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EXHIBIT 1.1
CAPSTONE CAPITAL CORPORATION
5,000,000 Shares
Common Stock
UNDERWRITING AGREEMENT
February 3, 1998
XXXXXXX XXXXX XXXXXX
XXXXX XXXXXX INC.
XXXX XXXXX XXXX XXXXXX, INCORPORATED
XXXXXXX LYNCH, PIERCE, XXXXXX & XXXXX INCORPORATED
XXXXXX XXXXXXX & CO. INCORPORATED
X.X. XXXXXXXX & CO.
c/o XXXXX XXXXXX INC.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
Capstone Capital Corporation, a Maryland corporation (the "Company")
qualified for federal income tax purposes as a real estate investment trust
pursuant to Sections 856 through 860 of the Internal Revenue Code of 1986, as
amended (the "Code"), proposes to issue and sell an aggregate of 5,000,000
shares (the "Firm Shares") of its Common Stock, par value $.001 per share (the
"Common Stock"), to you (collectively, the "Underwriters"). The Company also
proposes to sell to you, upon the terms and conditions set forth in Section 2
hereof, up to an additional 750,000 shares (the "Additional Shares") of Common
Stock to cover over-allotments, if any. The Firm Shares and the Additional
Shares are hereinafter collectively referred to as the "Shares."
The Company wishes to confirm as follows its agreements with you 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
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Commission thereunder (collectively, the "Act"), a registration statement (file
number 333-31639) on Form S-3 under the Act (the "registration statement"), and
such amendments to such registration statement as may have been required prior
to the date hereof have been similarly prepared and have been filed with the
Commission. The Company may have filed one or more prospectus supplements
thereto which have been previously furnished to the Underwriters. Such
registration statement, as so amended, and any post-effective amendments
thereto, have been declared by the Commission to be effective under the Act.
Such registration statement, as amended at the date of this Agreement, meets the
requirements set forth in Rule 415(a)(1)(x) under the Act and complies in all
other material respects with said Rule. The Company will next file with the
Commission pursuant to Rule 424(b) under the Act a final prospectus supplement
to the basic prospectus included in such registration statement, as so amended,
describing the Shares and the offering thereof, in such form as has been
provided to or discussed with, and approved, by the Underwriters.
The term "Registration Statement" as used in this Agreement means the
registration statement, as amended at the time it became effective, as
supplemented or amended prior to the execution of this Agreement, including (i)
all financial schedules and exhibits thereto and (ii) all documents incorporated
by reference or deemed to be incorporated by reference therein. If it is
contemplated, at the time this Agreement is executed, that a post-effective
amendment to the registration statement will be filed and must be declared
effective before the offering of the Shares may commence, the term "Registration
Statement" as used in this Agreement means the registration statement as amended
by said post-effective amendment. The term "Basic Prospectus" as used in this
Agreement means the prospectus included in the Registration Statement. The term
"Prepricing Prospectus" as used in this Agreement means any preliminary form of
the prospectus (as defined herein) subject to completion, in the form first
filed with, or transmitted for filing to, the Commission pursuant to the Rules
and Regulations of the Securities and Exchange Commission (the "Rules and
Regulations"). The term "Prospectus Supplement" as used in this Agreement means
any prospectus supplement specifically relating to the Shares, in the form filed
with, or transmitted for filing to, the Commission pursuant to Rule 424 under
the Act. The term "Prospectus" as used in this Agreement means the Basic
Prospectus together with the Prospectus Supplement except that if such Basic
Prospectus is amended or supplemented on or prior to the date on which the
Prospectus Supplement was first filed pursuant to Rule 424, the term
"Prospectus" shall refer to the Basic Prospectus as so amended or supplemented
and as supplemented by the Pros pectus Supplement. Any reference in this
Agreement to the registration statement, the Registration Statement, the Basic
Prospectus, any Prepricing Prospectus, any Prospectus Supplement 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, as of the date
of the registration statement, the Registration Statement, the Basic Prospectus,
such Prepricing Prospectus, such Prospectus Supplement or the Prospectus, as the
case may be, and any reference to any amendment or supplement to the
registration statement, the Registration Statement, the Basic Prospectus, any
Prepricing Prospectus, any Prospectus Supplement or the Prospectus shall be
deemed to refer to and include any documents filed after such date 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)
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of Item 12 of Form S-3. As used herein, the term "Incorporated Documents" means
the documents which at the time are incorporated by reference in the
registration statement, the Registration Statement, the Basic Prospectus, any
Prepricing Prospectus, any Prospectus Supplement, the Prospectus, or any
amendment or supplement thereto.
2. AGREEMENTS TO SELL AND PURCHASE. Subject to such adjustments as you
may determine to avoid fractional shares, the Company hereby agrees, subject to
all the terms and conditions set forth herein, to issue and 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, each Underwriter agrees, severally and not jointly,
to purchase from the Company, at a purchase price of $23.1575 per share (the
"purchase price per share"), the number of Firm Shares set forth opposite the
name of such Underwriter in Schedule I hereto.
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 prior to 9:00 P.M., New York City time, on the 30th day after the date
of the Prospectus (or, if such 30th day shall be a Saturday or Sunday or a
holiday, on the next business day thereafter when the New York Stock Exchange,
Inc. ("NYSE") is open for trading) up to an aggregate of 750,000 Additional
Shares. Additional Shares may be purchased only for the purpose of covering
overallotments made in connection with the offering of the Firm Shares.
3. TERMS OF PUBLIC OFFERING. The Company has been advised by you that
the Underwriters propose to make a public offering of their respective portions
of the Shares as soon after the Registration Statement has become effective and
this Agreement has been entered into, as in your judgment is advisable and
initially to offer the Shares upon the terms set forth in the Prospectus.
4. DELIVERY OF THE SHARES AND PAYMENT THEREFOR. Delivery to the
Underwriters of and payment for the Firm Shares shall be made at the office of
Xxxxx Xxxxxx Inc., 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, at 10:00
A.M., New York City time, on February 9, 1998 (the "Closing Date"). The place of
closing for the Firm Shares and the Closing Date may be varied by agreement
between you and the Company.
Delivery to the Underwriters of and payment for any Additional Shares
to be purchased by the Underwriters shall be made at the aforementioned office
of Xxxxx Xxxxxx Inc. at such time on such date (the "Option Closing Date"),
which may be the same as the Closing Date but shall in no event be earlier than
the Closing Date nor earlier than two nor later than ten business days after the
giving of the notice hereinafter referred to, as shall be specified in a written
notice from you on behalf of the Underwriters to the Company of the
Underwriters' determination to purchase a number, specified in such notice, of
Additional
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Shares. The place of closing for any Additional Shares and the Option Closing
Date for such Shares may be varied by agreement between you and the Company.
Certificates for the Firm Shares and for any Additional Shares to be
purchased hereunder shall be registered in such names and in such denominations
as you shall request prior to 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 you in New York City for
inspection and packaging not later than 9:30 A.M., New York City time, on the
business day next preceding the Closing Date or the Option Closing Date, as the
case may be. The certificates evidencing the Firm Shares and any Additional
Shares to be purchased hereunder shall be delivered to you on the Closing Date
or the Option Closing Date, as the case may be, against payment of the purchase
price therefor in immediately available funds.
