Contract
EXHIBIT
10.1
CAPITAL
LEASE FUNDING, INC
DOCS®
Financing Program
2,400,000
Shares
of Common Stock,
$0.01
par
value
August
15, 2005
THIS
SALES AGREEMENT (the “Agreement”) dated as of August 15, 2005 between Xxxxxxx
Xxxxxxx Securities Corporation, having its principal office at 000 Xxxxxxx
Xxxxxx, 0xx
Xxxxx,
Xxx Xxxx, Xxx Xxxx 00000 (the “Sales Manager”) and Capital
Lease Funding, Inc.,
a
corporation organized and existing under the laws of the State of Maryland
(the ”Company”).
WHEREAS,
the Company desires to issue and sell through the Sales Manager up to
2,400,000
shares
(the “Maximum Amount”) of its common stock, $0.01
par
value (the “Stock”), on the terms set forth in Article II below. The Maximum
Amount shall be appropriately adjusted for stock splits and reverse
splits.
IN
CONSIDERATION of the mutual covenants contained in this Agreement, the Company
and the Sales Manager agree as follows:
ARTICLE
I.
REPRESENTATIONS
AND WARRANTIES
OF
THE
COMPANY
1.1 For
purposes of this Agreement, unless the context requires to the contrary,
the
term “Company” shall also include all significant subsidiaries (as defined by
Section 1-02 of Regulation S-X) of the Company. The Company represents and
warrants to, and agrees with, the Sales Manager that:
(a) The
Company meets the requirements for use of Form S-3 under the Securities Act
of
1933, as amended (the “Act”), and the rules and regulations thereunder (“Rules
and Regulations”). A registration statement on Form S-3 (Registration No.
333-124003) with respect to, among other securities, the Stock, including
a form
of prospectus, has been prepared by the Company in conformity with the
requirements of the Act and the Rules and Regulations and filed with the
Securities and Exchange Commission (the “Commission”) and has become effective.
Such registration statement and prospectus may have been amended or supplemented
prior to the date hereof. Any such amendment or supplement was so prepared
and
filed, and any such amendment or supplement filed after the effective date
of
such registration statement and prior to the date hereof has become effective.
No stop order suspending the effectiveness of such registration statement
has
been issued, and no proceeding for that purpose has been instituted or, to
the
knowledge of the Company, threatened by the Commission. Copies of such
registration statement and prospectus, any such amendment or supplement and
all
documents incorporated by reference therein that were filed with the Commission
prior to the date hereof have been made available to the Sales Manager. Such
registration statement, as it may have heretofore been or may hereafter be
amended, is referred to herein as the “Registration Statement,” and the final
form of prospectus included in the Registration Statement for purposes of
offers
and sales of the Stock contemplated herein, as amended or supplemented from
time
to time, is referred to herein as the “Prospectus.” Any reference herein to the
Registration Statement, the Prospectus, or any amendment or supplement thereto
shall be deemed to refer to and include the documents incorporated (or deemed
to
be incorporated) by reference therein, and any reference herein to the terms
“amend,”“amendment” or “supplement” with respect to the Registration Statement
or Prospectus shall be deemed to refer to and include the filing after the
execution hereof of any document with the Commission deemed to be incorporated
by reference therein.
(b) (1)
Each
part of the Registration Statement, when such part became or becomes effective,
and the Prospectus and any amendment or supplement thereto, on the date of
filing thereof with the Commission and at each Settlement Date (as hereinafter
defined), conformed or will conform in all material respects with the
requirements of the Act and the Rules and Regulations; each part of the
Registration Statement, when such part became or becomes effective, did not
or
will not contain an untrue statement of a material fact or omit to state
a
material fact required to be stated therein or necessary to make the statements
therein not misleading; and the Prospectus and any amendment or supplement
thereto, on the date of filing thereof with the Commission and at each
Settlement Date, did not or will not include an untrue statement of a material
fact or omit to state a material fact necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading;
except that the foregoing shall not apply to statements in or omissions from
any
such document in reliance upon, and in conformity with, written information
furnished to the Company by or on behalf of the Sales Manager, specifically
for
use in the Registration Statement, the Prospectus or any amendment or supplement
thereto.
(c) The
documents incorporated by reference in the Registration Statement or the
Prospectus, or any amendment or supplement thereto, when they were or are
filed
with the Commission under the Securities Exchange Act of 1934, as amended
(the
“Exchange Act”), conformed or will conform in all material respects with the
requirements of the Act or the Exchange Act, as applicable, and the rules
and
regulations of the Commission thereunder.
(d) The
financial statements of the Company, together with the related schedules
and
notes thereto, set forth or included in the Registration Statement and
Prospectus, fairly present the financial condition of the Company as of the
dates indicated and the results of operations, changes in financial position,
stockholders’ equity, and cash flows for the periods therein specified, in
conformity with generally accepted accounting principles consistently applied
throughout the periods involved (except as otherwise stated therein). The
summary and selected financial and statistical data included in the Registration
Statement and the Prospectus present fairly the information shown therein
and,
to the extent based upon or derived from the financial statements, have been
compiled on a basis consistent with the financial statements presented therein.
(e) The
accountants who certified the financial statements and the supporting schedules
included in the Registration Statement are and, during the periods covered
by
their reports, were qualified and independent public accountants as required
by
Rule 2-01 of Regulation S-X.
(f) The
Company has been duly organized and is validly existing as a corporation
in good
standing under the laws of the State of Maryland.
The
Company is duly qualified and in good standing as a foreign corporation in
each
jurisdiction in which the character or location of its assets or properties
(owned, leased or licensed) or the nature of its business makes such
qualification necessary (including, if required, every jurisdiction in which
it
owns or leases real property), except for such jurisdictions where the failure
to so qualify would not have a Material Adverse Effect on the Company. For
purposes of this Agreement, “Material Adverse Effect” means any adverse effect
on the business, operations, properties or financial condition of the Company
that is (either alone or together with all other adverse effects) material
to
the Company, and any material adverse effect on the transactions contemplated
under this Agreement or any other agreement or
document
contemplated hereby. Each of the Company’s significant subsidiaries is validly
existing as a corporation, limited liability company or partnership, as
applicable, in its respective jurisdiction of formation. Schedule 1.1(f)
hereto
identifies each of the Company’s subsidiaries that is a significant subsidiary
(as defined in Section 1-02 of Regulation S-X) of the Company. All of the
issued
and outstanding capital stock, limited liability company interests or
partnership interests, as applicable, of each significant subsidiary has
been
duly authorized and validly issued, is fully paid and nonassessable and (except
as otherwise disclosed in the Registration Statement and the Prospectus)
is
owned by the Company, directly or indirectly, free and clear of any security
interest, mortgage, pledge, lien, encumbrance, claim or equity. Except as
disclosed in the Registration Statement and the Prospectus, the Company does
not
own, lease or license any asset or property or conduct any business outside
the
United States of America. The Company has all requisite corporate power and
authority and all necessary authorizations, approvals, consents, orders,
licenses, certificates and permits of and from all governmental orders or
regulatory bodies or any other person or entity, to own, lease, license and
operate its assets and properties and conduct its business as now being
conducted and as described in the Registration Statement and the Prospectus;
except for such authorizations, approvals, consents, orders, licenses,
certificates and permits the absence of which would not have a Material Adverse
Effect; and no such authorization, approval, consent, order, license,
certificate or permit contains a materially burdensome restriction other
than as
disclosed in the Registration Statement and the Prospectus.
