Exhibit 1.1
4,000,000 SHARES
of ___% Preferred Income Equity Redeemable SharesSM"
"PIERS-SM-"
XX XXXXX REALTY CORP.
UNDERWRITING AGREEMENT
_________, 1998
XXXXXX BROTHERS INC.
PRUDENTIAL SECURITIES INCORPORATED
c/x Xxxxxx Brothers Inc.
Three World Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
XX Xxxxx Realty Corp., a Maryland corporation (the "COMPANY"),
intending to qualify for federal income tax purposes as a real estate investment
trust pursuant to Sections 856 through 860 of the Internal Revenue Code of 1986,
as amended, including the regulations and published interpretations thereunder
(the "CODE"), XX Xxxxx Operating Partnership, L.P., a Delaware limited
partnership and the sole general partner of which is the Company (the "OPERATING
PARTNERSHIP"), XX Xxxxx Management LLC, a Delaware limited liability company and
a wholly owned subsidiary of the Operating Partnership (the "MANAGEMENT LLC"),
X.X. Xxxxx Management Corp., a New York corporation and in which the Operating
Partnership owns 100% of the non-voting common stock (which represents 95% of
the economic interest therein) (the "MANAGEMENT CORPORATION"), X.X. Xxxxx
Leasing, Inc., a New York corporation and in which the Operating Partnership
owns 100% of the non-voting common stock (which represents 95% of the economic
interest therein) (the "LEASING CORPORATION") and Emerald City Construction
Corp., a New York corporation and in which the Operating Partnership owns 100%
of the non-voting common stock (which represents 95% of the economic interest
therein) (the "CONSTRUCTION CORPORATION," and together with the Management
Corporation and the Leasing Corporation, the "SERVICE CORPORATIONS," and the
Service Corporations collectively with the Company, Operating Partnership and
the Management LLC, the "TRANSACTION ENTITIES") each wish to confirm as follows
its agreement with Xxxxxx Brothers Inc. and Prudential Securities Incorporated
(the "UNDERWRITERS," which term shall also include any underwriter substituted
as hereinafter provided in Section 9 of this Agreement) with respect to the sale
by the Company and the purchase by the Underwriters, acting severally and not
jointly (the "OFFERING"), of an aggregate of 4,000,000 shares (the "FIRM
SHARES") of the Company's ___% PIERS, designated by the Company as the ___%
Series A Convertible, Cumulative Preferred Stock, par value $.01 per share,
liquidation preference $25.00 per share (the "SERIES A PREFERRED SHARES"). In
addition, the Company proposes to grant to the Underwriters an option to
purchase up to an
________________________
"Preferred Income Equity Redeemable SharesSM" and "PIERSSM" are service marks
owned by Xxxxxx Brothers Inc.
additional 600,000 Series A Preferred Shares on the terms and for the purposes
set forth in Section 2 (the "OPTION SHARES"). The Firm Shares and the Option
Shares, if purchased, are hereinafter collectively called the "SHARES."
Capitalized terms used but not otherwise defined herein shall have the
meanings ascribed to them in the Prospectus (as hereinafter defined).
The Transaction Entities understand that the Underwriters propose to
make a public offering of the Shares as soon as the Underwriters deem advisable
after the Registration Statement (as hereinafter defined) becomes effective and
this Agreement has been executed and delivered.
1. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE TRANSACTION
ENTITIES. Each of the Transaction Entities, jointly and severally, represents,
warrants and agrees that, as of the date hereof:
(a) A registration statement on Form S-11 (No. 333-50311), and
any amendments thereto, with respect to the Shares has (i) been prepared by
the Company in conformity with the requirements of the United States
Securities Act of 1933, as amended (the "SECURITIES ACT") and the rules and
regulations (the "RULES AND REGULATIONS") of the United States Securities
and Exchange Commission (the "COMMISSION") thereunder, (ii) been filed with
the Commission under the Securities Act and (iii) become effective under
the Securities Act. Copies of such registration statement and any
amendments thereto have been delivered by the Company to you as the
Underwriters. As used in this Agreement, "EFFECTIVE TIME" means the date
and the time as of which such registration statement, or the most recent
post-effective amendment thereto, if any, was declared effective by the
Commission; "EFFECTIVE DATE" means the date of the Effective Time;
"PRELIMINARY PROSPECTUS" means each prospectus included in such
registration statement, or amendments thereto, before it became effective
under the Securities Act and any prospectus filed with the Commission by
the Company with the consent of the Underwriters pursuant to Rule 424(a) of
the Rules and Regulations; "REGISTRATION STATEMENT" means such registration
statement, as amended at the Effective Time, including all information
contained in the final prospectus filed with the Commission pursuant to
Rule 424(b) of the Rules and Regulations and deemed to be a part of the
registration statement as of the Effective Time pursuant to paragraph
(b) of Rule 430A of the Rules and Regulations; and "PROSPECTUS" means such
final prospectus, as first filed with the Commission pursuant to paragraph
(1) or (4) of Rule 424(b) of the Rules and Regulations. Any registration
statement (including any amendment or supplement thereto or information
which is deemed to be a part thereof) filed by the Company to register
additional Series A Preferred Shares under Rule 462(b) of the Rules and
Regulations ("RULE 462(B) REGISTRATION STATEMENT") shall be deemed a part
of the Registration Statement. Any prospectus (including any amendment or
supplement thereto or information which is deemed to be a part thereof)
included in a Rule 462(b) Registration Statement shall be deemed to be part
of the Prospectus. If a Rule 462(b) Registration Statement is filed in
connection with the offering and sale of the Shares, the Company will have
complied or will comply with the requirements of Rule 111 under the
Securities Act relating to the payment of filing fees therefor. The
Company has not
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distributed, and prior to the later of the Closing Date and the completion
of the distribution of the Shares, will not distribute, any offering
material in connection with the offering or sale of the Shares other than
the Registration Statement, the Preliminary Prospectus (as hereinafter
defined), the Prospectus or any other materials, if any, permitted by the
Securities Act (which were disclosed to the Underwriters and Underwriters'
counsel). For purposes of this Agreement, all references to the
Registration Statement, any Preliminary Prospectus or the Prospectus or any
amendment or supplement to any of the foregoing shall be deemed to include
the copy filed with the Commission pursuant to its Electronic Data
Gathering, Analysis and Retrieval system ("XXXXX").
(b) Each Preliminary Prospectus included as part of the
Registration Statement as originally filed or as part of any amendment or
supplement thereto, or filed pursuant to Rule 424 under the Securities Act
and the Rules and Regulations, complied when so filed in all material
respects with the provisions of the Securities Act. The Commission has not
issued any order preventing or suspending the use of any Preliminary
Prospectus.
(c) The Registration Statement conforms, and the Prospectus and
any further amendments or supplements to the Registration Statement or the
Prospectus will, when they become effective or are filed with the
Commission, as the case may be, conform in all material respects to the
requirements of the Securities Act and the Rules and Regulations and do not
and will not, as of the applicable Effective Date (as to the Registration
Statement and any amendment thereto) and as of the applicable filing date
and at the First Delivery Date (as hereinafter defined) (as to the
Prospectus and any amendment or supplement thereto) contain an untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not
misleading (with respect to the Prospectus, in light of the circumstances
under which they were made); PROVIDED that no representation or warranty is
made as to information contained in or omitted from the Registration
Statement or the Prospectus in reliance upon and in conformity with written
information furnished to the Company by or on behalf of any Underwriter
specifically for inclusion therein. The Prospectus delivered to the
Underwriters for use in connection with the offering of Shares will, at the
time of such delivery, be identical to the electronically transmitted
copies thereof filed with the Commission pursuant to XXXXX, except to the
extent permitted by Regulation S-T.
(d) No stop order suspending the effectiveness of the
Registration Statement or any part thereof has been issued and no
proceeding for that purpose has been instituted or, to the knowledge of any
of the Transaction Entities, threatened by the Commission or by the state
securities authority of any jurisdiction. No order preventing or
suspending the use of any Preliminary Prospectus or the Prospectus has been
issued and no proceeding for that purpose has been instituted or, to the
knowledge of any of the Transaction Entities, threatened by the Commission
or by the state securities authority of any jurisdiction.
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(e) The Company has been duly formed and is validly existing as
a corporation in good standing under the laws of the State of Maryland, is
duly qualified to do business and is in good standing as a foreign
corporation in each jurisdiction in which its ownership or lease of
property and other assets or the conduct of its business requires such
qualification, except where the failure to so qualify will not have a
material adverse effect on the business, prospects, operations, management,
consolidated financial position, net worth, stockholders' equity or results
of operations of the Transaction Entities considered as one enterprise or
on the use or value of the Properties (as hereinafter defined),
collectively (a "MATERIAL ADVERSE EFFECT"), and has all power and authority
necessary to own or hold its properties and other assets, to conduct the
business in which it is engaged and to enter into and perform its
obligations under this Agreement and the other Operative Documents (as
hereinafter defined) to which it is a party. None of the subsidiaries of
the Company (other than the Operating Partnership, the Management
Corporation, the Management LLC, the Leasing Corporation and Construction
Corporation) is a "SIGNIFICANT SUBSIDIARY," as such term is defined in
Rule 405 of the Rules and Regulations. Except as described in the
Prospectus, the Company owns no direct or indirect equity interest in any
entity other than the Transaction Entities.
(f) The Company has an authorized capitalization as set forth in
the Prospectus. Except as disclosed in the Prospectus, (i) no Series A
Preferred Shares are reserved for any purpose, (ii) except for the ___%
Series A Convertible, Cumulative Preference Units of the Operating
Partnership ("PREFERENCE UNITS") and the outstanding units of limited
partner interest of the Operating Partnership ("UNITS"), there are no
outstanding securities convertible into or exchangeable for any Series A
Preferred Shares or shares of the Company's common stock, par value $.01
per share ("COMMON STOCK"), and (iii) there are no outstanding options,
rights (preemptive or otherwise) or warrants to purchase or subscribe for
Series A Preferred Shares or any other securities of the Company.
(g) The Operating Partnership has been duly formed and is
validly existing as a limited partnership in good standing under the laws
of the State of Delaware, is duly qualified to do business and is in good
standing as a foreign limited partnership in each jurisdiction in which its
ownership or lease of property and other assets or the conduct of its
business requires such qualification, except where the failure to so
qualify will not have a Material Adverse Effect, and has all power and
authority necessary to own or hold its properties and other assets, to
conduct the business in which it is engaged and to enter into and perform
its obligations under this Agreement and the other Operative Documents (as
hereinafter defined) to which it is a party. The Company is the sole
general partner of the Operating Partnership. The Agreement of Limited
Partnership of the Operating Partnership, as amended (the "OPERATING
PARTNERSHIP AGREEMENT") is in full force and effect, and the aggregate
percentage interests of the Company and the limited partners in the
Operating Partnership are as set forth in the Prospectus; PROVIDED that to
the extent any portion of the over-allotment option described in Section 2
hereof is exercised at the First Delivery Date, the percentage interest of
such partners in the Operating Partnership will be adjusted accordingly.
Additionally, to the extent any portion of such over-allotment option is
exercised subsequent to the First
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Delivery Date, the Company will contribute the proceeds from the sale of
the Option Shares to the Operating Partnership in exchange for a number of
Preference Units equal to the number of Option Shares issued.
(h) Each of the Service Corporations has been duly formed and is
validly existing as a corporation in good standing under the laws of the
State of New York, is duly qualified to do business and is in good standing
as a foreign corporation in each jurisdiction in which its ownership or
lease of property and other assets or the conduct of its business requires
such qualification, except where the failure to so qualify would not have a
Material Adverse Effect, and has all power and authority necessary to own
or hold its properties and other assets, to conduct the business in which
it is engaged and to enter into and perform its obligations under this
Agreement and the other Operative Documents (as hereinafter defined) to
which it is a party. All of the issued and outstanding capital stock of
each Service Corporation has been duly authorized and validly issued, is
fully paid and non-assessable, has been offered and sold in compliance with
all applicable laws (including, without limitation, federal or state
securities laws) and, all of such capital stock owned by the Operating
Partnership (100% of the nonvoting common stock) is owned free and clear of
any security interest, mortgage, pledge, lien, encumbrance, claim,
restriction or equities. No shares of capital stock of any Service
Corporation are reserved for any purpose, and there are no outstanding
securities convertible into or exchangeable for any capital stock of any
Service Corporation and no outstanding options, rights (preemptive or
otherwise) or warrants to purchase or to subscribe for shares of such
capital stock or any other securities of any Service Corporation.
