[FORM OF UNDERWRITING AGREEMENT]
3,000,000 Shares
COMMERCIAL NET LEASE REALTY, INC.
Common Stock
UNDERWRITING AGREEMENT
----------------------
January __, 1996
XXXXX XXXXXX INC.
XXXXXXX, XXXXX & CO.
XXXX XXXXX XXXX XXXXXX INCORPORATED
X.X. XXXXXXXX & CO.
THE XXXXXXXX-XXXXXXXX COMPANY, INC.
As Representatives of the Several Underwriters
c/o XXXXX XXXXXX INC.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
Commercial Net Lease Realty, Inc., a Maryland corporation (the
"Company"), proposes to issue and sell an aggregate of 3,000,000 shares (the
"Firm Shares") of its common stock, $0.01 par value per share (the "Common
Stock"), to the several Underwriters named in Schedule I hereto (the
"Underwriters"). The Company also proposes to sell to the Underwriters, upon
the terms and conditions set forth in Section 2 hereof, up to an additional
450,000 shares (the "Additional Shares") of Common Stock. The Firm Shares and
the Additional Shares are hereinafter collectively referred to as the "Shares".
The Company wishes to confirm as follows its agreement with you (the
"Representatives") and the other several Underwriters on whose behalf you are
acting, in connection with the several purchases of the Shares by the
Underwriters.
1. Registration Statement and Prospectus. The Company has
prepared and filed with the Securities and Exchange Commission (the
"Commission") in accordance with the provisions of the Securities Act of 1933,
as amended, and the rules and regulations of the Commission thereunder
(collectively, the "Act"), a registration statement on Form S-3 under the Act
(the "registration statement"), including a prospectus relating to the Offered
Securities (as defined therein), and has filed with, or transmitted for filing
to, or shall promptly hereafter file with or transmit for filing to, the
Commission a supplement to the form of prospectus included in such registration
statement (the "Prospectus Supplement") specifically relating to the Shares and
the plan of distribution thereof pursuant to Rule 424 under the Act. The term
"Registration Statement" as used in this Agreement means the registration
statement (including all financial schedules and exhibits), as amended to the
date of this Agreement. If it is contemplated, at the time this Agreement is
executed, that a post-effective amendment to the registration statement will be
filed and must be declared effective before the offering of the Shares may
commence, the term "Registration Statement" as used in this Agreement means the
registration statement as amended by said post-effective amendment. The term
"Basic Prospectus" as used in this Agreement means the prospectus in the form
included in the Registration Statement. The term "Prospectus" means the Basic
Prospectus, as amended or supplemented by the Prospectus Supplement. The term
"Prepricing Prospectus" as used in this Agreement means a prospectus supplement
subject to completion specifically relating to the Shares which has heretofore
been filed with the Commission, together with the Basic Prospectus. If the
Company has filed an abbreviated registration statement to register additional
Shares pursuant to Rule 462(b) under the Act (including the exhibits thereto,
the "Rule 462 Registration Statement"), then any reference herein to the
Registration Statement shall also be deemed to include such Rule 462
Registration Statement. Any reference in this Agreement to the registration
statement, the Registration Statement, the Basic Prospectus, any Prepricing
Prospectus or the Prospectus shall be deemed to refer to and include the
documents incorporated by reference therein pursuant to Item 12 of Form S-3
under the Act, and any reference to any amendment or supplement to the
registration statement, the Registration Statement, the Basic Prospectus, any
Prepricing Prospectus or the Prospectus shall be deemed to refer to and include
any documents filed by the Company with the Commission after the date of the
Basic Prospectus under the Securities Exchange Act of 1934, as amended (the
"Exchange Act") which, upon filing, are incorporated by reference therein, as
required by paragraph (b) of Item 12 of Form S-3. As used herein, the term
"Incorporated Documents" means the documents which are incorporated by reference
in the registration statement, the Registration Statement, the Basic Prospectus,
any Prepricing Prospectus, the Prospectus, or any amendment or supplement
thereto.
2. Agreement to Sell and Purchase. The Company hereby agrees,
subject to all the terms and conditions set forth herein, to issue and sell to
each Underwriter and, upon the basis of the representations, warranties and
agreements of the Company herein contained and subject to all the terms and
conditions set forth herein, each Underwriter agrees, severally and not jointly,
to purchase from the Company, at a purchase price of $_____ per Share (the
"purchase price per share"), the number of Firm Shares set forth opposite the
name of such Underwriter in Schedule I hereto (or such number of Firm Shares
increased as set forth in Section 10 hereof).
The Company also agrees, subject to all the terms and conditions set
forth herein, to sell to the Underwriters, and, upon the basis of the
representations, warranties and agreements of the Company herein contained and
subject to all the terms and conditions set forth herein, the Underwriters shall
have the right to purchase from the Company, at the purchase price per share,
pursuant to an option (the "over-allotment option") which may be exercised at
any time and from time to time prior to 9:00 P.M., New York City time, on the
30th day after the date of this Agreement (or, if such 30th day shall be a
Saturday or Sunday or a holiday, on the next business day thereafter when the
New York Stock Exchange is open for trading), up to an aggregate of 450,000
Additional Shares. Additional Shares may be purchased only for the purpose of
covering over-allotments made in connection with the offering of the Firm
Shares. Upon any exercise of the over-allotment option, each Underwriter,
severally and not jointly, agrees to purchase from the Company the number of
Additional Shares (subject to such adjustments as you may determine in order to
avoid fractional shares) which bears the same proportion to the number of
Additional Shares to be purchased by the Underwriters as the number of Firm
Shares set forth opposite the name of such Underwriter in Schedule I hereto (or
such number of Firm Shares increased as set forth in Section 10 hereof) bears to
the aggregate number of Firm Shares.
3. Terms of Public Offering. The Company has been advised by you
that the Underwriters propose to make a public offering of their respective
portions of the Shares as soon after this Agreement has become effective as in
your judgment is advisable and initially to offer the Shares upon the terms set
forth in the Prospectus.
4. Delivery of the Shares and Payment Therefor. Delivery to the
Underwriters of and payment for the Firm Shares shall be made at the office of
Xxxxx Xxxxxx Inc., 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, XX 00000, at 10:00 A.M., New
York City time, on January __, 1996 (the "Closing Date"). [This date shall be
the third full business day following the date of this Agreement or, if the
pricing of the Firm Shares occurs after 4:30 P.M., New York City time, on the
fourth business day thereafter]. The place of closing for the Firm Shares and
the Closing Date may be varied by agreement between you and the Company.
Delivery to the Underwriters of and payment for any Additional
Shares to be purchased by the Underwriters shall be made at the aforementioned
office of Xxxxx Xxxxxx Inc. at such time on such date (the "Option Closing
Date"), which may be the same as the Closing Date but shall in no event be
earlier than the Closing Date nor later than ten business days after the giving
of the notice hereinafter referred to, as shall be specified in a written notice
from you on behalf of the Underwriters to the Company of the Underwriters'
determination to purchase a number, specified in such notice, of Additional
Shares. The place of closing for any Additional Shares and the Option Closing
Date for such Shares may be varied by agreement between you and the Company.
Certificates for the Firm Shares and for any Additional Shares to be
purchased hereunder shall be registered in such names and in such denominations
as you shall request prior to 1:00 P.M., New York City time, on the second
business day preceding the Closing Date or any Option Closing Date, as the case
may be. Such certificates shall be made available to you in New York City for
inspection and packaging not later than 9:30 A.M., New York City time, on the
business day next preceding the Closing Date or the Option Closing Date, as the
case may be. The certificates evidencing the Firm Shares and any Additional
Shares to be purchased hereunder shall be delivered to you on the Closing Date
or the Option Closing Date, as the case may be, against payment of the purchase
price therefor by certified or official bank check or checks payable in New York
Clearing House (next day) funds to the order of the Company.
5. Agreements of the Company. The Company agrees with the
several Underwriters as follows:
(a) If, at the time this Agreement is executed and
delivered, it is necessary for a post-effective amendment to the registration
statement to be declared effective before the offering of the Shares may
commence, the Company will endeavor to cause such post-effective amendment to
become effective as soon as possible and will advise you promptly and, if
requested by you, will confirm such advice in writing, when such post-effective
amendment has become effective.
(b) The Company will advise you promptly and, if requested
by you, will confirm such advice in writing: (i) of any request by the
Commission for amendment of or a supplement to the Registration Statement, any
Prepricing Prospectus or the Prospectus or for additional information; (ii) of
the issuance by the Commission of any stop order suspending the effectiveness of
the Registration Statement or of the suspension of qualification of the Shares
for offering or sale in any jurisdiction or the initiation of any proceeding for
such purpose; and (iii) within the period of time referred to in the first
sentence in subsection (f) below, of any change in the Company's condition
(financial or other), business, prospects, properties, net worth or results of
operations, or of the happening of any event, which makes any statement of a
material fact made in the Registration Statement or the Prospectus (as then
amended or supplemented) untrue or which requires the making of any additions to
or changes in the Registration Statement or the Prospectus (as then amended or
supplemented) in order to state a material fact required by the Act or the
regulations thereunder to be stated therein or necessary in order to make the
statements therein not misleading, or of the necessity to amend or supplement
the Prospectus (as then amended or supplemented) to comply with the Act or any
other law. If at any time the Commission shall issue any stop order suspending
the effectiveness of the Registration Statement, the Company will make every
reasonable effort to obtain the withdrawal of such order at the earliest
possible time.