(g) The
Company has good and marketable title to, or leasehold interests in, all
properties and assets (including, without limitation, mortgaged assets) as
described in the Registration Statement and the Prospectus owned by the Company,
free and clear of all liens, charges, encumbrances or restrictions, except
such
as are described in the Registration Statement and the Prospectus and except
such as would not have a Material Adverse Effect on the Company. The Company
has
such consents, easements, rights-of-way or licenses (collectively,
“rights-of-way”) from any person as are necessary to conduct its business in the
manner described in the Registration Statement, except for those which if
not
obtained would not, singly or in the aggregate, have a Material Adverse Effect
on the Company, and none of such rights-of-way contains any restriction that
is
materially burdensome to the Company.
(h) The
debt
financing employed by the Company to acquire its portfolio of mortgage assets
is
not convertible into shares of common stock of the Company or other equity
interests in the Company.
(i) There
is
no litigation or governmental or other proceeding or investigation before
any
court or before or by any public body or board pending or, to the knowledge
of
the Company, threatened against, or involving the assets, properties or
businesses of the Company which would materially adversely affect the value
or
the operation of any such assets or otherwise have a Material Adverse Effect
on
the Company except as described in the Registration Statement.
(j) The
Company maintains insurance (issued by insurers of recognized financial
responsibility) of the types and in the amounts generally deemed adequate
for
its businesses and, to the knowledge of the Company, consistent with insurance
coverage maintained by similar companies in similar businesses, including,
but
not limited to, insurance covering real and personal property owned or leased
by
the Company against theft, damage, destruction, acts of vandalism and all
other
risks customarily insured against, all of which insurance is in full force
and
effect.
(k) Subsequent
to the respective dates as of which information is given in the Registration
Statement and the Prospectus, except as described therein, (i) there has
not
been any material adverse change in the assets or properties, business, results
of operations, or financial condition of the Company, whether or not arising
from transactions in the ordinary course of business; (ii) the Company has
not
sustained any material loss or interference with its assets, businesses or
properties (whether owned or leased) from fire, explosion, earthquake, flood
or
other calamity, whether or not covered by insurance, or from any labor dispute
or any court or legislative or other governmental action, order or decree;
(iii)
since the date of the latest balance sheet included or incorporated by reference
in the Registration Statement and the Prospectus, except as reflected in
the
Registration Statement and the Prospectus, the Company has not undertaken
any
liability or obligation, direct or contingent, except such liabilities or
obligations undertaken in the ordinary course of business; and (iv) there
has
not been any transaction that is material to the Company, except transactions
in
the ordinary course of business or as otherwise disclosed in the Registration
Statement and the Prospectus.
(l) There
is
no document or contract of a character required to be described in the
Registration Statement or the Prospectus or to be filed as an exhibit to
the
Registration Statement that is not described or filed as required. Except
as
otherwise disclosed in the Registration Statement or Prospectus, each document,
instrument, contract and agreement of the Company described in the Registration
Statement or the Prospectus or incorporated by reference therein or listed
as
exhibits to the Registration Statement is in full force and effect and is
valid
and enforceable by and against the Company in accordance with their terms,
assuming the due authorization, execution and delivery thereof by each of
the
other parties thereto. The Company is not, nor to the knowledge of the Company
is any other party, in default in the observance or performance of any term
or
obligation to be performed by it under any such agreement, and no event has
occurred which with notice or lapse of time or both would constitute such
a
default, which default or event would have a Material Adverse Effect. No
default
exists, and no event has occurred which with notice or lapse of time or both
would constitute a default, in the due performance and observance of any
term,
covenant or condition, by the Company of any other agreement or instrument
to
which the Company is a party or by which it or its properties or business
may be
bound or affected, which default or event would have a Material Adverse
Effect.
(m) The
Company is not in violation of any term or provision of its charter or by-laws.
The Company is not in violation of any franchise, license, permit, judgment,
decree, order, statute, rule or regulation, where the consequences of such
violation would have a Material Adverse Effect.
(n) Neither
the execution, delivery and performance of this Agreement by the Company
nor the
consummation of any of the transactions contemplated hereby (including, without
limitation, the issuance and sale by the Company of the Stock) will give
rise to
a right to terminate or accelerate the due date of any payment due under,
or
conflict with or result in the breach of any term or provision of, or constitute
a default (or an event which with notice or lapse of time or both would
constitute a default) under, or require any consent or waiver under, or result
in the execution or imposition of any lien, charge, encumbrance, claim, security
interest, restriction or defect upon any properties or assets of the Company
pursuant to the terms of, any indenture, mortgage, deed of trust or other
agreement or instrument to which the Company is a party or by which the Company
is bound, or any of its properties are bound, or any franchise, license,
permit,
judgment, decree, order, statute, rule or regulation applicable to the Company
or violate any provision of the charter or by-laws of the Company, except
for
such consents or waivers which have already been obtained and are in full
force
and effect.
(o) All
of
the outstanding shares of common stock of the Company have been duly authorized
and validly issued and are fully paid and nonassessable and none of such
shares
were issued in violation of any preemptive or other similar right. The Stock,
when issued and sold pursuant to this Agreement, will be duly authorized
and
validly issued, fully paid and nonassessable and will not be issued in violation
of any preemptive or other similar right. Except as disclosed in the
Registration Statement and the Prospectus, there is no outstanding option,
warrant or other right calling for the issuance of, and there is no commitment,
plan or arrangement to issue, any capital stock of the Company or any security
convertible into or exercisable or exchangeable for such capital stock, except
for standard dividend reinvestment plans. The Stock conforms in all material
respects to all statements relating thereto contained in the Registration
Statement and the Prospectus.
(p) Subsequent
to the respective dates as of which information is given in the Registration
Statement and the Prospectus, except as (x) described or referred to therein,
or
(y) are not material (as to clauses (i) and (ii) only), are consistent with
past
practice (as to clauses (i) and (ii) only), and are publicly disclosed, the
Company has not (i) issued any securities or incurred any liability or
obligation, direct or contingent, except such liabilities or obligations
incurred in the ordinary course of business including, without limitation,
debt
financing to acquire and develop properties, (ii) entered into any transaction
not in the ordinary course of business or (iii) declared or paid any dividend
or
made any distribution on any shares of its capital stock or redeemed, purchased
or otherwise acquired or agreed to redeem, purchase or otherwise acquire
any
shares of its capital stock.
(q) Except
as
disclosed in the Registration Statement and Prospectus, no holder of any
security of the Company has the right, which has not been waived, to have
any
security owned by such holder included in the Registration
Statement.
(r) All
necessary corporate action has been duly and validly taken by the Company
to
authorize the execution, delivery and performance of this Agreement by the
Company. This Agreement has been duly and validly authorized, executed and
delivered by the Company and constitutes and will constitute the legal, valid
and binding obligation of the Company, enforceable against the Company in
accordance with its terms. Except for any “blue sky” filings or Stock Exchange
listing applications to be filed pursuant hereto, each approval, consent,
order,
authorization, designation, declaration or filing by or with any regulatory,
administrative or other governmental body necessary in connection with the
execution and delivery by the Company of this Agreement and the consummation
of
the transactions contemplated hereby and the issuance and sale of the Stock
by
the Company has been obtained or made and is in full force and effect. The
Company will use its commercially reasonable efforts to cause the Stock to
be
listed for trading on the Trading Market. For purposes of this Agreement,
the
“Trading Market” is (i) the New York Stock Exchange, Inc., and (ii) each other
securities exchange or market on which the common stock of the Company trades
or
is admitted for trading.