(i) The Management LLC has been duly formed and is validly
existing as a limited liability company in good standing under the laws of
the State of Delaware, is duly qualified to do business and is in good
standing as a foreign limited liability company in each jurisdiction in
which its ownership or lease of property and other assets or the conduct of
its business requires such qualification, except where the failure to so
qualify would not have a Material Adverse Effect, and has all power and
authority necessary to own or hold its properties and other assets, to
conduct the business in which it is engaged and to enter into and perform
its obligations under this Agreement and the other Operative Documents (as
hereinafter defined) to which it is a party. All of the issued and
outstanding membership interests of the Management LLC have been duly
authorized and validly issued, are fully paid and non-assessable, have been
offered and sold in compliance with all applicable laws (including, without
limitation, federal or state securities laws), and 100% of the membership
interests are owned by the Operating Partnership free and clear of any
security interest, mortgage, pledge, lien, encumbrance, claim, restriction
or equities. No membership interests of the Management LLC are reserved
for any purpose, and there are no outstanding securities convertible into
or exchangeable for any membership interests of the Management LLC and no
outstanding options, rights (preemptive or otherwise) or warrants to
purchase or to subscribe for membership interests or any other securities
of the Management LLC.
(j) The Shares have been duly and validly authorized and, when
issued and delivered against payment therefor as provided herein, will be
duly and validly
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issued, fully paid and non-assessable. Upon payment of the purchase price
and delivery of the Shares in accordance herewith, the Underwriters will
receive good, valid and marketable title to the Shares, free and clear of
all security interests, mortgages, pledges, liens, encumbrances, claims,
restrictions and equities. The terms of the Series A Preferred Shares
conform in substance to all statements and descriptions related thereto
contained in the Prospectus. The form of the certificates to be used to
evidence the Series A Preferred Shares will, at the First Delivery Date, be
in due and proper form and will comply with all applicable legal
requirements. The issuance of the Shares is not subject to any preemptive
or other similar rights.
(k) All issued and outstanding Units have been duly authorized
and validly issued and have been offered and sold in compliance in all
material respects with all applicable laws (including, without limitation,
federal or state securities laws). Except as disclosed in the Prospectus,
no Units are reserved for any purpose and there are no outstanding
securities convertible into or exchangeable for any Units and no
outstanding options, rights (preemptive or otherwise) or warrants to
purchase or subscribe for Units or other securities of the Operating
Partnership. The terms of the Units conform in all material respects to
statements and descriptions related thereto contained in the Prospectus.
(l) (A) This Agreement has been duly and validly authorized,
executed and delivered by each of the Transaction Entities, and assuming
due authorization, execution and delivery by the Underwriters, is a valid
and binding agreement of each of the Transaction Entities, enforceable
against the Transaction Entities in accordance with its terms, except to
the extent that such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization or other similar laws relating to or
affecting creditors' rights and general principles of equity and except as
rights to indemnity and contribution thereunder may be limited by
applicable law or policies underlying such law; (B) each of the Operating
Partnership Agreement and the members agreement of the Management LLC has
been duly and validly authorized, executed and delivered by the parties
thereto and is a valid and binding agreement of the parties thereto,
enforceable against such parties in accordance with its terms, except to
the extent that such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization or other similar laws relating to or
affecting creditors' rights and general principles of equity and except as
rights to indemnity and contribution thereunder may be limited by
applicable law or policies underlying such law; (C) each of the agreements
by and between the Service Corporations and/or the Management LLC and the
Company (the "MANAGEMENT AGREEMENTS") has been duly and validly authorized,
executed and delivered by the parties thereto and is a valid and binding
agreement, enforceable against the parties thereto in accordance with its
terms, except to the extent that such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization or other similar laws
relating to or affecting creditors' rights and general principles of equity
and except as rights to indemnity and contribution thereunder may be
limited by applicable law or policies underlying such law; (D) the
employment and noncompetition agreements between the Company and each of
Xxxxxxx X. Xxxxx, Xxxxx X. Xxxxxxx, Xxxxx X. Xxxx, Xxxxxx X. Xxxxx,
Xxxxxxxx X. Xxxxxxx, Xxxxxx Xxxxxx and Xxxxx X. Xxxxx (the "EMPLOYMENT
AGREEMENTS") have been duly and validly authorized, executed and
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delivered by the parties thereto and are each a valid and binding
agreement, enforceable against the parties thereto in accordance with its
terms, except to the extent that such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization or other similar laws
relating to or affecting creditors' rights and general principles of equity
and except as rights to indemnity and contribution thereunder may be
limited by applicable law or policies underlying such law; (E) the
agreements (the "ACQUISITION AGREEMENTS") pursuant to which the Company
will acquire the Pending Acquisitions (as defined in the Prospectus) will
have been duly and validly authorized, executed and delivered by each
Transaction Entity that is a party thereto, and are valid and binding
agreements, enforceable against such Transaction Entity in accordance with
its terms, except to the extent that such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization or other similar laws
relating to or affecting creditors' rights and general principles of equity
and except as rights to indemnity and contribution thereunder may be
limited by applicable law or policies underlying such law; and (F) the
lockup agreements by each of the Company and the Operating Partnership (the
"LOCK-UP AGREEMENTS") have been duly and validly authorized, executed and
delivered by such parties and are each a valid and binding agreement of
such parties, enforceable against such parties in accordance with their
terms except to the extent that such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization or other similar laws
relating to or affecting creditors' rights and general principles of equity
and except as rights to indemnity and contribution thereunder may be
limited by applicable law or policies underlying such law. This Agreement,
the Operating Partnership Agreement, the Employment Agreements, the
Acquisition Agreements and the Lock-Up Agreements are sometimes herein
collectively called the "OPERATIVE DOCUMENTS."
(m) The execution, delivery and performance of each Operative
Document by each of the Transaction Entities and the consummation of the
transactions contemplated hereby and thereby will not conflict with or
result in a breach or violation of any of the terms or provisions of, or
constitute (with or without the giving of notice or the passage of time, or
both) a default (or give rise to any right of termination, cancellation or
acceleration) under any of the terms, conditions or provisions of any note,
bond, indenture, mortgage, deed of trust, lease, license, contract, loan
agreement or other agreement or instrument to which any of the Transaction
Entities is a party or by which any of the Transaction Entities is bound or
to which any of the Properties (as hereinafter defined) or other assets of
any of the Transaction Entities is subject, nor will such actions result in
any violation of any of the provisions of the charter, by-laws, certificate
of limited partnership, agreement of limited partnership or other
organizational document of any of the Transaction Entities, or any statute
or any order, writ, injunction, decree, rule or regulation of any court or
governmental agency or body having jurisdiction over any of the Transaction
Entities or any of their properties or assets, except for any such breach
or violation that would not have a Material Adverse Effect; and except for
the registration of the Shares and the shares of Common Stock, which are
being offered by the Company concurrently with the Offering, under the
Securities Act and such consents, approvals, authorizations, registrations
or qualifications as may be required under the Exchange Act by the New York
Stock Exchange, Inc. ("NYSE"), or the National Association of Securities
Dealers, Inc. ("NASD"), and applicable state securities laws in connection
with the purchase and distribution of the Shares by the
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Underwriters, no consent, approval, authorization or order of, or filing or
registration with, any such court or governmental agency or body is
required for the execution, delivery and performance of the Operative
Documents by the Transaction Entities and the consummation of the
transactions contemplated hereby and thereby.
(n) Except as described or referred to in the Registration
Statement, there are no contracts, agreements or understandings between the
Company and any person granting such person the right to require the
Company to file a registration statement under the Securities Act with
respect to any securities of the Company owned or to be owned by such
person or to require the Company to include such securities in the
securities registered pursuant to the Registration Statement or in any
securities being registered pursuant to any other registration statement
filed by the Company under the Securities Act.
(o) Except as described in the Registration Statement, no
Transaction Entity has sold or issued any securities during the six-month
period preceding the date of the Prospectus, including any sales pursuant
to Rule 144A under, or Regulations D or S of, the Securities Act.
(p) None of the Transaction Entities nor any of the Properties
(as hereinafter defined) has sustained, since the date of the latest
audited financial statements included in the Prospectus, any material loss
or interference with its business from fire, explosion, flood or other
calamity, whether or not covered by insurance, or from any labor dispute or
court or governmental action, order or decree, other than as set forth or
contemplated in the Prospectus; and, since such date, there has not been
any change in the capital stock or long-term debt of any of the Transaction
Entities or any material adverse change, or any development involving a
prospective material adverse change, in or affecting any of the Properties
or the business, prospects, operations, management, financial position, net
worth, stockholders' equity or results of operations of any of the
Transaction Entities or use or value of the Properties, other than as set
forth or contemplated in the Prospectus.
(q) The financial statements (including the related notes and
supporting schedules) filed as part of the Registration Statement or
included in the Prospectus present fairly the financial condition, the
results of operations, the statements of cash flows and the statements of
stockholders' equity and other information purported to be shown thereby of
the Company and its consolidated subsidiaries, at the dates and for the
periods indicated, have been prepared in conformity with generally accepted
accounting principles applied on a consistent basis throughout the periods
involved and are correct and complete and are in accordance with the books
and records of the Company and its consolidated subsidiaries. The summary
and selected financial data included in the Prospectus present fairly the
information shown therein as at the respective dates and for the respective
periods specified, and the summary and selected financial data have been
presented on a basis consistent with the financial statements so set forth
in the Prospectus and other financial information. The Company's ratio of
earnings to fixed charges (actual and, if any, pro forma) included in the
Prospectus under the captions "Ratio of Earnings to Fixed Changes" and in
Exhibit 12.1 to the Registration Statement have been
8
calculated in compliance with Item 503(d) of Regulation S-K of the
Commission. Pro forma financial information included in the Prospectus has
been prepared in accordance with the applicable requirements of the
Securities Act and the Regulations with respect to pro forma financial
information and includes all adjustments necessary to present fairly the
pro forma financial position of the Company at the respective dates
indicated and the results of operations for the respective periods
specified. No other financial statements (or schedules) of the Company, or
any predecessor of the Company are required by the Securities Act to be
included in the Registration Statement or the Prospectus.
(r) Ernst & Young LLP, who have certified certain financial
statements of the Company, whose reports appear in the Prospectus and who
have delivered the initial letter referred to in Section 7(f) hereof, are,
and during the periods covered by such reports were, independent public
accountants as required by the Securities Act and the Rules and
Regulations.
(s) (A) The Operating Partnership, directly or indirectly, has
good and marketable title to each of the interests in the Properties and
the other assets described in the Prospectus as being owned by the
Operating Partnership (the "PROPERTIES"), in each case free and clear of
all liens, encumbrances, claims, security interests and defects, other than
those referred to in the Prospectus or those which would not have a
Material Adverse Effect and all material consents or approvals with respect
to any such transfer shall have been received; (B) all liens, charges,
encumbrances, claims or restrictions on or affecting any of the Properties
and the assets of any Transaction Entity which are required to be disclosed
in the Prospectus are disclosed therein; (C) except as otherwise described
in the Prospectus, neither any Transaction Entity nor any tenant of any of
the Properties is in default under (i) any space leases (as lessor or
lessee, as the case may be) relating to the Properties, or (ii) any of the
mortgages or other security documents or other agreements encumbering or
otherwise recorded against the Properties, and no Transaction Entity knows
of any event which, but for the passage of time or the giving of notice, or
both, would constitute a default under any of such documents or agreements
except with respect to (i) and (ii) immediately above any such default that
would not have a Material Adverse Effect; (D) no tenant under any of the
leases at the Properties has a right of first refusal to purchase the
premises demised under such lease; (E) to the best knowledge of the
Company, each of the Properties complies with all applicable codes, laws
and regulations (including, without limitation, building and zoning codes,
laws and regulations and laws relating to access to the Properties), except
for such failures to comply that would not have a Material Adverse Effect;
and (F) no Transaction Entity has knowledge of any pending or threatened
condemnation proceedings, zoning change or other proceeding or action that
will in any material manner affect the size of, use of, improvements on,
construction on or access to the Properties.
(t) The mortgages and deeds of trust which encumber the
Properties are not convertible into equity securities of the entity owning
such Property and said mortgages and deeds of trust are not cross-defaulted
or cross-collateralized with any property other than other Properties.
9
(u) The Operating Partnership, directly or indirectly, has
obtained title insurance on the fee interests in each of the Properties, in
an amount at least equal to the greater of (a) the mortgage indebtedness of
each such Property or (b) the purchase price of each such Property.
