the
Securities or (B) paid or agreed to pay to any person any compensation for
soliciting another to purchase any other securities of the Company.
(x) The Company has not distributed and, prior to the later of (i) the
Closing Date and (ii) the completion of the distribution of the Securities, will
not distribute any offering material in connection with the offering and sale of
the Securities other than the Registration Statement or any amendment thereto,
any Preliminary Prospectus or the Prospectus or any amendment or supplement
thereto, or other materials, if any, permitted by the Act.
(y) Subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus (or, if the Prospectus is
not in existence, the most recent Preliminary Prospectus), (1) the Company and
its subsidiaries have not incurred any material liability or obligation, direct
or contingent, nor entered into any material transaction not in the ordinary
course of business; (2) the Company has not purchased any of its outstanding
capital stock (other than as contemplated by Section 2(j) hereof); and (3) there
has not been any material change in the capital stock or partnership interests
(as the case may be), short-term debt or long-term debt of the Company and its
consolidated subsidiaries, except in each case as described in or contemplated
by the Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus).
(z) Upon consummation of the Formation Transactions, the Company or
its subsidiaries will have good and marketable title in fee simple to all items
of real property comprising part of the Properties (as defined in the
Registration Statement and the Prospectus, or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus) (except with respect to land
held pursuant to a ground lease or subject to an air space lease) and marketable
title to all personal property comprising part of the Properties, in each case
free and clear of any security interests, liens, encumbrances, equities, claims
and other defects, except such as do not materially
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and adversely affect the value of such property and do not interfere with the
use made or proposed to be made of such property by the Company or such
subsidiary, and any real property and buildings comprising part of the
Properties held pursuant to or subject to a ground lease, air space lease or
other lease will be held by the Company or any such subsidiary under or subject
to valid, subsisting and enforceable ground leases, air space leases or other
leases, with such exceptions as are not material and do not interfere with the
use made or proposed to be made of such property and buildings by the Company or
such subsidiary, in each case except as described in or contemplated by the
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus).
(aa) No labor dispute with the employees of the Company or any of its
subsidiaries exists or is threatened or, to the knowledge of the Company or any
of its subsidiaries, imminent that could result in a material adverse change in
the condition (financial or otherwise), business prospects, net worth or results
of operations of the Company and its subsidiaries, taken as a whole, except as
described in or contemplated by the Prospectus (or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus).
(bb) Upon consummation of the Formation Transactions, the Company and
its subsidiaries will own or possess, or will be able to acquire on reasonable
terms, all material patents, patent applications, trademarks, service marks,
trade names, licenses, copyrights and proprietary or other confidential
information currently employed or proposed to be employed by them in connection
with the business now operated or proposed to be operated by them as described
in the Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus), and neither the Company nor any such subsidiary has
received any notice of infringement of or conflict with asserted rights of any
third party with respect to any of the foregoing which, singly or in the
aggregate, if the subject of an unfavorable decision, ruling or finding, would
result in a material adverse change in the condition (financial or otherwise),
business prospects, net worth or results of operations of the Company and its
subsidiaries, taken as a whole, except as described in or contemplated by the
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus).
(cc) Upon consummation of the Formation Transactions, the Company and
each of its subsidiaries will own or possess all contract rights that are
material to the businesses now operated or proposed to be operated by them taken
as a whole as described in the Prospectus (or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus), including all such contract
rights referred to in the Prospectus. All such contracts are in full force and
effect, and neither the Company nor any such subsidiary is aware of any material
breach by any party under any of such contracts.
(dd) As of the Firm Closing Date, the Company and each of its
subsidiaries will be insured by insurers of recognized financial responsibility
against such losses and risks and in such amounts as are prudent and customary
in the businesses in which they are or will be engaged as described in the
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus); and neither the Company nor any such subsidiary has any
reason to believe that it will not be able to renew such insurance coverage as
and when such coverage expires or to obtain similar coverage from similar
insurers as may be necessary to continue its business at a cost that would not
materially and adversely affect the condition (financial or otherwise), business
prospects, net worth or results of operations of the Company and its
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subsidiaries, taken as a whole, except as described in or contemplated by the
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus).
(ee) No subsidiary of the Company is currently prohibited, directly or
indirectly, from paying any dividends to the Company, from making any other
distribution on such subsidiary's capital stock or partnership interests, from
repaying to the Company any loans or advances to such subsidiary from the
Company or from transferring any of such subsidiary's property or assets to the
Company or any other subsidiary of the Company, except as described in or
contemplated by the Prospectus (or, if the Prospectus is not in existence, the
most recent Preliminary Prospectus) and except pursuant to (i) existing
indebtedness as in effect on the date hereof, (ii) the Mortgage Loans (as
defined in the Registration Statement and the Prospectus, or, if the Prospectus
is not in existence, the most recent Preliminary Prospectus), (iii) the Credit
Facility (as defined in the Registration Statement and the Prospectus, or, if
the Prospectus is not in existence, the most recent Preliminary Prospectus),
(iv) applicable law and (v) with respect to prohibitions only against
transferring any of such subsidiary's property or assets to the Company or any
other subsidiary of the Company, (A) customary non-assignment provisions
contained in leases to which the Company or any of its subsidiaries is a party
and (B) security interests, including purchase money obligations, applicable to
any property of the Company or any of its subsidiaries as of the date hereof.
(ff) The Company and its subsidiaries will possess as of the Firm
Closing Date all certificates, authorizations and permits issued by the
appropriate federal, state or foreign regulatory authorities necessary to
conduct their respective businesses, and neither the Company nor any such
subsidiary has received any notice of proceedings relating to the revocation or
modification of any such certificate, authorization or permit which, singly or
in the aggregate, if the subject of any unfavorable decision, ruling or finding,
would result in a material adverse change in the condition (financial or
otherwise), business prospects, net worth or results of operations of the
Company and its subsidiaries, taken as a whole, except as described in or
contemplated by the Prospectus (or, if the Prospectus is not in existence, the
most recent Preliminary Prospectus).
(gg) The Company is not, and as of the Firm Closing Date and the
Option Closing Date will not be, subject to registration as an investment
company under the Investment Company Act of 1940, as amended.
(hh) Each of the Company and its subsidiaries has filed all foreign,
federal, state and local tax returns that are required to be filed or has
requested extensions thereof (except in any case in which the failure so to file
would not have a material adverse effect on the Company and its subsidiaries,
taken as a whole) and has paid all taxes required to be paid by it and any other
assessment, fine or penalty levied against it, to the extent that any of the
foregoing is due and payable, except for any such assessment, fine or penalty
that is currently being contested in good faith or as described in or
contemplated by the Prospectus (or, if the Prospectus is not in existence, the
most recent Preliminary Prospectus).
(ii) Neither the Company nor any of its subsidiaries is in violation
of any applicable federal or state law or regulation relating to occupational
safety and health or to the storage, handling or transportation of hazardous or
toxic materials and the Company and its subsidiaries have received all permits,
licenses or other approvals required of them under applicable federal and state
occupational safety and health and environmental laws and regulations to conduct
their respective businesses or the businesses proposed to be conducted by them
as described in the Prospectus (or, if the Prospectus is not in existence, the
most recent Preliminary
10
Prospectus), and the Company and each such subsidiary is in compliance with all
terms and conditions of any such permit, license or approval, except any such
violation of law or regulation, failure to receive required permits, licenses or
other approvals or failure to comply with the terms and conditions of such
permits, licenses or approvals which would not, singly or in the aggregate,
result in a material adverse change in the condition (financial or otherwise),
business prospects, net worth or results of operations of the Company and its
subsidiaries, taken as a whole, except as described in or contemplated by the
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus).
(jj) Each certificate signed by any officer of the Company and
delivered to the Representatives or counsel for the Underwriters on the Firm
Closing Date or on the Option Closing Date shall be deemed to be a
representation and warranty by the Company to each Underwriter as to the matters
covered thereby.
(kk) Except for the shares of capital stock of, or partnership
interests in (as applicable), each of the subsidiaries owned by the Company and
such subsidiaries, neither the Company nor any such subsidiary owns any shares
of stock or any other equity securities of any corporation or has any equity
interest in any firm, partnership, association or other entity, except as
described in or contemplated by the Prospectus (or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus).
(ll) The Company and each of its subsidiaries maintain a system of
internal accounting controls sufficient to provide reasonable assurance that (1)
transactions are executed in accordance with management's general or specific
authorizations; (2) transactions are recorded as necessary to permit preparation
of financial statements in conformity with generally accepted accounting
principles and to maintain asset accountability; (3) access to assets is
permitted only in accordance with management's general or specific
authorization; and (4) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(mm) No default exists, and no event has occurred which, with notice
or lapse of time or both, would constitute a default in the due performance and
observance of any term, covenant or condition of any indenture, mortgage, deed
of trust, lease 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
or any of their respective properties is bound or may be affected in any
material adverse respect with regard to property, business or operations of the
Company and its subsidiaries taken as a whole.
(nn) All claims, suits or proceedings instituted by ACD2, a California
corporation, or its affiliates or by Xxxxxx Aircraft Company or Xxxxxx
Electronic Corporation's Space & Communications Company or its affiliates, in
each case against any member of the Xxxxxx Group (as defined in the Registration
Statement and the Prospectus, or, if the Prospectus is not in existence, the
most recent Preliminary Prospectus) either have been settled with prejudice or
dismissed pursuant to a final judgment with prejudice, the time for appeal
therefrom having expired.
(oo) Except as otherwise disclosed in the Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary Prospectus), since
January 1, 1990 no foreclosures have been instituted and none are currently
threatened with respect to any property or assets directly or indirectly owned
(whether now or in the past) by the Xxxxxx Group or the Company or any of its
11
subsidiaries. Except for the Excluded Properties (as defined in the
Registration Statement and the Prospectus, or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus) and the properties set forth
on Schedule 4 hereto, no member of the Xxxxxx Group owns or operates any real
property other than the real properties comprising part of the Properties.
(pp) Except as otherwise described in the Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary Prospectus), (i) no
proceeding or filing of a petition seeking relief under Title 11 of the United
States Code or any other federal, state or foreign bankruptcy, insolvency,
liquidation or similar law has been commenced or instituted (whether voluntary
or involuntary) by or with respect to any member of the Xxxxxx Group, (ii) no
member of the Xxxxxx Group has applied for or consented to the appointment of a
receiver, trustee, custodian, sequestrator or similar official for any such
persons or for a substantial part of any such persons' property or assets and
(iii) no member of the Xxxxxx Group has made a general assignment for the
benefit of its creditors.
(qq) No relationship, direct or indirect, exists between or among the
Company or the Operating Partnership on the one hand, and the directors,
officers, stockholders (in the case of the Company), limited partners (in the
case of the Operating Partnership), tenants, customers or suppliers of the
Company or the Operating Partnership on the other hand, which is required to be
described in the Prospectus (or, if the Prospectus is not in existence, the most
recent Preliminary Prospectus) which is not so described.
(rr) The transfer of interests or other assets pursuant to the
Transaction Documents does not violate the articles or certificate of
incorporation, by-laws, limited liability company operating agreement,
declaration of trust, certificate of limited partnership, partnership agreement
or other organizational documents, as the case may be, of any member of the
Xxxxxx Group. The agreements and instruments set forth on Schedule 6 hereto
(the "Transfer Documents") are sufficient to effect the transfer to the Company
or its subsidiaries of all direct or indirect interests in the Properties and
other assets specified therein upon payment of the consideration therefor.
Pursuant to the Transfer Documents, the Properties and other assets specified
therein will be transferred to the Company or its subsidiaries directly and not
by way of a transfer of interests in partnerships or other types of entities
which own the Properties and such other assets.
