1
EXHIBIT 1.2
2,300,000 Shares
COMMERCIAL NET LEASE REALTY, INC.
Common Stock
UNDERWRITING AGREEMENT
February 13, 1997
XXXXX XXXXXX INC.
THE XXXXXXXX-XXXXXXXX COMPANY, INC.
c/o XXXXX XXXXXX INC.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Commercial Net Lease Realty, Inc., a Maryland corporation (the
"Company"), proposes to issue and sell an aggregate of 2,300,000 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
345,000 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 the
several Underwriters 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 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
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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(b) Registration Statement"), then any reference herein
to the Registration Statement shall also be deemed to include such Rule 462(b)
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 $14.335 per
Share; provided, that the purchase price for sales of 10,000 or more Shares to
a single purchaser will be $14.825 per Share (collectively, 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 aggregate proceeds to the Company are
expected to equal $33,039,500.
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
345,000 Additional Shares. Additional Shares may be purchased only for the
purpose of
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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 the Underwriters 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
Xxxxx Xxxxxx Inc. 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 their 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 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, at 10:00
A.M., New York City time, on February 19, 1997 (the "Closing Date"). The place
of closing for the Firm Shares and the Closing Date may be varied by agreement
between the Underwriters 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
Xxxxx Xxxxxx Inc. 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 the Underwriters 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 the Underwriters shall request prior to 9:30 A.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 the
Underwriters 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 the Underwriters on the Closing Date or the Option Closing Date,
as the case may be, against payment of the purchase price therefor by wire
transfer of immediately available funds to an account designated in writing by
the Company.
5. Agreements of the Company. The Company agrees with the
several Underwriters as follows:
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(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 the Underwriters promptly and, if requested by
the Underwriters, will confirm such advice in writing, when such post-effective
amendment has become effective.
(b) The Company will advise the Underwriters promptly and, if
requested by the Underwriters, 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 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 the Underwriters, without charge,
(i) seven 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 the Underwriters may request,
(iii) such number of copies of the Incorporated Documents, without exhibits, as
the Underwriters may request, and (iv) seven 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 the Underwriters
shall not previously have been advised or to which, after the Underwriters
shall have received a copy of the document proposed to be filed, the
Underwriters 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.
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(e) Prior to the execution and delivery of this Agreement, the
Company has delivered to the Underwriters, without charge, in such quantities
as the Underwriters 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 the Underwriters 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 the Underwriters agree that the Prospectus should be
amended or supplemented, the Company, if requested by the Underwriters, 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 the Underwriters 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
the Underwriters 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 12-month period commencing after the effective date of this Agreement and
ending not later than 15 months
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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 the Underwriters (i) as soon as available, if requested, 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 the
Underwriters 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 the Underwriters
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
Underwriters for all out-of-pocket expenses (including fees and expenses of
counsel for the Underwriters) incurred by the Underwriters 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 the
Underwriters 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 the Underwriters "lock-up"
letters, in form and substance satisfactory to the Underwriters, 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.
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(q) The Company will comply and will use its best efforts to 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 (a "REIT") 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.
(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, to the best of the Company's knowledge, 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 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
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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. 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
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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, 1996, 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
their 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 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
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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 and the Incorporated Documents 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
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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 (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
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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.
(v) 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
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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) To the best of the Company's knowledge, the Company,
its subsidiaries, the Properties, the Acquisition Properties and the operations
conducted thereon comply and heretofore have complied with all applicable
Environmental Laws, except as disclosed in the Environmental Reports (defined
below) and not likely to have a material adverse effect on the relevant
Property or Acquisition Property.
(ii) 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.
(iii) 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.
(iv) 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.
(v) To the best of the Company's knowledge, the Properties and the
Acquisition Properties are not included or 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.
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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
C 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 REIT 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
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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 the Underwriters 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 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
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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 any Underwriter 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 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
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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.
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(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 the Underwriters; 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 the Underwriters; 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 the satisfaction of the Underwriters.
(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 the opinion of the 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
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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 the opinion of the Underwriters,
adversely affect the market for the Shares.
(c) The Underwriters 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 the 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 and, to the knowledge of such counsel, 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;
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(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
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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 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 and statistical 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, 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 there are no 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;
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(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 other than any such certificates, authorizations, licenses or
permits which have been obtained; 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 REIT under the Code for all taxable years ending on
or before December 31, 1995, and its past and proposed method of operation will
enable it to qualify as a REIT 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 and (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;
(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
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(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) The Underwriters shall have received on the Closing Date an
opinion of Xxxxxxx Xxxx & Xxxxxxxxx, counsel for the Underwriters, dated the
Closing Date and addressed to the 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 the Underwriters may request.
(e) The Underwriters shall have received letters addressed to the
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 the Underwriters.
(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, provided, that, for
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purposes of the representations and warranties to be made as of the Closing
Date, the references to Part A of Schedule II in Sections 6(i), (n), (o) and
(cc) hereof shall also be deemed to refer to Part B of Schedule II, and the
Underwriters 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 the Underwriters), 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
the Underwriters such further certificates and documents as the Underwriters
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 the Underwriters and their counsel.
Any certificate or document signed by any officer of the Company and
delivered to 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
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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 the Underwriters, or by the
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 the Underwriters 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 the Underwriters and the
Company for the purchase of such Shares by one or more non-defaulting
Underwriters or other party or parties approved by the Underwriters 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 the Underwriters 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
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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 the approval of the Underwriters 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 the absolute discretion of the Underwriters, 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 the
judgment of the Underwriters, 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 Supplement, constitute the only information furnished by or on
behalf of the Underwriters 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 any Underwriter, 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.
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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.
[Signature page follows.]
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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 /s/ XXXXX X. XXXXXX, XX.
------------------------
Chairman of the Board
XXXXX XXXXXX INC.
THE XXXXXXXX-XXXXXXXX COMPANY, INC.
By XXXXX XXXXXX INC.
By /s/ XXXX XXXXXXXXX
-----------------------
Managing Director
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SCHEDULE I
COMMERCIAL NET LEASE REALTY, INC.
Number of
Underwriter Firm Shares
----------- -----------
Xxxxx Xxxxxx Inc. ........................................ 1,610,000
The Xxxxxxxx-Xxxxxxxx Company, Inc. ...................... 690,000
---------
Total .................................................... 2,300,000
=========
30
SCHEDULE II
ACQUISITION PROPERTIES
Land/
Retailer Xxxx Xxxx Xxxxx Xxxxxx Xxxxxxx
-----------------------------------------------------------------------------------------------------------------------
Part A
------
Properties acquired from January 1, 1997 through February 12, 1997:
Eckerd Land & Jasper FL 000 XX 0xx Xxxxxx
Xxxxxxxx
Xxxxxx Xxxx & Xxxxxxxxx XX 000 X. Xxxxx Xxxxxx
Building
Part B
------
Properties to be acquired from February 12, 1997 through February 19, 1997:
OfficeMax Land & Salinas CA Hwy. 101 & Xxxxx Drive
Building