(s) The
Company has not incurred any liability for a fee, commission or other
compensation on account of the employment of a broker or finder in connection
with the transactions contemplated by this Agreement other than as contemplated
hereby or as described in the Registration Statement.
(t) The
Company is conducting its business in compliance with all applicable laws,
rules
and regulations of the jurisdictions in which it is conducting business,
except
where the failure to be so in compliance would not have a Material Adverse
Effect.
(u) No
transaction has occurred between or among the Company and any of its officers
or
directors or any affiliate or affiliates of any such officer or director
that is
required to be described in and is not described in the Registration Statement
and the Prospectus.
(v) The
Company has not taken, nor will it take, directly or indirectly, any action
designed to or which might reasonably be expected to cause or result in,
or
which has constituted or which might reasonably be expected to constitute,
the
stabilization or manipulation of the price of the common stock of the Company
to
facilitate the sale or resale of any of the Stock.
(w) The
Company has filed all federal, state, local and foreign tax returns that
are
required to be filed through the date hereof (and will file all such tax
returns
when and as required to be filed after the date hereof), or has received
extensions thereof, and has paid all taxes shown on such returns to be due
on or
prior to the date hereof (and will pay all taxes shown on such returns to
be due
after the date hereof) and all assessments received by it to the extent that
the
same are material and have become due except where the failure to file such
a
return or pay such amount would not have a Material Adverse Effect.
(x) The
Company has met the qualification requirements for a “real estate investment
trust” during its taxable years ending December 31, 2004 and,
based on its proposed method of operations, the Company expects to continue
to
meet the requirements for qualification and taxation as a “real estate
investment trust” under the Internal Revenue Code of 1986, as amended (the
“Code”), assuming no change in the applicable underlying law. The Company does
not know of any event that would cause or is likely to cause the Company
to fail
to qualify as a “real estate investment trust” at any time.
(y) The
Company is not an “investment company” within the meaning of the Investment
Company Act of 1940, as amended.
(z) The
Company’s systems of internal accounting controls taken as a whole are
sufficient to meet the broad objectives of internal accounting control insofar
as those objectives pertain to the prevention or detection of errors or
irregularities in amounts that would be material in relation to the Company’s
financial statements; and, to the best of the Company’s knowledge, neither the
Company nor any employee or agent thereof has made any payment of funds of
the
Company or received or retained any funds, and no funds of the Company have
been
set aside to be used for any payment, in each case in violation of any law,
rule
or regulation.
(aa) The
Company is not involved in any labor dispute and, to the knowledge of the
Company, no such dispute has been threatened, except for such disputes as
would
not have a Material Adverse Effect on the Company, or subject the Company
or its
shareholders to any material liability or disability.
(bb) Except
as
disclosed in the Registration Statement or the Prospectus, (i) there has
been no
storage, disposal, generation, manufacture, refinement, transportation, handling
or treatment of toxic wastes, hazardous wastes or hazardous substances by
the
Company or any of its subsidiaries (or to the knowledge of the Company, any
of
their predecessors in interest) at, upon or from any of the property now
or
previously owned or leased by the Company or its subsidiaries in violation
of
any applicable law, ordinance, rule, regulation, order, judgment, decree
or
permit or which would require remedial action under any applicable law,
ordinance, rule, regulation, order, judgment, decree or permit, except for
any
violation or remedial action which would not have a Material Adverse Effect;
(ii) there has been no material spill, discharge, leak, emission, injection,
escape, dumping or release of any kind onto such property or into the
environment surrounding such property of any toxic wastes, solid wastes,
hazardous wastes or hazardous substances due to or caused by the Company
or any
of its subsidiaries, except for any such spill, discharge, leak emission,
injection, escape, dumping or release which would not have a Material Adverse
Effect; and (iii) the terms “hazardous wastes,”“toxic wastes” and “hazardous
substances” shall have the meanings specified in any applicable local, state,
federal and foreign laws or regulations with respect to environmental
protection.
ARTICLE
II.
SALE
AND
DELIVERY OF SECURITIES
2.1 Sale
and
Delivery of Securities.
(a) On
the
basis of the representations, warranties and agreements herein contained,
but
subject to the terms and conditions herein set forth, the Company agrees
to
issue and sell through the Sales Manager, as agent, and the Sales Manager
agrees
to sell, as agent for the Company, on a best efforts basis, up to the Maximum
Amount of the Stock during the term of this Agreement on the terms set forth
herein. The Stock will be sold from time to time as described in the
Registration Statement and Prospectus, in amounts, and subject to price
limitations, as directed by the Company and as agreed to by the Sales Manager.
(b) The
Company or the Sales Manager may, upon notice to the other party hereto by
telephone (confirmed promptly by telecopy), at any time and from time to
time
suspend the offering of Stock; provided,
however,
that
such suspension shall not affect or impair the parties’ respective obligations
with respect to the Stock sold hereunder prior to the giving of such
notice.
(c) The
compensation to the Sales Manager for sales of Stock shall be at the following
commission rates for the shares of Stock sold under this Agreement: 3.0%
of the
gross sales price per share (“sales proceeds”) for the first $25 million of
aggregate sales proceeds raised in each year; 2.5% of sales proceeds for
the
next $25 million of aggregate sales proceeds raised in such year and 2.0%
of
sales proceeds for any additional aggregate sales proceeds raised in such
year.
For purposes of this section 2.1(c), the first year shall end on December
31,
2005 and each subsequent year shall end on the next succeeding December 31.
The
remaining proceeds, after further deduction for any transaction fees imposed
by
any governmental or self-regulatory organization in respect to such sale
shall
constitute the net proceeds to the Company for such Stock (the “Net
Proceeds”).
(d) The
Company shall open and maintain a trading account (the “Trading Account”) at a
clearing agent designated by the Sales Manager to facilitate the transactions
contemplated by this Agreement. The Company shall, with respect to each sale
of
Stock, effect delivery of the applicable number of Stock to the Trading Account,
on or before the third business day (or such other day as is industry practice
for regular-way trading) following each sale of the Stock (each, a “Settlement
Date”). The Net Proceeds from the sale of the Stock shall be available in the
Trading Account following the settlement of the sale on the Settlement Date.
The
Sales Manager’s compensation shall be withheld from the sales proceeds on each
Settlement Date and shall be paid to the Sales Manager.
(e) At
each
Settlement Date, the Company shall be deemed to have affirmed each
representation, warranty, covenant and other agreement contained in this
Agreement. Any obligation of the Sales Manager under this Agreement shall
be
subject to the continuing accuracy of the representations and warranties
of the
Company herein, to the performance by the Company of its obligations hereunder
and to the continuing satisfaction of the additional conditions specified
in
Article IV below.
(f) If
the
Company shall default on its obligation to deliver Stock on any Settlement
Date,
the Company shall (i) hold the Sales Manager harmless against any loss, claim
or
damage arising from or as a result of such default by the Company and (ii)
pay
the Sales Manager any commission to which it would otherwise be entitled
absent
such default.
ARTICLE
III.