(ss) Commencing with the Firm Closing Date, after giving effect to the
Formation Transactions, the Company will be organized in conformity with the
requirements for qualification as a real estate investment trust (a "REIT")
under the Internal Revenue Code of 1986, as amended (the "Code"), and will have
no earnings and profits accumulated in a non-REIT year within the meaning of
Section 857(a)(3)(B) of the Code, and the proposed method of operation of the
Company and its subsidiaries will enable the Company to meet the requirements
for taxation as a REIT under the Code beginning with its taxable year ending
December 31, 1997 and for its subsequent taxable years. All statements in the
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus) regarding the Company's qualification as a REIT are
true, complete and correct in all material respects.
(tt) (i) Each of the Properties (including, for purposes of this
paragraph, the Excluded Properties) complies with all applicable codes, laws,
ordinances and regulations (including, without limitation, building and zoning
codes and laws and regulations relating to access to the Properties) and deed
restrictions or other covenants, except for such failures to comply that
12
would not materially impair the value of any of the Properties or would not
result in a forfeiture or reversion of title; (ii) neither the Company nor any
of its subsidiaries has knowledge of any pending or threatened litigation,
moratorium, condemnation proceedings, zoning change, or other similar proceeding
or action that could in any manner affect the size of, use of, improvements on,
construction on, access to or availability of utilities or other necessary
services to, the Properties, except such proceedings or actions which are not
reasonably expected to, singly or in the aggregate, result in a material adverse
change in the condition (financial or otherwise), business prospects, net worth
or results of operations of the Company and its subsidiaries, taken as a whole;
(iii) all liens, charges, encumbrances, claims, or restrictions on or affecting
the properties and assets (including the Properties) of the Company or any of
its subsidiaries that are required to be disclosed in the Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary Prospectus) are
disclosed therein; (iv) neither the Company, any of its subsidiaries nor any
tenant of any portion of any of the Properties is in default under any of the
ground leases or air space leases (as lessee), space leases (as lessor or
lessee, as the case may be) or other occupancy or license agreement relating to,
or under any of the mortgages or other security documents or other agreements
encumbering or otherwise recorded against, the Properties and there is no event
which, but for the passage of time or the giving of notice or both, would
constitute a default under any of such documents or agreements, except, with
respect to such leases and other occupancy or license agreements (other than
ground leases) and mortgages and ground and air space leases in connection with
the SeaTac Office Center Property, such defaults that have been, or will be as
of the Firm Closing Date, cured or waived and except such defaults that would
not, singly or in the aggregate, result in a material adverse change in the
condition (financial or otherwise), business prospects, net worth or results of
operations of the Company and its subsidiaries, taken as a whole; and (v) except
as described in the Prospectus (or, if the Prospectus is not in existence, the
most recent Preliminary Prospectus) and except as otherwise provided by law,
upon consummation of the Formation Transactions, no tenant under any lease
pursuant to which the Company or any of its subsidiaries will lease the
Properties will have an option or right of first refusal to purchase the
premises leased thereunder or the building of which such premises are a part.
(uu) Each of the Properties (including, for purposes of this
paragraph, the Excluded Properties) is in substantial compliance with all
presently applicable provisions of the Americans with Disabilities Act and no
failure of the Company or any of the Subsidiaries to comply with all presently
applicable provisions of the Americans with Disabilities Act would result in a
material adverse change in the condition (financial or otherwise), business
prospects, net worth or results of operations of the Company and its
subsidiaries, taken as a whole.
(vv) Except as otherwise disclosed in the Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary Prospectus), (i)
neither the Company, any of its subsidiaries nor, to the best knowledge of the
Company, any other owners of the Properties (including, for purposes of this
paragraph, the Excluded Properties) at any time or any other party has at any
time, handled, stored, treated, transported, manufactured, spilled, leaked, or
discharged, dumped, transferred or otherwise disposed of or dealt with,
Hazardous Materials (as hereinafter defined) on, to or from the Properties,
other than by any such action taken in compliance with all applicable
Environmental Statutes; (ii) neither the Company nor any of its subsidiaries
intends to use the Properties or any subsequently acquired properties for the
purpose of handling, storing, treating, transporting, manufacturing, spilling,
leaking, discharging, dumping, transferring or otherwise disposing of or dealing
with Hazardous Materials; (iii) neither the Company nor any of its subsidiaries
knows of any seepage, leak, discharge, release, emission, spill, or dumping of
Hazardous Materials into waters on or adjacent to the Properties or any other
real property owned
13
or occupied by any such party, or onto lands from which Hazardous Materials
might seep, flow or drain into such waters; (iv) except as described in the
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus), neither the Company nor any of its subsidiaries has
received any notice of, or has any knowledge of any occurrence or circumstance
which, with notice or passage of time or both, would give rise to a claim under
or pursuant to any federal, state or local environmental statute or regulation
or under common law, pertaining to Hazardous Materials on or originating from
any of the Properties or any assets described in the Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary Prospectus) or any
other real property owned or occupied by any such party or arising out of the
conduct of any such party, including without limitation a claim under or
pursuant to any Environmental Statute (hereinafter defined); (v) neither the
Properties nor any other real properties owned by members of the Xxxxxx Group is
included or, to the best of the Company's knowledge, proposed for inclusion on
the National Priorities List issued pursuant to CERCLA (as hereinafter defined)
by the United States Environmental Protection Agency (the "EPA") or, to the best
of the Company's knowledge, proposed for inclusion on any similar list or
inventory issued pursuant to any other Environmental Statute or issued by any
other Governmental Authority (as hereinafter defined).
As used herein, "Hazardous Material" shall include, without
limitation, any flammable explosives, radioactive materials, hazardous
materials, hazardous wastes, toxic substances, or related materials, asbestos or
any hazardous materials as defined by any federal, state or local environmental
law, ordinance, rule or regulation including, without limitation, the
Comprehensive Environmental Response, Compensation, and Liability Act of 1980,
as amended, 42 U.S.C. (S)(S) 9601-9675 ("CERCLA"), the Hazardous Materials
Transportation Act, as amended, 49 U.S.C. (S)(S) 1801-1819, the Resource
Conservation and Recovery Act, as amended, 42 U.S.C. (S)(S) 6901-6992K, the
Emergency Planning and Community Right-to-Know Act of 1986, 42 U.S.C.
(S)(S)11001-11050, the Toxic Substances Control Act, 15 U.S.C. (S)(S) 2601-2671,
the Federal Insecticide, Fungicide and Rodenticide Act, 7 U.S.C. (S)(S) 136-
136y, the Clean Air Act, 42 U.S.C. (S)(S) 7401-7642, the Clean Water Act
(Federal Water Pollution Control Act), 33 U.S.C. (S)(S) 1251-1387, the Safe
Drinking Water Act, 42 U.S.C. (S)(S) 300f-300j-26, and the Occupational Safety
and Health Act, 29 U.S.C. (S)(S) 651-678, as any of the above statutes may be
amended from time to time, and in the regulations promulgated pursuant to each
of the foregoing (individually, an "Environmental Statute") or by any federal,
state or local governmental authority having or claiming jurisdiction over the
properties and assets described in the Prospectus (a "Governmental Authority").
(ww) None of the environmental consultants which prepared
environmental and asbestos inspection reports with respect to any of the
Properties (including, for purposes of this paragraph, the Excluded Properties),
the engineering consultants which prepared engineering inspection reports with
respect to any of the Properties or Xxxxxx Xxxxxxx Xxxxxx & Co., real estate
advisors, which prepared a regional economic overview and market analysis for
Xxxxxx Industries dated January 2, 1997, were employed for such purpose on a
contingent basis or has any substantial interest in the Company or any of its
subsidiaries and none of them or any of their directors, officers or employees
is connected with the Company or any of its subsidiaries as a promoter, selling
agent, voting trustee, director, officer or employee.
(xx) Except as set forth in the environmental and engineering
inspection reports prepared with respect to the Properties (including, for
purposes of this paragraph, the Excluded Properties), neither the Company nor
the Operating Partnership is aware of any environmental or engineering condition
at any of the Properties that would result in a material adverse change in the
14
condition (financial or otherwise) or business prospects, net worth or results
of operations of the Company and its subsidiaries, taken as a whole.
(yy) No real estate transfer or similar taxes are or will become due
and payable by the Company or any of its subsidiaries as a result of the
acquisition by the Company or any of its subsidiaries of any direct or indirect
interest in any Property in connection with the Formation Transactions, other
than customary documentary transfer taxes which will be paid in full on or prior
to the Firm Closing Date.
(zz) At the Firm Closing Date, the Company or its subsidiaries will
have obtained title insurance on each of the Properties which constitute real
property (including ground leasehold estates) in an amount at least equal to
$240,000,000 and with a tie-in endorsement attached to each owner policy and
without coinsurance provisions.
(aaa) At or prior to the Firm Closing Date, each of the transactions
constituting the Formation Transactions will have occurred in the manner
described in the Prospectus (or, if the Prospectus is not in existence, the most
recent Preliminary Prospectus), except for those transactions contemplated in
the Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus) to occur subsequent to the Firm Closing Date.
(bbb) All of the representations and warranties of the Company, the
Operating Partnership, the Xxxxxx Group and the Continuing Investors (as defined
in the Registration Statement and the Prospectus, or, if the Prospectus is not
in existence, the most recent Preliminary Prospectus) contained in the
Transaction Documents are true and correct in all material respects.
Each reference in this Section 2 to "the condition (financial or
otherwise), management, business prospects, net worth, or results of operations
of the Company and its subsidiaries, taken as a whole" means the condition
(financial or otherwise), management, business prospects, net worth, or results
of operations of the Company and its subsidiaries, taken as a whole, upon
consummation of the Formation Transactions.
3. Purchase, Sale and Delivery of the Securities. (a) On the basis of
---------------------------------------------
the representations, warranties, agreements and covenants herein contained and
subject to the terms and conditions herein set forth, the Company agrees to
issue and sell to each of the Underwriters, and each of the Underwriters,
severally and not jointly, agrees to purchase from the Company, at a purchase
price of $________ per share, the number of Firm Securities set forth opposite
the name of such Underwriter in Schedule 1 hereto. One or more certificates in
definitive form for the Firm Securities that the several Underwriters have
agreed to purchase hereunder, and in such denomination or denominations and
registered in such name or names as the Representatives request upon notice to
the Company at least 48 hours prior to the Firm Closing Date, shall be delivered
by or on behalf of the Company to the Representatives for the respective
accounts of the Underwriters, against payment by or on behalf of the
Underwriters of the purchase price therefor by wire transfer in same-day funds
(the "Wired Funds") to the account of the Company. Such delivery of and payment
for the Firm Securities shall be made at the offices of Xxxxxx & Xxxxxxx, 000
Xxxx 0xx Xxxxxx, Xxxxx 0000, Xxx Xxxxxxx, Xxxxxxxxxx 00000 at 6:30 A.M., local
time, on __________, 1997, or at such other place, time or date as the
Representatives and the Company may agree upon or as the Representatives may
determine pursuant to Section 9 hereof, such time and date of delivery against
payment being herein referred to as the "Firm Closing Date". The Company will
make such certificate or certificates for the Firm Securities available for
checking and
15
packaging by the Representatives at the offices in New York, New York of the
Company's transfer agent or registrar or of Prudential Securities Incorporated
at least 24 hours prior to the Firm Closing Date.