(c) The Company will furnish to you, without charge, (i) six
signed copies of the registration statement and any Rule 462(b) Registration
Statement as originally filed with the Commission and of each amendment thereto,
including financial statements and all exhibits to the registration statement
and Rule 462(b) Registration Statement, (ii) such number of conformed copies of
the registration statement as originally filed and of each amendment thereto,
but without exhibits, as you may request, (iii) such number of copies of the
Incorporated Documents, without exhibits, as you may request, and (iv) six
copies of the exhibits to the Incorporated Documents.
(d) The Company will not file any amendment to the
Registration Statement (including any filing under Rule 462(b)) or make any
amendment or supplement to the Prospectus or, prior to the end of the period of
time referred to in the first sentence in subsection (f) below, file any
document which, upon filing becomes an Incorporated Document, of which you shall
not previously have been advised or to which, after you shall have received a
copy of the document proposed to be filed, you shall reasonably object; and no
such further document, when it is filed, will contain an untrue statement of a
material fact or will omit to state a material fact required to be stated
therein or necessary in order to make the statements therein not misleading.
(e) Prior to the execution and delivery of this Agreement,
the Company has delivered to you, without charge, in such quantities as you have
requested, copies of each form of the Prepricing Prospectus. The Company
consents to the use, in accordance with the provisions of the Act and with the
securities or Blue Sky laws of the jurisdictions in which the Shares are offered
by the several Underwriters and by dealers, prior to the date of the Prospectus,
of each Prepricing Prospectus so furnished by the Company.
(f) As soon after the execution and delivery of this
Agreement as possible and thereafter from time to time for such period as in the
opinion of counsel for the Underwriters a prospectus is required by the Act to
be delivered in connection with sales by any Underwriter or dealer, the Company
will expeditiously deliver to each Underwriter and each dealer, without charge,
as many copies of the Prospectus (and of any amendment or supplement thereto) as
you may request. The Company consents to the use of the Prospectus (and of any
amendment or supplement thereto) in accordance with the provisions of the Act
and with the securities or Blue Sky laws of the jurisdictions in which the
Shares are offered by the several Underwriters and by all dealers to whom Shares
may be sold, both in connection with the offering and sale of the Shares and for
such period of time thereafter as the Prospectus is required by the Act to be
delivered in connection with sales by any Underwriter or dealer. If during such
period of time any event shall occur that in the judgment of the Company or in
the opinion of counsel for the Underwriters is required to be set forth in the
Prospectus (as then amended or supplemented) or should be set forth therein in
order to make the statements therein, in the light of the circumstances when the
Prospectus is delivered to a purchaser, not misleading, or if it is necessary to
supplement or amend the Prospectus (or to file under the Exchange Act any
document which, upon filing, becomes an Incorporated Document) in order to
comply with the Act or any other law, the Company will forthwith prepare and,
subject to the provisions of paragraph (d) above, file with the Commission an
appropriate supplement or amendment thereto (or to such document), and will
expeditiously furnish to the Underwriters and dealers a reasonable number of
copies thereof. In the event that the Company and you, as Representatives of
the several Underwriters, agree that the Prospectus should be amended or
supplemented, the Company, if requested by you, will promptly issue a press
release announcing or disclosing the matters to be covered by the proposed
amendment or supplement.
(g) The Company will cooperate with you and with counsel for
the Underwriters in connection with the registration or qualification of the
Shares for offering and sale by the several Underwriters and by dealers under
the securities or Blue Sky laws of such jurisdictions as you may designate and
will file such consents to service of process or other documents necessary or
appropriate in order to effect such registration or qualification; provided that
in no event shall the Company be obligated to qualify to do business in any
jurisdiction where it is not now so qualified or to take any action which would
subject it to service of process in suits, other than those arising out of the
offering or sale of the Shares, in any jurisdiction where it is not now so
subject.
(h) The Company will make generally available to its
security holders a consolidated earnings statement, which need not be audited,
covering a twelve-month period commencing after the effective date of this
Agreement and ending not later than 15 months thereafter, as soon as practicable
after the end of such period, which consolidated earnings statement shall
satisfy the provisions of Section 11(a) of the Act.
(i) During the period of three years hereafter, the Company
will furnish to you (i) as soon as available, a copy of each report of the
Company mailed to stockholders or filed with the Commission, and (ii) from time
to time such other information concerning the Company as you may request.
(j) If this Agreement shall terminate or shall be terminated
after execution pursuant to any provisions hereof (otherwise than pursuant to
the second paragraph of Section 10 hereof or by notice given by you terminating
this Agreement pursuant to Section 10 or Section 11 hereof) or if this Agreement
shall be terminated by the Underwriters because of any failure or refusal on the
part of the Company to comply with the terms or fulfill any of the conditions of
this Agreement, the Company agrees to reimburse the Representatives for all
out-of-pocket expenses (including fees and expenses of counsel for the
Underwriters) incurred by you in connection herewith.
(k) The Company will apply the net proceeds from the sale of
the Shares substantially in accordance with the description set forth in the
Prospectus.
(l) If Rule 430A of the Act is employed, the Company will
timely file the Prospectus pursuant to Rule 424(b) under the Act and will advise
you of the time and manner of such filing.
(m) Except as provided in this Agreement, the Company will
not sell, contract to sell or otherwise dispose of any Common Stock or any
securities convertible into or exercisable or exchangeable for Common Stock, or
grant any options or warrants to purchase Common Stock, for a period of 180 days
after the date of the Prospectus, without the prior written consent of Xxxxx
Xxxxxx Inc. (except that the Company may at anytime grant options or warrants to
purchase Common Stock in connection with the grant of options to certain
employees, officers and directors under the Company's stock option plans or the
issuance of Common Stock upon exercise of such options).
(n) The Company has furnished to you "lock-up" letters, in
form and substance satisfactory to you, signed by Xxxxx X. Xxxxxx, Xx. and
Xxxxxx X. Xxxxxx.
(o) Except as stated in this Agreement and in the Prepricing
Prospectus and Prospectus, the Company has not taken, nor will it take, directly
or indirectly, any action designed to or that might reasonably be expected to
cause or result in stabilization or manipulation of the price of the Common
Stock to facilitate the sale or resale of the Shares.
(p) The Company will use its best efforts to have the shares
of Common Stock which it agrees to sell under this Agreement listed, subject to
notice of issuance, on the New York Stock Exchange on or before the Closing
Date.
(q) The Company will comply and will cause its tenants to
comply in all material respects with all applicable Environmental Laws (as
hereinafter defined).
(r) The Company will use its best efforts to continue to
qualify as a real estate investment trust under the Internal Revenue Code of
1986, as amended (the "Code"), and to continue to have each of its subsidiaries
comply with all applicable laws and regulations necessary to maintain a status
as a "qualified REIT subsidiary" under the Code.
(s) If the Company elects to rely upon Rule 462(b), the
Company shall both file a Rule 462(b) Registration Statement with the Commission
in compliance with Rule 462(b) and pay the applicable fees in accordance with
Rule 111 of the Act by the earlier of (i) 10:00 P.M. New York City time on the
date of this Agreement, and (ii) the time confirmations are sent or given, as
specified by Rule 462(b)(2).
6. Representations and Warranties of the Company. The Company
represents and warrants to each Underwriter that:
(a) The Basic Prospectus and each Prepricing 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
Act, complied when so filed in all material respects with the provisions of the
Act. To the Company's knowledge, the Commission has not issued any order
preventing or suspending the use of the Basic Prospectus or any Prepricing
Prospectus.
(b) The Company and the transactions contemplated by this
Agreement meet the requirements for using Form S-3 under the Act. The
Registration Statement has become effective for the registration under the Act
of the Shares; no stop order suspending the effectiveness of the Registration
Statement is in effect, and no proceedings for such purpose are pending before
or threatened by the Commission. The Registration Statement meets the
requirements set forth in Rule 415(a)(1)(x) under the Act and complies in all
other material respects with such Rule. The registration statement in the form
in which it became effective and also in such form as it may be when any
post-effective amendment thereto shall become effective and the Prospectus and
any supplement or amendment thereto when filed with the Commission under Rule
424(b) under the Act, complied or will comply in all material respects with the
provisions of the Act and did not or will not at any such times contain an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements made therein not
misleading, except that this representation and warranty does not apply to
statements in or omissions from the registration statement or the Prospectus
made in reliance upon and in conformity with information relating to any
Underwriter furnished to the Company in writing by or on behalf of any
Underwriter through you expressly for use therein.