COVENANTS
OF THE COMPANY
3.1 The
Company covenants and agrees with the Sales Manager that:
(a) [Intentionally
Omitted]
(b) During
the period in which a prospectus relating to the Stock is required to be
delivered under the Act, the Company will notify the Sales Manager promptly
of
the time when any subsequent amendment to the Registration Statement has
become
effective or any subsequent supplement to the Prospectus has been filed and
of
any request by the Commission for any amendment or supplement to the
Registration Statement or the Prospectus or for additional information; the
Company will prepare and file with the Commission, promptly upon the Sales
Manager’s reasonable request, any amendments or supplements to the Registration
Statement or Prospectus that, in the Sales Manager’s reasonable opinion, may be
necessary or advisable in connection with the sale of the Stock pursuant
to this
Agreement; during the period in which a prospectus relating to the Stock
is
required to be delivered under the Act, the Company will not file any
amendment
or supplement to the Registration Statement or Prospectus (other than a
supplement to the Prospectus that (i) relates solely to the issuance of
securities other than the Stock of the Company and (ii) does not materially
change the information about the Company or its business, operations, properties
or financial condition disclosed in the Registration Statement or Prospectus
previously thereto (an “Excluded Supplement”)) unless a copy thereof has been
submitted to the Sales Manager a reasonable period of time before the filing
and
the Sales Manager has not reasonably objected thereto; and it will cause
any
document that upon filing is deemed to be incorporated by reference in the
Registration Statement or Prospectus to be available on the Company’s website at
xxx.xxxxxxxx.xxx
(and
will furnish to the Sales Manager any such document that is not available
on the
Company’s website). The Company will cause each amendment or supplement to the
Prospectus to be filed with the Commission as required pursuant to the
applicable paragraph of Rule 424(b) of the Rules and Regulations or, in the
case
of any document to be incorporated therein by reference, to be filed with
the
Commission as required pursuant to the Exchange Act, within the time period
prescribed.
(c) The
Company will advise the Sales Manager, promptly after it shall receive notice
or
obtain knowledge thereof, of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement, of the suspension
of
the qualification of the Stock for offering or sale in any jurisdiction,
or of
the initiation or threatening of any proceeding for any such purpose; and
it
will promptly use its commercially reasonable efforts to prevent the issuance
of
any stop order or to obtain its withdrawal if such a stop order should be
issued.
(d) Within
the time during which a prospectus relating to the Stock is required to be
delivered under the Act, the Company will comply with all requirements imposed
upon it by the Act and by the Rules and Regulations, as from time to time
in
force, so far as necessary to permit the continuance of sales of or dealings
in
the Stock as contemplated by the provisions hereof and the Prospectus. If
during
such period any event occurs as a result of which the Prospectus, as then
amended or supplemented, would include an untrue statement of a material
fact or
omit to state a material fact necessary to make the statements therein, in
the
light of the circumstances then existing, not misleading, or if during such
period it is necessary to amend or supplement the Registration Statement
or
Prospectus to comply with the Act, the Company will promptly notify the Sales
Manager to suspend the offering of Stock during such period and the Company
will
amend or supplement the Registration Statement or Prospectus (at the expense
of
the Company) so as to correct such statement or omission or effect such
compliance and will use its commercially reasonable efforts to have any
amendment or supplement to the Registration Statement or Prospectus declared
effective as soon as possible, unless the Company has reasonable business
reasons to defer public disclosure of the relevant information.
(e) The
Company will use its commercially reasonable efforts to qualify the Stock
for
sale under the securities laws of such jurisdictions as the Sales Manager
designates and to continue such qualifications in effect so long as required
for
the sale of the Stock, except that the Company shall not be required in
connection therewith to qualify as a foreign corporation or to execute a
general
consent to service of process in any jurisdiction.
(f) The
Company will furnish to the Sales Manager and its legal counsel (at the expense
of the Company) copies of the Registration Statement and the Prospectus during
the period in which a prospectus relating to the Stock is required to be
delivered under the Act, in each case as soon as available and in such
quantities as the Sales Manager may from time to time reasonably request
and, in
the case when the Trading Market is a national securities exchange, the Company
will also furnish copies of the Prospectus to such exchange in accordance
with
Rule 153 of the Rules and Regulations.
(g) The
Company will make generally available to its security holders as soon as
practicable, but in any event not later than 15 months after the end of the
Company’s current fiscal quarter, an earnings statement (which need not be
audited) covering a 12-month period that satisfies the provisions of Section
11(a) of the Act and Rule 158 of the Rules and Regulations.
(h) The
Company, whether or not the transactions contemplated hereunder are consummated
or this Agreement is terminated, will pay all of its expenses incident to
the
performance of its obligations hereunder (including, but not limited to,
any
transaction fees imposed by any governmental or self-regulatory organization
with respect to transactions contemplated by this Agreement and any blue
sky
fees) and will pay the expenses of printing all documents relating to the
offering. The Company will reimburse the Sales Manager for its reasonable
fees
and disbursements of its legal counsel incurred in connection with entering
into
this Agreement. In addition, without limiting the foregoing, the Company
will
pay, or reimburse the Sales Manager for, any filing fees incurred by the
Sales
Manager in connection with filings required to be made by the Sales Manager
under NASD Rule 2710, the Corporate Financing Rule.
(i) The
Company shall use its commercially reasonable efforts to list, subject to
notice
of issuance, the Stock on each applicable Trading Market.
(j) The
Company will apply the Net Proceeds from the sale of the Stock as set forth
in
the Prospectus.
(k) The
Company will not, directly or indirectly, offer or sell any shares of common
stock (other than the Stock) or securities convertible into or exchangeable
for,
or any rights to purchase or acquire, common stock, during the period from
the
date of this Agreement through the final Settlement Date for the sale of
Stock
hereunder without (i) giving the Sales Manager at least one business day
prior
written notice specifying the nature of the proposed sale and the date of
such
proposed sale and (ii) suspending activity under this program for such period
of
time as may reasonably be determined by agreement of the Company and the
Sales
Manager; provided,
however,
that no
such notice and suspension shall be required in connection with the Company’s
issuance or sale of (i) shares of common stock pursuant to any employee or
director stock option or benefits plan, stock ownership plan, dividend
reinvestment plan, as such plans may be adopted or amended from time to time,
and (ii) common stock issuable upon conversion of securities or the exercise
of
warrants, options or other rights in effect or outstanding on the date hereof.
Notwithstanding the foregoing, this paragraph (k) shall not apply during
periods
that the Company is neither selling Stock through the Sales Manager nor has
requested the Sales Manager to sell Stock.
(l) The
Company will, at any time during the term of this Agreement, as supplemented
from time to time, advise the Sales Manager immediately after it shall have
received notice or obtain knowledge thereof, of any information or fact that
would alter or affect any opinion, certificate, letter and other document
provided to the Sales Manager pursuant to Article IV below.
(m) Each
time
that the Registration Statement or the Prospectus shall be amended or
supplemented (other than an Excluded Supplement) and on the dates specified
in
Section 4.1(f) below, the Company shall (unless the Company is not then selling
Stock through the Sales Manager and has not requested the Sales Manager to
sell
Stock) furnish or cause to be furnished to the Sales Manager forthwith a
certificate dated the date of filing with the Commission of such amendment,
supplement or other document, the date of effectiveness of amendment, as
the
case may be, in form satisfactory to the Sales Manager to the effect that
the
statements contained in the certificates referred to in Section 4.1(f) below
that were last furnished to the Sales Manager are true and correct at the
time
of such amendment, supplement, filing, as the case may be, as though made
at and
as of such time (except that such statements shall be deemed to relate to
the
Registration Statement and the Prospectus as amended and supplemented to
such
time) or, in lieu of such certificates, certificates of the same tenor as
the
certificates referred to in said Section 4.1(f) below, modified as necessary
to
relate to the Registration Statement and the Prospectus as amended and
supplemented to the time of delivery of such certificate.