(b) For the purpose of covering any over-allotments in connection with
the distribution and sale of the Firm Securities as contemplated by the
Prospectus, the Company hereby grants to the several Underwriters an option to
purchase, severally and not jointly, the Option Securities. The purchase price
to be paid for any Option Securities shall be the same price per share as the
price per share for the Firm Securities set forth above in paragraph (a) of this
Section 3, plus, if the purchase and sale of any Option Securities takes place
after the Firm Closing Date and after the Firm Securities are trading "ex-
dividend", an amount equal to the dividends payable on such Option Securities.
The option granted hereby may be exercised as to all or any part of the Option
Securities from time to time within thirty days after the date of the Prospectus
(or, if such 30th day shall be a Saturday or Sunday or a holiday, on the next
business day thereafter when the New York Stock Exchange is open for trading).
The Underwriters shall not be under any obligation to purchase any of the Option
Securities prior to the exercise of such option. The Representatives may from
time to time exercise the option granted hereby by giving notice in writing or
by telephone (confirmed in writing) to the Company setting forth the aggregate
number of Option Securities as to which the several Underwriters are then
exercising the option and the date and time for delivery of and payment for such
Option Securities. Any such date of delivery shall be determined by the
Representatives but shall not be earlier than two business days or later than
five business days after such exercise of the option and, in any event, shall
not be earlier than the Firm Closing Date. The time and date set forth in such
notice, or such other time on such other date as the Representatives and Company
may agree upon or as the Representatives may determine pursuant to Section 9
hereof, is herein called the "Option Closing Date" with respect to such Option
Securities. Upon exercise of the option as provided herein, the Company shall
become obligated to sell to each of the several Underwriters, and, subject to
the terms and conditions herein set forth, each of the Underwriters (severally
and not jointly) shall become obligated to purchase from the Company, the same
percentage of the total number of the Option Securities as to which the several
Underwriters are then exercising the option as such Underwriter is obligated to
purchase of the aggregate number of Firm Securities, as adjusted by the
Representatives in such manner as they deem advisable to avoid fractional
shares. If the option is exercised as to all or any portion of the Option
Securities, one or more certificates in definitive form for such Option
Securities, and payment therefor, shall be delivered on the related Option
Closing Date in the manner, and upon the terms and conditions, set forth in
paragraph (a) of this Section 3, except that reference therein to the Firm
Securities and the Firm Closing Date shall be deemed, for purposes of this
paragraph (b), to refer to such Option Securities and Option Closing Date,
respectively.
(c) The Company hereby acknowledges that the wire transfer by or on
behalf of the Underwriters of the purchase price for any Securities does not
constitute closing of a purchase and sale of the Securities. Only execution and
delivery of a receipt for Securities by the Underwriters indicates completion of
the closing of a purchase of the Securities from the Company. Furthermore, in
the event that the Underwriters wire funds to the Company prior to the
completion of the closing of a purchase of Securities, the Company hereby
acknowledges that until the Underwriters execute and deliver a receipt for the
Securities, by facsimile or otherwise, the Company will not be entitled to the
Wired Funds and shall return the Wired Funds to the Underwriters as soon as
practicable (by wire transfer of same-day funds) upon demand. In the event that
the closing of a purchase of Securities is not completed and the Wire Funds are
not
16
returned by the Company to the Underwriters on the same day the Wired Funds were
received by the Company, the Company agrees to pay to the Underwriters in
respect of each day the Wire Funds are not returned by it, in same-day funds,
interest on the amount of such Wire Funds in an amount representing the
Underwriters' cost of financing as reasonably determined by Prudential
Securities Incorporated.
(d) It is understood that any of you, individually and not as one of
the Representatives, may (but shall not be obligated to) make payment on behalf
of any Underwriter or Underwriters for any of the Securities to be purchased by
such Underwriter or Underwriters. No such payment shall relieve such
Underwriter or Underwriters from any of its or their obligations hereunder.
4. Offering by the Underwriters. Upon your authorization of the release
----------------------------
of the Firm Securities, the several Underwriters propose to offer the Firm
Securities for sale to the public upon the terms set forth in the Prospectus.
5. Covenants of the Company. Each of the Company and the Operating
------------------------
Partnership covenants and agrees with each of the Underwriters that:
(a) The Company will use its best efforts to cause the Registration
Statement, if not effective at the time of execution of this Agreement, and any
amendments thereto to become effective as promptly as possible. If required,
the Company will file the Prospectus or any Term Sheet that constitutes a part
thereof and any amendment or supplement thereto with the Commission in the
manner and within the time period required by Rules 434 and 424(b) under the
Act. During any time when a prospectus relating to the Securities is required
to be delivered under the Act, the Company (i) will comply with all requirements
imposed upon it by the Act and the rules and regulations of the Commission
thereunder to the extent necessary to permit the continuance of sales of or
dealings in the Securities in accordance with the provisions hereof and of the
Prospectus, as then amended or supplemented, and (ii) will not file with the
Commission the Prospectus, Term Sheet or the amendment referred to in the second
sentence of Section 2(a) hereof, any amendment or supplement to such Prospectus,
Term Sheet or any amendment to the Registration Statement or any Rule 462(b)
Registration Statement of which the Representatives shall not previously have
been advised and furnished with a copy for a reasonable period of time prior to
the proposed filing and as to which filing the Representatives shall not have
given their consent. The Company will prepare and file with the Commission, in
accordance with the rules and regulations of the Commission, promptly upon
request by the Representatives or counsel for the Underwriters, any amendments
to the Registration Statement or amendments or supplements to the Prospectus
that may be necessary or advisable in connection with the distribution of the
Securities by the several Underwriters, and will use its best efforts to cause
any such amendment to the Registration Statement to be declared effective by the
Commission as promptly as possible. The Company will advise the Representatives,
promptly after receiving notice thereof, of the time when the Registration
Statement or any amendment thereto has been filed or declared effective or the
Prospectus or any amendment or supplement thereto has been filed and will
provide evidence satisfactory to the Representatives of each such filing or
effectiveness.
(b) The Company will advise the Representatives, promptly after
receiving notice or obtaining knowledge thereof, of (i) the issuance by the
Commission of any stop order suspending the effectiveness of the Original
Registration Statement or any Rule 462(b) Registration Statement or any
amendment thereto or any order preventing or suspending the use of any
17
Preliminary Prospectus or the Prospectus or any amendment or supplement thereto,
(ii) the suspension of the qualification of the Securities for offering or sale
in any jurisdiction, (iii) the institution, threatening or contemplation of any
proceeding for any such purpose or (iv) any request made by the Commission for
amending the Original Registration Statement or any Rule 462(b) Registration
Statement, for amending or supplementing the Prospectus or for additional
information. The Company will use its best efforts to prevent the issuance of
any such stop order and, if any such stop order is issued, to obtain the
withdrawal thereof as promptly as possible.
(c) The Company will arrange for the qualification of the Securities
for offering and sale under the securities or blue sky laws of such
jurisdictions as the Representatives may designate and will continue such
qualifications in effect for as long as may be necessary to complete the
distribution of the Securities, provided, however, that in connection therewith
-----------------
the Company shall not be required to qualify as a foreign corporation or to
execute a general consent to service of process in any jurisdiction.
(d) If, at any time prior to the later of (i) the final date when a
prospectus relating to the Securities is required to be delivered under the Act
or (ii) the Option Closing Date, any event occurs as a result of which the
Prospectus, as then amended or supplemented, would include any untrue statement
of a material fact or omit to state a material fact necessary in order to make
the statements therein, in the light of the circumstances under which they were
made, not misleading, or if for any other reason it is necessary at any time to
amend or supplement the Prospectus to comply with the Act or the rules or
regulations of the Commission thereunder, the Company will promptly notify the
Representatives thereof and, subject to Section 5(a) hereof, will prepare and
file with the Commission, at the Company's expense, an amendment to the
Registration Statement or an amendment or supplement to the Prospectus that
corrects such statement or omission or effects such compliance.
(e) The Company will, without charge, provide (i) to the
Representatives and to counsel for the Underwriters a conformed copy of the
registration statement originally filed with respect to the Securities and each
amendment thereto (in each case including exhibits thereto) or any Rule 462(b)
Registration Statement, certified by the Secretary or an Assistant Secretary of
the Company to be true and complete copies thereof as filed with the Commission
by electronic transmission, (ii) to each other Underwriter, a conformed copy of
such registration statement or any Rule 462(b) Registration Statement and each
amendment thereto (in each case without exhibits thereto) and (iii) so long as a
prospectus relating to the Securities is required to be delivered under the Act,
as many copies of each Preliminary Prospectus or the Prospectus or any amendment
or supplement thereto as the Representatives may reasonably request; without
limiting the application of clause (iii) of this sentence, the Company, not
later than (A) 6:00 P.M., New York City time, on the date of determination of
the public offering price, if such determination occurred at or prior to 10:00
A.M., New York City time, on such date or (B) 2:00 P.M., New York City time, on
the business day following the date of determination of the public offering
price, if such determination occurred after 10:00 A.M., New York City time, on
such date, will deliver to the Underwriters, without charge, as many copies of
the Prospectus and any amendment or supplement thereto as the Representatives
may reasonably request for purposes of confirming orders that are expected to
settle on the Firm Closing Date. The Company will provide or cause to be
provided to each of the Representatives, and to each Underwriter that so
requests in writing, a copy of each report on Form SR filed by the Company as
required by Rule 463 under the Act.
18
(f) The Company, as soon as practicable, will make generally available
to its securityholders and to the Representatives a consolidated earnings
statement of the Company and its subsidiaries that satisfies the provisions of
Section 11(a) of the Act and Rule 158 thereunder.
(g) The Company will apply the net proceeds from the sale of the
Securities as set forth under "Use of Proceeds" in the Prospectus.
(h) The Company will not, directly or indirectly, without the prior
written consent of Prudential Securities Incorporated, on behalf of the
Underwriters, offer, sell, offer to sell, contract to sell, pledge, grant any
option to purchase or otherwise sell or dispose (or announce any offer, sale,
offer of sale, contract of sale, pledge, grant of any option to purchase or
other sale or disposition) of any shares of Common Stock or other capital stock
of the Company or Units or other partnership interests of the Operating
Partnership, or any securities convertible into, or exchangeable or exercisable
for, shares of Common Stock or other capital stock of the Company or Units or
other partnership interests of the Operating Partnership, for a period of 180
days after the date hereof, except (i) pursuant to this Agreement, (ii) pursuant
to a dividend reinvestment plan of the Company, (iii) pursuant to the Company's
1997 Stock Incentive Plan, and (iv) in connection with the acquisition by the
Company or the Operating Partnership of real property or interests in entities
holding real property, provided that the recipient or transferee of such
--------
securities or interests agrees in a writing satisfactory to Prudential
Securities Incorporated, on behalf of the Underwriters, to be subject to the
lock-up contained in this Section 5(h) for a period ending on the date that is
180 days after the date hereof.
(i) The Company will not, directly or indirectly, (i) take any action
designed to cause or to result in, or that has constituted or which might
reasonably be expected to constitute, the stabilization or manipulation of the
price of any security of the Company to facilitate the sale or resale of the
Securities or (ii) (A) sell, bid for, purchase, or pay anyone any compensation
for soliciting purchases of, the Securities or (B) pay or agree to pay to any
person any compensation for soliciting another to purchase any other securities
of the Company.
(j) The Company will obtain the agreements described in Section 7(f)
hereof prior to the Firm Closing Date.
(k) If at any time during the 25-day period after the Registration
Statement becomes effective or the period prior to the Option Closing Date, any
rumor, publication or event relating to or affecting the Company shall occur as
a result of which in your opinion the market price of the Common Stock has been
or is likely to be materially affected (regardless of whether such rumor,
publication or event necessitates a supplement to or amendment of the
Prospectus), subject to the Company's policy on issuing public statements, the
Company will, after notice from you advising the Company to the effect set forth
above, forthwith prepare, consult with you concerning the substance of, and
disseminate a press release or other public statement, reasonably satisfactory
to you, responding to or commenting on such rumor, publication or event.