(c) The Incorporated Documents heretofore filed, when they
were filed (or, if any amendment with respect to any such document was filed,
when such amendment was filed), conformed in all material respects with the
requirements of the Exchange Act and the rules and regulations of the Commission
thereunder; no such document when it was filed (or, if an amendment with respect
to any such document was filed, when such amendment was filed), contained an
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary in order to make the statements made therein,
in light of the circumstances under which they were made, not misleading.
(d) All the outstanding shares of Common Stock of the
Company have been duly authorized and validly issued, are fully paid and
nonassessable and are free of any preemptive or similar rights; the Shares have
been duly authorized and, when issued and delivered to the Underwriters against
payment therefor in accordance with the terms hereof, will be validly issued,
fully paid and nonassessable and free of any preemptive or similar rights; and
the capital stock of the Company conforms to the description thereof in the
registration statement and the Prospectus.
(e) Each of the Company and each of its subsidiaries is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Maryland with full corporate power and authority to own, lease
and operate its properties and to conduct its business as described in the
Registration Statement and the Prospectus, and is duly registered and qualified
to conduct its business and is in good standing in each jurisdiction or place
where the nature of its properties or the conduct of its business requires such
registration or qualification, except where the failure so to register or
qualify does not have a material adverse effect on the condition (financial or
other), business, properties, net worth or results of operations of the Company
and its subsidiaries. Neither the Company nor any of its subsidiaries does any
business in Cuba.
(f) The Company has no subsidiary or subsidiaries other than
Net Lease Realty I, Inc. and Net Lease Realty II, Inc. (each of which is wholly-
owned by the Company), and does not control, directly or indirectly, any
corporation, partnership, joint venture, association or other business
association. The issued shares of capital stock of each of the Company's
subsidiaries have been duly authorized and validly issued, are fully paid and
non-assessable and are owned legally and beneficially by the Company free and
clear of any security interests, liens, encumbrances, equities or claims.
(g) There are no legal or governmental proceedings pending
or, to the knowledge of the Company, threatened, against the Company or either
of its subsidiaries, or to which the Company or any properties of the Company or
either of its subsidiaries is subject, that are required to be described in the
Registration Statement or the Prospectus but are not described as required, and
there are no statutes, regulations, capital expenditures, contingencies or
agreements, contracts, indentures, leases or other instruments that are required
to be described in the Registration Statement or the Prospectus or to be filed
or incorporated by reference as an exhibit to the Registration Statement or any
Incorporated Document that are not described, filed or incorporated as required
by the Act or the Exchange Act.
(h) Neither the Company nor its subsidiaries is (A) in
violation of (i) its respective articles of incorporation or by-laws or (ii) to
the best of the Company's knowledge, any law, ordinance, administrative or
governmental rule or regulation applicable to the Company or its subsidiaries,
which violation would have a material adverse effect on the Company and its
subsidiaries, or (iii) any decree of any court or governmental agency or body
having jurisdiction over the Company or its subsidiaries, or (B) in default in
any material respect in the performance of any obligation, agreement or
condition contained in any bond, debenture, note or any other evidence of
indebtedness or in any material agreement, indenture, lease or other instrument
to which the Company or its subsidiaries is a party or by which the Company or
its subsidiaries or any of their respective properties may be bound.
(i) (A) To the best of the Company's knowledge, neither the
Company nor either of its subsidiaries is in violation of any municipal, state
or federal law, rule or regulation concerning any of the Properties (as defined
in the Prospectus) or the Acquisition Properties set forth in Part A of Schedule
II hereto which would have a material adverse effect on the Company and its
subsidiaries; (B) to the best of the Company's knowledge, each of the Properties
and the Acquisition Properties set forth in Part A of Schedule II hereto
complies with all applicable zoning laws, ordinances and regulations in all
material respects and, if and to the extent there is a failure to comply, such
failure does not materially impair the value of any of such properties and will
not result in a forfeiture or reversion of title thereof; (C) neither the
Company nor either of its subsidiaries has received from any governmental
authority any written notice of any condemnation of or zoning change affecting
any of the Properties or the Acquisition Properties set forth in Part A of
Schedule II hereto, and the Company does not know of any such condemnation or
zoning change which is threatened and which if consummated would have a material
adverse effect on the Company or any of such properties; (D) the leases under
which the Company leases the Properties and the Acquisition Properties set forth
in Part A of Schedule II hereto as lessor (the "Leases") are in full force and
effect and have been entered into in the ordinary course of business of the
Company; (E) the terms of the Advisory Agreement, dated as of April 1, 1993 and
effective as of January 1, 1995, between the Company and CNL Realty Advisors,
Inc. (the "Advisory Agreement") are fair and reasonable to the Company; (F) the
Company and each of its subsidiaries have complied with respective obligations
under the Leases and the Advisory Agreement in all material respects and the
Company does not know of any default by any other party to the Leases and
Advisory Agreement which, alone or together with other such defaults, would have
a material adverse effect on the Company and its subsidiaries or any of the
properties subject to a Lease; and (G) all liens, charges, encumbrances, claims
or restrictions on or affecting the properties and assets (including the
Properties and the Acquisition Properties set forth in Part A of Schedule II
hereto) of the Company and its subsidiaries that are required to be disclosed in
the Prospectus are disclosed therein.
(j) Neither the issuance and sale of the Shares, the
execution, delivery or performance of this Agreement by the Company, nor the
consummation by the Company of the transactions contemplated hereby (i) requires
any consent, approval, authorization or other order of or registration or filing
with, any court, regulatory body, administrative agency or other governmental
body, agency or official (except such as may be required for the registration of
the Shares under the Act and the Exchange Act and compliance with the securities
or Blue Sky laws of various jurisdictions) or conflicts or will conflict with or
constitutes or will constitute a breach or violation of, or a default under, the
articles of incorporation or by-laws of the Company or either of its
subsidiaries or (ii) conflicts or will conflict with or constitutes or will
constitute a breach of, or a default under, any agreement, indenture, lease or
other instrument to which the Company or either of its subsidiaries is a party
or by which the Company or any properties of the Company or either of its
subsidiaries may be bound (other than the piggyback registration rights granted
pursuant to the CNL Transaction (as defined in the Prospectus), all of which
have been waived in connection with the transactions contemplated by this
Agreement), or violates or will violate any statute, law, regulation or filing
or judgment, injunction, order or decree applicable to the Company or either of
its subsidiaries or any properties of the Company or either of its subsidiaries,
or will result in the creation or imposition of any lien, charge or encumbrance
upon any property or assets of the Company or either of its subsidiaries
pursuant to the terms of any agreement or instrument to which the Company or
either of its subsidiaries is a party or by which the Company or either of its
subsidiaries may be bound or to which any property or assets of the Company or
either of its subsidiaries is subject.
(k) To the Company's knowledge, the accountants, KPMG Peat
Marwick LLP, who have certified or shall certify the financial statements
included or incorporated by reference in the Registration Statement and the
Prospectus (or any amendment or supplement thereto) are independent public
accountants as required by the Act.
The financial statements, together with related schedules and
notes, included or incorporated by reference in the Registration Statement and
the Prospectus (and any amendment or supplement thereto), present fairly the
financial position, results of operations and changes in financial position of
the Company and its subsidiaries on the basis stated in the Registration
Statement at the respective dates or for the respective periods to which they
apply; such statements and related schedules and notes have been prepared in
accordance with generally accepted accounting principles consistently applied
throughout the periods involved, except as disclosed therein; and the other
financial and statistical information and data included or incorporated by
reference in the Registration Statement and the Prospectus (and any amendment or
supplement thereto) are accurately presented and prepared on a basis consistent
with such financial statements and the books and records of the Company and its
subsidiaries; and the pro forma financial statements and other pro forma
financial information included or incorporated by reference in the Registration
Statement and the Prospectus were prepared on the basis of reasonable
assumptions and comply in all material respects with the applicable requirements
of Rule 11-02 of Regulation S-X and the pro forma adjustments have been properly
applied to the historical amounts in the compilation of that data.
(l) The execution and delivery of, and the performance by
the Company of its obligations under, this Agreement have been duly and validly
authorized by the Company, and this Agreement has been duly executed and
delivered by the Company and constitutes the valid and legally binding agreement
of the Company, enforceable against the Company in accordance with its terms,
except as rights to indemnity and contribution hereunder may be limited by
federal or state securities laws.
(m) Except as disclosed in the Registration Statement and
the Prospectus (or any amendment or supplement thereto), subsequent to the
respective dates as of which such information is given in the Registration
Statement and the Prospectus (or any amendment or supplement thereto), the
Company and its subsidiaries have not incurred any liability or obligation,
direct or contingent, or entered into any transaction, not in the ordinary
course of business, that is material to the Company and its subsidiaries, and
there has not been any change in the capital stock, or material increase in the
short-term debt or long-term debt, of the Company and its subsidiaries, or any
material adverse change, or any development involving or which may reasonably be
expected to involve, a prospective material adverse change, in the condition
(financial or other), business, net worth or results of operations of the
Company and its subsidiaries.
(n) The Company and each of its subsidiaries have good and
marketable title to all property (real and personal) described in the Prospectus
as being owned by each of them (including the Properties and the Acquisition
Properties set forth in Part A of Schedule II hereto), free and clear of all
liens, claims, security interests or other encumbrances except such as are
described in the Registration Statement and the Prospectus or in a document
filed as an exhibit to the Registration Statement and all the property described
in the Prospectus as being held under lease by the Company or either of its
subsidiaries is held by it under valid, subsisting and enforceable leases.
(o) The purchase of the Acquisition Properties has been duly
authorized by the Board of Directors of the Company and each of the agreements
pursuant to which the Company has acquired the Acquisition Properties set forth
in Part A of Schedule II hereto, or will acquire any of the Acquisition
Properties set forth in Part B of Schedule II hereto (each, a "Purchase
Agreement" and together, the "Purchase Agreements") has been duly authorized,
executed and delivered by the Company and gives the Company the unconditional
right, upon payment of the amount provided in the applicable Purchase Agreement,
to acquire the applicable Acquisition Property.
(p) The Company has not distributed and, prior to the later
to occur of (i) the Closing Date and (ii) completion of the distribution of the
Shares, will not distribute any offering material in connection with the
offering and sale of the Shares other than the Registration Statement, the
Prepricing Prospectus, the Prospectus or other materials, if any, permitted by
the Act. The Company has not, directly or indirectly, (i) taken any action
designed to cause or to result in, or that has constituted or which might
reasonably be expected to constitute, the stabilization or manipulation of the
price of any security of the Company to facilitate the sale or resale of the
Shares or (ii) since the filing of the Registration Statement (A) sold, bid for,
purchased, or paid anyone any compensation for soliciting purchases of, the
Shares or (B) paid or agreed to pay to any person any compensation for
soliciting another to purchase any other securities of the Company.
(q) The Company and its subsidiaries have such permits,
licenses, franchises and authorizations of governmental or regulatory
authorities ("permits") as are necessary to own their respective properties and
to conduct their respective businesses in the manner described in the
Prospectus, subject to such qualifications as may be set forth in the
Prospectus; the Company and its subsidiaries have fulfilled and performed all
their respective material obligations with respect to such permits and no event
has occurred which allows, or after notice or lapse of time would allow,
revocation or termination thereof or result in any other material impairment of
the rights of the holder of any such permit, subject in each case to such
qualification as may be set forth in the Prospectus; and, except as described in
the Prospectus, none of such permits contains any restriction that is materially
burdensome to the Company and its subsidiaries.
(r) The Company and each of its subsidiaries maintain a
system of internal accounting controls sufficient to provide reasonable
assurances that (i) transactions are executed in accordance with management's
general or specific authorization; (ii) transactions are recorded as necessary
to permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain accountability for assets; (iii)
access to the financial and corporate books and records and assets is permitted
only in accordance with management's general or specific authorization; and (iv)
the recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(s) To the Company's knowledge, neither the Company and its
subsidiaries nor any employee or agent of the Company and its subsidiaries has
made any payment of funds of the Company or its subsidiaries or received or
retained any funds in violation of any law, rule or regulation, which payment,
receipt or retention of funds is of a character required to be disclosed in the
Prospectus.
(t) No labor dispute with the employees of the Company and
its subsidiaries exists or is threatened or imminent that could result in a
material adverse change in the condition (financial or other), business, net
worth or results of operations of the Company and its subsidiaries.
(u) The Company has filed all tax returns required to be
filed, which returns are complete and correct, and the Company is not in default
in the payment of any taxes which were payable pursuant to said returns or any
assessments with respect thereto.
No holder of any security of the Company has any right to
require registration of shares of Common Stock or any other security of the
Company because of the filing of the registration statement or consummation of
the transactions contemplated by this Agreement which has not been waived in
connection with the transactions contemplated by this Agreement.
(w) The Company and its subsidiaries own or possess all
patents, trademarks, trademark registrations, service marks, service xxxx
registrations, trade names, copyrights, licenses, inventions, trade secrets and
rights described in the Prospectus as being owned by them or necessary for the
conduct of their respective businesses, and the Company is not aware of any
claim to the contrary or any challenge by any other person to the rights of the
Company and its subsidiaries with respect to the foregoing.
(x) The Company is not now, and after sale of the Shares to
be sold by the Company hereunder and application of the net proceeds from such
sale as described in the Prospectus under the caption "Use of Proceeds" will not
be, an "investment company" within the meaning of the Investment Company Act of
1940, as amended.
(y) (i) The Company, its subsidiaries, the Properties, the
Acquisition Properties and, to the best of the Company's knowledge, the
operations conducted thereon comply and heretofore have complied with all
applicable Environmental Laws, except as disclosed in the Environmental Reports
and not likely to have a material adverse effect on the relevant Property or
Acquisition Property.
(ii) There are no judicial or administrative proceedings of
an environmental nature pending, or to the best of the Company's knowledge,
threatened against the Company or its subsidiaries.
(iii) The Company and its subsidiaries have not at any time
and, to the best of the Company's knowledge, no other party has at any time
handled, buried, stored, retained, refined, transported, processed,
manufactured, generated, produced, spilled, allowed to seep, leak, escape or
xxxxx, or be pumped, poured, emitted, emptied, discharged, injected, dumped,
transferred or otherwise disposed of or dealt with, Hazardous Materials (as
defined below) on, to, under or from the Properties or the Acquisition
Properties, except as disclosed in the environmental site assessment reports
obtained by the Company on or before the date hereof in connection with the
purchase of any of the Properties and the Acquisition Properties and provided to
the Underwriters or their counsel (collectively, the "Environmental Reports")
and not likely to have a material adverse effect on the relevant Property or
Acquisition Property. Neither the Company nor either of its subsidiaries intends
to use the Properties, the Acquisition Properties or any subsequently acquired
properties for the purpose of handling, burying, storing, retaining, refining,
transporting, processing, manufacturing, generating, producing, spilling,
seeping, leaking, escaping, leaching, pumping, pouring, emitting, emptying,
discharging, injecting, dumping, transferring or otherwise disposing of or
dealing with Hazardous Materials.
(iv) To the best of the Company's knowledge, no seepage,
leak, escape, xxxxx, discharge, injection, release, emission, spill, pumping,
pouring, emptying or dumping of Hazardous Materials into waters on or adjacent
to the Properties or the Acquisition Properties has occurred, is occurring or is
reasonably expected to occur, except as disclosed in the Environmental Reports
and not likely to have a material adverse effect on the relevant Property or
Acquisition Property.
(v) Neither the Company nor either of its subsidiaries has
received notice from any Governmental Authority or other person of, and does not
have knowledge of, any occurrence or circumstance which, with notice, passage of
time, or failure to act, would give rise to, any claim under or pursuant to any
Environmental Law or under common law pertaining to Hazardous Materials on or
originating from the Existing Properties or the Acquisition Properties or
arising out of the conduct of any party with respect to the Existing Properties
or the Acquisition Properties, except as disclosed in the Environmental Reports.
(vi) The Properties and the Acquisition Properties are not
included nor, to the best of the Company's knowledge, proposed for inclusion on
any federal, state, or local lists of sites which require or might require
environmental cleanup, including, but not limited to, the National Priorities
List or CERCLIS List issued pursuant to CERCLA (as defined below) by the United
States Environmental Protection Agency.
(vii) There are no matters of an environmental nature that are
required to be disclosed in the Registration Statement or the Prospectus or
related documents by the Act or the Exchange Act that are not disclosed in such
documents.
As used herein, "Hazardous Material" shall include, without
limitation, any flammable explosives, radioactive materials, hazardous
materials, hazardous wastes, hazardous or toxic substances, or related
materials, asbestos, polychlorinated biphenyls ("PCBs"), petroleum products and
by-products and substances defined or listed as "hazardous substances," "toxic
substances," "hazardous waste," or "hazardous materials" in any Federal, state
or local Environmental Law.
As used herein, "Environmental Law" shall mean all laws,
regulations or ordinances of any Federal, state or local governmental authority
having or claiming jurisdiction over any of the Properties or the Acquisition
Properties (a "Governmental Authority") that are designed to protect public
health and the environment or regulate the handling of Hazardous Materials,
including, without limitation, the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended (42 U.S.C. Section 9601 et
seq.) ("CERCLA"), the Hazardous Material Transportation Act, as amended
(49 U.S.C. Section 1801 et seq.), the Resource Conservation and Recovery Act,
as amended (42 U.S.C. Section 6901 et seq.), the Federal Water Pollution Control
Act, as amended (33 U.S.C. Section 1251 et seq.), and the Clear Air Act, as
amended (42 U.S.C. Section 7401 et seq.), and any and all analogous future
federal or present or future state or local laws.