(n) Each
time
that a post-effective amendment to the Registration Statement is declared
effective or the Company files a Form 10-K, and at such other times as may
be
reasonably requested by the Sales Manager, the Company shall (unless the
Company
is not then selling Stock through the Sales Manager and has not requested
the
Sales Manager to sell Stock) furnish or cause to be furnished forthwith to
the
Sales Manager and to its legal counsel, a written opinion of Hunton &
Xxxxxxxx LLP, counsel to the Company (“Company Counsel”), or other counsel
reasonably satisfactory to the Sales Manager, dated the date of effectiveness
of
such amendment or the date of filing with the Commission of such document,
as
the case may be, in form and substance satisfactory to the Sales Manager,
of the
same tenor as the opinion referred to in Section 4.1(d) below, but modified
as
necessary to relate to the Registration Statement and the Prospectus as amended
and supplemented to the time of delivery of such opinion.
(o) Each
time
that the Registration Statement or the Prospectus shall be amended or
supplemented (other than an Excluded Supplement or in connection with the
filing
or furnishing of any Form 10-Q or Form 8-K incorporated by reference therein)
to
include additional financial information, the Company shall (unless the Company
is not then selling Stock through the Sales Manager and has not requested
the
Sales Manager to sell Stock) cause Ernst & Young, LLP, or other independent
accountants then retained by the Company, forthwith to furnish to the Sales
Manager a letter, dated the date of effectiveness of such amendment, or the
date
of filing of such supplement or other document with the Commission, as the
case
may be, in form satisfactory to the Sales Manager, of the same tenor as the
letter referred to in Section 4.1(e) below but modified to relate to the
Registration Statement and the Prospectus, as amended and supplemented to
the
date of such letter.
ARTICLE
IV.
CONDITIONS
OF THE SALES MANAGER’S OBLIGATIONS
4.1 The
obligations of the Sales Manager to sell the Stock as provided herein shall
be
subject to the accuracy, as of the date hereof, and as of each Settlement
Date
contemplated under this Agreement, of the representations and warranties
of the
Company herein, to the performance by the Company of its obligations hereunder
and to the following additional conditions:
(a) The
Registration Statement contemplated by Section 3.1(a) above shall have been
declared effective. 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 the Sales
Manager, threatened by the Commission, and any request of the Commission
for
additional information (to be included in the Registration Statement or the
Prospectus or otherwise) shall have been complied with to the Sales Manager’s
reasonable satisfaction.
(b) The
Sales
Manager shall not have advised the Company that the disclosures in the
Registration Statement or the Prospectus are not reasonably acceptable to
the
Sales Manager.
(c) Except
as
contemplated in the Prospectus, subsequent to the respective dates as of
which
information is given in the Registration Statement and the Prospectus, there
shall not have been any material adverse change in the capital stock of the
Company, or any material adverse change, or any development that may reasonably
be expected to cause a material adverse change, in the financial condition,
business, net worth or results of operations of the Company, or any adverse
change in the rating assigned to any securities of the Company.
(d) (1)The
Sales
Manager shall have received at the date of the first sale of Stock hereunder
(the “Commencement Date”) and at every other date specified in Section 3.1(n)
above, opinions of Company Counsel, dated as of the Commencement Date and
dated
as of such other date, in the form of Schedule A hereto.
(2) The
Sales
Manager shall have received a letter from Company Counsel authorizing the
Sales
Manager to rely on the opinion on tax matters delivered by Company Counsel
as
Exhibit 8.1 to the Registration Statement.
(e) At
the
Commencement Date and at such other dates specified in Section 3.1(o) above,
the
Sales Manager shall have received a “comfort letter” from Ernst & Young,
LLP, independent public accountants for the Company, or other independent
accountants then retained by the Company, dated the date of delivery thereof,
in
form and substance satisfactory to the Sales Manager.
(f) The
Sales
Manager shall have received from the Company a certificate, or certificates,
signed by the Chief Financial Officer and President or Chief Executive Officer
or any Vice President of the Company, dated as of the Commencement Date and
(unless the Company is not then selling Stock through the Sales Manager and
has
not requested the Sales Manager to sell Stock) dated as of the first business
day of each calendar month thereafter (each, a “Certificate Date”), to the
effect that, to the best of their knowledge based upon reasonable
investigation:
(i) The
representations and warranties of the Company in this Agreement are true
and
correct, as if made at and as of the Commencement Date or the Certificate
Date
(as the case may be), and the Company has complied with all the agreements
and
satisfied all the conditions on its part to be performed or satisfied at
or
prior to the Commencement Date and each such Certificate Date (as the case
may
be);
(ii) No
stop
order suspending the effectiveness of the Registration Statement has been
issued, and no proceeding for that purpose has been instituted or, to the
knowledge of such officer after due inquiry, is threatened, by the
Commission;
(iii) Since
the
date of this Agreement there has occurred no event required to be set forth
in
an amendment or supplement to the Registration Statement or Prospectus that
has
not been so set forth and there has been no document required to be filed
under
the Exchange Act and the rules and regulations of the Commission thereunder
that
upon such filing would be deemed to be incorporated by reference in the
Prospectus that has not been so filed; and
(iv) Since
the
date of this Agreement, there has not been any material adverse change in
the
assets or properties, business, results of operations, or financial condition
of
the Company, which has not been described in an amendment or supplement to
the
Registration Statement or Prospectus (directly or by
incorporation).
(g) The
Sales
Manager’s participation in the distribution of Stock contemplated by this
Agreement shall have been reviewed and found acceptable by the NASD pursuant
to
NASD Rule 2710 (Corporate Financing Rule).
All
such
opinions, certificates, letters and other documents will be in compliance
with
the provisions hereof only if they are reasonably satisfactory in form and
substance to the Sales Manager. The Company will furnish the Sales Manager
with
such conformed copies of such opinions, certificates, letters and other
documents, as the Sales Manager shall reasonably request.
ARTICLE
V.
INDEMNIFICATION
AND CONTRIBUTION
5.1 (a) The
Company agrees to indemnify and hold harmless the Sales Manager and each
person,
if any, who controls the Sales Manager within the meaning of Section 15 of
the
Act or Section 20 of the Exchange Act, as follows:
(i) against
any and all loss, liability, claim, damage and expense whatsoever, as incurred,
arising out of any untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement (or any amendment thereto),
or the
omission or alleged omission therefrom of a material fact required to be
stated
therein or necessary to make the statements therein not misleading or arising
out of any untrue statement or alleged untrue statement of a material fact
contained in any preliminary prospectus or the Prospectus (or any amendment
or
supplement thereto) or the omission or alleged omission therefrom of a material
fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(ii) against
any and all loss, liability, claim, damage and expense whatsoever, as incurred,
to the extent of the aggregate amount paid in settlement of any litigation,
or
any investigation or proceeding by any governmental agency or body, commenced
or
threatened, or of any claim whatsoever based upon any such untrue statement
or
omission, or any such alleged untrue statement or omission, if such settlement
is effected with the written consent of the Company; and
(iii) against
any and all expense whatsoever, as incurred (including, subject to Section
5.1(c) below, the reasonable fees and disbursements of legal counsel chosen
by
the Sales Manager), reasonably incurred in investigating, preparing or defending
against any litigation, or any investigation or proceeding by any governmental
agency or body, commenced or threatened, or any claim whatsoever based upon
any
such untrue statement or omission, or any such alleged untrue statement or
omission, to the extent that any such expense is not paid under (i) or (ii)
above;
provided,
however,
that
this indemnity agreement shall not apply to any loss, liability, claim, damage
or expense to the extent arising out of any untrue statement or omission
or
alleged untrue statement or omission made in reliance upon and in conformity
with written information furnished to the Company by the Sales Manager expressly
for use in the Registration Statement (or any amendment thereto) or any
preliminary prospectus or the Prospectus (or any amendment or supplement
thereto).