(l) If the Company elects to rely on Rule 462(b), the Company shall
both file a Rule 462(b) Registration Statement with the Commission in compliance
with Rule 462(b) and pay the applicable fees in accordance with Rule 111
promulgated under the Act by the earlier of (i) 10:00 P.M. Eastern time on the
date of this Agreement and (ii) the time confirmations are sent or given, as
specified by Rule 462(b)(2).
19
(m) The Company will cause the Securities to be duly authorized for
listing by the New York Stock Exchange prior to the Firm Closing Date, subject
to official notice of issuance.
(n) The Company will use its best efforts to meet the requirements to
qualify, commencing with the taxable year ending December 31, 1997, as a REIT
under the Code.
(o) The Company will cause the Operating Partnership to operate as a
limited partnership in accordance with the requirements of Delaware law.
6. Expenses. The Company will pay all costs and expenses incident to the
--------
performance of its and the Operating Partnership's obligations under this
Agreement, whether or not the transactions contemplated herein are consummated
or this Agreement is terminated pursuant to Section 11 hereof, including all
costs and expenses incident to (i) the printing or other production of documents
with respect to the transactions, including any costs of printing the
registration statement originally filed with respect to the Securities and any
amendment thereto, any Rule 462(b) Registration Statement, any Preliminary
Prospectus and the Prospectus and any amendment or supplement thereto, this
Agreement and any blue sky memoranda, (ii) all arrangements relating to the
delivery to the Underwriters of copies of the foregoing documents, (iii) the
fees and disbursements of the counsel, the accountants and any other experts or
advisors retained by the Company, (iv) preparation, issuance and delivery to the
Underwriters of any certificates evidencing the Securities, including transfer
agent's and registrar's fees, (v) the qualification of the Securities under
state securities and blue sky laws, including filing fees and fees and
disbursements of counsel for the Underwriters relating thereto, (vi) the filing
fees of the Commission and the National Association of Securities Dealers, Inc.
relating to the Securities, (vii) any listing of the Securities on the New York
Stock Exchange, (viii) any meetings with prospective investors in the Securities
(other than as shall have been specifically approved by the Representatives to
be paid for by the Underwriters) and (ix) advertising relating to the offering
of the Securities (other than as shall have been specifically approved by the
Representatives to be paid for by the Underwriters). If the sale of the
Securities provided for herein is not consummated because any condition to the
obligations of the Underwriters set forth in Section 7 hereof is not satisfied,
because this Agreement is terminated pursuant to Section 11 hereof or because of
any failure, refusal or inability on the part of the Company or the Operating
Partnership to perform all obligations and satisfy all conditions on its part to
be performed or satisfied hereunder other than by reason of a default by any of
the Underwriters, the Company will reimburse the Underwriters severally upon
demand for all out-of-pocket expenses (including reasonable counsel fees and
disbursements) that shall have been incurred by them in connection with the
proposed purchase and sale of the Securities. The Company shall not in any
event be liable to any of the Underwriters for the loss of anticipated profits
from the transactions covered by this Agreement.
7. Conditions of the Underwriters' Obligations. The obligations of the
-------------------------------------------
several Underwriters to purchase and pay for the Firm Securities shall be
subject, in the Representatives' sole discretion, to the accuracy of the
representations and warranties of the Company and the Operating Partnership
contained herein as of the date hereof and as of the Firm Closing Date, as if
made on and as of the Firm Closing Date, to the accuracy of the statements of
the Company's officers made pursuant to the provisions hereof, to the
performance by the Company and the Operating Partnership of their respective
covenants and agreements hereunder and to the following additional conditions:
20
(a) If the Original Registration Statement or any amendment thereto
filed prior to the Firm Closing Date has not been declared effective as of the
time of execution hereof, the Original Registration Statement or such amendment
and, if the Company has elected to rely upon Rule 462(b), the Rule 462(b)
Registration Statement shall have been declared effective not later than the
earlier of (i) 11:00 A.M., New York time, on the date on which the amendment to
the registration statement originally filed with respect to the Securities or to
the Registration Statement, as the case may be, containing information regarding
the initial public offering price of the Securities has been filed with the
Commission and (ii) the time confirmations are sent or given as specified by
Rule 462(b)(2), or with respect to the Original Registration Statement, or such
later time and date as shall have been consented to by the Representatives; if
required, the Prospectus or any Term Sheet that constitutes a part thereof and
any amendment or supplement thereto shall have been filed with the Commission in
the manner and within the time period required by Rules 434 and 424(b) under the
Act; no stop order suspending the effectiveness of the Registration Statement or
any amendment thereto shall have been issued, and no proceedings for that
purpose shall have been instituted or threatened or, to the knowledge of the
Company or the Representatives, shall be contemplated by the Commission; and the
Company shall have complied with any request of the Commission for additional
information (to be included in the Registration Statement or the Prospectus or
otherwise).
(b) The Representatives shall have received an opinion, dated the Firm
Closing Date, of Xxxxxx & Xxxxxxx, counsel for the Company and its subsidiaries,
to the effect that:
(i) the Company and Xxxxxx Services, Inc. (the "Services
Company") have been duly incorporated and are validly existing as
corporations in good standing under the laws of the State of Maryland and
are duly qualified to transact business as foreign corporations and are in
good standing under the laws of the States of California and Delaware, and
based solely on certificates from public officials, we confirm that each of
the Company and the Services Company is duly qualified to transact business
as foreign corporations and in good standing under the laws of the States
of Arizona and Washington. The Operating Partnership has been duly
organized and is validly existing as a limited partnership in good standing
under the laws of the State of Delaware and is duly qualified to transact
business as a foreign limited partnership and is in good standing under the
laws of the State of California, and based solely on certificates from
public officials, we confirm that the Operating Partnership is duly
qualified to transact business in the States of Arizona and Washington;
[ALSO, TO COVER ANY OTHER SUBSIDIARIES TO BE FORMED BEFORE CLOSING]
(ii) the Company and each of the Subsidiaries have corporate or
partnership power (as the case may be) to own or lease their respective
properties and conduct their respective businesses as described in the
Registration Statement and the Prospectus, and each of the Company and the
Operating Partnership has corporate or partnership power (as the case may
be) to enter into this Agreement and to carry out all the terms and
provisions hereof to be carried out by it;
(iii) the issued shares of capital stock of the Services Company
have been duly authorized and validly issued, are fully paid and
nonassessable and, except as otherwise set forth in the Prospectus, to the
best knowledge of such counsel, are owned beneficially by the Company free
and clear of any perfected
21
security interests or any other security interests, liens, encumbrances,
equities or claims;
(iv) the authorized, issued and outstanding capital stock of the
Company is as set forth under the caption "Capitalization" in the
Prospectus; all necessary and proper corporate proceedings have been taken
in order to authorize validly the Common Stock referred to therein; all
outstanding shares of Common Stock (including the Firm Securities, when
issued and paid for by the Underwriters in accordance with the terms of
this Agreement) have been (or, in the case of the Firm Securities, will be)
duly and validly issued, are fully paid and nonassessable, have been issued
in compliance with the registration requirements of federal and state
securities laws (or pursuant to an exemption therefrom), were not, to the
knowledge of such counsel, issued in violation of or subject to, under the
Company's charter or Maryland law or any agreement to which the Company is
a party and which is known to such counsel, any preemptive rights or other
rights to subscribe for or purchase any securities, and conform to the
description thereof contained in the Prospectus; to the knowledge of such
counsel, no holders of outstanding shares of capital stock of the Company
are entitled under the Company's charter or Maryland law or any agreement
to which the Company is a party and which is known to such counsel, as
such, to any preemptive or other rights to subscribe for any of the Firm
Securities; and no holders of securities of the Company are entitled to
have such securities registered under the Registration Statement;
(v) the Units issued in connection with the Formation
Transactions, including, without limitation, the Units issued to the
Company, were duly authorized for issuance by the Operating Partnership to
the holders thereof. The Units issued to the Company, upon contribution of
cash in the amount specified in the Operating Partnership Agreement, will
be validly issued. The Units issued to the Continuing Investors in
connection with the Formation Transactions, upon delivery of the
consideration specified in the Omnibus Option Agreement (identified on
Schedule 3 hereto), will be validly issued. The issuance of the Units to
the Continuing Investors at or prior to the Firm Closing Date as
contemplated in the Omnibus Option Agreement is or was (as the case may be)
exempt from registration under the Act. The terms of the Units conform in
all material respects to the description thereof and all statements related
thereto contained in the Prospectus. The issuances of securities described
in Items 31 and 32 of the Registration Statement were not at the time of
issue, and are not as of the Delivery Date, required to be registered under
the Act;
(vi) the Formation Transactions did not constitute a "roll-up
transaction" under Item 901(c) of Regulation S-K of the federal securities
laws ("Regulation S-K") since they fall within Item 901(c)(2)(ii) of
Regulation S-K;
(vii) except as disclosed in the Registration Statement and the
Prospectus, to the best knowledge of such counsel there are no outstanding
(A) securities, equity interests or obligations of the Company or any of
its subsidiaries convertible into or exchangeable for any capital stock or
equity interests (as the case may be) of the Company or any such
subsidiary, (B) warrants, rights or options to subscribe for or purchase
from the Company to any such subsidiary
22
any such capital stock or equity interests or any such convertible or
exchangeable securities, equity interests or obligations, or (C)
obligations of the Company or any such subsidiary to issue any shares of
capital stock, equity interests, any such convertible or exchangeable
securities, equity interests or obligations, or any such warrants, rights
or options;
(vi) the statements set forth under the headings "Description of
Capital Stock", "Formation and Structure of the Company", "Certain
Relationships and Transactions", "Certain Provisions of Maryland Law and of
the Company's Articles of Incorporation and Bylaws", "Partnership Agreement
of the Operating Partnership", "Shares Available for Future Sale", "Federal
Income Tax Considerations" and "ERISA Considerations" in the Prospectus,
insofar as such statements describe statutes, rules or regulations, legal
conclusions with respect to their application or provisions of the
organizational documents of the Company, the Operating Partnership or the
Services Company, have been reviewed by such counsel, are correct in all
material respects and present fairly the information required to be
disclosed therein;
(ix) the execution and delivery of this Agreement have been duly
authorized by all necessary corporate or partnership (as the case may be)
action of the Company and the Operating Partnership, and this Agreement has
been duly executed and delivered by the Company and the Operating
Partnership, and is the valid and binding agreement of each of the Company
and the Operating Partnership, enforceable against the Company and the
Operating Partnership in accordance with its terms, subject to the effect
of bankruptcy, insolvency, moratorium, fraudulent conveyance,
reorganization and similar laws relating to creditors' rights generally and
to the application of equitable principles in any proceeding, whether at
law or in equity;
(x) to the best knowledge of such counsel, (A) no legal or
governmental proceedings are pending to which the Company or any of the
Subsidiaries is a party or to which the property of the Company or any of
the Subsidiaries is subject that are required to be described in the
Registration Statement or the Prospectus and are not described therein, and
no such proceedings have been threatened against the Company or any of the
Subsidiaries or with respect to any of their respective properties and (B)
no contract or other document is required to be disclosed in the
Registration Statement or the Prospectus or to be filed as an exhibit to
the Registration Statement that is not disclosed therein or filed as
required;
(xi) the issuance, offering and sale of the Securities to the
Underwriters by the Company pursuant to this Agreement, the compliance by
the Company and the Operating Partnership with the other provisions of this
Agreement and the consummation of the other transactions herein
contemplated do not (A) require the consent, approval, authorization,
registration or qualification of or with any federal, or California, New
York or Maryland governmental authority, except such as have been obtained