(v) Except as disclosed in the Prospectus: (A) to the knowledge
of the Transaction Entities, after due inquiry, the operations of the
Transaction Entities and the Properties are in compliance with all
Environmental Laws (as defined below) and all requirements of applicable
permits, licenses, approvals and other authorizations issued pursuant to
Environmental Laws; (B) to the knowledge of the Transaction Entities, after
due inquiry, none of the Transaction Entities or any Property has caused or
suffered to occur any Release (as defined below) of any Hazardous Substance
(as defined below) into the Environment (as defined below) on, in, under or
from any Property, and no condition exists on, in, under or adjacent to any
Property that could result in the incurrence of liabilities under, or any
violations of, any Environmental Law or give rise to the imposition of any
Lien (as defined below), under any Environmental Law; (C) none of the
Transaction Entities has received any written notice of a claim under or
pursuant to any Environmental Law or under common law pertaining to
Hazardous Substances on, in, under or originating from any Property;
(D) none of the Transaction Entities has actual knowledge of, or received
any written notice from any Governmental Authority (as defined below)
claiming any violation of any Environmental Law or a determination to
undertake and/or request the investigation, remediation, clean-up or
removal of any Hazardous Substance released into the Environment on, in,
under or from any Property; and (E) no Property is included or, to the
knowledge of the Transaction Entities, after due inquiry, proposed for
inclusion on the National Priorities List issued pursuant to CERCLA (as
defined below) by the United States Environmental Protection Agency (the
"EPA") or on the Comprehensive Environmental Response, Compensation, and
Liability Information System database maintained by the EPA, and none of
the Transaction Entities has actual knowledge that any Property has
otherwise been identified in a published writing by the EPA as a potential
CERCLA removal, remedial or response site or, to the knowledge of the
Transaction Entities, is included on any similar list of potentially
contaminated sites pursuant to any other Environmental Law.
As used herein, "HAZARDOUS SUBSTANCE" shall include any hazardous
substance, hazardous waste, toxic substance, pollutant or hazardous
material, including, without limitation, oil, petroleum or any petroleum-
derived substance or waste, asbestos or asbestos-containing materials, PCBs,
pesticides, explosives, radioactive materials, dioxins, urea formaldehyde
insulation or any constituent of any such substance, pollutant or waste which is
subject to regulation under any Environmental Law (including, without
limitation, materials listed in the United States Department of Transportation
Optional Hazardous Material Table, 49 C.F.R. Section 172.101, or in the EPA's
List of Hazardous Substances and Reportable Quantities, 40 C.F.R. Part 302);
"ENVIRONMENT" shall mean any surface water, drinking water, ground water, land
surface, subsurface strata, river sediment, buildings, structures, and ambient,
workplace and indoor and outdoor air; "ENVIRONMENTAL LAW" shall mean the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended (42
10
U.S.C. Section 9601 et seq.) ("CERCLA"), the Resource Conservation and
Recovery Act of 1976, as amended (42 U.S.C. Section 6901, et seq.), the
Clean Air Act, as amended (42 U.S.C. Section 7401, et seq.), the Clean
Water Act, as amended (33 U.S.C. Section 1251, et seq.), the Toxic
Substances Control Act, as amended (15 U.S.C. Section 2601, et seq.), the
Occupational Safety and Health Act of 1970, as amended (29 U.S.C. Section
651, et seq.), the Hazardous Materials Transportation Act, as amended (49
U.S.C. Section 1801, et seq.), and all other federal, state and local
laws, ordinances, regulations, rules and orders relating to the protection
of the environments or of human health from environmental effects;
"GOVERNMENTAL AUTHORITY" shall mean any federal, state or local
governmental office, agency or authority having the duty or authority to
promulgate, implement or enforce any Environmental Law; "LIEN" shall mean,
with respect to any Property, any mortgage, deed of trust, pledge, security
interest, lien, encumbrance, penalty, fine, charge, assessment, judgment or
other liability in, on or affecting such Property; and "RELEASE" shall mean
any spilling, leaking, pumping, pouring, emitting, emptying, discharging,
injecting, escaping, leaching, dumping, emanating or disposing of any
Hazardous Substance into the Environment, including, without limitation,
the abandonment or discard of barrels, containers, tanks (including,
without limitation, underground storage tanks) or other receptacles
containing or previously containing any Hazardous Substance.
None of the environmental consultants which prepared
environmental and asbestos inspection reports with respect to any of the
Properties was 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 nor 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.
(w) Except as described or referred to in the Registration
Statement, the Transaction Entities are insured by insurers of recognized
financial responsibility against such losses and risks and in such amounts
and covering such risks as are customary in the businesses in which they
are engaged or propose to engage after giving effect to the transactions
described in the Prospectus; and neither the Company nor any other
Transaction Entity has any reason to believe that it will not be able to
renew its existing insurance coverage as and when such coverage expires or
to obtain similar coverage from similar insurers as may be necessary to
continue their business at a cost that would not have a Material Adverse
Effect.
(x) Each Transaction Entity owns or possesses adequate rights to
use all material patents, patent applications, trademarks, service marks,
trade names, trademark registrations, service xxxx registrations,
copyrights and licenses necessary for the conduct of its business and has
no reason to believe that the conduct of its business will conflict with,
and has not received any notice of any claim of conflict with, any such
rights of others.
(y) Except as described in the Prospectus, there are no legal or
governmental proceedings pending to which any Transaction Entity is a party
or of which any property or assets of any Transaction Entity is the subject
which, if determined adversely to such Transaction Entity, might have a
Material Adverse Effect; and to the
11
best knowledge of the Transaction Entities, no such proceedings are
threatened or contemplated by governmental authorities or threatened by
others.
(z) There are no contracts or other documents which are required
to be described in the Prospectus or filed as exhibits to the Registration
Statement by the Securities Act or by the Rules and Regulations which have
not been described in the Prospectus or filed as exhibits to the
Registration Statement or incorporated therein by reference as permitted by
the Rules and Regulations. Neither the Company, nor to the Company's
knowledge, any other party is in default in the observance or performance
of any term or obligation to be performed by it under any agreement listed
in the exhibits to the Registration Statement, and no event has occurred
which with notice or lapse of time or both would constitute such a default,
in any such case which default or event would have a Material Adverse
Effect. 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, by the Company or any of
its subsidiaries of any other agreement or instrument to which the Company
or any of its subsidiaries is a party or by which any of them or their
respective properties or businesses may be bound or affected which default
or event would have a Material Adverse Effect.
(aa) No relationship, direct or indirect, exists between or among
any of the Transaction Entities on the one hand, and the directors,
officers, stockholders, customers or suppliers of the Transaction Entities
on the other hand, which is required to be described in the Prospectus
which is not so described.
(bb) No labor disturbance by the employees of any Transaction
Entity exists or, to the knowledge of the Transaction Entities, is imminent
which might be expected to have a Material Adverse Effect.
(cc) Each Transaction Entity is in compliance in all material
respects with all presently applicable provisions of the Employee
Retirement Income Security Act of 1974, as amended, including the
regulations and published interpretations thereunder ("ERISA"); no
"REPORTABLE EVENT" (as defined in ERISA) has occurred with respect to any
"PENSION PLAN" (as defined in ERISA) for which any Transaction Entity would
have any liability; no Transaction Entity has incurred or expects to incur
liability under (i) Title IV of ERISA with respect to termination of, or
withdrawal from, any "pension plan" or (ii) Sections 412 or 4971 of the
Code; and each "pension plan" for which any Transaction Entity would have
any liability that is intended to be qualified under Section 401(a) of the
Code is so qualified in all material respects and nothing has occurred,
whether by action or by failure to act, which would cause the loss of such
qualification, except where the failure to be so qualified would not have a
Material Adverse Effect.
(dd) Each Transaction Entity has filed all federal, state and
local income and franchise tax returns required to be filed through the
date hereof and has paid all taxes due thereon, and no tax deficiency has
been determined adversely to any Transaction Entity which has had (nor does
any Transaction Entity have any knowledge
12
of any tax deficiency which, if determined adversely to it might have) a
Material Adverse Effect.
(ee) At all times since August 14, 1997, the Company, the
Operating Partnership, the Management LLC and the Service Corporations have
been and upon the sale of Shares will continue to be, organized and
operated in conformity with the requirements for qualification of the
Company as a real estate investment trust ("REIT") under the Code and the
proposed method of operation of the Company, the Operating Partnership, the
Management LLC and the Service Corporations will enable the Company to
continue to meet the requirements for qualification and taxation as a REIT
under the Code.
(ff) Since the date as of which information is given in the
Prospectus through the date hereof, and except as may otherwise be
disclosed in the Prospectus, (i) no Transaction Entity has (a) issued or
granted any securities, (b) incurred any liability or obligation, direct or
contingent, other than liabilities and obligations which were incurred in
the ordinary course of business, (c) entered into any transaction not in
the ordinary course of business or (d) declared or paid any dividend on its
capital stock; and (ii) there has been no Material Adverse Effect.
(gg) Each Transaction Entity (i) makes and keeps accurate books
and records and (ii) maintains internal accounting controls which provide
reasonable assurance that (A) transactions are executed in accordance with
management's authorization, (B) transactions are recorded as necessary to
permit preparation of its financial statements and to maintain
accountability for its assets, (C) access to its assets is permitted only
in accordance with management's authorization and (D) the reported
accountability for its assets is compared with existing assets at
reasonable intervals.
(hh) No Transaction Entity (i) is in violation of its charter,
by-laws, certificate of limited partnership, agreement of limited
partnership or other similar organizational document except for any such
violation which would not have a Material Adverse Effect, (ii) is in
default, and no event has occurred which, with notice or lapse of time or
both, would constitute a default, in the due performance or observance of
any term, covenant or condition contained in any material indenture,
mortgage, deed of trust, loan agreement or other agreement or instrument to
which it is a party or by which it is bound or to which any of the
Properties or any of its other properties or assets is subject, except for
any such default which would not have a Material Adverse Effect or (iii) is
in violation of any law, ordinance, governmental rule, regulation or court
decree to which it or the Properties or any of its other properties or
assets may be subject or has failed to obtain any material license, permit,
certificate, franchise or other governmental authorization or permit
necessary to the ownership of the Properties or any of its other properties
or assets or to the conduct of its business except for any such violation
which would not have a Material Adverse Effect.
(ii) No Transaction Entity, nor any director, officer, agent,
employee or other person associated with or acting on behalf of any
Transaction Entity, has used any corporate funds for any unlawful
contribution, gift, entertainment or other unlawful
13
expense relating to political activity; made any direct or indirect
unlawful payment to any foreign or domestic government official or employee
from corporate funds; violated or is in violation of any provision of the
Foreign Corrupt Practices Act of 1977; or made any bribe, rebate, payoff,
influence payment, kickback or other unlawful payment.
(jj) No Transaction Entity is an "investment company" within the
meaning of such term under the Investment Company Act of 1940, as amended,
and the rules and regulations of the Commission thereunder.
(kk) The Series A Preferred Shares have been approved for listing
upon official notice of issuance on the NYSE.
(ll) Other than this Agreement and as set forth in the Prospectus
under the heading "Underwriting," there are no contracts, agreements or
understandings between any Transaction Entity and any person that would
give rise to a valid claim against any Transaction Entity or any
Underwriter for a brokerage commission, finder's fee or other like payment
with respect to the consummation of the transactions contemplated by this
Agreement.
(mm) To apply the net proceeds from the sale of the Shares being
sold by the Company in accordance with the description set forth in the
Prospectus under the caption "Use of Proceeds."
(nn) Except as stated in this Agreement and in the Prospectus, no
Transaction Entity has taken, nor will it take, directly or indirectly, any
action designed to or that might reasonably be expected to cause or result
in stabilization or manipulation of the price of the Series A Preferred
Shares to facilitate the sale or resale of the Shares.
2. PURCHASE OF THE SHARES BY THE UNDERWRITERS. On the basis of the
representations and warranties contained in, and subject to the terms and
conditions of, this Agreement, the Company agrees to sell 4,000,000 Firm Shares,
severally and not jointly, to the several Underwriters and each of the
Underwriters, severally and not jointly, agrees to purchase the number of Firm
Shares set forth opposite that Underwriter's name in Schedule 1 hereto. The
respective purchase obligations of the Underwriters with respect to the Firm
Shares shall be rounded among the Underwriters to avoid fractional shares, as
the Underwriters may determine.
In addition, the Company grants to the Underwriters an option to
purchase up to 600,000 Option Shares. Such option is granted solely for the
purpose of covering over-allotments in the sale of Firm Shares and is
exercisable as provided in Section 4 hereof. Option Shares shall be purchased
severally for the account of the Underwriters in proportion to the number of
Firm Shares set forth opposite the name of such Underwriters in Schedule 1
hereto. The respective purchase obligations of each Underwriter with respect to
the Option Shares shall be adjusted by the Underwriters so that no Underwriter
shall be obligated to purchase Option Shares other than in 100-share amounts.