(b) The
Sales
Manager agrees to indemnify and hold harmless the Company and its directors
and
each officer of the Company who signed the Registration Statement, and each
person, if any, who controls the Company within the meaning of Section 15
of the
Act or Section 20 of the Exchange Act against any and all loss, liability,
claim, damage and expense described in the indemnity contained in Section
5.1(a)
above, as incurred, but only with respect to untrue statements or omissions,
or
alleged untrue statements or omissions, made in the Registration Statement
(or
any amendments thereto) or any preliminary prospectus or the Prospectus (or
any
amendment or supplement thereto) in reliance upon and in conformity with
written
information furnished to the Company by the Sales Manager expressly for use
in
the Registration Statement (or any amendment thereto) or such preliminary
prospectus or the Prospectus (or any amendment or supplement thereto). The
total
liability of the Sales Manager under this Section 5.1(b) shall not exceed
the
total actual sales price of Stock sold by the Sales Manager that is the subject
of the dispute.
(c) Any
indemnified party that proposes to assert the right to be indemnified under
this
Article V will, promptly after receipt of notice of commencement of any action
against such party in respect of which a claim is to be made against an
indemnifying party or parties under this Article V, notify each such
indemnifying party of the commencement of such action, enclosing a copy of
all
papers served, but the omission so to notify such indemnifying party will
not
relieve the indemnifying party from any liability that it might have to any
indemnified party to the extent it is not materially prejudiced as a result
thereof. If any such action is brought against any indemnified party and
it
notifies
the
indemnifying party of its commencement, the indemnifying party will be entitled
to participate in and, to the extent that it elects by delivering written
notice
to the indemnified party promptly after receiving notice of the commencement
of
the action from the indemnified party, jointly with any other indemnifying
party
similarly notified, to assume the defense of the action, with legal counsel
reasonably satisfactory to the indemnified party, and after notice from the
indemnifying party to the indemnified party of its election to assume the
defense, the indemnifying party will not be liable to the indemnified party
for
any legal or other expenses except as provided below. The indemnified party
will
have the right to employ its own legal counsel in any such action, but the
fees,
expenses and other charges of such legal counsel will be at the expense of
such
indemnified party unless (1) the employment of legal counsel by the indemnified
party has been authorized in writing by the indemnifying party, (2) the
indemnified party has reasonably concluded (based on the written advice of
legal
counsel) that there may be legal defenses available to it or other indemnified
parties that are different from or in addition to those available to the
indemnifying party, (3) a conflict or potential conflict exists (based on
the
written advice of legal counsel to the indemnified party) between the
indemnified party and the indemnifying party (in which case the indemnifying
party will not have the right to direct the defense of such action on behalf
of
the indemnified party) or (4) the indemnifying party has not in fact employed
legal counsel to assume the defense of such action within a reasonable time
after receiving notice of the commencement of the action, in each of which
cases
the reasonable fees, disbursements and other charges of legal counsel will
be at
the expense of the indemnifying party or parties. It is understood that the
indemnifying party or parties shall not, in connection with any proceeding
or
related proceedings in the same jurisdiction, be liable for the reasonable
fees,
disbursements and other charges of more than one separate firm admitted to
practice in such jurisdiction at any one time for all such indemnified party
or
parties. All such fees, disbursements and other charges will be reimbursed
by
the indemnifying party promptly as they are incurred. An indemnifying party
will
not be liable for any settlement of any action or claim effected without
its
written consent (which consent will not be unreasonably withheld).
(d) In
order
to provide for just and equitable contribution in circumstances in which
the
indemnification provided for in the foregoing paragraphs of this Article
V is
applicable in accordance with its terms but for any reason is held to be
unavailable from the Company or the Sales Manager, the Company and the Sales
Manager will contribute to the total losses, claims, liabilities, expenses
and
damages (including any investigative, legal and other expenses reasonably
incurred in connection with, and any amount paid in settlement of, any action,
suit or proceeding or any claim asserted, but after deducting any contribution
received by the Company from persons other than the Sales Manager, such as
persons who control the Company within the meaning of the Act, officers of
the
Company who signed the Registration Statement and directors of the Company,
who
also may be liable for contribution) to which the Company and the Sales Manager
may be subject in such proportion as shall be appropriate to reflect the
relative benefits received by the Company on the one hand and the Sales Manager
on the other. The relative benefits received by the Company on the one hand
and
the Sales Manager on the other hand 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 compensation (before deducting expenses)
received by the Sales Manager from the sale of Stock on behalf of the Company.
If, but only if, the allocation provided by the foregoing sentence is not
permitted by applicable law, the allocation of contribution shall be made
in
such proportion as is appropriate to reflect not only the relative benefits
referred to in the foregoing sentence but also the relative
fault
of
the Company, on the one hand, and the Sales Manager, on the other, with respect
to the statements or omission which resulted in such loss, claim, liability,
expense or damage, or action in respect thereof, as well as any other relevant
equitable considerations with respect to such offering. Such relative fault
shall be determined by reference to whether the untrue or alleged untrue
statement of a material fact or omission or alleged omission to state a material
fact relates to information supplied by the Company or the Sales Manager,
the
intent of the parties and their relative knowledge, access to information
and
opportunity to correct or prevent such statement or omission. The Company
and
the Sales Manager agree that it would not be just and equitable if contributions
pursuant to this Section 5.1(d) were to be determined by pro rata allocation
or
by any other method of allocation, which does not take into account, the
equitable considerations referred to herein. The amount paid or payable by
an
indemnified party as a result of the loss, claim, liability, expense or damage,
or action in respect thereof, referred to above in this Section 5.1(d) shall
be
deemed to include, for the purpose of this Section 5.1(d), any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
foregoing provisions of this Section 5.1(d), the Sales Manager shall not
be
required to contribute any amount in excess of the amount by which the total
actual sales price at which Stock sold by the Sales Manager exceeds the amount
of any damages that the Sales Manager has otherwise been required to pay
by
reason of such untrue or alleged untrue statement or omission or alleged
omission and no person found guilty of fraudulent misrepresentation (within
the
meaning of Section 11(f) of the Act) will be entitled to contribution from
any
person who was not guilty of such fraudulent misrepresentation. For purposes
of
this Section 5.1(d), any person who controls a party to this Agreement within
the meaning of the Act will have the same rights to contribution as that
party,
and each officer and director of the Company who signed the Registration
Statement will have the same rights to contribution as the Company, subject
in
each case to the provisions hereof. Any party entitled to contribution, promptly
after receipt of notice of commencement of any action against such party
in
respect of which a claim for contribution may be made under this Section
5.1(d),
will notify any such party or parties from whom contribution may be sought,
but
the omission so to notify will not relieve that party or parties from whom
contribution may be sought from any other obligation it or they may have
under
this Section 5.1(d). No party will be liable for contribution with respect
to
any action or claim settled without its written consent (which consent will
not
be unreasonably withheld).
(e) The
indemnity and contribution provided by this Article V shall not relieve the
Company and the Sales Manager from any liability the Company and the Sales
Manager may otherwise have (including, without limitation, any liability
the
Sales Manager may have for a breach of its obligations under Article II
above).
ARTICLE
VI.
REPRESENTATIONS
AND AGREEMENTS TO SURVIVE DELIVERY
6.1 All
representations, warranties and agreements of the Company herein or in
certificates delivered pursuant hereto, and the agreements of the Sales Manager
contained in Article V above, shall remain operative and in full force and
effect regardless of any investigation made by or on behalf of the Sales
Manager
or any controlling persons, or the Company (or any of their officers, directors
or controlling persons), and shall survive delivery of and payment for the
Stock.
ARTICLE
VII.
TERMINATION
7.1 The
Company shall have the right, by giving notice as hereinafter specified,
to
terminate this Agreement in its sole discretion at any time. Any such
termination shall be without liability of any party to any other party except
that the provisions of Section 3.1(h), Article V and Article VI above shall
remain in full force and effect notwithstanding such termination.
7.2 The
Sales
Manager shall have the right, by giving notice as hereinafter specified,
to
terminate this Agreement in its sole discretion at any time. Any such
termination shall be without liability of any party to any other party except
that the provisions of Section 3.1(h), Article V and Article VI above shall
remain in full force and effect notwithstanding such termination.
7.3 This
Agreement shall remain in full force and effect unless terminated pursuant
to
Sections 7.1 or 7.2 above or otherwise by mutual agreement of the parties;
provided that any such termination by mutual agreement shall in all cases
be
deemed to provide that Section 3.1(h), Article V and Article VI above shall
remain in full force and effect.
7.4 Any
termination of this Agreement shall be effective on the date specified in
such
notice of termination; provided that such termination shall not be effective
until the close of business on the date of receipt of such notice by the
Sales
Manager or the Company, as the case may be. If such termination shall occur
during a period when sales of Stock are being made pursuant to this Agreement,
any sales of Stock made prior to the termination of this Agreement shall
settle
in accordance with the provisions of this Agreement.
ARTICLE
VIII.
NOTICES
8.1 All
notices or communications hereunder shall be in writing and if sent to the
Sales
Manager shall be mailed, delivered or telecopied and confirmed to the Sales
Manager at Xxxxxxx Xxxxxxx Securities Corporation, 000 Xxxxxxx Xxxxxx,
0xx
Xxxxx,
Xxx Xxxx, Xxx Xxxx 00000, facsimile number (000) 000-0000, Attention: Corporate
Finance, or if sent to the Company, shall be mailed, delivered or telecopied
and
confirmed to the Company at 000 Xxxxxx Xxxx, Xxx Xxxx, XX 00000, Attention:
General Counsel; facsimile number 000-000-0000. Each party to this Agreement
may
change such address for notices by sending to the parties to this Agreement
written notice of a new address for such purpose.
ARTICLE
IX.
MISCELLANEOUS
9.1 This
Agreement shall inure to the benefit of and be binding upon the Company and
the
Sales Manager and their respective successors and the controlling persons,
officers and directors referred to in Article V above, and no other person
will
have any right or obligation hereunder.
9.2 This
Agreement constitutes the entire agreement and supersedes all other prior
and
contemporaneous agreements and undertakings, both written and oral, between
the
parties hereto with regard to the subject matter hereof.
9.3 THIS
AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL
LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS
OF
LAWS.
9.4 This
Agreement may be executed in two or more counterparts, each of which shall
be
deemed an original, but all of which together shall constitute one and the
same
instrument. The parties agree that this Agreement will be considered signed
when
the signature of a party is delivered by facsimile transmission. Such facsimile
transmission shall be treated in all respects as having the same effect as
an
original signature.
IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective authorized officers as of the date
hereof.
CAPITAL
LEASE FUNDING, INC.
By:
/s/
Xxxx
X. XxXxxxxx
Name:
Xxxx X. XxXxxxxx
Title:
Chief Executive Officer
XXXXXXX XXXXXXX SECURITIES
CORPORATION
By:
/s/
Xxxxx
X’Xxxxx
Name:
Xxxxx X’Xxxxx
Title:
Vice President
SCHEDULE
1.1(f)
List
of
Significant Subsidiaries
Caplease,
LP
Caplease
Credit LLC
CLF
0000
Xxxxxxxxx Xxxxxx LLC
EVA
LLC
Caplease
CDO 2005-1, Ltd.
Schedule
A
Form
of Legal Opinion
_________
___, 2005
Xxxxxxx
Xxxxxxx Securities Corporation
000
Xxxxxxx Xxxxxx, 0xx Xxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Gentlemen:
We
have
acted as counsel to Capital Lease Funding, Inc., a Maryland corporation (the
“Company”), in connection with the negotiation of the Sales Agreement dated as
of [Date of Execution] between the Company and you (the “Agreement”) in
connection with the issuance and sale by the Company to you of up to 2,260,000
shares (the “Shares”) of common stock, $0.01 par value per share (the “Common
Stock”), of the Company.
This
opinion is being furnished to you at the request of the Company pursuant
to
Section 4.1(d) of the Agreement. Capitalized terms used herein and not otherwise
defined shall have the meanings ascribed to such terms in the
Agreement.
In
connection with the foregoing, we have examined the following
documents:
(i) the
Company’s Registration Statement on Form S-3 (Commission File No. ), as declared
effective on , 2005 (the “Registration Statement”) by the Securities and
Exchange Commission (the “Commission”) under the Securities Act of 1933, as
amended (the “Act”);
(ii) the
prospectus dated , 2005 (the “Base Prospectus”), and prospectus supplement
relating to the Shares dated , 2005 (the “Prospectus Supplement” and together
with the Base Prospectus, the “Prospectus”), as filed with the Commission on ,
2005 under Rule 424(b) of the Act;
(iii) the
Company’s Amended and Restated Articles of Incorporation filed with the State
Department of Assessments and Taxation of the State of Maryland (the “SDAT”) on
, 2004 (the “Charter”);
(iv) the
Company’s Amended and Restated Bylaws, certified as of the date hereof by the
Secretary of the Company (the “Bylaws”);
(v) the
Agreement;
(vi) the
resolutions adopted at a meeting of the Board of Directors of the Company
on
March 22, 2005, certified as of the date hereof by the Secretary of the Company
(the “Resolutions”); and
(vii) the
certificate of the SDAT, dated as of , 2005, as to the due formation and
existence and good standing of the Company (the “SDAT
certificate”).
In
addition to our examination of the documents referred to above, we also have
examined originals or reproductions or certified copies of certain corporate
records of the Company and its subsidiaries and such other records, certificates
and documents as we have deemed necessary or appropriate to enable us to
express
the opinions hereinafter set forth. In these examinations and for purposes
of
the opinions expressed below, we have assumed (i) the authenticity of all
documents submitted to us as originals, (ii) the conformity to the originals
of
all documents submitted as certified or photostatic copies and the authenticity
of the originals of such documents, (iii) due authorization, execution and
delivery of all documents by all parties other than the Company and the
validity, binding effect and enforceability thereof (other than the validity
and
binding effect thereof on the Company), (iv) the full legal capacity of all
individuals signing documents, and (v) the genuineness of all signatures.
With
respect to the opinion in paragraph 6 below, we also have assumed that the
issuance of the Shares will not violate the ownership limitations set forth
in
the Charter.
As
to
factual matters, we have relied upon representations made in the Agreement,
upon
certificates of officers of the Company and upon certificates and verbal
advice
of public officials. Whenever a statement herein is qualified by “to our
knowledge,”“known to us” or a similar phrase, it refers to the actual knowledge
of the attorneys of this firm involved in the representation of the Company
in
connection with this Agreement without independent investigation. For the
purpose of rendering this opinion, we have made additional legal and factual
inquiries as we deemed necessary under the circumstances.
With
respect to the opinions set forth below, we have further assumed that the
Company will have a sufficient number of shares of Common Stock authorized
for
issuance under its Charter from time to time to accommodate the issuances
contemplated by the Agreement.
Based
upon the foregoing without further investigation, and subject to the assumptions
and qualifications set forth herein, and with due regard to such legal
considerations as we deem relevant, we are of the opinion that:
1. The
Company has been duly incorporated and is validly existing as a corporation
under the laws of the State of Maryland, is in good standing with the SDAT.
The
Company has all requisite corporate power and authority to conduct its business
as described in the Registration Statement and Prospectus and to execute
and
deliver the Agreement.
2. The
issuance of the Shares has been duly authorized and, when issued and delivered
by the Company pursuant to the Agreement, the Charter and the Resolutions
against payment of the consideration therefor, will be fully paid and
nonassessable. The shareholders of the Company have no preemptive rights
with
respect to the Shares pursuant to the Charter, Bylaws or the Maryland REIT
Law.
To our knowledge, the issuance of the Shares to be sold by the Company under
the
Agreement is not subject to preemptive or other similar rights, or any
restriction upon the voting or transfer thereof, pursuant to any agreement
to
which the Company or any of its subsidiaries is a party or by which any of
them
may be bound.
3. The
Shares have been approved for listing, subject to official notice of issuance,
on the New York Stock Exchange.
4. The
information contained in the Registration Statement under the captions
“Description of Common Stock,”“Certain Provisions of Maryland Law and of Our
Charter and Bylaws,”“Restrictions on Ownership” and “Federal Income Tax
Consequences of our Status as a REIT,” in each case to the extent that such
information constitutes a statement of law or legal conclusions, has been
reviewed by us and is correct in all material respects.
5. The
Agreement has been duly authorized, executed and delivered by the
Company.
6. The
execution and delivery of the Agreement by the Company and the issuance of
the
Shares in accordance with the terms of the Agreement will not result in a
breach
or violation of the terms and provisions of any agreement filed by the Company
as an exhibit to its Annual Report on Form 10-K for the year ended December
31,
200_, except for the breaches or defaults that would not in the aggregate
have a
Material Adverse Effect on the Company, nor violate the Charter or Bylaws
or the
Maryland General Corporation Law.
7. Except
for filings, registrations, qualifications, permits and similar authorizations
required under any state securities or “blue sky” laws (as to which we express
no opinion), no consent, waiver, approval, authorization or other order of
any
regulatory body, administrative agency or other governmental body is legally
required for the issuance or sale of the Shares by the Company pursuant to
the
terms of the Agreement.
8. To
our
knowledge, there are no actions, suits or proceedings pending or threatened
against the Company or any of its officers in their capacity as such, before
or
by any federal or Maryland court, commission or regulatory body having
jurisdiction over the Company, wherein an unfavorable ruling, decision or
finding might have a Material Adverse Effect on the Company.
9. The
Company is not an “investment company,” as such term is defined in the
Investment Company Act of 1940, as amended.
We
have
been advised by the staff of the Commission that the Registration Statement
was
declared effective under the Act by the Commission on , 2005. To our knowledge,
no stop or other order suspending the effectiveness of the Registration
Statement has been issued and not withdrawn and no proceedings for that purpose
have been instituted or are pending or contemplated under the Act or under
the
securities laws of any jurisdiction.
We
have
participated in various conferences with officers of the Company. At those
conferences, the affairs of the Company and the contents of the Registration
Statement and Prospectus were discussed and revised. Because of the inherent
limitations in the independent verification of factual matters, and the
character of determinations involved in the preparation of registration
statements under the Act, we are not passing upon, and do not assume any
responsibility for, and make no representation that we have independently
verified, the accuracy, completeness or fairness of the statements contained
or
incorporated by reference in the Registration Statement or the Prospectus.
Also,
we do not express any opinion or belief as to any information furnished in
writing by you expressly for use in the Registration
Statement
or Prospectus. However, subject to the foregoing, on the basis of our
participation in the conferences referred to above and our examination of
the
documents referred to herein, we advise you that (a) the Registration Statement
as of its effective date and the Prospectus as of its date and as of the
date
hereof (other than the financial statements and related schedules and other
financial, statistical and operating data contained or required to be contained
therein as to which we express no belief) appeared on their faces to be
appropriately responsive in all material respects to the requirements of
the Act
and the rules and regulations of the Commission thereunder; (b) the documents
incorporated by reference in the Registration Statement or Prospectus (other
than the financial statements and related schedules and other financial,
statistical and operating data contained or required to be contained therein
as
to which we express no belief) when they were filed with the Commission appeared
on their faces to be appropriately responsive in all material respects to
the
requirements of the Exchange Act and the rules and regulations of the Commission
thereunder; and (c) nothing has come to our attention that leads us to believe
that (i) the Registration Statement, as of its effective date (other than
the
financial statements and related schedules and other financial, statistical
and
operating data included or required to be included therein as to which we
express no belief), contained any untrue statement of a material fact or
omitted
to state any material fact required to be stated therein or necessary to
make
the statements therein not misleading or (ii) the Prospectus, as of its date
(other than the financial statements and related schedules and other financial,
statistical and operating data included or required to be included therein
as to
which we express no belief), contained or contains any untrue statement of
a
material fact or omitted or omits to state any material fact necessary in
order
to make the statements therein, in the light of the circumstances under which
they were made, not misleading.
We
do not
purport to express any opinion as to the effect of the laws of any jurisdiction
other than the applicable Federal laws of the United States of America and
the
Maryland REIT Law, and we assume no responsibility as to the applicability
thereto, or the effect thereon, of the laws of any other
jurisdiction.
The
opinions set forth in paragraph 1 of this opinion with respect to good standing
and existence are based solely on the SDAT Certificate.
This
opinion is rendered to you solely in connection with the Agreement and may
not
be used or relied upon by any other person or for any other purpose, nor
may
this opinion or any copies thereof be furnished to a third party, filed with
a
governmental agency, quoted, cited or otherwise referred to without our prior
written consent. This letter is limited to the matters stated herein and
no
opinion is implied or may be inferred beyond the matters expressly stated.
This
opinion is given as of the date hereof, and we assume no obligation to advise
you after the date hereof of facts or circumstances that come to our attention
or changes in the law that occur which could affect the opinions contained
herein.
Very
truly yours,