5. AGREEMENTS OF THE COMPANY. The Company agrees with the
Underwriters as follows:
(a) If, at the time this Agreement is executed and delivered,
it is necessary for the Registration Statement or a post-effective amendment
thereto to be declared effective before the offering of the Shares may commence,
the Company will endeavor to cause the Registration Statement or such
post-effective amendment to become effective as soon as possible and will advise
you promptly and, if requested by you, will confirm such advice in writing, when
the Registration Statement or such post-effective amendment has become
effective.
(b) The Company will advise you promptly and, if requested by
you, will confirm such advice in writing: (i) of any request by the Commission
for amendment of or a supplement to the Registration Statement, any Prepricing
Prospectus, any Prospectus Supplement 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 paragraph (f) below, of any change in the Company's
condition (financial or other), business, prospects, properties, net worth or
results of operations, or of the happening of any event, which makes any
statement of a material fact made in the Registration Statement or the
Prospectus (as then amended or supplemented) untrue or which requires the making
of any additions to or changes in the Registration Statement or the Prospectus
(as then amended or supplemented) in order to state a material fact required by
the Act or the regulations thereunder to be stated therein or necessary in order
to make the statements therein not misleading, or of the necessity to amend or
supplement the Prospectus (as then amended or supplemented) to comply with the
Act or any other law. If at any time the Commission shall issue any stop order
suspending the effectiveness of the Registration Statement, the Company will
make every reasonable effort to obtain the withdrawal of such order at the
earliest possible time.
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(c) The Company will furnish to you, without charge (i) two
signed copies of the registration statement as originally filed with the
Commission and of each amendment thereto, including financial statements and all
exhibits to the registration statement, (ii) such number of conformed copies of
the registration statement as originally filed and of each amendment thereto,
but without exhibits, as you may request, (iii) such number of copies of the
Incorporated Documents, without exhibits, as you may request, and (iv) two
copies of the exhibits to the Incorporated Documents.
(d) The Company will not file any amendment to the
Registration Statement or make any amendment or supplement to the Prospectus or,
prior to the end of the period of time referred to in the first sentence in
subsection (f) below, file any document which, upon filing becomes an
Incorporated Document, of which you shall not previously have been advised or to
which, after you shall have received a copy of the document proposed to be
filed, you shall object.
(e) Prior to the execution and delivery of this Agreement, the
Company has delivered to you, without charge, in such quantities as you have
requested, copies of each form of the Prepricing Prospectus and of each form of
the Prospectus Supplement. 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 Underwriters and by
dealers, prior to the date of the Prospectus, of each Prepricing Prospectus and
each Prospectus Supplement 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 the Underwriters or any dealer, the
Company will expeditiously deliver to each Underwriter and each dealer, without
charge, as many copies of the Prospectus (and of any amendment or supplement
thereto) as you may request. The Company consents to the use of the Prospectus
(and of any amendment or supplement thereto) in accordance with the provisions
of the Act and with the securities or Blue Sky laws of the jurisdictions in
which the Shares are offered by the several Underwriters and by all dealers to
whom Shares may be sold, both in connection with the offering and sale of the
Shares and for such period of time thereafter as the Prospectus is required by
the Act to be delivered in connection with sales by any Underwriter or dealer.
If during such period of time any event shall occur that in the judgment of the
Company or in the opinion of counsel for the Underwriters is required to be set
forth in the Prospectus (as then amended or supplemented) or should be set forth
therein in order to make the statements therein, in the light of the
circumstances under which they were made, 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, and will expeditiously furnish to
the Underwriters and dealers a reasonable number of copies thereof. In the event
that the Company and you agree that the Prospectus should be amended or
supplemented, the
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Company, if requested by you, will promptly issue a press release announcing or
disclosing the matters to be covered by the proposed amendment or supplement.
(g) The Company will cooperate with you and, if applicable,
with counsel for the Underwriters in connection with the registration or
qualification of the Shares for offering and sale by the Underwriters and by
dealers under the securities or Blue Sky laws of such jurisdictions as you may
designate and will file such consents to service of process or other documents
necessary or appropriate in order to effect such registration or qualification;
provided that in no event shall the Company be obligated to qualify to do
business in any jurisdiction where it is not now otherwise required to be 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
securityholders a consolidated earnings statement, which need not be audited,
covering a twelve-month period commencing after the effective date of the
Registration Statement and ending not later than 15 months thereafter, as soon
as practicable after the end of such period, which consolidated earnings
statement shall satisfy the provisions of Section 11(a) of the Act.
(i) During the period of five years hereafter, the Company
will furnish to you (i) as soon as available, a copy of each report of the
Company mailed to stockholders or filed with the Commission, and (ii) from time
to time such other information concerning the Company as you may request.
(j) If this Agreement shall terminate or shall be terminated
after execution pursuant to any provisions hereof (otherwise than pursuant to
the second paragraph of Section 10 hereof or by notice given by you terminating
this Agreement pursuant to Section 10 or Section 11 hereof) or if this Agreement
shall be terminated by the Underwriters because of any failure or refusal on the
part of the Company to comply with the terms or fulfill any of the conditions of
this Agreement, the Company agrees to reimburse the Underwriters for all
out-of-pocket expenses (including fees and expenses of counsel for the
Underwriters) incurred by you in connection herewith.
(k) The Company will apply the net proceeds from the sale of
the Shares to be sold by it hereunder substantially in accordance with the
description thereof set forth in the Prospectus Supplement.
(l) The Company will timely file the Prospectus pursuant to
Rule 424(b) under the Act and will advise you of the time and manner of such
filing.
(m) Except as provided in this Agreement, the Company will not
offer, 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 (except pursuant to the
grant or exercise of options under the Company's Stock Incentive or option
plan(s) and shares of Common Stock issuable upon conversion of the Company's 10
1/2% Convertible Subordinated Debentures due 2002 or the
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6.55% Convertible Subordinated Debentures due 2002) for the period of 90 days
after the date of the Prospectus, without the prior written consent of Xxxxx
Xxxxxx Inc.
(n) Except as stated in this Agreement and in any Prepricing
Prospectus, Prospectus Supplement 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 any security of the Company to facilitate the sale or resale of the
Shares.
(o) The Company will use its best efforts to have the Shares
listed, subject to notice of issuance, on the NYSE on or before the Closing Date
and to maintain the listing of the Shares on the NYSE for a period of three
years after the Closing Date.
(p) The Company will use its best efforts to continue to
qualify as a real estate investment trust ("REIT") under Sections 856 through
860 of the Code.
(q) The Company will not file any registration statement with
the Commission for the registration of any securities of the Company for a
period of 30 days after the date of the Prospectus Supplement without the prior
written consent of Xxxxx Xxxxxx Inc., except that such prior written consent
shall not be required for the filing by the Company of a registration statement
on Form S-8 with respect to shares reserved under the 1994 Stock Incentive Plan.
6. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to the Underwriters that:
(a) No order preventing or suspending the use of any Prepricing
Prospectus has been issued and no proceeding for that purpose has been
instituted or threatened by the Commission or the securities authority of any
state or other jurisdiction. No stop order suspending the effectiveness of the
Registration Statement or any part thereof has been issued and no proceeding for
that purpose has been instituted or threatened by the Commission or the
securities authority of any state or other jurisdiction.