The price of both the Firm Shares and any Option Shares shall be $[_____] per
share.
14
The Company shall not be obligated to deliver any of the Shares to be
delivered on the First Delivery Date or the Second Delivery Date (as hereinafter
defined), as the case may be, except upon payment for all the Shares to be
purchased on such Delivery Date as provided herein.
3. OFFERING OF SHARES BY THE UNDERWRITERS.
Upon authorization by the Underwriters of the release of the Firm
Shares, the Underwriters propose to offer the Firm Shares for sale upon the
terms and conditions set forth in the Prospectus.
4. DELIVERY OF AND PAYMENT FOR THE SHARES. Delivery of and payment
for the Firm Shares shall be made at the office of Xxxxxx & Xxxxx LLP, 000 Xxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, or at such other date or place as shall be
determined by agreement between the Underwriters and the Company, at 10:00 A.M.,
New York City time, on the third full business day following the date of this
Agreement or on the fourth full business day if the Agreement is executed after
the daily closing time of the New York Stock Exchange (unless postponed in
accordance with the provisions of Section 9 hereof). This date and time are
sometimes referred to as the "FIRST DELIVERY DATE." On the First Delivery Date,
the Company shall deliver or cause to be delivered certificates representing the
Firm Shares to the Underwriters for the account of each Underwriter against
payment to or upon the order of the Company of the purchase price by wire
transfer of same-day funds. Time shall be of the essence, and delivery at the
time and place specified pursuant to this Agreement is a further condition of
the obligation of each Underwriter hereunder. Upon delivery, the Firm Shares
shall be registered in such names and in such denominations as the Underwriters
shall request in writing not less than two full business days prior to the First
Delivery Date. For the purpose of expediting the checking and packaging of the
certificates for the Firm Shares, the Company shall make the certificates
representing the Firm Shares available for inspection by the Underwriters in
New York, New York, not later than 2:00 P.M., New York City time, on the
business day prior to the First Delivery Date.
At any time on or before the thirtieth day after the date of this
Agreement, the option granted in Section 2 may be exercised, in whole or in
part, from time to time, by written notice being given to the Company by the
Underwriters. Such notice shall set forth the aggregate number of Option Shares
as to which the option is being exercised, the names in which the Option Shares
are to be registered, the denominations in which the Option Shares are to be
issued and the date and time, as determined by the Underwriters, when the Option
Shares are to be delivered; PROVIDED, HOWEVER, that this date and time shall not
be earlier than the First Delivery Date nor earlier than the second business day
after the date on which the option shall have been exercised nor later than the
fifth business day after the date on which the option shall have been exercised.
The date and time the Option Shares are delivered are sometimes referred to as
the "SECOND DELIVERY DATE" and the First Delivery Date and the Second Delivery
Date are sometimes each referred to as a "DELIVERY DATE."
Delivery of and payment for the Option Shares shall be made at the
place specified in the first sentence of the first paragraph of this Section 4
(or at such other place as shall be determined by agreement between the
Underwriters and the Company) at 10:00 A.M.,
15
New York City time, on the Second Delivery Date. On the Second Delivery Date,
the Company shall deliver or cause to be delivered the certificates representing
the Option Shares to the Representative for the account of each Underwriter
against payment to or upon the order of the Company of the purchase price by
wire transfer of same-day funds. Time shall be of the essence, and delivery at
the time and place specified pursuant to this Agreement is a further condition
of the obligation of each Underwriter hereunder. Upon delivery, the Option
Shares shall be registered in such names and in such denominations as the
Underwriters shall request in the aforesaid written notice. For the purpose of
expediting the checking and packaging of the certificates for the Option Shares,
the Company shall make the certificates representing the Option Shares available
for inspection by the Underwriters in New York, New York, not later than 2:00
P.M., New York City time, on the business day prior to the Second Delivery Date.
5. FURTHER AGREEMENTS OF THE COMPANY. The Company agrees:
(a) To prepare the Prospectus in a form approved by the
Underwriters and to file such Prospectus pursuant to Rule 424(b) under the
Securities Act not later than the Commission's close of business on the
second business day following the execution and delivery of this Agreement
or, if applicable, such earlier time as may be required by Rule 430A(a)(3)
under the Securities Act; to make no further amendment or any supplement to
the Registration Statement or to the Prospectus except as permitted herein;
to advise the Underwriters, promptly after it receives notice thereof, of
the time when any amendment to the Registration Statement has been filed or
becomes effective or any supplement to the Prospectus or any amended
Prospectus has been filed and to furnish the Underwriters with copies
thereof; to advise the Underwriters, promptly after it receives notice
thereof, of the issuance by the Commission of any stop order or of any
order preventing or suspending the use of any Preliminary Prospectus or the
Prospectus, of the suspension of the qualification of the Shares for
offering or sale in any jurisdiction, of the initiation or threatening of
any proceeding for any such purpose, or of any request by the Commission
for the amending or supplementing of the Registration Statement or the
Prospectus or for additional information; and, in the event of the issuance
of any stop order or of any order preventing or suspending the use of any
Preliminary Prospectus or the Prospectus or suspending any such
qualification, to use promptly its best efforts to obtain its withdrawal;
(b) To furnish promptly to each of the Underwriters and to
counsel for the Underwriters a signed copy of the Registration Statement as
originally filed with the Commission, and each amendment thereto filed with
the Commission, including all consents and exhibits filed therewith;
(c) To deliver promptly to the Underwriters such number of the
following documents as the Underwriters shall reasonably request: (i)
conformed copies of the Registration Statement as originally filed with the
Commission and each amendment thereto (in each case including consents and
exhibits other than this Agreement and the computation of per share
earnings) and (ii) each Preliminary Prospectus, the Prospectus and any
amended or supplemented Prospectus; and, if the delivery of a prospectus is
required at any time after the Effective Time in connection with the
offering or sale of the Shares or any other securities relating thereto and
if at
16
such time any events shall have occurred as a result of which the
Preliminary Prospectus or the Prospectus as then amended or supplemented
would include an untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made when such Preliminary
Prospectus or the Prospectus is delivered, not misleading, or, if for any
other reason it shall be necessary to amend or supplement the Preliminary
Prospectus or the Prospectus in order to comply with the Securities Act or
the Exchange Act, to notify the Underwriters and, upon its request, to file
such document and to prepare and furnish without charge to each Underwriter
and to any dealer in securities as many copies as the Underwriters may from
time to time reasonably request of an amended or supplemented Preliminary
Prospectus or the Prospectus which will correct such statement or omission
or effect such compliance. The aforementioned documents furnished to the
Underwriters will be identical to the electronically transmitted copies
thereof filed with the Commission pursuant to XXXXX, except to the extent
permitted by Regulation S-T;
(d) To file promptly with the Commission any amendment to the
Registration Statement or the Prospectus or any supplement to the
Prospectus that may, in the judgment of the Underwriters or Counsel to the
Underwriters, be required by the Securities Act or requested by the
Commission;
(e) Prior to filing with the Commission any amendment to the
Registration Statement or supplement to the Prospectus or any Prospectus
pursuant to Rule 424 of the Rules and Regulations, to furnish a copy
thereof to the Underwriters and counsel for the Underwriters and obtain the
consent of the Underwriters to the filing;
(f) The Company will make generally available to its security
holders as soon as practicable but no later than 60 days after the close of
the period covered thereby an earnings statement (in form complying with
the provisions of Section 11(a) of the Securities Act and Rule 158 of the
Rules and Regulations), which need not be certified by independent
certified public accountants unless required by the Securities Act or the
Rules and Regulations, covering a twelve-month period commencing after the
"effective date" (as defined in said Rule 158) of the Registration
Statement;
(g) The Company will furnish to each Underwriter, from time to
time during the period when the Prospectus is required to be delivered
under the Securities Act or the Exchange Act such number of copies of the
Prospectus (as amended or supplemented) as such Underwriter may reasonably
request for the purposes contemplated by the Securities Act or the Exchange
Act or the respective applicable rules and regulations of the Commission
thereunder;
(h) For a period of five years following the Effective Date, to
furnish to the Underwriters copies of all materials furnished by the
Company to its stockholders and all public reports and all reports and
financial statements furnished by the Company to the principal national
securities exchange upon which the Series A Preferred Shares may be listed
pursuant to requirements of or agreements with such exchange or to the
Commission pursuant to the Exchange Act or any rule or regulation of the
Commission thereunder;
17
(i) Promptly from time to time to take such action as the
Underwriters may reasonably request to qualify the Shares for offering and
sale under the securities, real estate syndication or Blue Sky laws of such
jurisdictions as the Underwriters may request and to comply with such laws
so as to permit the continuance of sales and dealings therein in such
jurisdictions for as long as may be necessary to complete the distribution
of the Shares;
(j) For a period of 180 days from the date of the Prospectus,
the Company will not, directly or indirectly, (1) offer for sale, sell,
contract to sell, pledge or otherwise dispose of (or enter into any
transaction or device which is designed to, or could be expected to, result
in the disposition by any person at any time in the future of) any Common
Stock or securities convertible into or exercisable or exchangeable for
Common Stock (other than the Shares, shares issued pursuant to employee
benefit plans, qualified stock option plans or other employee compensation
plans existing on the date hereof and except in connection with the
acquisition of real property or interests therein, including mortgage or
leasehold interests), or sell or grant options, rights or warrants with
respect to any Common Stock or securities convertible into or exercisable
or exchangeable for Common Stock (except pursuant to customary compensation
arrangements and employee benefit plans) without the prior written consent
of Xxxxxx Brothers Inc.;
(k) To maintain the listing of the Series A Preferred Shares on
the NYSE;
(l) To take such steps as shall be necessary to ensure that none
of the Transaction Entities shall become an "investment company" within the
meaning of such term under the Investment Company Act of 1940, as amended,
and the rules and regulations of the Commission thereunder;
(m) The Company will use its best efforts to continue to meet
the requirements to qualify as a REIT under the Code; and
(n) If at any time during the 25-day period after the
Registration Statement becomes effective, any rumor, publication or event
relating to or affecting the Company shall occur as a result of which in
your and the Company's opinion the market price of the Series A Preferred
Shares 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), the Company will consult with you concerning
the substance of and the advisability of disseminating a press release or
other public statement responding to or commenting on such rumor,
publication or event.
6. EXPENSES. The Transaction Entities jointly and severally agree
to pay (a) the costs incident to the authorization, issuance, sale and delivery
of the Shares and any taxes payable in that connection; (b) the costs incident
to the preparation, printing, filing and distribution under the Securities Act
of the Registration Statement and any amendments and exhibits thereto; (c) the
costs of distributing the Registration Statement as originally filed and each
amendment thereto and any post-effective amendments thereof (including, in each
case,
18
exhibits), any Preliminary Prospectus, the Prospectus and any amendment or
supplement to the Prospectus, all as provided in this Agreement; (d) the costs
of producing and distributing this Agreement and any other related documents in
connection with the offering, purchase, sale and delivery of the Shares; (f) the
filing fees incident to securing any required review by the NASD of the terms of
sale of the Shares; (g) any applicable listing or other fees; (h) the fees and
expenses of qualifying the Shares under the securities laws of the several
jurisdictions as provided in Section 5(i) and of preparing, printing and
distributing a Blue Sky Memorandum (including related reasonable fees and
expenses of counsel to the Underwriters); (j) all costs and expenses of the
Underwriters, including the reasonable fees and disbursements of counsel for the
Underwriters, incident to the offer and sale of the Series A Preferred Shares by
the Underwriters to employees and persons having business relationships with the
Company and its subsidiaries, as described in Section 4; (k) all other costs and
expenses incident to the performance of the obligations of the Transaction
Entities under this Agreement; (l) the costs and charges of any transfer agent
and registrar; (m) any expenses incurred by the Company in connection with a
"road show" presentation to potential investors; and (n) the fees and
disbursements of the Company's counsel and accountants; PROVIDED that, except as
provided in this Section 6 and in Section 13 the Underwriters shall pay their
own costs and expenses, including the costs and expenses of their counsel, any
transfer taxes on the Shares which they may sell and the expenses of advertising
any offering of the Shares made by the Underwriters.
7. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The respective
obligations of the Underwriters hereunder are subject to the accuracy, when made
and on each Delivery Date, of the representations and warranties of the
Transaction Entities contained herein, to the performance by each Transaction
Entity and of its obligations hereunder, and to each of the following additional
terms and conditions:
(a) If, at the time this Agreement is executed and delivered, it
is necessary for the Registration Statement or a post-effective amendment
thereto to be declared effective before the offering of the Shares may
commence, the Registration Statement or such post-effective amendment shall
have become effective not later than 5:30 P.M., New York City time, on the
date hereof, or at such later date and time as shall be consented to in
writing by you, and all filings, if any, required by Rules 424 and 430A
under the Rules and Regulations shall have been timely made; no stop order
suspending the effectiveness of the Registration Statement shall have been
issued and no proceeding for that purpose shall have been instituted or, to
the knowledge of the Transaction Entities, or any Underwriter, threatened
by the Commission, and any request of the Commission for additional
information (to be included in the Registration Statement or the Prospectus
or otherwise) shall have been complied with to the satisfaction of the
Underwriters.
(b) Subsequent to the effective date of this Agreement, there
shall not have occurred (i) any Material Adverse Effect, or (ii) any event
or development relating to or involving any Transaction Entity, or any
partner, officer, director or trustee of any Transaction Entity, which
makes any statement of a material fact made in the Prospectus untrue or
which, in the opinion of the Company and its counsel or the Underwriters
and their counsel, requires the making of any addition to or change in the
Prospectus in order to state a material fact required by the Securities Act
or any other law to be stated therein
19
or necessary in order to make the statements therein not misleading, if
amending or supplementing the Prospectus to reflect such event or
development would, in your opinion, adversely affect the market for the
Shares.
(c) All corporate proceedings and other legal matters incident
to the authorization, form and validity of this Agreement, the Shares, the
Registration Statement and the Prospectus, and all other legal matters
relating to this Agreement and the transactions contemplated hereby shall
be reasonably satisfactory in all material respects to counsel for the
Underwriters, and the Company shall have furnished to such counsel all
documents and information that they may reasonably request to enable them
to pass upon such matters.
(d) Xxxxx & Wood LLP shall have furnished to the Underwriters
its written opinion, as counsel to the Company, addressed to the
Underwriters and dated such Delivery Date, in form and substance reasonably
satisfactory to the Underwriters and counsel to the Underwriters, to the
effect that:
(i) The Company has been duly formed and is validly
existing as a corporation in good standing under the laws of the State
of Maryland, is in good standing with the State Department of
Assessments and Taxation of Maryland and is duly qualified to do
business and is in good standing as a foreign corporation in each
jurisdiction in which its ownership or lease of property or other
assets or the conduct of its business requires such qualification,
except where the failure to so qualify would not have a Material
Adverse Effect, and has all power and authority necessary to own or
hold its properties or other assets, to conduct the business in which
it is engaged as described in the Registration Statement and the
Prospectus, and to enter into and perform its obligations under this
Agreement and the other Operative Documents to which it is a party.
(ii) The Company has an authorized capitalization as set
forth in the Prospectus under the caption "Capitalization." Except as
disclosed in the Prospectus, to such counsel's knowledge, no Series A
Preferred Shares are reserved for any purpose and except for the
Preference Units, there are no outstanding securities convertible into
or exchangeable for any Series A Preferred Shares, and no outstanding
options, rights (preemptive or otherwise) or warrants to purchase or
subscribe for Series A Preferred Shares or any other securities of the
Company.
(iii) The Operating Partnership has been duly formed and
is validly existing as a limited partnership in good standing under
the laws of the State of Delaware, is duly qualified to do business
and is in good standing as a foreign limited partnership in each
jurisdiction in which its ownership or lease of property and other
assets or the conduct of its business requires such qualification,
except where the failure to so qualify would not have a Material
Adverse Effect, and has all power and authority necessary to own or
hold its properties and other assets, to conduct the business in which
it is engaged as
20
described in the Registration Statement and the Prospectus, and to
enter into and perform its obligations under this Agreement and the
other Operative Documents to which it is a party. The Company is the
sole general partner of the Operating Partnership. The Operating
Partnership Agreement is in full force and effect, and the aggregate
percentage interests of the Company and the limited partners in the
Operating Partnership are as set forth in the Prospectus.
(iv) The Management LLC has been duly formed and is validly
existing as a limited liability company in good standing under the
laws of the State of Delaware, is duly qualified to do business and is
in good standing as a foreign limited liability company in each
jurisdiction in which its ownership or lease of property and other
assets or the conduct of its business requires such qualification,
except where the failure to so qualify would not have a Material
Adverse Effect, and has all power and authority necessary to own or
hold its properties and other assets, to conduct the business in which
it is engaged as described in the Registration Statement and the
Prospectus and to enter into and perform its obligations under this
Agreement and the other Operative Documents to which it is a party.
All of the issued and outstanding membership interests of the
Management LLC have been duly authorized and validly issued, and 100%
of the membership interest is owned by the Operating Partnership. No
membership interests of the Management LLC are reserved for any
purpose, and there are no outstanding securities convertible into or
exchangeable for any membership interests of the Management LLC and no
outstanding options, rights (preemptive or otherwise) or warrants to
purchase or to subscribe for membership interests or any other
securities of the Management LLC.
(v) Each of the Service Corporations has been duly formed
and is validly existing as a corporation in good standing under the
laws of the State of New York, is duly qualified to do business and is
in good standing as a foreign corporation in each jurisdiction in
which its ownership or lease of property and other assets or the
conduct of its business requires such qualification, and has all power
and authority necessary to own or hold its properties and other
assets, to conduct the business in which it is engaged as described in
the Registration Statement and the Prospectus, and to enter into and
perform its obligations under this Agreement and the other Operative
Documents to which it is a party. All of the issued and outstanding
capital stock of each Service Corporation has been duly authorized and
validly issued and is fully paid and non-assessable, has been offered
and sold in compliance with all applicable laws (including, without
limitation, federal or state securities laws) and, all of such capital
stock is owned by the Operating Partnership (100% of the nonvoting
common stock). No shares of capital stock of any Service Corporation
are reserved for any purpose, and there are no outstanding securities
convertible into or exchangeable for any capital stock of any Service
Corporation and no outstanding options, rights (preemptive or
otherwise) or warrants to purchase or to subscribe for shares of such
capital stock or any other securities of any Service Corporation.
21
(vi) The Shares have been duly and validly authorized and,
when issued and delivered against payment therefor as provided herein,
will be duly and validly issued, fully paid and non-assessable. The
terms of the Series A Preferred Shares conform in substance to all
statements and descriptions related thereto contained in the
Prospectus. The form of the certificate to be used to evidence the
Series A Preferred Shares is in due and proper form and comply with
all applicable legal requirements. The issuance of the Shares is not
subject to any preemptive or other similar rights arising under the
Articles of Incorporation or by-laws of the Company, the Corporations
and Associations Article of the Annotated Code of Maryland, as
amended, or any agreement or other instrument to which the Company is
a party known to such counsel.
(vii) All issued and outstanding Preference Units have
been duly authorized and validly issued. Except as set forth in the
Prospectus, to such counsel's knowledge, no Preference Units are
reserved for any purpose, and there are no outstanding securities
convertible into or exchangeable for any Preference Units and no
outstanding options, rights (preemptive or otherwise) or warrants to
purchase or to subscribe for Preference Units or other securities of
the Operating Partnership. The terms of the Preference Units conform
in all material respects to the statements and descriptions related
thereto contained in the Prospectus.
(viii) (A) This Agreement has been duly and validly
authorized, executed and delivered by each of the Transaction Entities
and, and assuming due authorization, execution and delivery by the
Underwriters, is a valid and binding agreement of each of the
Transaction Entities, enforceable against such parties in accordance
with its terms, except to the extent that such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization or other
similar laws relating to or affecting creditors' rights and general
principles of equity and except as rights to indemnity and
contribution thereunder may be limited by applicable law or policies
underlying such law; (B) the Operating Partnership Agreement has been
duly and validly authorized, executed and delivered by each
Transaction Entity which is a party thereto and is a valid and binding
agreement, enforceable against such Transaction Entity in accordance
with its terms, except to the extent that such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization or other
similar laws relating to or affecting creditors' rights and general
principals of equity and except as rights to indemnity and
contribution thereunder may be limited by applicable law or policies
underlying such law; (C) the Acquisition Agreements have been duly and
validly authorized, executed and delivered by each Transaction Entity
that is a party thereto, and is a valid and binding agreement,
enforceable against such Transaction Entity in accordance with its
terms, except to the extent that such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization or other similar
laws relating to or affecting creditors' rights and general principles
of equity and except as rights to indemnity and contribution
thereunder may be limited by applicable law or policies underlying
such law; (D) the Employment Agreements have been duly and validly
22
authorized, executed and delivered by the Company and are valid and
binding agreements, enforceable against the Company in accordance with
their respective terms, except to the extent that such enforceability
may be limited by applicable bankruptcy, insolvency, reorganization or
other similar laws relating to or affecting creditors' rights and
general principles of equity and except as rights to indemnity and
contribution thereunder may be limited by applicable law or policies
underlying such law; and (E) the Lock-up Agreements of the Company and
the Operating Partnership have been duly and validly authorized,
executed and delivered by the Company or the Operating Partnership, as
applicable, and are valid and binding agreements, enforceable against
such parties in accordance with their terms, except to the extent that
such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization or other similar laws relating to or
affecting creditors' rights and general principles of equity and
except as rights to indemnity and contribution thereunder may be
limited by applicable law or policies underlying such law.
(ix) The execution, delivery and performance of each
Operative Document by each of the Transaction Entities and the
consummation of the transactions contemplated hereby and thereby will
not conflict with or result in a breach or violation of any of the
terms or provisions of, or constitute a default under any of the
terms, conditions or provisions of, any note, bond, indenture,
mortgage, deed of trust, lease, license, contract, loan agreement or
other agreement or instrument to which any of the Transaction Entities
is a party or by which any of the Transaction Entities is bound or to
which any of the Properties or other assets of any of the Transaction
Entities is subject, nor will such actions result in any violation of
the provisions of the charter, by-laws, certificate of limited
partnership, agreement of limited partnership, or other organizational
documents of any of the Transaction Entities, or any statute or any
order, writ, injunction, decree, rule or regulation of any court or
governmental agency or body having jurisdiction over any of the
Transaction Entities or any of their properties or assets, except for
any such breach or violation that would not have a Material Adverse
Effect; and except for the registration of the Shares under the
Securities Act and such consents, approvals, authorizations,
registrations or qualifications as may be required under the Exchange
Act, by the NYSE or the NASD and applicable state securities or real
estate syndication laws in connection with the purchase and
distribution of the Shares by the Underwriters, no consent, approval,
authorization or order of, or filing or registration with, any such
court or governmental agency or body is required for the execution,
delivery and performance of the Operative Documents by the Transaction
Entities and the consummation of the transactions contemplated hereby
and thereby.
(x) To such counsel's knowledge, other than as set forth or
referred to in the Registration Statement, there are no contracts,
agreements or understandings between the Company and any person
granting such person the right to require the Company to file a
registration statement under the Securities Act with respect to any
securities of the Company owned or to be owned by such
23
person or to require the Company to include such securities in the
securities registered pursuant to the Registration Statement or in any
securities being registered pursuant to any other registration
statement filed by the Company under the Securities Act.
(xi) To such counsel's knowledge, other than as set forth in
the Prospectus, there are no legal or governmental proceedings pending
to which any Transaction Entity is a party or of which any property or
assets of any Transaction Entity is the subject which, if determined
adversely to such Transaction Entity, might reasonably be expected to
have a Material Adverse Effect; and to the best knowledge of such
counsel no such proceedings are threatened or contemplated by
governmental authorities or threatened by others.
(xii) To the best knowledge of such counsel, there are
no contracts or other documents which are required to be described in
the Prospectus or filed as exhibits to the Registration Statement by
the Securities Act or by the Rules and Regulations which have not been
described in the Prospectus or filed as exhibits to the Registration
Statement or incorporated therein by reference as permitted by the
Rules and Regulations.
(xiii) To the best knowledge of such counsel, no
relationship, direct or indirect, exists between or among any of the
Transaction Entities on the one hand, and the directors, officers,
stockholders, customers or suppliers of the Transaction Entities on
the other hand, which is required to be described in the Prospectus
which is not so described.
(xiv) To the best knowledge of such counsel and other
than as described in the Prospectus, no Transaction Entity (i) is in
violation of its charter, by-laws, certificate of limited partnership,
agreement of limited partnership or other similar organizational
document, (ii) is in default, and no event has occurred which, with
notice or lapse of time or both, would constitute a default, in the
due performance or observance of any term, covenant or condition
contained in any material indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which it is a party or
by which it is bound or to which any of the Properties or any of its
other properties or assets is subject or (iii) is in violation of any
law, ordinance, governmental rule, regulation or court decree to which
it or the Properties or any of its other properties or assets may be
subject or has failed to obtain any material license, permit,
certificate, franchise or other governmental authorization or permit
necessary to the ownership of the Properties or any of its other
properties or assets or to the conduct of its business, except, in the
case of each of (i), (ii) and (iii) immediately above, any such
violation or default that would not have a Material Adverse Effect.