under the Act and such as may be required under state securities or blue
sky laws, or (B) conflict with or result in a breach or violation of any of
the terms and provisions of, or constitute a default under, any indenture,
mortgage, deed of trust, lease or other agreement or instrument to which
the Company or any
23
of the Subsidiaries is a party or by which the Company or any of the
Subsidiaries or any of their respective properties are bound identified by
an officer of the Company as material to the Company or any of the
Subsidiaries (the "Material Agreements"), or the charter documents or by-
laws or certificate of limited partnership or partnership agreement (as the
case may be) of the Company or any of the Subsidiaries, or any provision of
any California, New York or Maryland statute, rule or regulation (other
than federal or state securities laws, which are addressed elsewhere
herein), or court orders specifically directed to the Company and
identified by an officer of the Company as material to the Company or any
of the Subsidiaries (the "Court Orders");
(xii) each of the Company and its Subsidiaries has the corporate
or partnership power (as the case may be) to enter into and deliver (as
applicable) the agreements and instruments set forth on Schedule 5 hereto
(the "Operative Documents") to which it is party and to carry out all the
terms and provisions thereof to be carried out by it. The execution and
delivery of the Operative Documents have been duly authorized by the
Company and the Subsidiaries (as applicable) and the Operative Documents
have been or will be on the Firm Closing Date duly executed and delivered
by the Company and the Subsidiaries (as applicable), and each is the valid
and binding agreement of the Company and the Subsidiaries (as applicable),
enforceable against the Company and the Subsidiaries (as applicable) in
accordance with its terms, subject to the effect of bankruptcy, insolvency,
moratorium, fraudulent conveyance, reorganization and similar laws relating
to creditors' rights generally and to the application of equitable
principles in any proceeding, whether at law or in equity;
(xiii) the execution and delivery of the Operative Documents, the
compliance by the Company and the Subsidiaries (as applicable) with their
respective obligations under the Operative Documents and the consummation
of the Formation Transactions do not (A) require the consent, approval,
authorization, registration or qualification of or with any federal,
California, New York or Maryland governmental authority, except such as
have been obtained under the Act, such as may be required under state
securities or blue sky laws and, if the registration statement filed with
respect to the Securities (as amended) is not effective under the Act as of
the time of execution hereof, such as may be required (and shall be
obtained as provided in this Agreement) under the Act, or (B) conflict
with or result in a breach or violation of any of the terms and provisions
of, or constitute a default under, any Material Agreement, or the charter
documents or by-laws or certificate of limited partnership or partnership
agreement (as the case may be) of the Company or any of the Subsidiaries,
or any provision of any California, New York or Maryland statute, rule or
regulation (other than federal or state securities laws, which are
addressed elsewhere herein), or any Court Order;
(xiv) all of the Collateral (as defined in the Pledge Agreement
listed on Schedule 5 hereto) has been duly and validly pledged with the
Company, as agent for the pledgees under the Pledge Agreement, in
accordance with law, and the Company, as agent for the pledgees under the
Pledge Agreement, has a valid and enforceable security interest in all of
the Collateral under the Uniform Commercial
24
Code of California, ranking prior to and free and clear of the interests,
claims and rights of others;
(xv) the Company is not, and after giving effect to the Formation
Transactions and the other transactions contemplated by this Agreement will
not be, subject to registration as an investment company under the
Investment Company Act of 1940, as amended;
(xvi) the transfer of interests or other assets pursuant to the
agreements and instruments set forth on Schedule 6 hereto (the "Transfer
Documents") does not violate the articles or certificate of incorporation,
by-laws, limited liability company agreement, declaration of trust,
certificate of limited partnership, partnership agreement or other
organizational documents, as the case may be, of any member of the Xxxxxx
Group. The Transfer Documents are sufficient to effect the transfer to the
Company or the Subsidiaries of all direct or indirect interests in the
Properties and other assets specified therein upon payment of the
consideration therefor;
(xvii) the Registration Statement is effective under the Act; any
required filing of the Prospectus, or any Term Sheet that constitutes a
part thereof, pursuant to Rules 424(b) and 434 has been made in the manner
and within the time period required thereby; and based upon such counsel's
due inquiry made to the Office of the Secretary of the Commission, no stop
order suspending the effectiveness of the Registration Statement or any
amendment thereto has been issued, and no proceedings for that purpose have
been instituted or threatened or, to the best knowledge of such counsel,
are contemplated by the Commission;
(xviii) the Registration Statement originally filed with respect
to the Securities and each amendment thereto, any Rule 462(b) Registration
Statement and the Prospectus (in each case, other than the financial
statements, schedules and other financial and statistical data contained
therein, as to which such counsel need express no opinion) comply as to
form in all material respects with the applicable requirements of the Act
and the rules and regulations of the Commission thereunder;
(xix) if the Company elects to rely on Rule 434, the Prospectus
is not "materially different", as such term is used in Rule 434, from the
prospectus included in the Registration Statement at the time of its
effectiveness or an effective post-effective amendment thereto (including
such information that is permitted to be omitted pursuant to Rule 430A);
and
(xx) upon completion of the Formation Transactions, the Company
will be organized in conformity with the requirements for qualification as
a real estate investment trust under the Code, and the proposed method of
operation of the Company and the Operating Partnership as described in the
Registration Statement and the Prospectus and a certificate of a
responsible officer of the Company will enable the Company to meet the
requirements for taxation as a real estate investment trust under the Code
beginning with the year ended December 31, 1997.
25
Such counsel shall also state that they have no reason to believe that the
Registration Statement, as of its effective date, contained any untrue statement
of a material fact or omitted to state any material fact required to be stated
therein or necessary to make the statements therein not misleading or that the
Prospectus, as of its date or the date of such opinion, included or includes any
untrue statement of a material fact or omitted or omits to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; it being understood
that such counsel need express no belief with respect to the financial
statements, schedules and other financial and statistical data included in the
Registration Statement or the Prospectus.
In rendering any such opinion, such counsel may rely, as to matters of
fact, to the extent such counsel deems proper, on certificates of responsible
officers of the Company and public officials and, as to matters involving the
application of laws of any jurisdiction other than the State of California, the
State of New York, the Delaware General Corporation Law and the Delaware Revised
Limited Partnership Act or the United States, to the extent satisfactory in form
and scope to counsel for the Underwriters, upon the opinions of Xxxxxxx Xxxxx
Xxxxxxx & Ingersoll, Baltimore, Maryland, and as to matters involving the
application of community property law of the State of California, to the extent
satisfactory in form and scope to counsel for the Underwriters, upon the opinion
of Xxxxxxxxx, Xxxxx & Xxxxxx, LLP. The foregoing opinion shall also state that
the Underwriters are justified in relying upon such opinions of Xxxxxxx Xxxxx
Xxxxxxx & Ingersoll and Xxxxxxxxx, Xxxxx & Xxxxxx, LLP, and copies of such
opinions shall be delivered to the Representatives and counsel for the
Underwriters.
References to the Registration Statement and the Prospectus in this
paragraph (b) shall include any amendment or supplement thereto at the date of
such opinion.
(b)(1) The Representatives shall have received opinions, dated the
Firm Closing Date, of Xxxxxxxxx, Xxxxx & Xxxxxx, LLP, restating the opinions of
such firm dated November 1, 1996 and previously delivered to Prudential
Securities Incorporated, with respect to certain community property law issues.
(c) The Representatives shall have received an opinion, dated the Firm
Closing Date, of Xxxx, Scholer, Fierman, Xxxx & Handler, LLP, counsel for the
Underwriters, with respect to the issuance and sale of the Firm Securities, the
Registration Statement and the Prospectus, and such other related matters as the
Representatives may reasonably require, and the Company shall have furnished to
such counsel such documents as they may reasonably request for the purpose of
enabling them to pass upon such matters.
(d) The Representatives shall have received from Deloitte & Touche LLP
a letter or letters dated, respectively, the date hereof and the Firm Closing
Date, in form and substance satisfactory to the Representatives, to the effect
that:
(i) they are independent accountants with respect to the Company
and its consolidated subsidiaries and the Xxxxxx Group and the Acquisition
Properties within the meaning of the Act and the applicable rules and
regulations thereunder;
(ii) in their opinion, the audited consolidated financial
statements and schedules and pro forma financial statements examined by
them and included in the Registration Statement and the Prospectus comply
in form in all material respects
26
with the applicable accounting requirements of the Act and the related
published rules and regulations;
(iii) on the basis of a reading of the latest available interim
unaudited consolidated condensed financial statements of the Xxxxxx Group
and the Acquisition Properties, carrying out certain specified procedures
(which do not constitute an examination made in accordance with generally
accepted auditing standards) that would not necessarily reveal matters of
significance with respect to the comments set forth in this paragraph
(iii), a reading of the minute books of the stockholders, the board of
directors and any committees thereof of the members of the Xxxxxx Group and
inquiries of certain officials of the Xxxxxx Group who have responsibility
for financial and accounting matters, nothing came to their attention that
caused them to believe that:
(A) at a specific date (not more than five business days
prior to the date of such letter), there were any increases in debt or
accumulated deficit of the Xxxxxx Group or any decreases in total assets of
the Xxxxxx Group, in each case as compared with amounts shown in the
September 30, 1996 combined balance sheet included in the Registration
Statement and the Prospectus, or for the period from October 1, 1996 to
__________, 199 , there were any decreases, as compared with the
corresponding period of the previous year, in rental income, total revenues
or net income (as applicable) of the Xxxxxx Group and the Acquisition
Properties, except in all instances for changes, increases or decreases
which the Registration Statement and the Prospectus disclose have occurred
or may occur; and
(B) at a specific date (not more than five business days
prior to the date of such letter), with respect to the Xxxxxx Group, there
were any increases in borrowings as compared with amounts shown in the
September 30, 1996 balance sheet included in the Registration Statement and
the Prospectus, except in all instances for changes or increases which the
Registration Statement and the Prospectus disclose have occurred or may
occur.
(iv) they have carried out certain specified procedures, not
constituting an audit, with respect to certain amounts, percentages and
financial information identified by the Representatives that are derived
from the general accounting records of the Company and its consolidated
subsidiaries and are included in the Registration Statement and the
Prospectus and have compared such amounts, percentages and financial
information with such records of the Company and its consolidated
subsidiaries and with information derived from such records and have found
them to be in agreement, excluding any questions of legal interpretation;
and
(v) on the basis of a reading of the unaudited pro forma
condensed consolidated financial statements included in the Registration
Statement and the Prospectus, carrying out certain specified procedures
that would not necessarily reveal matters of significance with respect to
the comments set forth in this paragraph (v), inquiries of certain
officials of the Company and its consolidated subsidiaries who have
responsibility for financial and accounting matters and proving the
arithmetic accuracy of the application of the pro forma adjustments to
27
the historical amounts in the unaudited pro forma condensed consolidated
financial statements, nothing came to their attention that caused them to
believe that the unaudited pro forma condensed consolidated financial
statements do not comply in form in all material respects with the
applicable accounting requirements of Rule 11-02 of Regulation S-X or that
the pro forma adjustments have not been properly applied to the historical
amounts in the compilation of such statements.
In the event that the letters referred to above set forth any such changes,
decreases or increases, it shall be a further condition to the obligations of
the Underwriters that (A) such letters shall be accompanied by a written
explanation of the Company as to the significance thereof, unless the
Representatives deem such explanation unnecessary, and (B) such changes,
decreases or increases do not, in the sole judgment of the Representatives, make
it impractical or inadvisable to proceed with the purchase and delivery of the
Securities as contemplated by the Registration Statement, as amended as of the
date hereof.