(b) The execution and delivery of, and the performance by the
Company of its obligations under, this Agreement, have been duly authorized by
all necessary corporate action of the Company, and, at the Closing Date or the
related Option Closing Date (as the case may be), this Agreement will have been
duly executed and delivered by the Company, and this Agreement will constitute a
valid and binding instrument of the Company enforceable against the Company in
accordance with its respective terms, subject to the effect of bankruptcy,
insolvency, moratorium, fraudulent conveyance, reorganization and similar laws
relating to creditors' rights generally and to the application of equitable
principles in any proceeding, whether at law or in equity, except as rights to
indemnity and contribution hereunder may be limited by federal or state
securities laws.
(c) Each Prepricing Prospectus included as part of the
registration statement as originally filed or as part of any amendment or
supplement thereto, or filed
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pursuant to Rule 424 under the Act, complied when so filed in all material
respects with the provisions of the Act.
(d) The Company and the transactions contemplated by this
Agreement meet the requirements for using Form S-3 under the Act. The
registration statement in the form in which it became or becomes 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,
including the Prospectus Supplement, 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 therein not misleading,
except that this representation and warranty does not apply to statements in or
omissions from the registration statement or the Prospectus or any supplement or
amendment thereto made in reliance upon and in conformity with information
relating to the Underwriters furnished to the Company in writing by or on behalf
of the Underwriters through you expressly for use therein.
(e) 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 Act, the Exchange Act and the respective rules and
regulations thereunder; any further Incorporated Documents so filed will, when
they are filed, conform in all material respects with the requirements of the
Act, the Exchange Act and the respective rules and regulations 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 therein not
misleading; 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.
(f) 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 Supplement, the Prospectus or other
materials, if any, permitted by the Act.
(g) All outstanding capital stock of the Company has been duly
authorized and validly issued, is fully paid and nonassessable and is free of
any preemptive or similar rights; the Shares to be issued and sold by the
Company 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. Application has been
made to list the Shares on the NYSE. The form of certificate for the Shares will
comply with all applicable legal and NYSE requirements.
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(h) Except as disclosed in the Prospectus, there are no
outstanding options, warrants or other rights calling for the issuance of, nor
any commitment, plan or arrangement to issue, any shares of capital stock of the
Company or any security convertible into or exchangeable or exercisable for
capital stock of the Company.
(i) No holder of any security of the Company or any other person
has the right, contractual or otherwise, which right has not been waived by the
holder thereof, (A) to cause the Company to sell or otherwise issue to them, or
to permit them to underwrite the sale of, the Shares, or (B) as a result of the
filing of the registration statement or the consummation of the transactions
contemplated by this Agreement, to require registration under the Act of any
shares of Common Stock or other securities of the Company.
(j) The Company is a corporation duly organized 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 presently conducted and as disclosed 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 and will not have a material adverse effect on the condition
(financial or other), business, prospects, properties, net worth or results of
operations of the Company and the Subsidiaries (as hereinafter defined) taken as
a whole (a "Material Adverse Effect"). The term "Subsidiary" or "Subsidiaries"
means (A) a corporation, a majority of the voting or capital stock of which is,
at the time, directly or indirectly owned by the Company and (B) any other
partnership, joint venture, association, joint stock company, trust,
unincorporated organization or other entity (other than a corporation)
(collectively, a "Person") in which the Company, directly or indirectly, (i)
owns a majority of the equity interest thereof and (ii) has the power to elect
or direct the election of a majority of the members of the governing body of
such Person or otherwise has control over such Person (e.g., as the general or
managing partner of a partnership).
(k) The Company is organized and operates in a manner so as to
qualify as a REIT under the Code; the Company elected to be taxed as a REIT
commencing with the Company's taxable year ended December 31, 1994 and will
continue to so elect.
(l) Each Subsidiary is duly organized, validly existing and in
good standing in the jurisdiction of its incorporation, if a corporation, and is
legally formed and validly existing under the laws of the jurisdiction of its
organization, if a partnership, association or business organization, with full
corporate or organizational power and authority to own, lease and operate its
properties and to conduct its business as presently conducted. Each Subsidiary
is duly registered and qualified to conduct its business (and, if a corporation,
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 and
will not have a Material Adverse Effect; all the outstanding shares of capital
stock of each Subsidiary that is a corporation
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have been duly authorized and validly issued, are fully paid and nonassessable,
and all ownership interests in each Subsidiary that is not a corporation have
been validly created pursuant to the partnership or other agreements or
organizational documents of each such Subsidiary, and the shares or other
interests owned by the Company are owned by the Company directly, or indirectly
through one of the other Subsidiaries, free and clear of any lien, adverse
claim, security interest, equity or other encumbrance.
(m) There are no legal or governmental proceedings pending or, to
the knowledge of the Company, threatened, against the Company or any of the
Subsidiaries, or to which the Company or any of the Subsidiaries, or to which
any of their respective properties is subject, that are required to be disclosed
in the Registration Statement or the Prospectus but are not disclosed as
required, and there are no agreements, indentures, leases or other instruments
that are required to be disclosed in the Registration Statement or the
Prospectus or to be filed as an exhibit to the Registration Statement or any
Incorporated Document that are not disclosed or filed as required by the Act or
the Exchange Act.
(n) Neither the Company nor any of the Subsidiaries is (i) in
violation of its certificate or articles of incorporation, by-laws, partnership
agreements, or other organizational documents, or (ii) in violation of any law,
ordinance, administrative or governmental rule or regulation applicable to the
Company or any of the Subsidiaries, including any lending or banking law,
governmental rule or regulation, or of any decree of any court or governmental
agency or body having jurisdiction over the Company or any of the Subsidiaries,
or (iii) 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,
mortgage or other instrument to which the Company or any of the Subsidiaries is
a party or by which any of them or any of their respective properties may be
bound.
(o) Neither the issuance and sale of the Shares, the execution,
delivery or performance of this Agreement by the Company nor the consummation by
the Company of the transactions contemplated hereby (i) requires any consent,
approval, authorization or other order of or registration or filing with, any
court, regulatory body, administrative agency or other governmental body, agency
or official (except such as may be required for the registration of the Shares
under the Act and the Exchange Act and compliance with the securities or Blue
Sky laws of various jurisdictions, all of which have been or will be effected in
accordance with this Agreement) or conflicts or will conflict with or
constitutes or will constitute a breach of, or a default under, the certificate
or articles of incorporation, bylaws, partnership agreements, or other
organizational documents, of the Company or any of the Subsidiaries or (ii)
conflicts or will conflict with or constitutes or will constitute a breach of,
or a default under, any agreement, indenture, lease, mortgage or other
instrument to which the Company or any of the Subsidiaries is a party or by
which any of them or any of their respective properties may be bound, or
violates or will violate any statute, law, regulation or filing or judgment,
injunction, order or decree applicable to the Company or any of the Subsidiaries
or any of their respective properties, or will result in the creation or
imposition of any lien, charge or encumbrance upon any property or assets of the
Company
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or any of the Subsidiaries pursuant to the terms of any agreement or instrument
to which any of them is a party or by which any of them may be bound or to which
any of the property or assets of any of them is subject.
(p) 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 Exchange
Act and the respective rules and regulations thereunder.
(q) 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
consolidated financial position, results of operations and changes in financial
position of the Company and the Subsidiaries on the basis stated in the
Registration Statement at the respective dates or for the respective periods to
which they apply; such statements and related schedules and notes have been
prepared in accordance with generally accepted accounting principles
consistently applied throughout the periods involved, except as disclosed
therein; and the other financial and statistical information and data included
or incorporated by reference in the Registration Statement and the Prospectus
(and any amendment or supplement thereto) are accurately presented and prepared
on a basis consistent with such financial statements and the books and records
of the Company and the Subsidiaries. The other financial and statistical
information and data included 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 the Subsidiaries.
(r) Except as disclosed in the Registration Statement and the
Prospectus (or any amendment or supplement thereto), subsequent to the
respective dates as of which such information is given in the Registration
Statement and the Prospectus (or any amendment or supplement thereto), neither
the Company nor any of the Subsidiaries has 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 the
Subsidiaries taken as a whole, 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 or any of the 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, prospects, properties, net worth or results of operation of the
Company and the Subsidiaries taken as a whole.
(s) The Company or the Subsidiaries has good and marketable title
to all of the property (real and personal) disclosed in the Prospectus as being
owned by them, free and clear of all liens, claims, security interests or other
encumbrances except such as are disclosed in the Registration Statement and the
Prospectus or in any other document previously made available to the
Underwriters or to their counsel or such as do not materially
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affect the value of such property and do not materially interfere with the use
made and proposed to be made of such property by the Company or the
Subsidiaries, and all the property disclosed in the Prospectus as being held
under lease by the Company and each of the Subsidiaries is held by it under
valid, subsisting and enforceable leases, free and clear of all liens, claims,
security interests and other encumbrances.
(t) The Company and the Subsidiaries have title insurance on all
real properties described in the Prospectus as owned or leased by them
(collectively, the "Properties"), in an amount at least equal to the aggregate
acquisition price paid by the Company or the Subsidiaries for such Properties
and the cost of construction of the improvements located on such properties.
(u) The Company and the Subsidiaries have title insurance on each
Mortgage Loan (as defined in the Prospectus) in an amount at least equal to the
aggregate principal amount of each such Mortgage Loan, except where the failure
to have such title insurance would not have a Material Adverse Effect.
(v) The mortgages and deeds of trust encumbering the Properties
are not cross-defaulted or cross-collateralized to any property not owned
directly or indirectly by the Company.
(w) The Company and each of the Subsidiaries has such permits,
licenses, franchises and authorizations of governmental or regulatory
authorities ("permits") as are necessary to own its respective properties and to
conduct its business as presently conducted and in the manner disclosed in the
Prospectus, including the necessary lending or banking law permits, subject to
such qualifications as may be set forth in the Prospectus; the Company and each
of the Subsidiaries has fulfilled and performed all its 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
results in any other material impairment of the rights of the holder of any such
permit, subject in each case to such qualification as may be set forth in the
Prospectus; and, except as disclosed in the Prospectus, none of such permits
contains any restriction that is materially burdensome to the Company or any of
the Subsidiaries.
(x) Except as disclosed in the Prospectus, the Company and the
Subsidiaries own or possess all patents, trademarks, trademark registrations,
service marks, service xxxx registrations, trade names, copyrights, licenses,
inventions, trade secrets and rights disclosed in the Prospectus as being owned
by them or any of 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 the Subsidiaries
with respect to the foregoing.
(y) Insurance, including property and casualty insurance, in favor
of the Company or the Subsidiaries, as the case may be, is in effect and will be
maintained with respect to the Properties, with insurers of recognized financial
responsibility, against such losses and risks in an amount and on such terms as
is reasonable and customary for business
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of the type conducted by the Company, the Subsidiaries or lessees, sub-lessees
or mortgagors of the Properties, as the case may be; all policies of insurance
insuring the Company, the Subsidiaries, and lessees, sub-lessees or mortgagors
of the Properties, as the case may be, or their respective businesses, assets
(including the property and casualty insurance on the Properties), employees,
officers and directors are in full force and effect; the Company, each of the
Subsidiaries, and, to the best knowledge of the Company, each lessee, sub-lessee
and mortgagor of the Properties is in compliance with the terms of such policies
and instruments in all material respects; neither the Company nor any of the
Subsidiaries, or, to the best knowledge of the Company, no lessee, sub-lessee or
mortgagor of the Properties has received from any insurance company written
notice of any material defects or deficiencies affecting the insurability of any
of the Properties; and there are no claims by the Company, any of the
Subsidiaries or, to the best knowledge of the Company, any lessee, sub-lessee or
mortgagor under any such policy or instrument as to which any insurance company
is denying liability or defending under a reservation of rights clause.
(z) The Company and the 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 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.
(aa) Neither the Company nor any of its Subsidiaries nor any
employee or agent of the Company or any Subsidiary has made any payment of funds
of the Company or any Subsidiary or received or retained any funds in violation
of any law, rule or regulation.
(bb) The Company and each of the Subsidiaries have filed all tax
returns required to be filed, which returns are complete and correct, and
neither the Company nor any Subsidiary is in default in the payment of any taxes
which were payable pursuant to said returns or any assessments with respect
thereto.
(cc) 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 consummation of the transactions contemplated by this
Agreement.
(dd) The Company is not now, and, after sale of the Shares to be
sold by the Company hereunder and application of the net proceeds from such sale
as described in the Prospectus under the caption "Use of Proceeds," will not be,
an "investment company" within the meaning of the Investment Company Act of
1940, as amended ("1940 Act").
(ee) The Company and the Subsidiaries and, to the Company's
knowledge, the owner and operator of any property on which the Company or the
Subsidiaries holds a mortgage and the operator of any property owned by the
Company or the Subsidiaries (i) are
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in compliance with any and all applicable foreign, federal, state and local laws
and regulations relating to the protection of human health and safety, the
environment, or hazardous or toxic substances or wastes, pollutants or
contaminants (as regulated by such laws and regulations) ("Environmental Laws"),
(ii) have received all permits, licenses or other approvals under applicable
Environmental Laws required in connection with their businesses, properties or
assets as conducted or contemplated to be conducted as described in the
Registration Statement, and (iii) are in compliance with all terms and
conditions of any such permit, license or approval, except where such
noncompliance with Environmental Laws, failure to receive required permits,
licenses or other approvals or failure to comply with the terms and conditions
of such permits, licenses or approvals would not, singly or in the aggregate,
have a Material Adverse Effect.
(ff) There has been no storage, disposal, generation, manufacture,
refinement, transportation, handling, treatment, spill, discharge, leak,
emission, injection, dumping, or release of hazardous or toxic substances or
wastes, pollutants or contaminants by the Company or the Subsidiaries or, to the
knowledge of the Company, by any other person, at, to, or from any property
(including the Properties) now or previously owned or operated by the Company or
the Subsidiaries or now or previously subject to a mortgage held by the Company
or the Subsidiaries, except for any such storage, disposal, generation,
manufacture, refinement, transportation, handling, treatment, spill, discharge,
leak, emission, injection, dumping, or release which would not have, or could
not be reasonably likely to have singularly or in the aggregate, a Material
Adverse Effect; and, to the knowledge of the Company, there has been no spill,
discharge, leak, emission, injection, escape, dumping, or release at any other
location of any hazardous or toxic substances or wastes, pollutants or
contaminants generated at any property (including the Properties) now or
previously owned or operated by the Company or the Subsidiaries or now or
previously subject to a mortgage held by the Company or the Subsidiaries, except
for any such spill, discharge, leak, emission, injection, dumping, or release
which would not have, or could not be reasonably likely to have, singularly or
in the aggregate, a Material Adverse Effect.
(gg) The Company has filed all reports and other documents required
to be filed by it under the Exchange Act.
(hh) Each of the Subsidiaries constitutes either a partnership for
federal income tax purposes or a "qualified REIT subsidiary" within the meaning
of Section 856(i) of the Code.
(ii) None of the assets of the Company or the Subsidiaries
constitute, nor will such assets, as of the Closing Date, constitute "plan
assets," as such term is defined in the Employee Retirement Income Security Act
of 1974, as amended ("ERISA").
(jj) Subject to the provisions of applicable law, none of the
Subsidiaries is currently prohibited, directly or indirectly, from paying any
dividends to the Company, from making any other distributions on such
Subsidiary's capital stock or from repaying to the Company any loans or advances
to such Subsidiary's property or assets to the Company.
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(kk) The information and disclosures regarding the Company's
directors and officers, contained in the Company's Proxy Statement for the
Annual Meeting of Stockholders held in May 1997, (i) are accurate and consistent
with the information provided to the Company by each director and officer for
that purpose and (ii) did not omit to disclose any material fact that should
have been so disclosed under the rules and regulations of the Exchange Act
governing Proxy Statement disclosure obligations.
7. INDEMNIFICATION AND CONTRIBUTION.
(a) The Company agrees to indemnify and hold harmless each of you
and each other Underwriter and each person, if any, who controls any Underwriter
within the meaning of Section 15 of the Act or Section 20(a) 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 any Prospectus Supplement or in the Registration
Statement or the Prospectus or in any amendment or supplement thereto, or
arising out of or based upon any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, except insofar as such losses, claims, damages,
liabilities or expenses arise out of or are based upon any untrue statement or
omission or alleged untrue statement or omission which has been made therein or
omitted therefrom in reliance upon and in conformity with the information
relating to such Underwriter furnished in writing to the Company by or on behalf
of any Underwriter through you expressly for use in connection therewith;
provided, however, that the indemnification contained in this paragraph (a) with
respect to any Prepricing Prospectus shall not inure to the benefit of any
Underwriter (or to the benefit of any person controlling any Underwriter) on
account of any such loss, claim, damage, liability or expense arising from the
sale of the Shares by such Underwriter to any person if a copy of the Prospectus
shall not have been delivered or sent to such person within the time required by
the Act and the regulations thereunder, and the untrue statement or alleged
untrue statement or omission or alleged omission of a material fact contained in
such Prepricing Prospectus was corrected in the Prospectus, provided that the
Company has delivered the Prospectus to the several Underwriters in requisite
quantity on a timely basis to permit such delivery or sending. The foregoing
indemnity agreement shall be in addition to any liability which the Company may
otherwise have.
(b) If any action, suit or proceeding shall be brought against any
Underwriter or any person controlling any Underwriter in respect of which
indemnity may be sought against the Company, such Underwriter or such
controlling person shall promptly notify the Company, and the Company shall
assume the defense thereof, including the employment of counsel and payment of
all fees and expenses. Such Underwriter or any such controlling person shall
have the right to employ separate counsel in any such action, suit or proceeding
and to participate in the defense thereof, but the fees and expenses of such
counsel shall be at the expense of such Underwriter or such controlling person
unless (i) the Company has agreed in writing to pay such fees and expenses, (ii)
the Company has failed to assume the defense and employ counsel, or (iii) the
named parties to any such action, suit
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or proceeding (including any impleaded parties) include both such Underwriter or
such controlling person and the Company and such Underwriter or such controlling
person shall have been advised by its counsel that representation of such
indemnified party and the Company by the same counsel would be inappropriate
under applicable standards of professional conduct (whether or not such
representation by the same counsel has been proposed) due to actual or potential
differing interests between them (in which case the Company shall not have the
right to assume the defense of such action, suit or proceeding on behalf of such
Underwriter or such controlling person). It is understood, however, that the
Company shall, in connection with any one such action, suit or proceeding or
separate but substantially similar or related actions, suits or proceedings in
the same jurisdiction arising out of the same general allegations or
circumstances, be liable for the reasonable fees and expenses of only one
separate firm of attorneys (in addition to any local counsel) at any time for
all such Underwriters and controlling persons not having actual or potential
differing interests with you or among themselves, which firm shall be designated
in writing by Xxxxx Xxxxxx Inc., and that all such fees and expenses shall be
reimbursed as they are incurred. The Company shall not be liable for any
settlement of any such action, suit or proceeding effected without its written
consent, but if settled with such written consent, or if there be a final
judgment for the plaintiff in any such action, suit or proceeding, the Company
agrees to indemnify and hold harmless any Underwriter, to the extent provided in
the preceding paragraph, and any such controlling person from and against any
loss, claim, damage, liability or expense by reason of such settlement or
judgment.
(c) Each Underwriter agrees, severally and not jointly, to
indemnify and hold harmless the Company, its directors, its officers who sign
the Registration Statement, and any person who controls the Company within the
meaning of Section 15 of the Act or Section 20(a) of the Exchange Act, to the
same extent as the foregoing indemnity from the Company to each Underwriter, but
only with respect to information relating to such Underwriter furnished in
writing by or on behalf of such Underwriter through you expressly for use in the
Registration Statement, the Prospectus, any Prepricing Prospectus, any
Prospectus Supplement, 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, any Prospectus
Supplement, 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 Underwriters' expense), and the
Company, its directors, any such officer, and any such controlling person shall
have the rights and duties given to the Underwriters by paragraph (b) above. The
foregoing indemnity agreement shall be in addition to any liability which any
Underwriter 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,
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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 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
legal or other expenses reasonably 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.
(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.
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(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) If, at the time this Agreement is executed and delivered, it
is necessary for the registration statement or a post-effective amendment
thereto to be declared effective before the offering of the Shares may commence,
the registration statement or such post-effective amendment shall have become
effective not later than 5:30 P.M., New York City time, on the date hereof, or
at such later date and time as shall be consented to in writing by you, and all
filings, if any, required by Rules 424 and 430A under the Act shall have been
timely made; no stop order suspending the effectiveness of the registration
statement shall have been issued and no proceeding for that purpose shall have
been instituted or, to the knowledge of the Company or the Underwriters,
threatened by the Commission, and any request of the Commission for additional
information (to be included in the registration statement or the prospectus or
otherwise) shall have been complied with to your satisfaction.
(b) Subsequent to the effective date of this Agreement, there
shall not have occurred (i) any change, or any development involving a
prospective change, in or affecting the condition (financial or other),
business, prospects, properties, net worth or results of operations of the
Company or the Subsidiaries not contemplated by the Prospectus, which in your
opinion, would materially adversely affect the market for the Shares, or (ii)
any event or development relating to or involving the Company or any officer or
director of the Company which makes any statement made in the Prospectus untrue
or which, in the opinion of the Company and its counsel or the Underwriters and
their counsel, requires the making of any addition to or change in the
Prospectus in order to state a material fact required by the Act or any other
law to be stated therein or necessary in order to make the statements therein
not misleading, if amending or supplementing the Prospectus to reflect such
event or development would, in your opinion, materially adversely affect the
market for the Shares.
(c) You shall have received on the Closing Date, an opinion of
Sirote & Permutt, P.C., special counsel for the Company, dated the Closing Date
and addressed to
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you, to the effect that:
(i) The Company is a corporation duly incorporated
and validly existing in good standing under the laws of the State of Maryland
with full corporate power to own, lease and operate its properties and to
conduct its business as presently conducted and as disclosed in the Registration
Statement and the Prospectus (and any amendment or supplement thereto), 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;
(ii) To the best knowledge of such counsel, after
reasonable inquiry, the Company has no Subsidiaries other than those listed on
Schedule II hereto. Each of the Subsidiaries is duly organized, validly existing
and in good standing in the jurisdiction of its incorporation, if a corporation,
and is legally formed and validly existing under the laws of the jurisdiction of
its organization, if a partnership, association or business organization, with
full corporate or organizational power and authority to own, lease and operate
its properties and to conduct its business as presently conducted and as
disclosed in the Registration Statement and the Prospectus (and any amendment or
supplement thereto) 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; all the outstanding shares of capital stock of each
Subsidiary that is a corporation have been duly authorized and validly issued
and are fully paid and nonassessable, and all ownership interests in each
Subsidiary that is not a corporation have been validly created pursuant to the
partnership or other agreements or organizational documents of each such
Subsidiary. Except as described in the Registration Statement and the Prospectus
(and any amendment or supplement thereto), all of such shares and interests in
the Subsidiaries owned by the Company are owned by the Company directly, or
indirectly through one of the other Subsidiaries, free and clear of any
perfected security interest, or, to the best knowledge of such counsel after
reasonable inquiry, any other security interest, lien, adverse claim, equity or
other encumbrance;
(iii) The authorized and outstanding stock of the
Company is as set forth under the caption "Capitalization" in the Prospectus;
and the authorized 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 Capital Stock";
(iv) All the shares of stock of the Company outstanding
prior to the issuance of the Shares to be issued and sold by the Company
hereunder, have been duly authorized and validly issued, are fully paid and
nonassessable and are free of any preemptive or similar rights;
(v) The Shares to be issued and sold to the
Underwriters by the Company hereunder (i) have been duly authorized and, when
issued and delivered to the
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Underwriters against payment therefor in accordance with the terms hereof, will
be validly issued, fully paid and nonassessable and free of any preemptive, or
to the best knowledge of such counsel, similar rights that entitle or will
entitle any person to acquire any Shares upon the issuance thereof by the
Company and (ii) conform in all material respects to the descriptions thereof in
the Prospectus and (iii) have been duly authorized for listing by the NYSE upon
official notice of issuance;
(vi) The form of certificates for the Shares conforms
in all material respects to the requirements of the Maryland General Corporation
Law;
(vii) Except as disclosed in the Prospectus, there are
no outstanding options, warrants or other rights calling for the issuance of,
and such counsel does not know of, any commitment, plan or arrangement to issue,
any shares of stock of the Company or any security convertible into or
exchangeable or exercisable for stock of the Company;
(viii) No holder of any security of the Company or any
other person has the right, contractual or otherwise, which right has not been
waived by the holder thereof, (A) to cause the Company to sell or otherwise
issue to them, or to permit them to underwrite the sale of, the Shares or (B) as
a result of the filing of the Registration Statement or consummation of
transactions contemplated by this Agreement, to require registration under the
Act of any shares of Common Stock or other securities of the Company;
(ix) The Registration Statement and all post-effective
amendments, if any, have become effective under the Act and, to the best
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);
(x) The Company has full corporate power to enter into
this Agreement and to issue, sell and deliver the Shares to be sold by it to the
Underwriters as provided herein, and this Agreement has been duly authorized,
executed and delivered by the Company and is a valid, legal and binding
agreement of the Company, enforceable against the Company in accordance with its
respective terms, subject to the qualification that the enforceability of the
Company's obligations hereunder and thereunder may be limited by bankruptcy,
insolvency, reorganization, moratorium, and other laws relating to or affecting
creditors' rights generally and by general equitable principles and except as
enforcement of rights to indemnity and contribution hereunder may be limited by
federal or state securities laws or principles of public policy;
(xi) Neither the Company nor any of the Subsidiaries is
(i) in violation of its respective certificate or articles of incorporation,
bylaws, partnership agreements, or other organizational documents; or (ii) to
the best knowledge of such counsel after reasonable inquiry, is (A) in default
in the performance of any material obligation, agreement or condition contained
in any bond, debenture, note or other evidence of indebtedness or in any
material agreement, indenture, lease, or other instrument known to
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such counsel to which such person is a party or by which any of them or their
respective properties may be bound, or (B) in violation of any law, ordinance,
administrative or governmental rule or regulation, including any lending or
banking law, governmental rule or regulation, applicable to the Company or any
Subsidiary or of any decree of any court or governmental agency or body having
jurisdiction over the Company or any of the Subsidiaries which violations would,
in the aggregate, have a Material Adverse Effect;
(xii) Neither the issuance, offer, sale or delivery of
the Shares, the execution, delivery or performance of this Agreement, compliance
by the Company with the provisions hereof nor consummation by the Company of the
transactions contemplated hereby conflicts or will conflict with or constitutes
or will constitute a breach of, or a default under, the certificate or articles
of incorporation, bylaws, partnership agreements or other organizational
documents, of the Company or any of the Subsidiaries or any agreement,
indenture, lease, mortgage or other instrument to which the Company or any of
the Subsidiaries is a party or by which any of them or any of their respective
properties is bound that is an exhibit to the Registration Statement or to any
Incorporated Document, or is known to such counsel after reasonable inquiry, or
will result in the creation or imposition of any lien, charge or encumbrance
upon any property or assets of the Company or any of the Subsidiaries, nor will
any such action result in any violation of any existing law, regulation, ruling
(assuming compliance with all applicable state securities and Blue Sky laws),
judgment, injunction, order or decree known to such counsel after reasonable
inquiry, applicable to the Company, the Subsidiaries or any of their respective
properties;
(xiii) Except as disclosed in the Prospectus (or any
supplement thereto), to the best knowledge of such counsel after due inquiry,
there are no legal or governmental proceedings pending or threatened against the
Company or any of the Subsidiaries, or to which the Company or any of the
Subsidiaries, or any of their property, is subject, which are required to be
disclosed in the Registration Statement or Prospectus (or any amendment or
supplement thereto);
(xiv) 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 (i) as have been obtained under the
Act and the Exchange Act, (ii) as have been obtained under state securities or
Blue Sky laws governing the purchase and distribution of the Shares, and (iii)
as required by the National Association of Securities Dealers, Inc., as to which
counsel need not express any opinion) for the valid issuance and sale of the
Shares to the Underwriter as contemplated by this Agreement;
(xv) Such counsel does not know of any agreements,
indentures, leases or other instruments required to be disclosed in the
Registration Statement or the Prospectus (or any amendment or supplement
thereto) or to be filed as an exhibit to the Registration Statement or any
Incorporated Document that are not disclosed or filed as required, and such
agreements, indentures, lease or other instruments as are summarized in the
Registration Statement or the Prospectus are fairly summarized in all respects;
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(xvi) 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 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) when filed complied
as to form in all material respects with the Exchange Act and the rules and
regulations of the Commission thereunder;
(xvii) The Company and each of the Subsidiaries are duly
licensed or authorized in each jurisdiction where they are required to be so
licensed or authorized to conduct their respective businesses except where the
failure to be so licensed or qualified would not have a Material Adverse Effect;
the Company and each of the Subsidiaries have all other necessary orders,
consents, approvals, permits, licenses, franchises and authorizations of and
from all regulatory authorities to conduct their respective businesses as
presently conducted, including the necessary lending or banking law permits,
except where the failure to have such orders, consents, approvals, permits,
licenses, franchises and authorizations would not have a Material Adverse
Effect, and, to the best of such counsel's knowledge after due inquiry, neither
the Company nor any of the Subsidiaries has received any notification from any
regulatory authority to the effect that any additional approval is required to
be obtained by the Company or any of the Subsidiaries;
(xviii) The statements in the Registration Statement and
Prospectus under the captions "Investments and Commitments", "Risk Factors,"
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," "Business," "Management" and "Description of Capital Stock,"
insofar as such statements constitute summaries of the legal matters, documents
or proceedings referred to therein, fairly present in all material respects the
information called for with respect to such legal matters, documents and
proceedings and fairly summarize in all material respects the matters referred
to therein;
(xix) The Company is not, and after the sale of the
Shares and the application of the net proceeds therefrom as disclosed in the
Prospectus under the caption "Use of Proceeds" will not be, an "investment
company" within the meaning of the 1940 Act;
(xx) The Company has filed all reports and other
documents required to be filed by it under the Exchange Act;
(xxi) None of the assets of the Company or the
Subsidiaries constitute "plan assets," as such term is defined in ERISA;
(xxii) The Company was and is organized in conformity
with the requirements for qualification as a REIT and its proposed method of
operation, as described in the Prospectus, permits it to meet the requirements
for qualification under the Code;
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(xxiii) The discussion in the Prospectus under the
captions "Federal Income Tax Considerations" is accurate in all material
respects and fairly summarizes the federal income tax considerations that are
likely to be material to holders of the Common Stock who are not subject to
special treatment under the tax laws; and
(xxiv) Each of the Subsidiaries constitutes either a
partnership for federal income tax purposes or a "qualified REIT subsidiary"
within the meaning of Section 856(i) of the Code.
In addition, such counsel shall state that they have 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, although such counsel is
not passing on, and is not assuming any responsibility for the accuracy,
completeness or fairness of the statements contained in, the Registration
Statement and the Prospectus (except to the extent specified in the foregoing
opinion), no facts have 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, 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 the Prospectus, as of its date and as of the Closing Date or
the Option Closing Date, as the case may be, 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 or contains any untrue
statement of a material fact or omitted or omits to state a material fact
necessary in order to make the statements herein, in the light of the
circumstances under which they were or are 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
and statistical data included in the Registration Statement or the Prospectus or
any Incorporated Document).
Such counsel shall also reaffirm as of the Closing Date their opinion
filed as Exhibit 8 to the Registration Statement.
In rendering their opinion as aforesaid, counsel may rely upon an
opinion, dated the Closing Date, of Xxxxxxx Xxxxx Xxxxxxx & Xxxxxxxxx with
respect to Maryland law and may rely upon other opinions, each dated the Closing
Date, of other counsel retained by them or the Company as to laws of any
jurisdiction other than the United States or the State of Alabama, provided that
(1) each such local counsel is acceptable to the Underwriters, (2) such reliance
is expressly authorized by each opinion so relied upon and a copy of each such
opinion is delivered to the Underwriters and is in form and substance
satisfactory to it and its counsel, and (3) counsel shall state in their opinion
that they believe that they and the Underwriters are justified in relying
thereon.
(d) You shall have received on the Closing Date an opinion of
Xxxxx Xxxxxxxxxx LLP, counsel for the Underwriters, dated the Closing Date and
addressed to you, with respect to the matters referred to in clauses (v)(other
than subclause (ii) and (iii)
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thereof), (ix), (x) and (xvi) of the foregoing paragraph (c) and the third to
last paragraph of the foregoing paragraph (c), and such other related matters as
you may request. In rendering their opinion as aforesaid, such counsel may rely
on the opinion, dated the Closing Date and any Option Closing Date, of Xxxxxxx
Xxxxx Xxxxxxx & Xxxxxxxxx with respect to Maryland law.
(e) You shall have received letters addressed to you and
dated the date hereof and the Closing Date from KPMG Peat Marwick LLP,
independent certified public accountants, substantially in the forms heretofore
approved by you.
(f) (i) No stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for that
purpose shall have been taken or, to the knowledge of the Company, shall be
contemplated by the Commission at or prior to the Closing Date; (ii) there shall
not have been any change in the capital stock of the Company nor any material
increase in the short-term or long-term debt of the Company (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 the
Subsidiaries taken as a whole; (iv) the Company and the 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 the
Subsidiaries, taken as a whole, other than those reflected in the Registration
Statement or the Prospectus (or any amendment or supplement thereto); and (v)
all the representations and warranties of the Company contained in this
Agreement shall be true and correct on and as of the date hereof and on and as
of the Closing Date as if made on and as of the Closing Date, and you shall have
received a certificate, dated the Closing Date and signed by the chief executive
officer and the chief financial officer of the Company (or such other officers
as are acceptable to you), to the effect set forth in this Section 8(f) and in
Section 8(g) hereof.
(g) The Company shall not have failed at or prior to the
Closing Date to have performed or complied with any of its agreements herein
contained and required to be performed or complied with by it hereunder at or
prior to the Closing Date.
(h) Prior to the Closing Date, the Shares which the Company
agrees to sell pursuant to this Agreement shall have been listed, subject to
notice of issuance, on the NYSE.
(i) The Company shall have furnished or caused to be
furnished to you such further certificates and documents as you shall have
requested.
All such opinions, certificates, letters and other documents will be in
compliance with the provisions hereof only if they are satisfactory in form and
substance to you and your
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counsel.
Any certificate or document signed by any officer of the Company and
delivered to you, 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 it 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, each Prospectus
Supplement, 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, each Prospectus Supplement,
the Prospectus, the Incorporated Documents, and all amendments or supplements to
any of them, as may be reasonably requested for use in connection with the
offering and sale of the Shares; (iii) the preparation, printing,
authentication, issuance and delivery of certificates for the Shares, including
any stamp taxes in connection with the original issuance and sale of the Shares;
(iv) the printing (or reproduction) and delivery of this Agreement, the
preliminary and supplemental Blue Sky Memoranda and all other agreements or
documents printed (or reproduced) and delivered in connection with the offering
of the Shares; (v) if applicable, 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 relating to the preparation, printing or reproduction,
and delivery of the preliminary and supplemental Blue Sky Memoranda and such
registration and qualification); (vii) if applicable, 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 the
registration statement or a post-effective amendment thereto to be declared
effective before the offering of the Shares may commence, when notification of
the effectiveness of the registration statement or such post-
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effective amendment has been released by the Commission. Until such time as this
Agreement shall have become effective, it may be terminated by the Company, by
notifying you, or by you, 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 that 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 Securities set
forth opposite its name in Exhibit A hereto bears to the aggregate number of
Firm Securities set forth opposite the names of all non-defaulting Underwriters
or in such other proportion as you may specify in accordance with Section 20 of
the Master Agreement Among Underwriters of Xxxxx Xxxxxx Inc., to purchase the
Securities 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 Securities which it or they are obligated to purchase on
the Closing Date and the aggregate number of Securities with respect to which
such default occurs is more than one-tenth of the aggregate number of Securities
which the Underwriters are obligated to purchase on the Closing Date and
arrangements satisfactory to you and the Company for the purchase of such
Securities by one or more non-defaulting Underwriters or other party or parties
approved by you and the Company are not made within 36 hours after such default,
this Agreement will terminate without liability on the part of any
non-defaulting Underwriter or the Company. In any such case which does not
result in termination of this Agreement, either you or the Company shall have
the right to postpone the Closing Date, but in no event for longer than seven
days, in order that the required changes, if any, in the Registration Statement
and the Prospectus or any other documents or arrangements may be effected. Any
action taken under this paragraph shall not relieve any defaulting Underwriter
from liability in respect of any such default of any such Underwriter under this
Agreement. The term "Underwriter" as used in this Agreement includes, for all
purposes of this Agreement, any party not listed in Schedule I hereto who, with
your approval and the approval of the Company, purchases Shares which a
defaulting Underwriter is obligated, but fails or refuses, to purchase.
Any notice under this Section 10 may be given by telegram, telecopy or
telephone but shall be subsequently confirmed by letter.
11. TERMINATION OF AGREEMENT. This Agreement shall be subject to
termination in your absolute discretion, without liability on the part of any
Underwriter to the Company, by notice to the Company, if prior to the Closing
Date or any Option Closing Date (if different from the Closing Date and then
only as to the Additional Shares), as the case may be, (i) trading in the Common
Stock of the Company shall be suspended or subject to any restriction or
limitation not in effect on the date of this Agreement, (ii) 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,
(iii) there shall have been any downgrading in the rating of any debt securities
or preferred stock of the Company by
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any "nationally recognized statistical rating organization" (as defined for
purposes of Rule 436(g) under the Act), or any public announcement that any such
organization has under surveillance or review its rating of any debt securities
or preferred stock of the Company (other than an announcement with positive
implications of a possible upgrading, and no implication of a possible
downgrading, of such rating), (iv) a general moratorium on commercial banking
activities in New York shall have been declared by either federal or state
authorities, or (v) there shall have occurred any outbreak or escalation of
hostilities or other international or domestic calamity, crisis or change in
political, financial or economic conditions, the effect of which on the
financial markets of the United States is such as to make it, in your judgment,
impracticable or inadvisable to commence or continue the offering of the Shares
at the offering price to the public set forth on the cover page of the
Prospectus or to enforce contracts for the resale of the Shares by the
Underwriters. Notice of such termination may be given to the Company by
telegram, telecopy or telephone and shall be subsequently confirmed by letter.
12. INFORMATION FURNISHED BY THE UNDERWRITERS. The only Information
furnished by or on behalf of the Underwriters through you (as such information
is referred to in Sections 6(b) and 7 hereof) shall be the statements set forth
in the last paragraph on the cover page, the stabilization legend on the inside
cover page, and the statements in the first, third and fifth paragraphs under
the caption "Underwriting" in the Prospectus Supplement.
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 Capstone Capital Corporation, 0000 Xxxxx Xxxxxx Xxxxx, Xxxxx 000,
Xxxxxxxxxx, Xxxxxxx 00000, Attention: Xxxx X. XxXxxxxxx, with a copy to Sirote &
Permutt, P.C., 0000 Xxxxxxxxx Xxxxxx Xxxxx, Xxxxxxxxxx, Xxxxxxx 00000,
Attention: Xxxx X. Xxxxxx, Esq.; or (ii) if to you, care of Xxxxxxx Xxxxx
Xxxxxx, 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Manager,
Investment Banking Division, with a copy to Xxxxx Xxxxxxxxxx LLP, 0000 Xxxxxx xx
xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxxxxxxx X. Xxxxxx, Esq.
This Agreement has been and is made solely for the benefit of the
several Underwriters, the Company, its directors and officers, and the other
controlling persons referred to in Section 7 hereof and their respective
successors and assigns, to the extent provided herein, and no other person shall
acquire or have any right under or by virtue of this Agreement. Neither the term
"successor" nor the term "successors and assigns" as used in this Agreement
shall include a purchaser from any Underwriter of any of the Shares in his
status as such purchaser.
14. APPLICABLE LAW; COUNTERPARTS. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York applicable to
contracts made and to be performed within the State of New York.
This Agreement may be signed in various counterparts which together
constitute one and the same instrument. If signed in counterparts, this
Agreement shall not become effective unless at least one counterpart hereof
shall have been executed and delivered on behalf of each party hereto.
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Please confirm that the foregoing correctly sets forth the agreement
between the Company and the several Underwriters.
Very truly yours,
CAPSTONE CAPITAL CORPORATION
By:/s/ Xxxx X. XxXxxxxxx
-------------------------------------
Xxxx X. XxXxxxxxx
President and Chief Executive Officer
Confirmed as of the date first above mentioned.
XXXXXXX XXXXX XXXXXX
XXXXX XXXXXX INC.
XXXX XXXXX XXXX XXXXXX, INCORPORATED
XXXXXXX LYNCH, PIERCE, XXXXXX & XXXXX INCORPORATED
XXXXXX XXXXXXX & CO. INCORPORATED
X.X. XXXXXXXX & CO.
By: XXXXX XXXXXX INC.
By/s/ Xxxxxxxx Xxxxxxx
----------------------------------
Xxxxxxxx Xxxxxxx
Managing Director
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SCHEDULE I
Capstone Capital Corporation
Underwriter Number of Firm
----------- Shares to be Purchased
----------------------
Xxxxx Xxxxxx Inc................................................................. 1,000,000
Xxxx Xxxxx Xxxx Xxxxxx,
Incorporated..................................................................... 1,000,000
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated............................... 1,000,000
Xxxxxx Xxxxxxx & Co. Incorporated................................................ 1,000,000
X.X. Xxxxxxxx & Co............................................................... 1,000,000
----------------------
Total 5,000,000
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SCHEDULE II
CAPSTONE CAPITAL CORPORATION
SUBSIDIARIES
Capstone Capital of Alabama, Inc.
Capstone Capital of Baytown, Inc.
Capstone Capital of Xxxxxx Bay, Inc.
Capstone Capital of California, Inc.
Capstone Capital of Cape Coral, Inc.
Capstone Capital of Las Vegas, Inc.
Capstone Capital of Massachusetts, Inc.
Capstone Capital of Pennsylvania, Inc.
Capstone Capital of Sarasota, Inc.
Capstone Capital of Texas, Inc.
Capstone Capital of Virginia, Inc.
Capstone Capital Properties, Inc.
Capstone Capital Senior Housing, Inc.
Capstone Acquisition Corporation
Capstone of Baytown, Ltd.
Capstone of Xxxxxx Bay, Ltd.
Capstone of Los Angeles, Ltd.
Capstone of Cape Coral, Ltd.
Capstone of Las Vegas, Ltd.
Capstone of Sarasota, Ltd.
Capstone Capital of San Antonio, Ltd.
Capstone of Virginia Limited Partnership
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