(xv) Commencing with the taxable year ending December 31,
1997, the Company has been organized in conformity with the
requirements for qualification and taxation as a REIT under the Code
and the proposed method
24
of operation of the Company will enable the Company to continue to
meet the requirements for qualification and taxation as a REIT under
the Code and the Operating Partnership is classified as a partnership
and not as (a) an association taxable as a corporation or (b) a
"publicly traded partnership" taxable as a corporation under
Section 7704(a) of the Code.
(xvi) No Transaction Entity is an "investment company"
within the meaning of such term under the Investment Company Act of
1940, as amended and the rules and regulations of the Commission
thereunder. The Series A Preferred Shares have been approved for
listing on the NYSE upon notice of issuance.
(xvii) The Registration Statement was declared effective
under the Securities Act as of the date and time specified in such
opinion, the Prospectus was filed with the Commission pursuant to the
subparagraph of Rule 424(b) of the Rules and Regulations specified in
such opinion on the date specified therein and, to the best knowledge
of such counsel, no stop order suspending the effectiveness of the
Registration Statement has been issued and, to the best knowledge of
such counsel, no proceeding for that purpose is pending or threatened
by the Commission.
(xviii) The Registration Statement and the Prospectus and
any further amendments or supplements thereto made by the Company
prior to such Delivery Date (other than the financial statements and
related schedules and other financial and statistical data included
therein, as to which such counsel need express no opinion) comply as
to form in all material respects with the requirements of the
Securities Act and the Rules and Regulations.
(xix) The statements contained in the Prospectus under
the captions "Capital Stock," "Certain Provisions of Maryland Law and
the Company's Charter and Bylaws," "Shares Available for Future Sale,"
"Partnership Agreement," and "Material Federal Income Tax
Consequences," insofar as those statements are descriptions of
contracts, agreements or other legal documents, or they describe
federal statutes, rules and regulations or legal conclusions,
constitute a fair summary thereof, and the opinion of such counsel
filed as Exhibit 8 to the Registration Statement is confirmed and the
Underwriters may rely upon such opinion as if it were addressed to
them.
In rendering such opinion, such counsel may (i) state that its opinion is
limited to matters governed by the Federal laws of the United States of
America and the States of Delaware, Maryland and New York; (ii) rely (to
the extent such counsel deems proper and specifies in their opinion), as to
matters involving the application of the laws of the States of Maryland and
Delaware upon the opinion of other counsel of good standing, PROVIDED that
such other counsel is reasonably satisfactory to counsel for the
Underwriters and furnishes a copy of its opinion to the Underwriters; (iii)
in respect of matters of fact, upon certificates of officers of the Company
or its subsidiaries, PROVIDED that such counsel shall state that it
believes that both the Underwriters and it are justified
25
in relying upon such opinions, of local counsel. Such counsel shall also
have furnished to the Underwriters a written statement, addressed to the
Underwriters and dated such Delivery Date, in form and substance
satisfactory to the Underwriters and counsel to the Underwriters, to the
effect that (x) such counsel has acted as counsel to the Company in
connection with the preparation of the Registration Statement and the
Prospectus, and (y) based on the foregoing, no facts have come to the
attention of such counsel which lead it to believe that the Registration
Statement, as of the Effective Date, contained any untrue statement of a
material fact or omitted to state a material fact required to be stated
therein or necessary in order to make the statements therein not
misleading, or that the Prospectus contains any untrue statement of a
material fact or omits to state a material fact necessary in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading. The foregoing opinion and statement may be qualified
by a statement to the effect that such counsel does not assume any
responsibility for the accuracy, completeness or fairness of the statements
contained in the Registration Statement or the Prospectus and may state
that such counsel expresses no belief with respect to the financial
statements and notes thereto and other financial and statistical data
included in the Registration Statement or the Prospectus.
(e) The Underwriters shall have received from Xxxxxx & Xxxxx
LLP, counsel for the Underwriters, such opinion or opinions, dated such
Delivery Date, with respect to the issuance and sale of the Shares, the
Registration Statement, the Prospectus and other related matters as the
Underwriters may reasonably require, and the Company shall have furnished
to such counsel such documents as they reasonably request for the purpose
of enabling them to pass upon such matters.
(f) At the time of execution of this Agreement, the Underwriters
shall have received from Ernst & Young LLP a letter, in form and substance
satisfactory to the Underwriters, addressed to the Underwriters and dated
the date hereof (i) confirming that they are independent public accountants
within the meaning of the Securities Act and are in compliance with the
applicable requirements relating to the qualification of accountants under
Rule 2-01 of Regulation S-X of the Commission, and (ii) stating, as of the
date hereof (or, with respect to matters involving changes or developments
since the respective dates as of which specified financial information is
given in the Prospectus, as of a date not more than five days prior to the
date hereof), the conclusions and findings of such firm with respect to the
financial information and other matters ordinarily covered by accountants'
"comfort letters" to underwriters in connection with registered public
offerings as contemplated in the Statement on Auditing Standards No. 72.
(g) With respect to the letter of Ernst & Young LLP referred to
in the preceding paragraph and delivered to the Underwriters concurrently
with the execution of this Agreement (the "INITIAL LETTER"), the Company
shall have furnished to the Underwriters a letter (the "BRING-DOWN LETTER")
of such accountants, addressed to the Underwriters and dated such Delivery
Date (i) confirming that they are independent public accountants within the
meaning of the Securities Act and are in compliance with the applicable
requirements relating to the qualification of accountants under Rule 2-01
of Regulation S-X of the Commission, (ii) stating, as of the date of the
bring-down letter
26
(or, with respect to matters involving changes or developments since the
respective dates as of which specified financial information is given in
the Prospectus, as of a date not more than five days prior to the date of
the bring-down letter), the conclusions and findings of such firm with
respect to the financial information and other matters covered by the
initial letter and (iii) confirming in all material respects the
conclusions and findings set forth in the initial letter.
(h) Each Transaction Entity shall have furnished to the
Underwriters a certificate, dated such Delivery Date, of its, or its
general partner's or managing member's Chairman of the Board, its President
or a Vice President and its chief financial officer stating that:
(i) The representations, warranties and agreements of the
Transaction Entities in Section 1 are true and correct as of such
Delivery Date; the Company has complied with all its agreements
contained herein; and the conditions set forth in Sections 7(a) and
(b) have been fulfilled; and
(ii) They have carefully examined the Registration Statement
and the Prospectus and, in their opinion (A) as of the Effective Date,
the Registration Statement and Prospectus did not include any untrue
statement of a material fact and did not omit to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading (with respect to the Prospectus, in light of
the circumstances under which they were made), and (B) since the
Effective Date no event has occurred which should have been set forth
in a supplement or amendment to the Registration Statement or the
Prospectus.
(i) The NYSE shall have approved the Shares for listing, subject
only to official notice of issuance.
(j) On the First Delivery Date, counsel for the Underwriters
shall have been furnished with such documents and opinions as they may
require for the purpose of enabling them to pass upon the issuance and sale
of the Shares as herein contemplated and related proceedings, or in order
to evidence the accuracy of any of the representations or warranties, or
the fulfillment of any of the conditions, herein contained; and all
proceedings taken by the Transaction Entities in connection with the
issuance and sale of the Shares as herein contemplated shall be
satisfactory in form and substance to the Underwriters and counsel for the
Underwriters.
(k) The Company shall have furnished or caused to be furnished
to you such further certificates and documents as the Underwriters or
counsel to the Underwriters shall have reasonably requested.
(l) In the event that the Underwriters exercise their option
provided in Section 2(b) hereof to purchase all or any portion of the
Option Shares, the representations and warranties of the Transaction
Entities contained herein and the statements in any certificates furnished
by the Transaction Entities hereunder shall be true
27
and correct as of each Date of Delivery and, at the relevant Date of
Delivery, the Underwriters shall have received:
(i) A certificate, dated such Date of Delivery, of the
President or a Vice President of each Transaction Entity or of its
general partner or managing member and of the chief financial or chief
accounting officer of each Transaction Entity or of its general
partner or managing member, and confirming that the certificate
delivered on the First Delivery Date pursuant to Section 7(h) hereof
remains true and correct as of such Date of Delivery.
(ii) The favorable opinion of Xxxxx & Xxxx LLP, counsel
for the Transaction Entities, in form and substance satisfactory to
counsel for the Underwriters, dated such Date of Delivery, relating to
the Option Shares to be purchased on such Date of Delivery and
otherwise to the same effect as the opinions required by
Section 7(d) hereof.
(iii) The favorable opinion of Xxxxxx & Xxxxx LLP, counsel
for the Underwriters, dated such Date of Delivery, relating to the
Option Shares to be purchased on such Date of Delivery and otherwise
to the same effect as the opinion required by Section 7(e) hereof.
(iv) A letter from Ernst & Young LLP, in form and
substance satisfactory to the Underwriters and dated such Date of
Delivery, substantially the same in form and substance as the letters
furnished to the Underwriters pursuant to Sections 7(f) and (g)
hereof.
All opinions, letters, evidence and certificates mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance reasonably satisfactory
to counsel for the Underwriters.
Any certificate or document signed by any officer of the Transaction
Entities and delivered to the Underwriters, or to counsel for the Underwriters,
shall be deemed a representation and warranty by the Transaction Entities to
each Underwriter as to the statements made therein.
The several obligations of the Underwriters to purchase Option Shares
hereunder are subject to the satisfaction on and as of any Date of Delivery of
the conditions set forth in this Section 7, except that, if any Date of Delivery
is other than the First Delivery Date, the certificates, opinions and letters
referred to in Sections 7(d) through 7(i) hereof shall be dated the Date of
Delivery in question and the opinions called for by Sections 7(d) and
7(e) hereof shall be revised to reflect the sale of Option Shares.
8. EFFECTIVE DATE OF AGREEMENT.
This Agreement shall become effective: (i) upon the execution hereof
by the parties hereto; or (ii) if, at the time this Agreement is executed and
delivered, it is necessary for the Registration Statement or a post-effective
amendment thereto to be declared effective before
28
the offering of the Shares may commence, when notification of the effectiveness
of the Registration Statement or such post-effective amendment has been released
by the Commission.
9. DEFAULT BY ONE OR MORE OF THE UNDERWRITERS.
If, on either Delivery Date, any Underwriter defaults in the
performance of its obligations under this Agreement, the remaining
non-defaulting Underwriters shall be obligated to purchase the Shares which the
defaulting Underwriter agreed but failed to purchase on such Delivery Date in
the respective proportions which the number of Firm Shares set forth opposite
the name of each remaining non-defaulting Underwriter in Schedule 1 hereto bears
to the total number of Firm Shares set forth opposite the names of all the
remaining non-defaulting Underwriters in Schedule 1 hereto; PROVIDED, HOWEVER,
that the remaining non-defaulting Underwriters shall not be obligated to
purchase any of the Shares on such Delivery Date if the total number of Shares
which the defaulting Underwriter or Underwriters agreed but failed to purchase
on such date exceeds 9.09% of the total number of Shares to be purchased on such
Delivery Date, and any remaining non-defaulting Underwriter shall not be
obligated to purchase more than 110% of the number of Shares which it agreed to
purchase on such Delivery Date pursuant to the terms of Section 2. If the
foregoing maximums are exceeded, the remaining non-defaulting Underwriters, or
those other underwriters satisfactory to the Underwriters who so agree, shall
have the right, but shall not be obligated, to purchase, in such proportion as
may be agreed upon among them, all the Shares to be purchased on such Delivery
Date. If the remaining Underwriters or other underwriters satisfactory to the
Underwriters do not elect to purchase the Shares which the defaulting
Underwriter or Underwriters agreed but failed to purchase on such Delivery Date,
this Agreement (or, with respect to the Second Delivery Date, the obligation of
the Underwriters to purchase, and of the Company to sell, the Option Shares)
shall terminate without liability on the part of any non-defaulting Underwriter
or the Transaction Entities, except that the Transaction Entities will continue
to be liable for the payment of expenses to the extent set forth in Sections 6
and 13. As used in this Agreement, the term "Underwriter" includes, for all
purposes of this Agreement unless the context requires otherwise, any party not
listed in Schedule 1 hereto who, pursuant to this Section 9, purchases Firm
Shares which a defaulting Underwriter agreed but failed to purchase.