References to the Registration Statement and the Prospectus in this
paragraph (d) with respect to either letter referred to above shall include any
amendment or supplement thereto at the date of such letter.
(e) The Representatives shall have received a certificate, dated the
Firm Closing Date, of the chief executive officer and the principal financial or
accounting officer of the Company to the effect that:
(i) the representations and warranties of the Company and the
Operating Partnership in this Agreement are true and correct as if made on
and as of the Firm Closing Date; the Registration Statement, as amended as
of the Firm Closing Date, does not include any untrue statement of a
material fact or omit to state any material fact necessary to make the
statements therein not misleading, and the Prospectus, as amended or
supplemented as of the Firm Closing Date, does not include any untrue
statement of a material fact or omit to state any material fact necessary
in order to make the statements therein, in the light of the circumstances
under which they were made, not misleading; and each of the Company and the
Operating Partnership has performed all covenants and agreements and
satisfied all conditions on its part to be performed or satisfied at or
prior to the Firm Closing Date;
(ii) no stop order suspending the effectiveness of the
Registration Statement or any amendment thereto has been issued, and no
proceedings for that purpose have been instituted or threatened or, to the
best of the Company's or the Operating Partnership's knowledge, are
contemplated by the Commission; and
(iii) subsequent to the respective dates as of which information
is given in the Registration Statement and the Prospectus, neither the
Company nor any of its subsidiaries has sustained any material loss or
interference with their respective businesses or properties from fire,
flood, hurricane, accident or other calamity, whether or not covered by
insurance, or from any labor dispute or any legal or governmental
proceeding, and there has not been any material adverse change, or any
development involving a prospective material adverse change, in the
condition (financial or otherwise), management, business prospects, net
worth or results of
28
operations of the Company and its subsidiaries, taken as a whole, except in
each case as described in or contemplated by the Registration Statement and
the Prospectus (exclusive of any amendment or supplement thereto).
(f) The Representatives shall have received from each Continuing
Investor an agreement to the effect that such person will not, directly or
indirectly, without the prior written consent of Prudential Securities
Incorporated, on behalf of the Underwriters, offer, sell, offer to sell,
contract to sell, pledge, grant any option to purchase or otherwise sell or
dispose (or announce any offer, sale, offer of sale, contract of sale, pledge,
grant of an option to purchase or other sale or disposition) of any shares of
Common Stock or other capital stock of the Company or Units or other partnership
interests of the Operating Partnership, or any securities convertible into, or
exchangeable or exercisable for, shares of Common Stock or other capital stock
of the Company or Units or other partnership interests of the Operating
Partnership, for a period of two years after the date of this Agreement;
provided, however, the Continuing Investors may pledge Units held by them to
-------- -------
secure their indemnification obligations in connection with the Formation
Transactions pursuant to the Pledge Agreement listed on Schedule 3 hereto.
(g) On or before the Firm Closing Date, the Representatives and
counsel for the Underwriters shall have received such further certificates,
documents or other information as they may have reasonably requested from the
Company.
(h) Prior to the commencement of the offering of the Securities, the
Securities shall have been approved for listing on the New York Stock Exchange,
subject to official notice of issuance.
(i) The Formation Transactions shall have been consummated or shall
occur simultaneously with the closing of the purchase and sale of the Firm
Securities hereunder.
(j) On or before the Firm Closing Date, all necessary consents to the
Formation Transactions shall have been obtained.
(k) On or before the Firm Closing Date, the Company and the Operating
Partnership shall have delivered to you with respect to each of the Properties
(including, for purposes of the applicable provisions of this paragraph, the
Excluded Properties) copies of:
(i) an owner policy or policies of title insurance insuring that
the Operating Partnership owns fee simple title to the real property (other
than the land in which the Operating Partnership is acquiring a ground
leasehold estate) comprising part of the Properties and owns and holds a
valid ground leasehold estate in the land comprising part of the Properties
in which the Operating Partnership is acquiring a ground leasehold estate,
in an amount not less than $240,000,000, which policies shall be issued by
a title insurance company acceptable to you (any such person or persons,
the "Title Company"), include tie-in endorsements, do not contain any
coinsurance provisions and contain as exceptions to title only those
exceptions acceptable to the Representatives;
(ii) an as-built survey of each of the Properties in form
satisfactory to you;
29
(iii) all assignments of ground leases, airspace leases and
tenant leases, service contracts and similar rights necessary to operate
each of the Properties and that are required to be delivered pursuant to
the Omnibus Option Agreement;
(iv) all tenant estoppels, third party consents, waivers,
licenses, permits, authorizations, agreements, certificates and the like
necessary to operate each of the Properties and that are required to be
delivered pursuant to the Omnibus Option Agreement;
(v) all certificates of occupancy, zoning compliance letters, and
evidence of utility availability for each of the Properties;
(vi) policies or certificates of insurance (including earthquake
insurance) relating to each of the Properties evidencing coverages and in
amounts as are prudent and customary in the businesses in which they are or
will be engaged;
(vii) UCC, judgment and tax lien searches confirming that the
personal property comprising part of the Properties is subject to no liens,
charges, encumbrances, claims or restrictions;
(viii) such affidavits, certificates and instruments of
indemnification as shall reasonably be required to induce the Title Company
to issue the policies contemplated in clause (i) of this Section 7(k);
(ix) checks payable to the appropriate public officials in
payment of all recording costs and transfer taxes (or checks or wire
transfers to the Title Company in respect of such amounts) due in respect
of the recording of any instruments to be recorded in connection with the
Formation Transactions, together with a check or wire transfer for the
Title Company in payment of the Title Company's premium, search and
examination charges, survey costs and any other amounts due in connection
with the issuance of its policy (or commitment); and
(x) if any of the Properties is subject to an existing mortgage,
a current payoff letter from the holder of such existing mortgage
indicating the principal amount required to satisfy all amounts then
secured by such existing mortgage and the additional amount required for
each day after the date of such letter necessary to satisfy all obligations
secured thereby.
All opinions, certificates, letters and documents delivered pursuant to
this Agreement will comply with the provisions hereof only if they are
reasonably satisfactory in all material respects to the Representatives and
counsel for the Underwriters. The Company shall furnish to the Representatives
such conformed copies of such opinions, certificates, letters and documents in
such quantities as the Representatives and counsel for the Underwriters shall
reasonably request.
The respective obligations of the several Underwriters to purchase and pay
for any Option Securities shall be subject, in their discretion, to each of the
foregoing conditions to purchase the Firm Securities, except that all references
to the Firm Securities and the Firm Closing Date shall be deemed to refer to
such Option Securities and the related Option Closing Date, respectively.
30
8. Indemnification and Contribution. (a) Each of the Company and the
---------------------------------
Operating Partnership, jointly and severally, agrees to indemnify and hold
harmless each Underwriter and each person, if any, who controls any Underwriter
within the meaning of Section 15 of the Act or Section 20 of the Securities
Exchange Act of 1934 (the "Exchange Act"), against any losses, claims, damages
or liabilities, joint or several, to which such Underwriter or such controlling
person 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:
(i) any untrue statement or alleged untrue statement made by the
Company or the Operating Partnership in Section 2 of this Agreement,
(ii) any untrue statement or alleged untrue statement of any
material fact contained in (A) the Registration Statement or any amendment
thereto, any Preliminary Prospectus or the Prospectus or any amendment or
supplement thereto or (B) any application or other document, or any
amendment or supplement thereto, executed by the Company or based upon
written information furnished by or on behalf of the Company filed in any
jurisdiction in order to qualify the Securities under the securities or
blue sky laws thereof or filed with the Commission or any securities
association or securities exchange (each an "Application"),
(iii) the omission or alleged omission to state in the
Registration Statement or any amendment thereto, any Preliminary Prospectus
or the Prospectus or any amendment or supplement thereto, or any
Application a material fact required to be stated therein or necessary to
make the statements therein not misleading or
(iv) any untrue statement or alleged untrue statement of any
material fact contained in any audio or visual materials used in connection
with the marketing of the Securities, including, without limitation,
slides, videos, films and tape recordings, as more specifically described
on Schedule 7 hereto,
and will reimburse, as incurred, each Underwriter and each such controlling
person for any legal or other expenses reasonably incurred by such Underwriter
or such controlling person in connection with investigating, defending against
or appearing as a third-party witness in connection with any such loss, claim,
damage, liability or action; provided, however, that neither the Company nor the
-----------------
Operating Partnership will be liable in any such case to the extent that any
such loss, claim, damage or liability arises out of or is based upon any untrue
statement or alleged untrue statement or omission or alleged omission made in
such registration statement or any amendment thereto, any Preliminary
Prospectus, the Prospectus or any amendment or supplement thereto or any
Application in reliance upon and in conformity with written information
furnished to the Company by such Underwriter through the Representatives
specifically for use therein; and provided, further, that neither the Company
-----------------
nor the Operating Partnership will be liable to any Underwriter or any person
controlling such Underwriter with respect to any such untrue statement or
omission made in any Preliminary Prospectus that is corrected in the Prospectus
(or any amendment or supplement thereto) if the person asserting any such loss,
claim, damage or liability purchased Securities from such Underwriter but was
not sent or given a copy of the Prospectus (as amended or supplemented) at or
prior to the written confirmation of the sale of such Securities to such person
in any case where such delivery of the Prospectus (as amended or supplemented)
is required by the Act, unless such failure to deliver the Prospectus (as
amended or supplemented) was a result
31
of noncompliance by the Company or the Operating Partnership with Section 5(d)
and (e) of this Agreement. This indemnity agreement will be in addition to any
liability which the Company or the Operating Partnership may otherwise have.
Neither the Company nor the Operating Partnership will, without the prior
written consent of the Underwriter or Underwriters purchasing, in the aggregate,
more than fifty percent (50%) of the Securities, settle or compromise or consent
to the entry of any judgment in any pending or threatened claim, action, suit or
proceeding in respect of which indemnification may be sought hereunder (whether
or not any such Underwriter or any person who controls any such Underwriter
within the meaning of Section 15 of the Act or Section 20 of the Exchange Act is
a party to such claim, action, suit or proceeding), unless such settlement,
compromise or consent includes an unconditional release of all of the
Underwriters and such controlling persons from all liability arising out of such
claim, action, suit or proceeding.
(b) Each Underwriter, severally and not jointly, will indemnify and
hold harmless the Company, each of its directors, each of its officers who
signed the Registration Statement and each person, if any, who controls the
Company within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act against any losses, claims, damages or liabilities to which the
Company or any such director, officer or controlling person 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 (i)
any untrue statement or alleged untrue statement of any material fact contained
in the Registration Statement or any amendment thereto, any Preliminary
Prospectus or the Prospectus or any amendment or supplement thereto, or any
Application or (ii) the omission or the alleged omission to state therein a
material fact required to be stated in the Registration Statement or any
amendment thereto, any Preliminary Prospectus or the Prospectus or any amendment
or supplement thereto, or any Application 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 reliance upon and in conformity with written information
furnished to the Company by such Underwriter through the Representatives
specifically for use therein; and, subject to the limitation set forth
immediately preceding this clause, will reimburse, as incurred, any legal or
other expenses reasonably incurred by the Company or any such director, officer
or controlling person in connection with investigating or defending any such
loss, claim, damage, liability or any action in respect thereof. This indemnity
agreement will be in addition to any liability which such Underwriter may
otherwise have. No Underwriter will, without the prior consent of the Company,
settle or compromise or consent to the entry of any judgment in any pending or
threatened claim, action, suit or proceeding in respect of which indemnification
may be sought hereunder (whether or not the Company, any of its directors or
officers who signed the Registration Statement or any person who controls the
Company within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act is a party to such claim, action, suit or proceeding), unless such
settlement, compromise or consent includes an unconditional release of the
Company, its officers and directors who signed the Registration Statement and
such controlling persons from all liability arising out of such claim, action,
suit or proceeding.
(c) Promptly after receipt by an indemnified party under this Section
8 of notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under this
Section 8, notify the indemnifying party of the commencement thereof; but the
omission so to notify the indemnifying party will not relieve it from (i) any
liability which it may have to any indemnified party under this Section 8 except
to the extent that the indemnifying party has been prejudiced as a result
thereof or (ii) any liability which it may have to any indemnified party
otherwise than under this Section 8. In case any such action is
32
brought against any indemnified party, and it notifies the indemnifying party of
the commencement thereof, the indemnifying party will be entitled to participate
therein and, to the extent that it may wish, jointly with any other indemnifying
party similarly notified, to assume the defense thereof, with counsel
satisfactory to such indemnified party; provided, however, that if the
-----------------
defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that there may be one or more legal defenses available to it and/or other
indemnified parties which are different from or additional to those available to
the indemnifying party, the indemnifying party shall not have the right to
direct the defense of such action on behalf of such indemnified party or parties
and such indemnified party or parties shall have the right to select separate
counsel to defend such action on behalf of such indemnified party or parties.
After notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof and approval by such indemnified party
of counsel appointed to defend such action, the indemnifying party will not be
liable to such indemnified party under this Section 8 for any legal or other
expenses, other than reasonable costs of investigation, subsequently incurred by
such indemnified party in connection with the defense thereof, unless (i) the
indemnified party shall have employed separate counsel in accordance with the
proviso to the next preceding sentence (it being understood, however, that in
connection with such action the indemnifying party shall not be liable for the
expenses of more than one separate counsel (in addition to local counsel) in any
one action or separate but substantially similar actions in the same
jurisdiction arising out of the same general allegations or circumstances,
designated by the Representatives in the case of paragraph (a) of this Section
8, representing the indemnified parties under such paragraph (a) who are parties
to such action or actions) or (ii) the indemnifying party does not promptly
retain counsel satisfactory to the indemnified party or (iii) the indemnifying
party has authorized the employment of counsel for the indemnified party at the
expense of the indemnifying party. After such notice from the indemnifying
party to such indemnified party, the indemnifying party will not be liable for
the costs and expenses of any settlement of such action effected by such
indemnified party without the consent of the indemnifying party.
(d) In circumstances in which the indemnity agreement provided for in
the preceding paragraphs of this Section 8 is unavailable or insufficient, for
any reason, to hold harmless an indemnified party in respect of any losses,
claims, damages or liabilities (or actions in respect thereof), each
indemnifying party, in order to provide for just and equitable contribution,
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 (i) the relative
benefits received by the indemnifying party or parties on the one hand and the
indemnified party on the other from the offering of the Securities or (ii) if
the allocation provided by the foregoing clause (i) is not permitted by
applicable law, not only such relative benefits but also the relative fault of
the indemnifying party or parties on the one hand and the indemnified party on
the other in connection with the statements or omissions or alleged statements
or omissions that 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 the Underwriters on the other shall be deemed to
be in the same proportion as the total proceeds from the offering (before
deducting expenses) received by the Company bear to the total underwriting
discounts and commissions received by the Underwriters. The relative fault of
the parties shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the Company
or the Underwriters, the parties' relative intents, knowledge, access to
information and opportunity to correct or prevent such statement or omission,
and any other equitable considerations appropriate
33
in the circumstances. The Company and the Operating Partnership and the
Underwriters agree that it would not be equitable if the amount of such
contribution were determined by pro rata or per capita allocation (even if the
Underwriters were treated as one entity for such purpose) or by any other method
of allocation that does not take into account the equitable considerations
referred to above in this paragraph (d). Notwithstanding any other provision of
this paragraph (d), no Underwriter shall be obligated to make contributions
hereunder that in the aggregate exceed the total public offering price of the
Securities purchased by such Underwriter under this Agreement, less the
aggregate amount of any damages that such Underwriter has otherwise been
required to pay in respect of the same or any substantially similar claim, and
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 Underwriters' obligations to
contribute hereunder are several in proportion to their respective underwriting
obligations and not joint, and contributions among Underwriters shall be
governed by the provisions of the Prudential Securities Incorporated Master
Agreement Among Underwriters. For purposes of this paragraph (d), each person,
if any, who controls an Underwriter within the meaning of Section 15 of the Act
or Section 20 of the Exchange Act shall have the same rights to contribution as
such Underwriter, and the Company and the Operating Partnership shall be deemed
one party and jointly and severally liable for any obligations to contribute
hereunder and each director of the Company, each officer of the Company who
signed the Registration Statement and each person, if any, who controls the
Company within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act, shall have the same rights to contribution as the Company and the
Operating Partnership.
9. Default of Underwriters. If one or more Underwriters default in their
-----------------------
obligations to purchase Firm Securities or Option Securities hereunder and the
aggregate number of such Securities that such defaulting Underwriter or
Underwriters agreed but failed to purchase is ten percent or less of the
aggregate number of Firm Securities or Option Securities to be purchased by all
of the Underwriters at such time hereunder, the other Underwriters may make
arrangements satisfactory to the Representatives for the purchase of such
Securities by other persons (who may include one or more of the non-defaulting
Underwriters, including the Representatives), but if no such arrangements are
made by the Firm Closing Date or the related Option Closing Date, as the case
may be, the other Underwriters shall be obligated severally in proportion to
their respective commitments hereunder to purchase the Firm Securities or Option
Securities that such defaulting Underwriter or Underwriters agreed but failed to
purchase. If one or more Underwriters so default with respect to an aggregate
number of Securities that is more than ten percent of the aggregate number of
Firm Securities or Option Securities, as the case may be, to be purchased by all
of the Underwriters at such time hereunder, and if arrangements satisfactory to
the Representatives are not made within 36 hours after such default for the
purchase by other persons (who may include one or more of the non-defaulting
Underwriters, including the Representatives) of the Securities with respect to
which such default occurs, this Agreement will terminate without liability on
the part of any non-defaulting Underwriter or the Company or the Operating
Partnership other than as provided in Section 10 hereof. In the event of any
default by one or more Underwriters as described in this Section 9, the
Representatives shall have the right to postpone the Firm Closing Date or the
Option Closing Date, as the case may be, established as provided in Section 3
hereof for not more than seven business days in order that any necessary changes
may be made in the arrangements or documents for the purchase and delivery of
the Firm Securities or Option Securities, as the case may be. As used in this
Agreement, the term "Underwriter" includes any person substituted for an
Underwriter under this Section 9. Nothing herein shall relieve any defaulting
Underwriter from liability for its default.
34
10. Survival. The respective representations, warranties, agreements,
--------
covenants, indemnities and other statements of the Company, its officers, the
Operating Partnership and the several Underwriters 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 (i) any investigation made by or
on behalf of the Company, any of its officers or directors, the Operating
Partnership, any Underwriter or any controlling person referred to in Section 8
hereof and (ii) delivery of and payment for the Securities. The respective
agreements, covenants, indemnities and other statements set forth in Sections 6
and 8 hereof shall remain in full force and effect, regardless of any
termination or cancellation of this Agreement.
11. Termination. (a) This Agreement may be terminated with respect to
-----------
the Firm Securities or any Option Securities in the sole discretion of the
Representatives by notice to the Company given prior to the Firm Closing Date or
the related Option Closing Date, respectively, in the event that the Company or
the Operating Partnership shall have failed, refused or been unable to perform
all obligations and satisfy all conditions on its part to be performed or
satisfied hereunder at or prior thereto or, if at or prior to the Firm Closing
Date or such Option Closing Date, respectively,
(i) the Company or any of its subsidiaries shall have, in the
sole judgment of the Representatives, sustained any material loss or
interference with their respective businesses or properties from fire,
flood, hurricane, accident or other calamity, whether or not covered by
insurance, or from any labor dispute or any legal or governmental
proceeding or there shall have been any material adverse change, or any
development involving a prospective material adverse change (including
without limitation a change in management or control of the Company), in
the condition (financial or otherwise), business prospects, net worth or
results of operations of the Company and its subsidiaries, taken as a
whole, except in each case as described in or contemplated by the
Registration Statement and the Prospectus (exclusive of any amendment or
supplement thereto);
(ii) trading in the Common Stock shall have been suspended by the
Commission or the New York Stock Exchange or trading in securities
generally on the New York Stock Exchange shall have been suspended or
minimum or maximum prices shall have been established on any such exchange;
(iii) a banking moratorium shall have been declared by New York,
California or United States authorities; or
(iv) there shall have been (A) an outbreak or escalation of
hostilities between the United States and any foreign power, (B) an
outbreak or escalation of any other insurrection or armed conflict
involving the United States or (C) any other calamity or crisis or material
adverse change in general economic, political or financial conditions
having an effect on the U.S. financial markets that, in the sole judgment
of the Representatives, makes it impractical or inadvisable to proceed with
the public offering or the delivery of the Securities as contemplated by
the Registration Statement, as amended as of the date hereof.
(b) Termination of this Agreement pursuant to this Section 11 shall be
without liability of any party to any other party except as provided in
Section(s) 6 and 10 hereof.
35
12. Information Supplied by Underwriters. The statements set forth in the
------------------------------------
last paragraph on the front cover page and under the heading "Underwriting" in
any Preliminary Prospectus or the Prospectus (to the extent such statements
relate to the Underwriters) constitute the only information furnished by any
Underwriter through the Representatives to the Company for the purposes of
Sections 2(b) and 8 hereof. The Underwriters confirm that such statements (to
such extent) are correct.
13. Notices. All communications hereunder shall be in writing and, if
-------
sent to any of the Underwriters, shall be delivered or sent by mail, telex or
facsimile transmission and confirmed in writing to Prudential Securities
Incorporated, Xxx Xxx Xxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Equity
Transactions Group; and if sent to the Company, shall be delivered or sent by
mail, telex or facsimile transmission and confirmed in writing to the Company at
0000 Xxxx Xxxxxxxx Xxxxxxx, Xx Xxxxxxx, Xxxxxxxxxx 00000, Attention: Chief
Executive Officer.
14. Successors. This Agreement shall inure to the benefit of and shall be
----------
binding upon the several Underwriters, the Company, the Operating Partnership
and their respective successors and legal representatives, and nothing expressed
or mentioned in this Agreement is intended or shall be construed to give any
other person any legal or equitable right, remedy or claim under or in respect
of this Agreement, or any provisions herein contained, this Agreement and all
conditions and provisions hereof being intended to be and being for the sole and
exclusive benefit of such persons and for the benefit of no other person except
that (i) the indemnities of the Company and the Operating Partnership contained
in Section 8 of this Agreement shall also be for the benefit of any person or
persons who control any Underwriter within the meaning of Section 15 of the Act
or Section 20 of the Exchange Act and (ii) the indemnities of the Underwriters
contained in Section 8 of this Agreement shall also be for the benefit of the
directors of the Company, the officers of the Company who have signed the
Registration Statement and any person or persons who control the Company within
the meaning of Section 15 of the Act or Section 20 of the Exchange Act. No
purchaser of Securities from any Underwriter shall be deemed a successor because
of such purchase.
15. APPLICABLE LAW. THE VALIDITY AND INTERPRETATION OF THIS AGREEMENT,
--------------
AND THE TERMS AND CONDITIONS SET FORTH HEREIN, SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING
EFFECT TO ANY PROVISIONS RELATING TO CONFLICTS OF LAWS.
16. Consent to Jurisdiction and Service of Process. All judicial
----------------------------------------------
proceedings arising out of or relating to this Agreement may be brought in any
state or federal court of competent jurisdiction in the State of New York, and
by execution and delivery of this Agreement, each of the Company and the
Operating Partnership accepts for itself and in connection with its properties,
generally and unconditionally, the nonexclusive jurisdiction of the aforesaid
courts and waives any defense of forum non conveniens and irrevocably agrees to
be bound by any judgment rendered thereby in connection with this Agreement.
Each of the Company and the Operating Partnership designates and appoints
__________________, and such other persons as may hereafter be selected by each
of the Company and the Operating Partnership irrevocably agreeing in writing to
so serve, as its agent to receive on its behalf service of all process in any
such proceedings in any such court, such service being hereby acknowledged by
each of the Company and the Operating Partnership to be effective and binding
service in every respect. A copy of any such process so served shall be mailed
by registered mail to each of the Company and the Operating Partnership at its
address provided in Section 13 hereof; provided, however, that, unless otherwise
-------- -------
provided
36
by applicable law, any failure to mail such copy shall not affect the validity
of service of such process. If any agent appointed by the Company or the
Operating Partnership refuses to accept service, each of the Company and the
Operating Partnership hereby agrees that service of process sufficient for
personal jurisdiction in any action against the Company or the Operating
Partnership in the State of New York may be made by registered or certified
mail, return receipt requested, to the Company or the Operating Partnership at
its address provided in Section 13 hereof, and each of the Company and the
Operating Partnership hereby acknowledges that such service shall be effective
and binding in every respect. Nothing herein shall affect the right to serve
process in any other manner permitted by law or shall limit the right of any
Underwriter to bring proceedings against each of the Company and the Operating
Partnership in the courts of any other jurisdiction.
17. Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
37
If the foregoing correctly sets forth our understanding, please indicate
your acceptance thereof in the space provided below for that purpose, whereupon
this letter shall constitute an agreement binding the Company, the Operating
Partnership and each of the several Underwriters.
Very truly yours,
XXXXXX REALTY CORPORATION
By:
--------------------------------
Name:
Title:
XXXXXX REALTY, L.P.
By: Xxxxxx Realty Corporation,
its General Partner
By:
---------------------------
Name:
Title:
The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.
PRUDENTIAL SECURITIES INCORPORATED
XXXXXXXXX, LUFKIN & XXXXXXXX
SECURITIES CORPORATION
X.X. XXXXXX SECURITIES INC.
XXXXX XXXXXX INC.
By: PRUDENTIAL SECURITIES INCORPORATED
By
-------------------------------------
Xxxx-Xxxxxx Canfin, Director
For itself and on behalf of the Representatives.
38
SCHEDULE 1
UNDERWRITERS
------------
Number of Firm
Securities to
Underwriter be Purchased
----------- --------------
Prudential Securities Incorporated......
Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities
Corporation............................
X.X. Xxxxxx Securities Inc..............
Xxxxx Xxxxxx Inc........................
[insert names of other Underwriters
-----------------------------------
alphabetically by bracket or in other
-------------------------------------
order determined by Prudential
------------------------------
Securities Incorporated -
-------------------------
Equity Transactions Group]
--------------------------
__________
Total..................... 11,300,000
SCHEDULE 2
PARTNERS OF OPERATING PARTNERSHIP
---------------------------------
NUMBER PERCENTAGE
GENERAL PARTNER OF UNITS OF ALL UNITS
--------------- -------- ------------
Xxxxxx Realty Corporation
LIMITED PARTNERS
----------------
SCHEDULE 3
TRANSACTION DOCUMENTS
---------------------
1. Amended and Restated Agreement of Limited Partnership of Xxxxxx Realty, L.P.
dated ________, 1997.
2. Registration Rights Agreement dated ________, 1997 among the Company and the
other persons named therein.
3. Noncompetition Agreement dated ________, 1997 between the Company and Xxxx
X. Xxxxxx, Xx.
4. Noncompetition Agreement dated ________, 1997 between the Company and Xxxx
X. Xxxxxx, Xx.
5. Omnibus Option Agreement dated October 30, 1996 among the Operating
Partnership and the Grantors (as defined below).
6. Representation Letter, Consent and Power of Attorney dated October 30, 1996
executed by each of the Grantors.
7. Supplemental Representations, Warranties and Indemnity Agreement dated
________, 1997 among the Company, the Operating Partnership and Xxxx X.
Xxxxxx, Xx., Xxxx X. Xxxxxx, Xx. and Xxxxxx Industries.
8. Pledge Agreement dated ________, 1997 among Xxxx X. Xxxxxx, Xx., Xxxx X.
Xxxxxx, Xx., Xxxxxx Industries and the Company, as agent for the pledgees.
9. Option Agreement dated ________, 1997 between the Operating Partnership and
Kilroy Calabasas Associates.
10. Option Agreement dated ________, 1997 between the Operating Partnership and
Xxxxxx Airport Imperial Co.
11. Management Agreement dated ________, 1997 between the Operating Partnership
and Xxxxxx Airport Imperial Co.
12. Management Agreement dated ________, 1997 between the Operating Partnership
and Kilroy Calabasas Associates.
13. Development Agreement dated ________, 1997 between the Operating Partnership
and the Services Company.
14. [L&W to add the Mortgage Loan documents]
15. [L&W to add the Credit Facility documents]
16. Shared Facilities Agreement dated ________, 1997 between the Company and
Kilroy Industries.
17. License Agreement dated ________, 1997 between the Company and ________ [re:
Kilroy name].
18. Indemnification Agreement dated ________, 1997 between the Company and Xxxx
X. Xxxxxx, Xx.
19. Indemnification Agreement dated ________, 1997 between the Company and Xxxx
X. Xxxxxx, Xx.
20. Indemnification Agreement dated ________, 1997 between the Company and
Xxxxxxx X. Xxxxxx.
21. Indemnification Agreement dated ________, 1997 between the Company and
Xxxxxxxx Xxxx Xxxxxxx.
22. Indemnification Agreement dated ________, 1997 between the Company and
Xxxxxxx X. Xxxxx, Xx.
23. Indemnification Agreement dated ________, 1997 between the Company and A.
Xxxxxxxxx Xxxxx.
24. Indemnification Agreement dated ________, 1997 between the Company and
Xxxxxxx X. Xxxxxx.
25. Indemnification Agreement dated ________, 1997 between the Company and
Xxxxxxx X. Xxxx.
26. Indemnification Agreement dated ________, 1997 between the Company and Xxxx
X. Xxxxxxxx
27. Employment Agreement dated ________, 1997 between the Company and Xxxx X.
Xxxxxx, Xx.
28. Employment Agreement dated ________, 1997 between the Company and Xxxxxxx X.
Xxxxx Xx.
29. Employment Agreement dated ________, 1997 between the Company and Xxxxxxx X.
Xxxxxx.
30. Employment Agreement dated ________, 1997 between the Company and Xxxxxxxx
Xxxx Greenup.
31. All other agreements and instruments related to the Formation Transactions
[To add each xxxx of sale and assignment instrument (i.e. assignment of
contracts, leases and ground leases, deeds, etc.)]
* * *
Certain Defined Terms
---------------------
"Grantors" -- Xxxxxxx Xxxxxx Bouzaid
Xxxxx Xxxx
K-FIDO Associates, a California Limited Partnership
Kilroy A-102 Trust, a California inter vivos trust
Xxxxxx Airport Associates, a California general partnership
Xxxxxx Xxxxxxxx 00 Partnership, a California general partnership
Kilroy-Freehold Industrial Development Organization, a California
general partnership
Kilroy Garden Grove Associates, a California general partnership
Kilroy Industries, a California corporation
Xxxx X. Xxxxxx, Xx.
Xxxx X. Xxxxxx, Xx.
Kilroy K-FIDO Associates, a California Limited Partnership
Xxxxxx XX Affiliates II, a California Limited Partnership
Kilroy Long Beach Associates, a California Limited Partnership
Kilroy Long Beach Partner II, a California Limited Partnership
Kilroy 1979 Trust, a California inter vivos trust
Kilroy Technologies Company, LLC, a California Limited Liability
Company
Xxxx XxXxxxx
Xxxxxxxx X. XxXxxxxx
Xxxx Xxxxxxx
SEA/TAC Properties, Ltd., a California Limited Partnership
SCHEDULE 4
OTHER PROPERTIES OWNED BY MEMBERS OF THE KILROY GROUP
-----------------------------------------------------
SCHEDULE 5
OPERATIVE DOCUMENTS
-------------------
1. Amended and Restated Agreement of Limited Partnership of Xxxxxx Realty,
L.P. dated ________, 1997.
2. Registration Rights Agreement dated ________, 1997 among the Company and the
other persons named therein.
3. Noncompetition Agreement dated ________, 1997 between the Company and Xxxx
X. Xxxxxx, Xx.
4. Noncompetition Agreement dated ________, 1997 between the Company and Xxxx
X. Xxxxxx, Xx.
5. Omnibus Option Agreement dated October 30, 1996 among the Operating
Partnership and the Grantors (as defined below).
6. Representation Letter, Consent and Power of Attorney dated October 30, 1996
executed by each of the Grantors.
7. Supplemental Representations, Warranties and Indemnity Agreement dated
________, 1997 among the Company, the Operating Partnership and Xxxx X.
Xxxxxx, Xx., Xxxx X. Xxxxxx, Xx. and Xxxxxx Industries.
8. Pledge Agreement dated ________, 1997 among Xxxx X. Xxxxxx, Xx., Xxxx X.
Xxxxxx, Xx., Xxxxxx Industries and the Company, as agent for the pledgees.
9. Option Agreement dated ________, 1997 between the Operating Partnership and
Kilroy Calabasas Associates.
10. Option Agreement dated ________, 1997 between the Operating Partnership and
Xxxxxx Airport Imperial Co.
11. Management Agreement dated ________, 1997 between the Operating Partnership
and Xxxxxx Airport Imperial Co.
12. Management Agreement dated ________, 1997 between the Operating Partnership
and Kilroy Calabasas Associates.
13. Development Agreement dated ________, 1997 between the Operating Partnership
and the Services Company.
14. Shared Facilities Agreement dated ________, 1997 between the Company and
Kilroy Industries.
15. License Agreement dated ________, 1997 between the Company and ________ [re:
Kilroy name].
[To add each xxxx of sale and assignment instrument (i.e. assignment of
contracts, leases and ground leases, deeds, etc.)]
SCHEDULE 6
LIST OF TRANSFER DOCUMENTS
--------------------------
1. Omnibus Option Agreement dated October 30, 1996 among the Operating
Partnership and the Grantors (as defined in Schedule 3 hereto).
2. Representation Letter, Consent and Power of Attorney dated October 30, 1996
executed by each of the Grantors.
3. Supplemental Representations, Warranties and Indemnity Agreement dated
________, 1997 among the Company, the Operating Partnership and Xxxx X.
Xxxxxx, Xx., Xxxx X. Xxxxxx, Xx. and Xxxxxx Industries.
4. Option Agreement dated ________, 1997 between the Operating Partnership and
Kilroy Calabasas Associates.
5. Option Agreement dated ________, 1997 between the Operating Partnership and
Xxxxxx Airport Imperial Co.
6. License Agreement dated ________, 1997 between the Company and ________ [re:
Kilroy name].
[To add each xxxx of sale and assignment instrument (i.e. assignment of
contracts, leases and ground leases, deeds, etc.)]
SCHEDULE 7
MARKETING MATERIALS PROVIDED BY THE COMPANY
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