As used in this paragraph 6(y), "to the best of the Company's
knowledge" shall, with respect to the Acquisition Properties set forth in Part B
of Schedule II hereto, be based solely on the information contained in the
Environmental Reports.]
(z) The Company is organized in conformity with the
requirements for qualification as a real estate investment trust under Sections
856 through 860 of the Code and the rules and regulations thereunder; as of the
close of any taxable year, the Company has had no earnings and profits
accumulated in a non-REIT year within the meaning of Section 857(a)(3)(B) of the
Code; and the Company's past and proposed method of operation have enabled it,
and will enable it, to meet the requirements for taxation as a real estate
investment trust under the Code for all years of its taxable operations ending
on or before December 31, 1996.
(aa) Each of the Company's subsidiaries is in compliance with
all requirements applicable to a "qualified REIT subsidiary" within the meaning
of Section 856(i) of the Code and all applicable regulations under the Code, and
the Company is not aware of any fact that would negatively impact such
qualifications.
(bb) The Company and each of its subsidiaries are insured by
insurers of recognized financial responsibility against such losses and risks
and in such amounts as are prudent and customary in the businesses in which they
are engaged and the value of their properties; neither the Company nor any of
its subsidiaries has been refused any insurance coverage sought or applied for,
and the Company does not have any reason to believe that the Company and each of
its subsidiaries will not be able to renew its respective existing insurance
coverage as and when such coverage expires or to obtain similar coverage from
similar insurers as may be necessary to continue its respective businesses at a
cost that would not materially and adversely affect the condition (financial or
otherwise), business prospects, net worth or results of operations of the
Company and its subsidiaries.
(cc) The Company and its subsidiaries have title insurance on
each of the Properties and the Acquisition Properties set forth in Part A of
Schedule II hereto in an amount at least equal to the greater of (a) the cost of
acquisition of such property and (b) the replacement cost of the improvements
located on such property.
(dd) No subsidiary of the Company is currently prohibited
directly or indirectly, from paying any dividends to the Company, from making
any other distribution on such subsidiary's capital stock, from repaying to the
Company any loans or advances to such subsidiary from the Company or from
transferring and of such subsidiary's assets or property to the Company or any
other subsidiary of the Company, except as described in or contemplated by the
Prospectus.
7. Indemnification and Contribution. (a) The Company agrees to
indemnify and hold harmless each of you and each other Underwriter and each
person, if any, who controls any Underwriter within the meaning of Section 15 of
the Act or Section 20 of the Exchange Act from and against any and all losses,
claims, damages, liabilities and expenses (including reasonable costs of
investigation) arising out of or based upon any untrue statement or alleged
untrue statement of a material fact contained in any Prepricing Prospectus or in
the Basic Prospectus or in the Registration Statement or the Prospectus or in
any amendment or supplement thereto, or arising out of or based upon any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading,
except insofar as such losses, claims, damages, liabilities or expenses arise
out of or are based upon any untrue statement or omission or alleged untrue
statement or omission which has been made therein or omitted therefrom in
reliance upon and in conformity with the information relating to such
Underwriter furnished in writing to the Company by or on behalf of any
Underwriter through you expressly for use in connection therewith; provided,
however, that the indemnification contained in this paragraph (a) with respect
to any Prepricing Prospectus shall not inure to the benefit of any Underwriter
(or to the benefit of any person controlling such Underwriter) to the extent
that any such loss, claim, damage, liability or expense results from the fact
that such Underwriter sold Shares to any person as to whom it shall be
established that a copy of the Prospectus as then amended or supplemented
(excluding documents incorporated by reference) was not delivered or sent to
such person within the time required by the Act and the regulations thereunder
and such loss, claim, damage, liability or expense of such Underwriter results
from an untrue statement or alleged untrue statement or omission or alleged
omission of a material fact contained in such Prepricing Prospectus which was
identified to such Underwriter and was corrected in the Prospectus (excluding
documents incorporated by reference), provided that the Company has delivered
the Prospectus to the several Underwriters in requisite quantity on a timely
basis to permit such delivery or sending. The foregoing indemnity agreement
shall be in addition to any liability which the Company may otherwise have.
(b) If any action, suit or proceeding shall be brought
against any Underwriter or any person controlling any Underwriter in respect of
which indemnity may be sought against the Company, such Underwriter or such
controlling person shall promptly notify the Company and the Company shall
assume the defense thereof, including the employment of counsel and payment of
all fees and expenses. Such Underwriter or any such controlling person shall
have the right to employ separate counsel in any such action, suit or proceeding
and to participate in the defense thereof, but the fees and expenses of such
counsel shall be at the expense of such Underwriter or such controlling person
unless (i) the Company has agreed in writing to pay such fees and expenses, (ii)
the Company has failed to assume the defense and employ counsel, or (iii) the
named parties to any such action, suit or proceeding (including any impleaded
parties) include both such Underwriter or such controlling person and the
Company and such Underwriter or such controlling person shall have been advised
by its counsel that representation of such indemnified party and the Company by
the same counsel would be inappropriate under applicable standards of
professional conduct (whether or not such representation by the same counsel has
been proposed) due to actual or potential differing interests between them (in
which case the Company shall not have the right to assume the defense of such
action, suit or proceeding on behalf of such Underwriter or such controlling
person). It is understood, however, that the Company shall, in connection with
any one such action, suit or proceeding or separate but substantially similar or
related actions, suits or proceedings in the same jurisdiction arising out of
the same general allegations or circumstances, be liable for the reasonable fees
and expenses of only one separate firm of attorneys (in addition to any local
counsel) at any time for all such Underwriters and controlling persons not
having actual or potential differing interests with you or among themselves,
which firm shall be designated in writing by Xxxxx Xxxxxx Inc., and that all
such fees and expenses shall be reimbursed as they are incurred. The Company
shall not be liable for any settlement of any such action, suit or proceeding
effected without its written consent, but if settled with such written consent,
or if there be a final judgment for the plaintiff in any such action, suit or
proceeding, the Company agrees to indemnify and hold harmless any Underwriter,
to the extent provided in the preceding paragraph, and any such controlling
person from and against any loss, claim, damage, liability or expense by reason
of such settlement or judgment.
(c) Each Underwriter agrees, severally and not jointly, to
indemnify and hold harmless the Company, its directors, its officers who sign
the Registration Statement, and any person who controls the Company within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act, to the same
extent as the foregoing indemnity from the Company to each Underwriter, but only
with respect to information relating to such Underwriter furnished in writing by
or on behalf of such Underwriter through you expressly for use in the
Registration Statement, the Prospectus or any Prepricing Prospectus, or any
amendment or supplement thereto. If any action, suit or proceeding shall be
brought against the Company, any of its directors, any such officer, or any such
controlling person based on the Registration Statement, the Prospectus or any
Prepricing Prospectus, or any amendment or supplement thereto, and in respect of
which indemnity may be sought against any Underwriter pursuant to this paragraph
(c), such Underwriter shall have the rights and duties given to the Company by
paragraph (b) above (except that if the Company shall have assumed the defense
thereof such Underwriter shall not be required to do so, but may employ separate
counsel therein and participate in the defense thereof, but the fees and
expenses of such counsel shall be at such Underwriter's expense), and the
Company, its directors, any such officer, and any such controlling person shall
have the rights and duties given to the Underwriters by paragraph (b) above.
The foregoing indemnity agreement shall be in addition to any liability which
the Underwriters may otherwise have.
(d) If the indemnification provided for in this Section 7 is
unavailable to an indemnified party under paragraphs (a) or (c) hereof in
respect of any losses, claims, damages, liabilities or expenses referred to
therein, then an indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by such indemnified party
as a result of such losses, claims, damages, liabilities or expenses (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company on the one hand and the Underwriters on the other hand from the offering
of the Shares, or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) above but also the relative
fault of the Company on the one hand and the Underwriters on the other in
connection with the statements or omissions that resulted in such losses,
claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations. The relative benefits received by the Company on the
one hand and the Underwriters on the other shall be deemed to be in the same
proportion as the total net proceeds from the offering (before deducting
expenses) received by the Company bear to the total underwriting discounts and
commissions received by the Underwriters, in each case as set forth in the table
on the cover page of the Prospectus. The relative fault of the Company on the
one hand and the Underwriters on the other hand shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company on the one hand or by the
Underwriters on the other hand and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission.
(e) The Company and the Underwriters agree that it would not
be just and equitable if contribution pursuant to this Section 7 were determined
by a pro rata allocation (even if the Underwriters were treated as one entity
for such purpose) or by any other method of allocation that does not take
account of the equitable considerations referred to in paragraph (d) above. The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages, liabilities and expenses referred to in paragraph (d) above
shall be deemed to include, subject to the limitations set forth above, any
reasonable legal or other expenses incurred by such indemnified party in
connection with investigating any claim or defending any such action, suit or
proceeding. Notwithstanding the provisions of this Section 7, no Underwriter
shall be required to contribute any amount in excess of the amount by which the
total price of the Shares underwritten by it and distributed to the public
exceeds the amount of any damages which such Underwriter has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. The
Underwriters' obligations to contribute pursuant to this Section 7 are several
in proportion to the respective numbers of Firm Shares set forth opposite their
names in Schedule I hereto (or such numbers of Firm Shares increased as set
forth in Section 10 hereof) and not joint.
(f) No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement of any pending or
threatened action, suit or proceeding in respect of which any indemnified party
is or could have been a party and indemnity could have been sought hereunder by
such indemnified party, unless such settlement includes an unconditional release
of such indemnified party from all liability on claims that are the subject
matter of such action, suit or proceeding.
(g) Any losses, claims, damages, liabilities or expenses for
which an indemnified party is entitled to indemnification or contribution under
this Section 7 shall be paid by the indemnifying party to the indemnified party
as such losses, claims, damages, liabilities or expenses are incurred. The
indemnity and contribution agreements contained in this Section 7 and the
representations and warranties of the Company set forth in this Agreement shall
remain operative and in full force and effect, regardless of (i) any
investigation made by or on behalf of any Underwriter or any person controlling
any Underwriter, the Company, its directors or officers, or any person
controlling the Company, (ii) acceptance of any Shares and payment therefor
hereunder, and (iii) any termination of this Agreement. A successor to any
Underwriter or any person controlling any Underwriter, or to the Company, its
directors or officers, or any person controlling the Company, shall be entitled
to the benefits of the indemnity, contribution and reimbursement agreements
contained in this Section 7.
8. Conditions of Underwriters' Obligations. The several
obligations of the Underwriters to purchase the Firm Shares hereunder are
subject to the following conditions:
(a) (i) If, at the time this Agreement is executed and
delivered, it is necessary for a post-effective amendment to the registration
statement to be declared effective before the offering of the Shares may
commence, 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; if the Company has elected
to rely on Rule 462(b), the Rule 462(b) Registration Statement shall have become
effective not later than the earlier of (x) 10:00 P.M., New York City time, on
the date hereof, or (y) at such later date and time as shall be consented to in
writing by you; and all filings, if any, required by Rules 424 and 430A under
the Act shall have been timely made; (ii) no stop order suspending the
effectiveness of the registration statement shall have been issued and no
proceeding for that purpose shall have been instituted or, to the knowledge of
the Company or any Underwriter, threatened by the Commission; and (iii) any
request of the Commission for additional information (to be included in the
registration statement or the Prospectus or otherwise) shall have been complied
with to your satisfaction.
(b) Subsequent to the effective date of this Agreement,
there shall not have occurred (i) any change, or any development involving a
prospective change, in or affecting the condition (financial or other),
business, properties, net worth, or results of operations of the Company and its
subsidiaries not contemplated by the Prospectus (exclusive of any amendments or
supplements thereto subsequent to the date of this Agreement), which in your
opinion, as Representatives of the several Underwriters, would materially
adversely affect the market for the Shares, or (ii) any event or development
relating to or involving the Company and its subsidiaries or any officer or
director of the Company and its subsidiaries which makes any statement 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 Act
or any other law to be stated therein or necessary in order to make the
statements therein not misleading, if amending or supplementing the Prospectus
to reflect such event or development would, in your opinion, as Representatives
of the several Underwriters, adversely affect the market for the Shares.
(c) You shall have received on the Closing Date, an opinion
of Shaw, Pittman, Xxxxx & Xxxxxxxxxx, counsel for the Company, dated the Closing
Date and addressed to you, as Representatives of the several Underwriters, to
the effect that:
(i) Each of the Company and each of its subsidiaries is a
corporation duly incorporated and validly existing in good standing under the
laws of the State of Maryland with full corporate power and authority to own,
lease and operate its properties and to conduct its business as described in the
Registration Statement and the Prospectus (and any amendment or supplement
thereto), and, based solely on certificates of public officials and officers of
the Company and its subsidiaries, is duly registered and qualified to conduct
its business and is in good standing in each jurisdiction or place where the
nature of its properties or the conduct of its business requires such
registration or qualification, except where the failure so to register or
qualify does not have a material adverse effect on the condition (financial or
other), business, properties, net worth or results of operations of the Company
and its subsidiaries;
(ii) To the knowledge of such counsel, the Company has no
subsidiaries other than Net Lease Realty I, Inc. and Net Lease Realty II, Inc.
and does not control, directly or indirectly, any corporation, partnership,
joint venture, association or other business association. The issued shares of
capital stock of each of the Company's subsidiaries have been duly authorized
and validly issued, are fully paid and non-assessable and are owned legally and
beneficially by the Company free and clear of any security interests, liens,
encumbrances, equities or claims;
(iii) The authorized and outstanding capital stock of the
Company is as set forth under the caption "Capitalization" in the Prospectus;
and the authorized capital stock of the Company conforms in all material
respects as to legal matters to the description thereof contained in the
Prospectus under the caption "Description of Common Stock";
(iv) All the shares of capital stock of the Company
outstanding prior to the issuance of the Shares have been duly authorized and
validly issued, and are fully paid and nonassessable;
(v) The Shares have been duly authorized and, when issued
and delivered to the Underwriters against payment therefor in accordance with
the terms hereof, will be validly issued, fully paid and nonassessable and free
of any preemptive rights under Maryland General Corporation Law;
(vi) To the knowledge of such counsel, based upon such
inquiry as such counsel deems appropriate, (a) the Shares, when issued and
delivered in accordance with the terms hereof, will be free of any contractual
preemptive right or other similar rights that entitle or will entitle any person
to acquire any Shares upon the issuance thereof by the Company and (b) no holder
of securities of the Company is entitled to have such securities registered
under the Registration Statement which right has not been waived in connection
with the transactions contemplated by this Agreement;
(vii) The form of certificates for the Shares conforms to the
requirements of the Maryland General Corporation Law;
(viii) The Registration Statement and all post-effective
amendments, if any, and the Rule 462(b) Registration Statement, if any, have
become effective under the Act and, to the knowledge of such counsel, no stop
order suspending the effectiveness of the Registration Statement has been issued
and no proceedings for that purpose are pending before or contemplated by the
Commission; and any required filing of the Prospectus pursuant to Rule 424(b)
has been made in accordance with Rule 424(b);
(ix) The Company has the corporate power and authority to
enter into this Agreement and the Purchase Agreements and to issue, sell and
deliver the Shares to the Underwriters as provided herein, and this Agreement
and the Purchase Agreements have been duly authorized, executed and delivered by
the Company and are valid, legal and binding agreements of the Company,
enforceable against the Company in accordance with their respective terms,
except as enforcement of rights to indemnity and contribution hereunder may be
limited by Federal or state securities laws or principles of public policy and
subject to the qualification that the enforceability of the Company's
obligations hereunder and thereunder may be limited by bankruptcy, fraudulent
conveyance, insolvency, reorganization, moratorium, and other laws relating to
or affecting creditors' rights generally, and by general equitable principles
when applied by a court of law or equity;
(x) To the knowledge of such counsel, neither the Company
nor either of its subsidiaries is (a) in violation of its respective articles of
incorporation or by-laws or (b) in default in the performance of any material
obligation, agreement or condition contained in any bond, debenture, note or
other evidence of indebtedness set forth on Schedule A attached to such opinion,
except as may be disclosed in the Prospectus;
(xi) Neither the offer, sale or delivery of the Shares, the
execution, delivery or performance by the Company of this Agreement, compliance
by the Company with the provisions hereof nor consummation by the Company of the
transactions contemplated hereby (a) conflicts or will conflict with or
constitutes or will constitute a breach of, or a default under, (1) the articles
of incorporation or by-laws of the Company or either of its subsidiaries or (2)
any agreement, indenture, lease or other instrument to which the Company or
either of its subsidiaries is a party or by which the Company or any properties
of the Company or either of its subsidiaries is bound (A) that is an exhibit to
the Registration Statement or (B) which is known to such counsel (other than the
piggyback registration rights granted pursuant to the CNL Transaction (as
defined in the Prospectus), all of which have been waived in connection with the
transactions contemplated by this Agreement); or (b) results or will result in
the creation or imposition of any lien, charge or encumbrance upon any property
or assets of the Company or its subsidiaries, pursuant to any agreement,
indenture, lease or other instrument to which the Company or either of its
subsidiaries is a party or by which the Company or any properties of the Company
or either of its subsidiaries is bound (1) that is incorporated by reference or
an exhibit to the Registration Statement or (2) which is known to such counsel;
or (c) violates or will violate (1) any existing federal or Maryland law,
regulation or ruling (assuming compliance with all applicable state securities
and Blue Sky laws, regulations, rulings and orders) or (2) to the knowledge of
such counsel, any judgment, injunction, order or decree applicable to the
Company or its subsidiaries or any properties of the Company or either of its
subsidiaries;
(xii) No consent, approval, authorization or other order of,
or registration or filing with, any court, regulatory body, administrative
agency or other governmental body, agency, or official is required on the part
of the Company (except as have been obtained under the Act and the Exchange Act
or such as may be required under state securities or Blue Sky laws governing the
purchase and distribution of the Shares) for the valid issuance and sale of the
Shares to the Underwriters as contemplated by this Agreement;
(xiii) (a) The Registration Statement and the Prospectus and
any supplements or amendments thereto (except for the financial statements and
the notes thereto and the schedules and other financial data included therein,
as to which such counsel need not express any opinion) comply as to form in all
material respects with the requirements of the Act; and (b) each of the
Incorporated Documents (except for the financial statements and the notes
thereto and the schedules and other financial and statistical data included
therein, as to which counsel need not express any opinion) complies as to form
in all material respects with the Exchange Act and the rules and regulations of
the Commission thereunder;
(xiv) To the knowledge of such counsel, based upon such
inquiry as such counsel deems appropriate, (A) other than as described or
contemplated in the Prospectus (or any supplement thereto), there are no legal
or governmental proceedings pending or threatened against the Company or either
of its subsidiaries, or to which the Company or either of its subsidiaries or
any properties of the Company and either of its subsidiaries is subject, which
are required to be described in the Registration Statement or Prospectus (or any
amendment or supplement thereto) and (B) there are no statutes, regulations,
capital expenditures, contingencies or agreements, contracts, indentures, leases
or other instruments, that are required to be described in the Registration
Statement or the Prospectus (or any amendment or supplement thereto) or to be
filed or incorporated by reference as an exhibit to the Registration Statement
or any Incorporated Document that are not described, filed or incorporated as
required, as the case may be;
(xv) To the knowledge of such counsel, neither the Company
nor either of its subsidiaries is in violation of any law, ordinance,
administrative or governmental rule or regulation applicable to the Company or
its subsidiaries or of any decree of any court or governmental agency or body
having jurisdiction over the Company or its subsidiaries;
(xvi) Such counsel is not aware of any certificates,
authorizations, licenses or permits required by any federal regulatory authority
which are necessary for the Company and its subsidiaries to conduct their
respective businesses; to the knowledge of such counsel, neither the Company nor
either of its subsidiaries has received any notice of proceedings relating to
the revocation or modification of any certificate, authorization, license or
permit issued by any federal, state, municipal or foreign regulatory authority
which, singly or in the aggregate, if the subject of an unfavorable decision,
ruling or finding, would result in a material adverse change in the condition
(financial or otherwise), business prospects, net worth or results of operations
of the Company or its subsidiaries;
(xvii) The Company is not subject to registration as an
investment company under the Investment Company Act of 1940, as amended, and the
transactions contemplated by this Agreement will not cause the Company to become
an investment company subject to registration under the Investment Company Act
of 1940, as amended;
(xviii) Commencing with the Company's initial taxable year,
the Company has qualified as a real estate investment trust under the Code for
all taxable years ending on or before December 31, 1994, and its past and
proposed method of operation will enable it to qualify as a real estate
investment trust under the Code for its taxable year ending on December 31,
1996; and each of the Company's subsidiaries is a "qualified REIT subsidiary"
within the meaning of Section 856(i) of the Code;
(xix) To the knowledge of such counsel, (a) neither the
Company nor either of its subsidiaries is in violation of any federal law or
regulation relating to occupational safety and health or to the environment,
including, without limitation, the storage, handling, transportation or disposal
of hazardous or toxic materials, (b) the Company and its subsidiaries have
received all permits, registrations, licenses and other approvals required of
them under applicable federal occupational safety and health and environmental
laws and regulations to conduct their respective businesses, (c) the Company and
its subsidiaries are in compliance with all terms and conditions of any such
permit, registration, license or approval, except any such violation of law or
regulation, failure to receive required permits, registrations, licenses or
other approvals or failure to comply with the terms and conditions of such
permits, registrations, licenses or approvals which would not, singly or in the
aggregate, result in a material adverse change in the condition (financial or
otherwise), business prospects, net worth or results of operations of the
Company or its subsidiaries, (d) there are no occurrences or circumstances of an
environmental nature which, with notice, passage of time, or failure to act,
would result in material liability under applicable federal environmental laws
or regulations or result in a material adverse change in the condition
(financial or otherwise), business prospects, net worth or results of operations
of the Company or its subsidiaries and (e) there are no matters of an
environmental nature required by the Act or the Exchange Act to be disclosed in
the Registration Statement or the Prospectus or related documents that are not
disclosed in such documents;
(xx) The Shares have been approved for listing on the New
York Stock Exchange, subject to official notice of issuance;
(xxi) The statements in the Prospectus, insofar as they are
descriptions of contracts or agreements or constitute statements of law or legal
conclusions, are accurate and present fairly the information required to be
shown in all material respects; and
(xxii) Although counsel has not undertaken, except as
otherwise indicated in their opinion, to determine independently, and does not
assume any responsibility for, the accuracy or completeness of the statements in
the Registration Statement, such counsel has participated in the preparation of
the Registration Statement and the Prospectus, including review and discussion
of the contents thereof (including review and discussion of the contents of all
Incorporated Documents), and nothing has come to the attention of such counsel
that has caused them to believe that the Registration Statement (including the
Incorporated Documents) at the time the Registration Statement became effective,
or the Prospectus, as of its date and as of the Closing Date or the Option
Closing Date, as the case may be, contained an untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary to make the statements therein not misleading or that any amendment or
supplement to the Prospectus, as of its respective date, and as of the Closing
Date or the Option Closing Date, as the case may be, contained any untrue
statement of a material fact or omitted to state a material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading (it being understood that such counsel need
express no opinion with respect to the financial statements and the notes
thereto and the schedules and other financial data included in the Registration
Statement or the Prospectus or any Incorporated Document).
(d) You shall have received on the Closing Date an opinion
of Xxxxxxx Xxxx & Xxxxxxxxx, counsel for the Underwriters, dated the Closing
Date and addressed to you, as Representatives of the several Underwriters, with
respect to the matters referred to in clauses (viii) and (xiii)(a) of the
foregoing paragraph (c) and such other related matters as you may request.
(e) You shall have received letters addressed to you, as
Representatives of the several Underwriters, and dated the date hereof and the
Closing Date from KPMG Peat Marwick LLP, independent certified public
accountants, substantially in the forms heretofore approved by you.
(f) (i) No stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for that
purpose shall have been taken or, to the knowledge of the Company, shall be
contemplated by the Commission at or prior to the Closing Date; (ii) there shall
not have been any change in the capital stock of the Company nor any material
increase in the short-term or long-term debt of the Company and its subsidiaries
(other than in the ordinary course of business) from that set forth or
contemplated in the Registration Statement or the Prospectus (or any amendment
or supplement thereto); (iii) there shall not have been, since the respective
dates as of which information is given in the Registration Statement and the
Prospectus (or any amendment or supplement thereto), except as may otherwise be
stated in the Registration Statement and Prospectus (or any amendment or
supplement thereto), any material adverse change in the condition (financial or
other), business, prospects, properties, net worth or results of operations of
the Company and its subsidiaries; (iv) the Company and its subsidiaries shall
not have any liabilities or obligations, direct or contingent (whether or not in
the ordinary course of business), that are material to the Company and its
subsidiaries, other than those reflected in the Registration Statement or the
Prospectus (or any amendment or supplement thereto); and (v) all the
representations and warranties of the Company contained in this Agreement shall
be true and correct on and as of the date hereof and on and as of the Closing
Date as if made on and as of the Closing Date, and you shall have received a
certificate, dated the Closing Date and signed by the chief executive officer
and the chief financial officer of the Company (or such other officers as are
acceptable to you), to the effect set forth in this Section 8(f) and in Section
8(g) hereof.
(g) The Company shall not have failed at or prior to the
Closing Date to have performed or complied with any of its agreements herein
contained and required to be performed or complied with by it hereunder at or
prior to the Closing Date.
(h) Prior to the Closing Date the Shares shall have been
listed, subject to notice of issuance, on the New York Stock Exchange.
(i) The Company shall have furnished or caused to be
furnished to you such further certificates and documents as you shall have
requested.
All such opinions, certificates, letters and other documents
will be in compliance with the provisions hereof only if they are satisfactory
in form and substance to you and your counsel.
Any certificate or document signed by any officer of the
Company and delivered to you, as Representatives of the Underwriters, or to
counsel for the Underwriters, shall be deemed a representation and warranty by
the Company to each Underwriter as to the statements made therein.
The several obligations of the Underwriters to purchase
Additional Shares hereunder are subject to the satisfaction on and as of any
Option Closing Date of the conditions set forth in this Section 8, except that,
if any Option Closing Date is other than the Closing Date, the certificates,
opinions and letters referred to in paragraphs (c) through (g) shall be dated
the Option Closing Date in question and the opinions called for by paragraphs
(c) and (d) shall be revised to reflect the sale of Additional Shares.
9. Expenses. The Company agrees to pay the following costs and
expenses and all other costs and expenses incident to the performance by the
Company of its obligations hereunder: (i) the preparation, printing or
reproduction, and filing with the Commission of the registration statement
(including financial statements and exhibits thereto), each Prepricing
Prospectus, the Prospectus, and each amendment or supplement to any of them;
(ii) the printing (or reproduction) and delivery (including postage, air freight
charges and charges for counting and packaging) of such copies of the
registration statement, each Prepricing Prospectus, the Prospectus, the
Incorporated Documents, and all amendments or supplements to any of them, as may
be reasonably requested for use in connection with the offering and sale of the
Shares; (iii) the preparation, printing, authentication, issuance and delivery
of certificates for the Shares, including any stamp taxes in connection with the
original issuance and sale of the Shares; (iv) the printing (or reproduction)
and delivery of this Agreement, the preliminary and supplemental Blue Sky
Memoranda and all other agreements or documents printed (or reproduced) and
delivered in connection with the offering of the Shares; (v) the listing of the
Shares on the New York Stock Exchange; (vi) the registration or qualification of
the Shares for offer and sale under the securities or Blue Sky laws of the
several states as provided in Section 5(g) hereof (including the reasonable
fees, expenses and disbursements of counsel for the Underwriters relating to the
preparation, printing or reproduction, and delivery of the preliminary and
supplemental Blue Sky Memoranda and such registration and qualification); (vii)
the filing fees and the fees and expenses of counsel for the Underwriters in
connection with any filings required to be made with the National Association of
Securities Dealers, Inc.; (viii) the transportation and other expenses incurred
by or on behalf of Company representatives in connection with presentations to
prospective purchasers of the Shares; and (ix) the fees and expenses of the
Company's accountants and the fees and expenses of counsel (including local and
special counsel) for the Company.
10. Effective Date of Agreement. This Agreement shall become
effective: (i) upon the execution and delivery hereof by the parties hereto; or
(ii) if, at the time this Agreement is executed and delivered, it is necessary
for a post-effective amendment to the registration statement to be declared
effective before the offering of the Shares may commence, when notification of
the effectiveness of such post-effective amendment has been released by the
Commission. Until such time as this Agreement shall have become effective, it
may be terminated by the Company, by notifying you, or by you, as
Representatives of the several Underwriters, by notifying the Company.
If any one or more of the Underwriters shall fail or refuse to
purchase Shares which it or they are obligated to purchase hereunder on the
Closing Date, and the aggregate number of Shares which such defaulting
Underwriter or Underwriters are obligated but fail or refuse to purchase is not
more than one-tenth of the aggregate number of Shares which the Underwriters are
obligated to purchase on the Closing Date, each non-defaulting Underwriter shall
be obligated, severally, in the proportion which the number of Firm Shares set
forth opposite its name in Schedule I hereto bears to the aggregate number of
Firm Shares set forth opposite the names of all non-defaulting Underwriters or
in such other proportion as you may specify in accordance with Section 20 of the
Master Agreement Among Underwriters of Xxxxx Xxxxxx Inc., to purchase the Shares
which such defaulting Underwriter or Underwriters are obligated, but fail or
refuse, to purchase. If any one or more of the Underwriters shall fail or
refuse to purchase Shares which it or they are obligated to purchase on the
Closing Date and the aggregate number of Shares with respect to which such
default occurs is more than one-tenth of the aggregate number of Shares which
the Underwriters are obligated to purchase on the Closing Date and arrangements
satisfactory to you and the Company for the purchase of such Shares by one or
more non-defaulting Underwriters or other party or parties approved by you and
the Company are not made within 36 hours after such default, this Agreement will
terminate without liability on the part of any non-defaulting Underwriter or the
Company. In any such case which does not result in termination of this
Agreement, either you or the Company shall have the right to postpone the
Closing Date, but in no event for longer than seven days, in order that the
required changes, if any, in the Registration Statement and the Prospectus or
any other documents or arrangements may be effected. Any action taken under
this paragraph shall not relieve any defaulting Underwriter from liability in
respect of any such default of any such Underwriter under this Agreement. The
term "Underwriter" as used in this Agreement includes, for all purposes of this
Agreement, any party not listed in Schedule I hereto who, with your approval and
the approval of the Company, purchases Shares which a defaulting Underwriter is
obligated, but fails or refuses, to purchase.
Any notice under this Section 10 may be given by telegram, telecopy
or telephone but shall be subsequently confirmed by letter.
11. Termination of Agreement. This Agreement shall be subject to
termination in your absolute discretion, without liability on the part of any
Underwriter to the Company by notice to the Company, if prior to the Closing
Date or any Option Closing Date (if different from the Closing Date and then
only as to the Additional Shares), as the case may be, (i) trading in securities
generally on the New York Stock Exchange, the American Stock Exchange or the
Nasdaq National Market shall have been suspended or materially limited, (ii) a
general moratorium on commercial banking activities in New York or Florida shall
have been declared by either federal or state authorities, or (iii) there shall
have occurred any outbreak or escalation of hostilities or other international
or domestic calamity, crisis or change in political, financial or economic
conditions, the effect of which on the financial markets of the United States is
such as to make it, in your judgment, impracticable or inadvisable to commence
or continue the offering of the Shares at the offering price to the public set
forth on the cover page of the Prospectus or to enforce contracts for the resale
of the Shares by the Underwriters. Notice of such termination may be given to
the Company by telegram, telecopy or telephone and shall be subsequently
confirmed by letter.
12. Information Furnished by the Underwriters. The statements set
forth in the last paragraph on the cover page, the stabilization legend on the
inside front cover, and the statements in the first and third paragraphs under
the caption "Underwriting" in any Prepricing Prospectus and in the Prospectus,
constitute the only information furnished by or on behalf of the Underwriters
through you as such information is referred to in Sections 6(b) and 7 hereof.
13. Miscellaneous. Except as otherwise provided in Sections 5, 10
and 11 hereof, notice given pursuant to any provision of this Agreement shall be
in writing and shall be delivered (i) if to the Company, at the office of the
Company at 000 Xxxx Xxxxx Xxxxxx, Xxxxx 000, Xxxxxxx, Xxxxxxx 00000, Attention:
Xxxxx X. Xxxxxx, Xx., Chairman and Chief Executive Officer; or (ii) if to you,
as Representatives of the several Underwriters, care of Xxxxx Xxxxxx Inc., 000
Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Manager, Investment
Banking Division.
This Agreement has been and is made solely for the benefit of the
several Underwriters, the Company, its directors and officers, and the other
controlling persons referred to in Section 7 hereof and their respective
successors and assigns, to the extent provided herein, and no other person shall
acquire or have any right under or by virtue of this Agreement. Neither the
term "successor" nor the term "successors and assigns" as used in this Agreement
shall include a purchaser from any Underwriter of any of the Shares in his
status as such purchaser.
14. Applicable Law; Counterparts. This Agreement shall be
governed by and construed in accordance with the laws of the State of New York
applicable to contracts made and to be performed within the State of New York.
This Agreement may be signed in various counterparts which together
constitute one and the same instrument. If signed in counterparts, this
Agreement shall not become effective unless at least one counterpart hereof
shall have been executed and delivered on behalf of each party hereto.
Please confirm that the foregoing correctly sets forth the agreement
between the Company and the several Underwriters.
Very truly yours,
COMMERCIAL NET LEASE REALTY, INC.
By
---------------------------
Chairman of the Board
Confirmed as of the date first
above mentioned on behalf of
themselves and the other several
Underwriters named in Schedule I
hereto.
XXXXX XXXXXX INC.
XXXXXXX, XXXXX & CO.
XXXX XXXXX XXXX XXXXXX INCORPORATED
X.X. XXXXXXXX & CO.
THE XXXXXXXX-XXXXXXXX COMPANY, INC.
As Representatives of the Several Underwriters
By XXXXX XXXXXX INC.
By
-------------------------
Managing Director
SCHEDULE I
COMMERCIAL NET LEASE REALTY, INC.
Number of
Underwriter Firm Shares
----------- -----------
Xxxxx Xxxxxx Inc.
Xxxxxxx, Xxxxx & Co.
Xxxx Xxxxx Xxxx Xxxxxx Incorporated
X.X. Xxxxxxxx & Co.
The Xxxxxxxx-Xxxxxxxx Company, Inc.
---------
Total 3,000,000
=========
SCHEDULE II
ACQUISITION PROPERTIES
Location
Retailer (street address) City State
-------- ---------------- ---- -----
A. [Acquired 9/30 - Closing]
B. [To be Acquired]