Nothing contained herein shall relieve a defaulting Underwriter of any
liability it may have to the Transaction Entities for damages caused by its
default. If other underwriters are obligated or agree to purchase the Shares of
a defaulting or withdrawing Underwriter, either the Underwriters or the Company
may postpone the Delivery Date for up to seven full business days in order to
effect any changes that in the opinion of counsel for the Company or counsel for
the Underwriters may be necessary in the Registration Statement, the Prospectus
or in any other document or arrangement.
10. INDEPENDENT UNDERWRITER.
(a) Although the Conduct Rules of the NASD exempts REITs from the
conflict of interest provisions thereof, because Xxxxxx Brothers Inc. and
certain of its affiliates will receive more than 10% of the net proceeds of the
Offering in payment of the Acquisition Facility, the Underwriters have
determined to conduct the Offering in accordance with the applicable provisions
of Rule 2720 of the Conduct Rules ("RULE 2720"). In accordance with
29
these requirements, the Company hereby confirms its engagement, without
compensation, of the services of Prudential Securities Incorporated as, and
Prudential Securities Incorporated hereby confirms its agreement with the
Company to render services as, a "qualified independent underwriter" (in such
capacity, the "Independent Underwriter") within the meaning of Rule 2720 of the
NASD with respect to the offering and sale of the Securities.
(b) The Independent Underwriter hereby represents and warrants to,
and agrees with, the Company and Xxxxxx Brothers Inc. that with respect to the
offering and sale of Securities as described in the Prospectus:
(i) the Independent Underwriter is a "qualified
independent underwriter" within the meaning of Rule 2720;
(ii) the Independent Underwriter has participated in the
preparation of the Registration Statement and the Prospectus and has
exercised the usual standards of "due diligence" with respect thereto;
(iii) the Independent Underwriter has undertaken the legal
responsibilities and liabilities of an underwriter under the
Securities Act, including those contained in Section 11 thereof,
subject to the limitations on such liabilities set forth herein. It
is specifically understood, however, that Prudential Securities
Incorporated will bear such legal responsibilities and liabilities
only to the extent, if any, that a court of competent jurisdiction
rules in a judgment which has become final, and not subject to further
appeal, that Prudential Securities Incorporated, as Independent
Underwriter, bears the legal responsibilities and liabilities of an
"underwriter";
(iv) based upon, among other factors, the information set
forth in the Preliminary Prospectus and its review of such other
documents and the taking of such other actions as the Independent
Underwriter, in its sole discretion, has deemed necessary or
appropriate for the purposes of delivering its recommendation
hereunder, the Independent Underwriter recommends, as of the date of
the execution and delivery of this Agreement, that the public offering
price for the Securities not exceed the amount of $[____] per share,
which price should in no way be considered or relied upon except as
set forth therein and in the letter referred to in clause (v) below;
and
(v) the Independent Underwriter will furnish to the
other Underwriters on the date hereof a letter, dated the date hereof,
substantially to the effect set forth in Schedule 2 hereto.
(c) The Company, the Independent Underwriter and the other
Underwriters agree to comply in all material respects with all of the
requirements of Rule 2720 applicable to them in connection with the offering and
sale of the Securities. The Company agrees to cooperate with the Underwriters
to enable the Underwriters to comply with Rule 2720 and the Independent
Underwriter to perform the services contemplated by this Agreement.
30
(d) The Independent Underwriter hereby consents to the references to
it as set forth under the caption "Underwriting" in the Prospectus.
11. INDEMNIFICATION AND CONTRIBUTION.
(a) The Transaction Entities jointly and severally, shall indemnify
and hold harmless each Underwriter, its officers and employees and each person,
if any, who controls any Underwriter within the meaning of the Securities Act,
from and against any loss, claim, damage or liability, joint or several, or any
action in respect thereof (including, but not limited to, any loss, claim,
damage, liability or action relating to purchases and sales of Shares), to which
that Underwriter, officer, employee or controlling person may become subject,
under the Securities Act or otherwise, insofar as such loss, claim, damage,
liability or action arises out of, or is based upon, (i) any untrue statement or
alleged untrue statement of a material fact contained (a) in any Preliminary
Prospectus, the Registration Statement or the Prospectus or in any amendment or
supplement thereto or (b) in any blue sky application or other document prepared
or executed by the Company (or based upon any written information furnished by
the Company) specifically for the purpose of qualifying any or all of the Shares
under the securities laws of any state or other jurisdiction (any such
application, document or information being hereinafter called a "Blue Sky
Application"), (ii) the omission or alleged omission to state in any Preliminary
Prospectus, the Registration Statement or the Prospectus, or in any amendment or
supplement thereto, or in any Blue Sky Application any material fact required to
be stated therein or necessary to make the statements therein not misleading
(with respect to the Prospectus, in light of the circumstances under which they
were made) or (iii) any act or failure to act or any alleged act or failure to
act by any Underwriter in connection with, or relating in any manner to, the
Shares or the offering contemplated hereby, and which is included as part of or
referred to in any loss, claim, damage, liability or action arising out of or
based upon matters covered by clause (i) or (ii) above (PROVIDED that the
Transaction Entities shall not be liable under this clause (iii) to the extent
that it is determined in a final judgment by a court of competent jurisdiction
that such loss, claim, damage, liability or action resulted directly from any
such acts or failures to act undertaken or omitted to be taken by such
Underwriter through its gross negligence or willful misconduct), and shall
reimburse each Underwriter and each such officer, employee or controlling person
promptly upon demand for any legal or other expenses reasonably incurred by that
Underwriter, officer, employee or controlling person in connection with
investigating or defending or preparing to defend against any such loss, claim,
damage, liability or action as such expenses are incurred; PROVIDED, HOWEVER,
that the Transaction Entities shall not be liable in any such case to the extent
that any such loss, claim, damage, liability or action arises out of, or is
based upon, any untrue statement or alleged untrue statement or omission or
alleged omission made in any Preliminary Prospectus, the Registration Statement
or the Prospectus, or in any such amendment or supplement, or in any Blue Sky
Application, in reliance upon and in conformity with written information
concerning such Underwriter furnished to the Company through the Underwriters by
or on behalf of any Underwriter specifically for inclusion therein. The
foregoing indemnity agreement is in addition to any liability which the
Transaction Entities may otherwise have to any Underwriter or to any officer,
employee or controlling person of that Underwriter.
(b) Each Underwriter, severally and not jointly, shall indemnify and
hold harmless each Transaction Entity, its officers and employees, each of its
directors (including any
31
person who, with his consent, is named in the Registration Statement as about to
become a director of the Company), and each person, if any, who controls each
Transaction Entity within the meaning of the Securities Act, from and against
any loss, claim, damage or liability, joint or several, or any action in respect
thereof, to which each Transaction Entity or any such director, officer or
controlling person may become subject, under the Securities Act or otherwise,
insofar as such loss, claim, damage, liability or action arises out of, or is
based upon, (i) any untrue statement or alleged untrue statement of a material
fact contained (A) in any Preliminary Prospectus, the Registration Statement or
the Prospectus or in any amendment or supplement thereto, or (B) in any Blue Sky
Application or (ii) the omission or alleged omission to state in any Preliminary
Prospectus, the Registration Statement or the Prospectus, or in any amendment or
supplement thereto, or in any Blue Sky Application any material fact required to
be stated therein or necessary to make the statements therein not misleading,
but in each case only to the extent that the untrue statement or alleged untrue
statement or omission or alleged omission was made in reliance upon and in
conformity with written information concerning such Underwriter furnished to the
Company through the Underwriters by or on behalf of that Underwriter
specifically for inclusion therein, and shall reimburse each Transaction Entity
and any such director, officer or controlling person for any legal or other
expenses reasonably incurred by each Transaction Entity or any such director,
officer or controlling person in connection with investigating or defending or
preparing to defend against any such loss, claim, damage, liability or action as
such expenses are incurred. The foregoing indemnity agreement is in addition to
any liability which any Underwriter may otherwise have to each Transaction
Entity or any such director, officer, employee or controlling person.
(c) The Company also agrees to indemnify and hold harmless Prudential
Securities Incorporated and each person, if any, who controls Prudential
Securities Incorporated within the meaning of either Section 15 of the Act or
Section 20 of the Exchange Act, from and against any and all losses, claims,
damages, liabilities and judgments incurred as a result of Prudential Securities
Incorporated's participation as a "qualified independent underwriter" within the
meaning of Rule 2720 in connection with the offering of the Securities, except
for any losses, claims, damages, liabilities and judgments resulting from
Prudential Securities Incorporated's, or such controlling person's, willful
misconduct or gross negligence.
(d) Promptly after receipt by an indemnified party under this
Section 11 of notice of any claim or the commencement of any action, the
indemnified party shall, if a claim in respect thereof is to be made against the
indemnifying party under this Section 11, notify the indemnifying party in
writing of the claim or the commencement of that action; PROVIDED, HOWEVER, that
the failure to notify the indemnifying party shall not relieve it from any
liability which it may have under this Section 11 except to the extent it has
been materially prejudiced by such failure and, PROVIDED FURTHER, that the
failure to notify the indemnifying party shall not relieve it from any liability
which it may have to an indemnified party otherwise than under this Section 11.
If any such claim or action shall be brought against an indemnified party, and
it shall notify the indemnifying party thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it wishes, jointly with
any other similarly notified indemnifying party, to assume the defense thereof
with counsel reasonably satisfactory to the indemnified party. After notice
from the indemnifying party to the indemnified party of its election to assume
the defense of such claim or action, the indemnifying party shall not be liable
to the indemnified party under this Section 11 for any legal or other expenses
subsequently incurred
32
by the indemnified party in connection with the defense thereof other than
reasonable costs of investigation; PROVIDED, HOWEVER, that the Underwriters
shall have the right to employ counsel to represent jointly the Underwriters and
those other Underwriters and their respective officers, employees and
controlling persons who may be subject to liability arising out of any claim in
respect of which indemnity may be sought by the Underwriters against the
Transaction Entities under this Section 11 if, in the reasonable judgment of the
Underwriters, it is advisable for the Underwriters and those Underwriters,
officers, employees and controlling persons to be jointly represented by
separate counsel, and in that event the fees and expenses of such separate
counsel shall be paid by the indemnifying party. No indemnifying party shall
(i) without the prior written consent of the indemnified parties (which consent
shall not be unreasonably withheld), settle or compromise or consent to the
entry of any judgment with respect to any pending or threatened claim, action,
suit or proceeding in respect of which indemnification or contribution may be
sought hereunder (whether or not the indemnified parties are actual or potential
parties to such claim or action) unless such settlement, compromise or consent
includes an unconditional release of each indemnified party from all liability
arising out of such claim, action, suit or proceeding, or (ii) be liable for any
settlement of any such action effected without its written consent (which
consent shall not be unreasonably withheld), but if settled with the consent of
the indemnifying party or if there be a final judgment of the plaintiff in any
such action, the indemnifying party agrees to indemnify and hold harmless any
indemnified party from and against any loss or liability by reason of such
settlement or judgment.
(e) If the indemnification provided for in this Section 11 shall for
any reason be unavailable to or insufficient to hold harmless an indemnified
party under Section 11(a) or 11(d) in respect of any loss, claim, damage or
liability, or any action in respect thereof, referred to therein, then each
indemnifying party shall, in lieu of indemnifying such indemnified party,
contribute to the amount paid or payable by such indemnified party as a result
of such loss, claim, damage or liability, or action in respect thereof, (i) in
such proportion as shall be appropriate to reflect the relative benefits
received by the Transaction Entities on the one hand and the Underwriters on the
other from the offering of the Shares or (ii) if the allocation provided by
clause (i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Transaction Entities on the one hand
and the Underwriters on the other with respect to the statements or omissions
which resulted in such loss, claim, damage or liability, or action in respect
thereof, as well as any other relevant equitable considerations. The relative
benefits received by the Transaction Entities on the one hand and the
Underwriters on the other with respect to such offering shall be deemed to be in
the same proportion as the total net proceeds from the offering of the Shares
purchased under this Agreement (before deducting expenses) received by the
Transaction Entities, on the one hand, and the total underwriting discounts and
commissions received by the Underwriters with respect to the Shares purchased
under this Agreement, on the other hand, bear to the total gross proceeds from
the offering of the Shares under this Agreement, in each case as set forth in
the table on the cover page of the Prospectus. The relative fault shall be
determined by reference to whether the untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact relates
to information supplied by the Transaction Entities or the Underwriters, the
intent of the parties and their relative knowledge, access to information and
opportunity to correct or prevent such statement or omission. The Transaction
Entities and the Underwriters agree that it would not be just and equitable if
contributions pursuant to this Section were to be determined by pro rata
33
allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take into account
the equitable considerations referred to herein. The amount paid or payable by
an indemnified party as a result of the loss, claim, damage or liability, or
action in respect thereof, referred to above in this Section shall be deemed to
include, for purposes of this Section 11(e), any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
Section 11(e), no Underwriter shall be required to contribute any amount in
excess of the amount by which the total price at which the Shares underwritten
by it and distributed to the public was offered to the public exceeds the amount
of any damages which such Underwriter has otherwise paid or become liable to pay
by reason of any untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. The
Underwriters' obligations to contribute as provided in this Section 11(e) are
several in proportion to their respective underwriting obligations and not
joint.
(f) The Underwriters severally confirm and each Transaction Entity
acknowledges that (i) the statements with respect to the public offering of the
Shares by the Underwriters set forth on the cover page of, (ii) the legend
concerning over-allotments on the inside front cover page of and (iii) the names
of the Underwriters and the number of Shares which they are each purchasing, the
concession and reallowance figures and the information contained in the third,
ninth, tenth, eleventh, twelfth, thirteenth, fourteenth and fifteenth
paragraphs, in each case appearing under the caption "Underwriting" in, the
Prospectus are correct and constitute the only information concerning such
Underwriters furnished in writing to the Company by or on behalf of the
Underwriters specifically for inclusion in the Registration Statement and the
Prospectus.
12. TERMINATION. The obligations of the Underwriters hereunder may
be terminated by the Underwriters by notice given to and received by the Company
prior to delivery of and payment for the Firm Shares if, prior to that time, any
of the following events shall have occurred or if the Underwriters shall decline
to purchase the Shares for any reason permitted under this Agreement:
(a)(i) Any of the Transaction Entities or any Property shall have
sustained since the date of the latest audited financial statements
included in the Prospectus any loss or interference with its business from
fire, explosion, flood or other calamity, whether or not covered by
insurance, or from any labor dispute or court or governmental action, order
or decree, otherwise than as set forth or contemplated in the Prospectus or
(ii) since such date there shall have been any change in the capital stock
or long-term debt of any Transaction Entity or any change, or any
development involving a prospective change, in or affecting any Property or
the general affairs, management, financial position, stockholders' equity
or results of operations of any Transaction Entity, otherwise than as set
forth or contemplated in the Prospectus, the effect of which, in any such
case described in clause (i) or (ii), is, in the judgment of the
Underwriters, so material and adverse as to make it impracticable or
inadvisable to proceed with the public offering or the delivery of the
Shares being delivered on such Delivery Date on the terms and in the manner
contemplated in the Prospectus;
34
(b) Subsequent to the execution and delivery of this Agreement
there shall have occurred any of the following: (i) trading in securities
generally on the New York Stock Exchange or the American Stock Exchange or
in the over-the-counter market, or trading in any securities of the Company
on any exchange or in the over-the-counter market, shall have been
suspended or minimum prices shall have been established on any such
exchange or such market by the Commission, by such exchange or by any other
regulatory body or governmental authority having jurisdiction, (ii) a
banking moratorium shall have been declared by Federal or state
authorities, (iii) the United States shall have become engaged in
hostilities, there shall have been an escalation in hostilities involving
the United States or there shall have been a declaration of a national
emergency or war by the United States or (iv) there shall have occurred
such a material adverse change in general economic, political or financial
conditions (or the effect of international conditions on the financial
markets in the United States shall be such) as to make it, in the judgment
of a majority in interest of the several Underwriters, impracticable or
inadvisable to proceed with the public offering or delivery of the Shares
being delivered on such Delivery Date on the terms and in the manner
contemplated in the Prospectus; or
(c) The Transaction Entities shall have failed at or prior to
such Delivery Date to have performed or complied with any of their
agreements herein contained and required to be performed or complied with
by them hereunder at or prior to such Delivery Date.
13. REIMBURSEMENT OF UNDERWRITERS' EXPENSES. The Company shall
reimburse the Underwriters in an amount equal to $40,000 for legal expenses. If
(a) the Company shall fail to tender the Shares for delivery to the Underwriters
by reason of any failure, refusal or inability on the part of the Transaction
Entities to perform any agreement on their part to be performed, or because any
condition specified in Sections 12(a) and (c) hereof required to be fulfilled by
the Transaction Entities is not fulfilled, the Transaction Entities will
reimburse the Underwriters for all reasonable out-of-pocket expenses (including
fees and disbursements of counsel) incurred by the Underwriters in connection
with this Agreement and the proposed purchase of the Shares, and upon demand the
Transaction Entities shall pay the full amount thereof to the Underwriters. If
this Agreement is terminated pursuant to Section 12(b) or pursuant to Section 9
by reason of the default of one or more Underwriters, the Transaction Entities
shall not be obligated to reimburse any defaulting Underwriter on account of
those expenses.
14. NOTICES, ETC. All statements, requests, notices and agreements
hereunder shall be in writing, and:
(a) if to the Underwriters, shall be delivered or sent by mail,
telex or facsimile transmission to Xxxxxx Brothers Inc., Three World
Financial Center, New York, New York 10285, Attention: Syndicate
Department (Fax: 000-000-0000), with a copy, in the case of any notice
pursuant to Section 8(c), to the Director of Litigation, Office of the
General Counsel, Xxxxxx Brothers Inc., 0 Xxxxx Xxxxxxxxx Xxxxxx, 00xx
Xxxxx, Xxx Xxxx, XX 00000;
35
(b) if to the Transaction Entities shall be delivered or sent by
mail, telex or facsimile transmission to the Company, 00 Xxxx 00xx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxxxxx X. Xxxxx (Fax: (212)
000-0000);
PROVIDED, HOWEVER, that any notice to an Underwriter pursuant to
Section 11(d) shall be delivered or sent by mail, telex or facsimile
transmission to such Underwriter at its address set forth in its acceptance
telex to the Underwriters, which address will be supplied to any other party
hereto by the Underwriters upon request. Any such statements, requests, notices
or agreements shall take effect at the time of receipt thereof. The Transaction
Entities shall be entitled to act and rely upon any request, consent, notice or
agreement given or made on behalf of the Underwriters by Xxxxxx Brothers Inc.
15. PERSONS ENTITLED TO BENEFIT OF AGREEMENT. This Agreement shall
inure to the benefit of and be binding upon the Underwriters, the Transaction
Entities, and their respective personal representatives and successors. This
Agreement and the terms and provisions hereof are for the sole benefit of only
those persons, except that (a) the representations, warranties, indemnities and
agreements of the Transaction Entities contained in this Agreement shall also be
deemed to be for the benefit of the person or persons, if any, who control any
Underwriter within the meaning of Section 15 of the Securities Act and (b) the
indemnity agreement of the Underwriters contained in Section 11(c) of this
Agreement shall be deemed to be for the benefit of directors of the Transaction
Entities, officers of the Company who have signed the Registration Statement and
any person controlling the Transaction Entities within the meaning of Section 15
of the Securities Act. Nothing in this Agreement is intended or shall be
construed to give any person, other than the persons referred to in this
Section 14, any legal or equitable right, remedy or claim under or in respect of
this Agreement or any provision contained herein.
16. SURVIVAL. The respective indemnities, representations,
warranties and agreements of the Transaction Entities, and the Underwriters
contained in this Agreement or made by or on behalf on them, respectively,
pursuant to this Agreement, shall survive the delivery of and payment for the
Shares and shall remain in full force and effect, regardless of any
investigation made by or on behalf of any of them or any person controlling any
of them.
17. DEFINITION OF THE TERMS "BUSINESS DAY" AND "SUBSIDIARY". For
purposes of this Agreement, (a) "business day" means any day on which the
New York Stock Exchange, Inc. is open for trading and (b) "subsidiary" has the
meaning set forth in Rule 405 of the Rules and Regulations.
18. GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of New York.
19. COUNTERPARTS. This Agreement may be executed in one or more
counterparts and, if executed in more than one counterpart, the executed
counterparts shall each be deemed to be an original but all such counterparts
shall together constitute one and the same instrument.
36
20. HEADINGS. The headings herein are inserted for convenience of
reference only and are not intended to be part of, or to affect the meaning or
interpretation of, this Agreement.
[Remainder of page intentionally left blank.]
37
If the foregoing correctly sets forth the agreement between the
Company and the Underwriters, please indicate your acceptance in the space
provided for that purpose below.
Very truly yours,
XX XXXXX REALTY CORP.
By:
------------------------------
Name:
Title:
XX XXXXX OPERATING PARTNERSHIP,
L.P.
By: XX Xxxxx Realty Corp.,
its general partner
By:
-----------------------
Name:
Title:
XX XXXXX MANAGEMENT LLC
By: XX Xxxxx Operating
Partnership, L.P.,
its managing member
By:
-----------------------
Name:
Title:
X.X. XXXXX MANAGEMENT CORP.
By:
------------------------------
Name:
Title:
X.X. XXXXX LEASING, INC.
By:
------------------------------
Name:
Title:
38
EMERALD CITY CONSTRUCTION CORP.
By:
------------------------------
Name:
Title:
Accepted:
XXXXXX BROTHERS INC.
PRUDENTIAL SECURITIES INCORPORATED
By: XXXXXX BROTHERS INC.
By:
-------------------------
Name:
Title:
For itself and on behalf of the
several Underwriters named in
Schedule 1 hereto
Schedule 1
NUMBER OF
UNDERWRITERS SHARES
------------ ----------
Xxxxxx Brothers Inc. . . . . . . . . . . . . . . . . . . .
Prudential Securities Incorporated . . . . . . . . . . . .
Total. . . . . . . . . . . . . . . . . . . . . . 4,000,000
----------
----------
S-1
Schedule 2
Form of Pricing Opinion
Xxxxxx Brothers Inc.
Three World Financial Center
New York, New York 10285
XX Xxxxx Realty Corp.
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
PRICING OPINION
Ladies and Gentlemen:
XX Xxxxx Realty Corp., a Maryland corporation (the "COMPANY"), has filed with
the Securities and Exchange Commission a registration statement on Form S-11
(Reg. No. 333-50311) relating to the offering of 4,000,000 shares of ___%
Preferred Income Equity Redeemable SharesSM ("PIERS-SM-") (plus up to 600,000
shares of PIERS subject to the underwriters' over-allotment option), par value
$.01 per share (the "PREFERRED STOCK").
Xxxxxx Brothers Inc. ("XXXXXX") is acting as the other underwriter of the
offering to the public of the Preferred Stock (the "OFFERING"). In connection
with the Offering an affiliate of Xxxxxx will receive $240 million in net
proceeds in repayment of amounts outstanding under a loan made to the Company.
As a result, an affiliate of Xxxxxx, will receive more than 10% of the proceeds
of the Offering.
Although the Conduct Rules of the NASD exempt REITs from the conflict of
interest provisions thereof, because Xxxxxx and certain of its affiliates will
receive more than 10% of the net proceeds of the Offering, the underwriters have
determined to conduct the Offering in accordance with the applicable provisions
of Rule 2720 of the Conduct Rules. Accordingly, the public offering price can
be no higher than that recommended by a "qualified independent underwriter"
meeting certain standards.
We have been retained as a Qualified Independent Underwriter to recommend to you
the maximum offering price for the Preferred Stock as required by the NASD
Conduct Rules.
We have participated in the preparation of the Registration Statement and the
Prospectus (as such terms are defined in the Underwriting Agreement) and have
exercised the usual standards of "due diligence" with respect thereto.
Assuming that the Offering is commenced on [________], 1998, we recommend that
the offering price of the Preferred Stock be no higher than $[_______], which
price should in no event be considered or relied upon as an indication of the
actual value of the Preferred Stock.
_________________________
"Preferred Income Equity Redeemable SharesSM" and "PIERSSM" are service marks
owned by Xxxxxx Brothers Inc.
S-2
Our recommendations are based on economic, market, financial and other
conditions as they exist at the date hereof and on other conditions and
circumstances relating to the Company as described in the Registration
Statement. Changes in the conditions and circumstances relating to the Company
from those described in the Registration Statement and events occurring after
the date hereof, including changes in the markets in which the Company operates,
could materially affect the conclusions stated in this letter. We shall not be
obligated or required to reaffirm or revise these recommendations or otherwise
to comment on any events occurring after the date hereof or on any change to the
conditions or circumstances relating to the Company from those so described.
Very truly yours,
PRUDENTIAL SECURITIES INCORPORATED
By:
-----------------------------
Name:
Title:
