Exhibit 1.1
GLADSTONE COMMERCIAL CORPORATION
5,500,000 SHARES OF COMMON STOCK
($0.001 PAR VALUE PER SHARE)
UNDERWRITING AGREEMENT
August ___, 2003
Xxxxxx, Xxxxx Xxxxx, Incorporated
Xxxxxxxxx & Company, Inc.
J.J.B Xxxxxxx, X.X. Xxxxx, Inc.
Xxxxxx, Xxxxxxxx & Company, Incorporated
c/x Xxxxxx, Xxxxx Xxxxx, Incorporated
0000 Xxxxxxxxxxx Xxxx
Xxxxx 000
XxXxxx, Xxxxxxxx 00000
Ladies and Gentlemen:
Gladstone Commercial Corporation, a Maryland corporation (the
"Company") proposes to sell to the several underwriters named in Schedule I
(collectively, the "Underwriters") an aggregate of 5,500,000 shares (the "Firm
Shares") of the Company's common stock, $0.001 par value per share (the "Common
Stock"). All of the Firm Shares will be sold by the Company. The Firm Shares are
to be sold to each Underwriter, acting severally and not jointly, in such
amounts as are set forth in Schedule I opposite the name of such Underwriter.
Solely for the purpose of covering over-allotments in the sale of the
Firm Shares, the Company grants to the Underwriters the right to purchase up to
an additional 825,000 shares of Common Stock (the "Option Shares"), which option
shall be exercisable in the manner, and such Option Shares shall be sold in the
denominations, set forth in Section 3(b) below. The Firm Shares and Option
Shares are herein sometimes referred to as the "Shares."
The Company is the general partner of Gladstone Commercial Limited
Partnership (the "Operating Partnership"), a Delaware limited partnership that
serves as the Company's primary operating partnership subsidiary.
Section 1. Representations and Warranties of the Company and Operating
Partnership. The Company and the Operating Partnership jointly and severally
represent and warrant to, and agree with, each of the Underwriters that:
(a) The Company has prepared and filed with the Securities and Exchange
Commission (the "Commission") a registration statement on Form S-11
(Registration No. 333-106024) with respect to the Shares, including a
preliminary form of prospectus subject to completion, in conformity with the
requirements of the Securities Act of 1933, as amended (the
"1933 Act"), and the rules and regulations of the Commission thereunder (all
such rules and regulations, including Regulation S-X to the extent applicable,
referred to as the "1933 Act Regulations"); and such amendments to such
registration statement as may have been required, if any, prior to the date
hereof have been filed with the Commission, and such amendments have been
similarly prepared. Copies of such registration statement and amendment or
amendments and of each related preliminary prospectus, and the exhibits,
financial statements and schedules, as finally amended and revised, have been
delivered to you. The Company has prepared in the same manner, and proposes so
to file with the Commission, one of the following: (i) prior to effectiveness of
such registration statement, a further amendment thereto, including the form of
final prospectus, (ii) if the Company does not rely on Rule 434 of the 1933 Act
Regulations, a final prospectus in accordance with Rules 430A and 424(b) of the
1933 Act Regulations, or (iii) if the Company relies on Rule 434 of the 1933 Act
Regulations, a term sheet relating to the Shares that shall identify the
preliminary prospectus that it supplements containing such information as is
required or permitted by Rules 434, 430A and 424(b) of the 1933 Act Regulations.
The Company also may file a related registration statement with the Commission
pursuant to Rule 462(b) of the 1933 Act Regulations for the purpose of
registering additional shares of Common Stock, which registration statement will
be effective upon filing with the Commission. As filed, such amendment, any
registration statement filed pursuant to Rule 462(b) of the 1933 Act Regulations
and any term sheet and form of final prospectus, or such final prospectus, shall
include all Rule 430A Information (as hereinafter defined) and, except to the
extent that you shall agree in writing to a modification, shall be in all
respects in the form furnished to you prior to the date and time that this
Agreement was executed and delivered by the parties hereto, or, to the extent
not completed at such date and time, shall contain only such specific additional
information and other changes (beyond that contained in the latest preliminary
prospectus) as the Company shall have previously advised you in writing would be
included or made therein.
The term "Registration Statement" as used in this Agreement shall mean
such registration statement at the time such registration statement becomes
effective and, in the event any post-effective amendment thereto becomes
effective prior to the Closing Time (as hereinafter defined), shall also mean
such registration statement as so amended; provided, however, that such term
shall also include all Rule 430A Information contained in any Prospectus (as
hereinafter defined) and any Term Sheet (as hereinafter defined) and deemed to
be included in such registration statement at the time such registration
statement becomes effective as provided by Rule 430A of the 1933 Act
Regulations. The term "Preliminary Prospectus" shall mean any preliminary
prospectus referred to in the preceding paragraph and any preliminary prospectus
included in the Registration Statement at the time it becomes effective that
omits Rule 430A Information. The term "Prospectus" as used in this Agreement
shall mean (a) if the Company relies on Rule 434 of the 1933 Act Regulations,
the Term Sheet relating to the Shares that is first filed pursuant to Rule
424(b)(7) of the 1933 Act Regulations, together with the Preliminary Prospectus
identified therein that such Term Sheet supplements, or (b) if the Company does
not rely on Rule 434 of the 1933 Act Regulations, the prospectus relating to the
Shares in the form in which it is first filed with the Commission pursuant to
Rule 424(b) of the 1933 Act Regulations or, if no filing pursuant to Rule 424(b)
of the 1933 Act Regulations is required, shall mean the form of final prospectus
included in the Registration Statement at the time such Registration Statement
becomes effective. The term "Rule 430A Information" means information with
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respect to the Shares and the offering thereof permitted pursuant to Rule 430A
of the 1933 Act Regulations to be omitted from the Registration Statement when
it becomes effective. The term "462(b) Registration Statement" means any
registration statement filed with the Commission pursuant to Rule 462(b) of the
1933 Act Regulations (including the Registration Statement and any Preliminary
Prospectus or Prospectus incorporated therein at the time such registration
statement becomes effective). The term "Term Sheet" means any term sheet that
satisfies the requirements of Rule 434 of the 1933 Act Regulations. Any
reference to the "date" of a Prospectus that includes a Term Sheet shall mean
the date of such Term Sheet.
(b) No order preventing or suspending the use of any Preliminary
Prospectus has been issued by the Commission and no proceedings for that purpose
have been instituted or, to the knowledge of the Company, threatened by the
Commission or the state securities authority of any jurisdiction, and each
Preliminary Prospectus, at the time of filing thereof, conformed in all respects
to the requirements of the 1933 Act and the 1933 Act Regulations and did not
contain any 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, in
the light of the circumstances under which they were made, not misleading;
provided, however, that this representation and warranty shall not apply to any
statements or omissions made in reliance upon and in conformity with information
furnished in writing to the Company by an Underwriter expressly for use in the
Registration Statement or any 462(b) Registration Statement.
(c) When the Registration Statement and any 462(b) Registration
Statement shall become effective, or any Term Sheet that is part of the
Prospectus is filed with the Commission pursuant to Rule 434, when the
Prospectus is first filed pursuant to Rule 424(b) of the 1933 Act Regulations,
when any amendment to the Registration Statement or any 462(b) Registration
Statement becomes effective, when any supplement to the Prospectus or Term Sheet
is filed with the Commission, and at each Date of Delivery (as hereinafter
defined in Section 3), (i) the Registration Statement, the 462(b) Registration
Statement, the Prospectus, the Term Sheet and all amendments thereof and
supplements thereto will conform in all respects with the requirements of the
1933 Act and the 1933 Act Regulations and (ii) neither the Registration
Statement, the 462(b) Registration Statement, the Prospectus, any Term Sheet nor
any amendment or supplement thereto, will contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
in which they were made, not misleading; provided, however, that this
representation and warranty shall not apply to any statement or omission made in
reliance upon and in conformity with information furnished to the Company in
writing by an Underwriter expressly for use in the Registration Statement or any
462(b) Registration Statement.
(d) The Company has been duly formed and is existing as a corporation
under and by virtue of the laws of the State of Maryland and is in good standing
with the State Department of Assessments and Taxation of Maryland (the "SDAT"),
with all requisite corporate power and authority to own, lease and license its
properties, and conduct its business as currently carried on and described in
the Prospectus. The Company has qualified to do business and is in good standing
as a foreign corporation, in every jurisdiction in which the ownership or
leasing of its properties or the nature or conduct of its business, as described
in the Prospectus, requires such
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qualification, except where the failure to do so would not have a material
adverse effect on the condition, financial or otherwise, results of operations,
cash flows or prospects of the Company and its Subsidiaries considered as one
enterprise (a "Material Adverse Effect"). The Company does not own any interest
in or control, directly or indirectly, any corporation, association or other
entity except as set forth in the next paragraph.
(e) Upon completion of the offering of the Shares the Company will be
the sole general partner of the Operating Partnership and will own a 100%
interest in the Operating Partnership. The subsidiaries of the Company and the
Operating Partnership are listed on Schedule II attached hereto (the
"Subsidiaries"). Each Subsidiary has been duly organized and is validly existing
as a limited partnership, limited liability company or corporation in good
standing under the laws of its state of organization, with all requisite power
and authority to own and lease its properties, and conduct its business as
described in the Prospectus. Each Subsidiary has qualified to do business and is
in good standing as a foreign limited partnership, limited liability company or
corporation in every jurisdiction in which the ownership or leasing of its
properties or the nature or conduct of its business, as described in the
Prospectus, requires such qualification, except where the failure to do so would
not have a Material Adverse Effect.
(f) The Company has the corporate power to enter into this Agreement
and to consummate the transactions contemplated herein. The Company has the
corporate power to issue, sell and deliver the Shares as provided herein. This
Agreement has been duly authorized, executed and delivered by the Company and
constitutes the valid and binding agreement of the Company enforceable against
the Company in accordance with its terms, except to the extent that the
indemnification and contribution provisions set forth in Section 9 of this
Agreement may be limited by applicable law or equitable principles, and except
as enforceability may be limited by bankruptcy, reorganization, moratorium or
similar laws affecting the enforceability of creditors' rights generally and
rules of law governing specific performance, injunctive relief and other
equitable remedies. The capital stock, limited liability company interests or
partnership interests, as the case may be, of each Subsidiary have been duly
authorized and validly issued, are fully paid and non-assessable and, upon
completion of the formation transactions described in the Prospectus will be, in
the case of such interests to be owned directly or indirectly by the Company,
free and clear of any security interest, mortgage, pledge, lien, encumbrance,
claim or equity. No such equity interest in any Subsidiary was issued in
violation of the preemptive or similar right of any security holder of such
Subsidiary.
(g) The Operating Partnership has the full legal right, power and
authority to enter into this Agreement and to consummate the transactions
contemplated herein. This Agreement has been duly authorized, executed and
delivered by the Operating Partnership and constitutes the valid and binding
agreement of the Operating Partnership enforceable against the Operating
Partnership in accordance with its terms, except to the extent that the
indemnification and contribution provisions set forth in Section 9 of this
Agreement may be limited by applicable law or equitable principles, and except
as enforceability may be limited by bankruptcy, reorganization, moratorium or
similar laws affecting enforceability of creditors' rights generally and rules
of law governing specific performance, injunctive relief and other equitable
remedies.
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(h) Each consent, approval, authorization, order, designation or filing
by or with any governmental agency or body necessary for the valid
authorization, issuance, sale and delivery of the Shares, the execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby, has been made or obtained by the Company or
the Operating Partnership, and is in full force and effect, except as may be
required under the 1933 Act, the 1933 Act Regulations or applicable state or
foreign securities laws. The issuance, sale and delivery of the Shares, the
execution, delivery and performance of this Agreement, and the consummation of
the transactions contemplated by this Agreement, (i) will not result in a breach
or violation of any of the terms and provisions of, or constitute a default by
the Company under its Amended and Restated Articles of Incorporation, as further
amended or restated (the "Articles of Incorporation") or Bylaws or by the
Operating Partnership under its Certificate of Limited Partnership or Agreement
of Limited Partnership, as amended and/or restated (the "Partnership Agreement")
and (ii) will not result in a breach or violation of any of the terms or
provisions of, or constitute a default by the Company or any Subsidiary, under,
any provision of any indenture, mortgage, deed of trust, loan agreement, note,
lease or other agreement or instrument to which the Company or any Subsidiary is
a party or to which they or their properties is subject, or (iii) will not
result in a breach or violation of any statute, judgment, decree, order, rule or
regulation of any court or governmental agency or body applicable to the Company
or any Subsidiary or any of their properties, except, in each case, for such
breach or violation as would not have a Material Adverse Effect.
(i) The authorized, issued and outstanding shares of common stock of
the Company are as set forth in the Prospectus under the caption
"Capitalization". All the issued and outstanding shares of Common Stock of the
Company, including the Shares to be sold by the Company, have been duly
authorized and validly issued, and are, or when issued against payment therefor
as authorized by the Company's board of directors will be, fully paid and
non-assessable. The shares of Common Stock of the Company conform in all
material respects to the description of the Common Stock contained in the
Registration Statement and the Prospectus. All offers and sales of the Company's
shares of common stock prior to the date hereof were at all relevant times duly
registered under the 1933 Act or were exempt from the registration requirements
of the 1933 Act by reason of Sections 3(b), 4(2) or 4(6) thereof and were duly
registered or the subject of an available exemption from the registration
requirements of the applicable state securities or blue sky laws. The Shares to
be sold by the Company, when issued and delivered by the Company and paid for
pursuant to this Agreement, will be validly issued, fully paid and
non-assessable and will conform in all material respects to the description
thereof contained in the Prospectus. No preemptive rights of stockholders exist
with respect to any of the Shares under the General Corporation Laws of the
State of Maryland, the Articles of Incorporation or the Bylaws. No person or
entity holds a right to require or participate in the registration under the
1933 Act of the Shares. No person or entity has a right of participation or
first refusal with respect to the sale of the Shares by the Company. None of the
issued shares of Common Stock of the Company has been issued in violation of any
preemptive or similar rights. Except as described in the Registration Statement
and Prospectus, (A) there are no outstanding options, warrants or other rights
calling for the issuance of any shares of Common Stock of the Company or any
security convertible into or exchangeable for capital stock of the Company, (B)
there is no commitment, plan or arrangement to issue any shares of Common Stock
of the Company or any security convertible into or exchangeable for shares of
Common Stock of the
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Company, and (C) the Company does not own, directly or indirectly, any capital
stock or other equity securities of any other corporation or any ownership
interest in any partnership, limited liability company, joint venture,
association or other entity. The Operating Partnership has not issued any
security or other equity interest other than units of partnership interest
issued to the Company and its wholly-owned subsidiaries ("Units"). None of the
Units in the Operating Partnership has been or will be issued or is owned or
held in violation of any preemptive right. The outstanding Units in the
Operating Partnership have been issued by the Operating Partnership in
compliance with applicable federal and state securities laws.
(j) The financial statements of the Company included in the
Registration Statement and the Prospectus presents fairly the financial position
of the Company as of the date specified in conformity with generally accepted
accounting principles applied on a consistent basis and in conformity with
Regulation S-X of the Commission. The amounts in the Prospectus under the
caption "Management's Discussion and Analysis of Financial Condition and
Results of Operations" are accurately computed, fairly present the information
shown therein and have been determined on a basis consistent with the financial
statements included in the Registration Statement and the Prospectus. No other
financial statements or schedules are required by Form S-11 or under the 1933
Act Regulations to be included in the Registration Statement, the Prospectus or
any Preliminary Prospectus.
(k) PricewaterhouseCoopers LLP, which has audited and is reporting upon
the financial statements included in the Registration Statement and the
Prospectus, are, and were during the periods covered by their report included in
the Registration Statement and the Prospectus, independent public accountants
with respect to the Company and its Subsidiaries within the meaning of the 1933
Act and the 1933 Act Regulations.
(l) The Company has obtained, for the benefit of the Underwriters, from
each of the Company's directors and executive officers named in the Registration
Statement, a written agreement conforming to the description under "Lockup
Agreement" in the "Underwriting" section of the Prospectus.
(m) Since the respective dates as of which information is given in the
Registration Statement and the Prospectus, there has not been (i) any change in
the capital stock, long-term debt, or short-term borrowings of the Company and
the Subsidiaries on a consolidated basis; (ii) any event or development which
could reasonably be seen as having a Material Adverse Effect; (iii) any
liability or obligation, direct or contingent, incurred or undertaken by the
Company or any Subsidiary, except for liabilities or obligations incurred in the
ordinary course of business or which otherwise would not have a Material Adverse
Effect; or (iv)
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any declaration or payment of any dividend or distribution of any kind on or
with respect to the Company's shares of common stock.
(n) The Company is not in violation of its Articles of Incorporation or
Bylaws and no Subsidiary is in violation of its applicable organizational
documents (including, without limitation, partnership and limited liability
company agreements) and, as of the date hereof, no default exists, and no event
has occurred, nor state of facts exists, which, with notice or after the lapse
of time to cure or both, would constitute a default in the due performance and
observance of any obligation, agreement, covenant, consideration or condition
contained in any indenture, mortgage, deed of trust, loan agreement, note, lease
or other agreement or instrument to which the Company or any Subsidiary is a
party or by which it or any of its properties is subject, and no violation of
any law, order, rule, regulation, writ, injunction or decree of any government,
governmental instrumentality or court, domestic or foreign, has occurred or
exists, in any such case where the consequences of such violation or default
would have a Material Adverse Effect.
(o) [Intentionally Omitted]
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(p) [Intentionally Omitted]
(q) The Company does not own any real or personal property or hold any
property under a ground lease or other lease other than the lease of the
company's principal executive offices.
(r) Except as described in the Prospectus, there is not pending, nor to
the Company's and the Operating Partnership's knowledge threatened, any action,
suit, proceeding, inquiry or investigation, against the Company, any Subsidiary
or any of their respective officers, directors or stockholders or to which the
properties, assets or rights of the Company or its Subsidiaries are subject,
before or brought by any court or governmental agency or body or board of
arbitrators, which would, if adversely determined, have a Material Adverse
Effect, or which could prevent consummation of the transactions contemplated by
this Agreement.
(s) There are no contracts or other documents required by the 1933 Act
or the 1933 Act Regulations to be described in or incorporated by reference into
the Registration Statement or the Prospectus or to be filed as exhibits to the
Registration Statement which have not been
8
accurately described in all material respects in the Prospectus or incorporated
or filed as required. The agreements to which the Company or any Subsidiary is
party which are described in the Registration Statement and the Prospectus are
valid and enforceable in all material respects by the Company and/or its
Subsidiary except as enforceability may be limited by bankruptcy,
reorganization, moratorium or similar laws affecting the enforceability of
creditors' rights generally and rules of law governing specific performance,
injunctive relief and other equitable remedies, and, to the best of the
Company's and the Operating Partnership's knowledge, no party thereto is in
breach or default under any of such agreements except where such breach or
default would not have a Material Adverse Effect.
(t) The Company or a Subsidiary owns, possesses or has obtained all
permits, licenses, franchises, certificates, consents, orders, approvals and
other authorizations of governmental or regulatory authorities and other third
parties as are necessary to own or lease, its properties and to carry on its
businesses as described in the Registration Statement, except where a failure to
own, possess or obtain such permits, licenses, franchises, certificates,
consents, orders, approvals and other authorizations would not have a Material
Adverse Effect. Neither the Company nor the Operating Partnership has received
any notice relating to termination, revocation or modification of any such
license, permit, franchise, certificate, consent, order, approval or
authorization, which termination, revocation or modification would have a
Material Adverse Effect.
(u) The Company or a Subsidiary owns or possesses all trademarks,
service marks, tradenames, trademark registrations, service xxxx registrations,
copyrights, licenses, trade secrets, processes and other intangible property
rights and know-how necessary for the conduct of its business as described in
the Registration Statement (collectively, the "Intellectual Property"). Except
as described in the Prospectus, (i) no third parties have received rights to any
such Intellectual Property from the Company or any Subsidiary, other than
licenses granted in the ordinary course of business; (ii) to the Company's and
the Operating Partnership's knowledge, there is no infringement by third parties
of any such Intellectual Property, (iii) there is no pending or, to the
Company's and the Operating Partnership's knowledge, threatened action, suit,
proceeding or claim by others challenging the Company's or a Subsidiary's rights
in or to any such Intellectual Property, and the Company and the Operating
Partnership are unaware of any facts which would form a basis for any such
claim; (iv) there is no pending or, to the Company's and the Operating
Partnership's knowledge, threatened action, suit, proceeding or claim by others
challenging the validity or scope of any such Intellectual Property, and the
Company and the Operating Partnership are unaware of any facts which would form
a basis for any such claim; and (v) there is no pending or, to the Company's and
the Operating Partnership's knowledge, threatened action, suit, proceeding or
claim by others that the Company or any Subsidiary infringes or otherwise
violates, or would infringe or otherwise violate any patent, trademark,
copyright, trade secret or other proprietary rights of others, and the Company
and the Operating Partnership are unaware of any facts which would form a basis
for any such claim.
(v) The Company, the Operating Partnership and each Subsidiary have
implemented controls and other procedures that are designed to ensure that
information required to be disclosed by the Company in the reports that it files
or submits under the Securities Exchange Act of 1934 is recorded, processed,
summarized and reported, within the time periods specified in the Commission's
rules and forms and is accumulated and communicated to the Company's management,
including its chief executive officer and chief financial officer, or persons
performing similar functions, as appropriate to allow timely decisions
regarding required disclosure; and the Company makes and keeps books, records,
and accounts, which, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of the assets of the Company, the Operating
Partnership and each Subsidiary; and the Company, the Operating Partnership and
each Subsidiary 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; and, to the Company's knowledge, neither the Company, the Operating
Partnership nor any Subsidiary, nor any employee or agent thereof, has made any
payment of funds of the Company or any Subsidiary, as the case may be, or
received or retained any funds, and no funds of the Company, the Operating
Partnership or any Subsidiary, as the case may be, have been set aside to be
used for any payment, in each case in violation of any law, rule or regulation.
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(w) The Company and each Subsidiary have filed all federal, state,
local and foreign income and franchise tax returns and tax forms required to be
filed and are not in default in the payment of any taxes which were payable
pursuant to said returns or any assessments with respect thereto, other than any
which the Company or such Subsidiary is contesting in good faith and as to which
adequate reserves have been provided. Such returns and forms are complete and
correct in all material respects. The Company and each Subsidiary have made all
payroll withholdings required to be made by them with respect to employees. The
charges, accruals and reserves on the books of the Company and each Subsidiary
in respect of any tax liability for any year not finally determined are adequate
to meet any assessments or reassessments for additional taxes. There have been
no tax deficiencies asserted and, to the Company's and the Operating
Partnership's knowledge, no tax deficiency might be reasonably asserted or
threatened against the Company or any Subsidiary that could individually or in
the aggregate have a Material Adverse Effect.
(x) The Company and its Subsidiaries maintain insurance (issued by
insurers of recognized financial responsibility) of the types and in the amounts
generally deemed adequate for their business and, to the Company's and the
Operating Partnership's knowledge, generally consistent with insurance coverage
maintained by similar companies in similar businesses, including, but not
limited to, insurance covering real and personal property owned or leased by the
Company and its Subsidiaries against theft, damage, destruction, acts of
vandalism and all other risks customarily insured against, and casualty and
liability insurance covering the Company's and its Subsidiaries' operations, all
of which insurance is in full force and effect.
(y) No labor problem exists with the Company's or any Subsidiary's
employees or, to the Company's and the Operating Partnership's knowledge, is
threatened or imminent, that would have a Material Adverse Effect.
(z) Neither the Company nor its officers, directors, stockholders or
affiliates, have taken, and such parties will not take, directly or indirectly,
any action designed to, or that might be reasonably expected to, cause or result
in or constitute, the stabilization or manipulation of the price of the Shares
to facilitate the sale or resale of the Shares.
(aa) The shares of Common Stock have been registered pursuant to
Section 12(g) of the Securities Exchange Act of 1934, as amended (the "1934
Act") and the Shares have been approved for listing on the Nasdaq Stock Market's
National Market (the "Nasdaq National Market") subject to official notice of
issuance.
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(bb) Neither the Company nor any Subsidiary has incurred any liability
for a fee, commission or other compensation on account of the employment of a
broker or finder in connection with the transactions contemplated by this
Agreement other than as contemplated hereby.
(cc) Neither the Company nor any Subsidiary is, nor will it become as a
result of the transactions contemplated hereby, nor does it intend to conduct
its business in a manner that could cause either of them to become, an
"investment company" or a company controlled by an "investment company" within
the meaning of the Investment Company Act of 1940, as amended.
(dd) Except as described in the Prospectus and except for the issuance
of options to purchase shares of Common Stock pursuant to the Company's 2003
Equity Incentive Plan, the Company has not sold or issued any shares of Common
Stock during the six-month period preceding the date of the Prospectus,
including any sales pursuant to Rule 144A under, or Regulations D or S of, the
1933 Act Regulations.
(ee) [Intentionally Omitted]
(ff) No relationship, direct or indirect, exists between or among the
Company on the one hand, and the directors, officers, or stockholders of the
Company on the other hand, which is required to be described in the Prospectus
and which is not so described.
(gg) [Intentionally Omitted]
(hh) The Company is organized in conformity with the requirements for
qualification as a real estate investment trust under the Internal Revenue Code
of 1986, as amended (the "Code"), and the Company's method of operation will
enable it to meet the requirements for taxation as a real estate investment
trust under the Code. The Operating Partnership will be treated as partnerships
for federal income purposes and not as a corporation or association taxable as a
corporation.
(ii) The Company and its Subsidiaries are in compliance in all material
respects with all currently applicable provisions of the Employee Retirement
Income Security Act of 1974, as amended, including the regulations and published
interpretations thereunder (herein called "ERISA"); no "reportable event" (as
defined in ERISA) has occurred with respect to any "pension plan" (as defined in
Section 3(2) ERISA) for which the Company or any Subsidiary would have any
liability; the Company and its Subsidiaries have not incurred and do not expect
to incur liability under (i) Title IV of ERISA with respect to termination of,
or withdrawal from, any "pension plan" or (ii) Sections 412 or 4971 of the Code;
and each "pension plan" for which
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the Company or any Subsidiary would have any liability that is intended to be
qualified under Section 401(a) of the Code is so qualified in all material
respects and nothing has occurred, whether by action or by failure to act, that
would reasonably be expected to cause the loss of such qualification.
Section 2. [Intentionally Omitted]
Section 3. Sale and Delivery of Shares to the Underwriters; Closing.
(a) On the basis of the representations and warranties herein
contained, and subject to the terms and conditions herein set forth, the Company
agrees to sell to the Underwriters named in Schedule I hereto, and each such
Underwriter agrees, severally and not jointly, to purchase from the Company, at
a purchase price of $_____ per share, the aggregate number of Firm Shares set
forth opposite the name of such Underwriter in Schedule I hereto. The purchase
price represents an initial public offering price of $_____ per share and an
underwriting discount of $_____ per share.
(b) On the basis of the representations and warranties herein
contained, and subject to the terms and conditions herein set forth, the Company
hereby grants an option to the Underwriters, to purchase up to an additional
825,000 Option Shares on the same terms and conditions as the Firm Shares. The
option hereby granted will expire if not exercised within the 30 day period
after the first date on which the Firm Shares are released by you for sale to
the public. The option granted hereby may be exercised by you, as
Representatives of the several Underwriters, in whole or in part (but not more
than once), only for the purpose of covering over-allotments that may be made in
connection with the offering and distribution of the Firm Shares, by giving
written notice to the Company. The notice of exercise shall set forth the number
of Option Shares as to which the several Underwriters are exercising the option,
and the time and date of payment and delivery thereof. Such time and date of
delivery (the "Date of Delivery") shall be determined by you but shall not be
earlier than the second business day after the date on which the notice of the
exercise of the option shall have been given nor later than seven full business
days after the exercise of such option, nor in any event prior to the Closing
Time. If the option is exercised as to all or any portion of the Option Shares,
the Option Shares as to which the option is exercised shall be purchased by the
Underwriters, severally and not jointly, in their respective underwriting
obligation proportions.
(c) Payment of the purchase price for and delivery of the Firm Shares
shall be made at the offices of Ferris, Baker, Xxxxx, Incorporated, 0000
Xxxxxxxxxxx Xxxx, Xxxxx 000, XxXxxx, Xxxxxxxx 00000 or at such other place as
shall be agreed upon by the Company and you, at 9:00 A.M. (prevailing Eastern
time), either (i) on the fourth full business day after the effective date of
the Registration Statement, or (ii) at such other time thereafter as you, and
the Company shall determine (unless, in either case, postponed pursuant to
Section 12 hereof) (such date and time of payment and delivery being herein
called the "Closing Time") (the Closing Time and each Date of Delivery, if any,
being sometimes referred to as a "Closing Date") but in no event later than
August 31, 2003. In addition, in the event that any or all of the Option Shares
are purchased by the Underwriters, payment of the purchase price for and
delivery of the Option Shares shall be made at the offices of Ferris, Baker,
Xxxxx, Incorporated in the manner set forth above, or at such other
12
place as you shall determine, on the Date of Delivery as specified in the notice
from you to the Company. Payment for the Firm Shares and the Option Shares in
immediately available United States funds shall be made by the order of the
Company against delivery to you for the respective accounts of the Underwriters
of the Shares to be purchased by them.
(d) The Shares to be purchased by the Underwriters shall be in such
denominations and registered in such names as you may request in writing at
least one full business day before the Closing Time or the Date of Delivery, as
the case may be. The Shares will be made available at the offices of Ferris,
Baker, Xxxxx, Incorporated or at such other place as Ferris, Baker, Xxxxx,
Incorporated may designate for examination and packaging not later than 9:00
A.M. (prevailing Eastern time) on the business day prior to the Closing Time or
the Date of Delivery, as the case may be.
Section 4. Certain Covenants of the Company and the Operating
Partnership. The Company and the Operating Partnership covenant and agree with
each Underwriter as follows:
(a) The Company will use its best efforts to cause the Registration
Statement to become effective (if not yet effective at the date and time that
this Agreement is executed and delivered by the parties hereto). If the Company
elects to rely upon Rule 430A of the 1933 Act Regulations or the filing of the
Prospectus is otherwise required under Rule 424(b) of the 1933 Act Regulations,
and subject to the provisions of Section 4(b) of this Agreement, the Company
will comply with the requirements of Rule 430A and will file the Prospectus,
properly completed, pursuant to the applicable provisions of Rule 424(b), or a
Term Sheet pursuant to and in accordance with Rule 434, within the time period
prescribed. If the Company elects to rely upon Rule 462(b), the Company shall
file a 462(b) Registration Statement with the Commission in compliance with Rule
462(b) by 10:00 A.M., prevailing Eastern time on the date after the date of this
Agreement, and the Company shall at the time of filing either pay to the
Commission the filing fee for the Rule 462(b) Registration Statement or give
irrevocable instructions for the payment of such fee. The Company will notify
you immediately and confirm the notice in writing, (i) when the Registration
Statement, the 462(b) Registration Statement or any post-effective amendment to
the Registration Statement, shall have become effective, or any supplement to
the Prospectus or any amended Prospectus shall have been filed, (ii) of the
receipt of any comments from the Commission, (iii) of any request by the
Commission to amend the Registration Statement or the 462(b) Registration
Statement or amend or supplement the Prospectus or for additional information,
and (iv) of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or any 462(b) Registration Statement
or of any order preventing or suspending the use of any Preliminary Prospectus,
or of the suspension of the qualification of the Shares for offering or sale in
any jurisdiction, or of the institution or threat of any proceedings for any of
such purposes. The Company will use every reasonable effort to prevent the
issuance of any such stop order or of any order preventing or suspending such
use and, if any such order is issued, use its reasonable efforts to obtain the
withdrawal thereof at the earliest possible moment.
(b) The Company will not at any time file or make any amendment to the
Registration Statement or any amendment or supplement (i) to the Prospectus, if
the Company has not elected to rely upon Rule 430A, or (ii) if the Company has
elected to rely upon Rule
13
430A, to either the Prospectus included in the Registration Statement at the
time it becomes effective or to the Prospectus filed in accordance with Rule
424(b) or any Term Sheet filed in accordance with Rule 434, or (iii) if the
Company has elected to rely upon Rule 462(b), to any 462(b) Registration
Statement, in any case if you shall not have previously been advised and
furnished a copy thereof a reasonable time prior to the proposed filing, or if
you or counsel for the Underwriters shall reasonably object to such amendment or
supplement.
(c) The Company has furnished or will furnish to you, at the Company's
expense, as soon as available, as many conformed copies of the Registration
Statement as originally filed and of all amendments thereto, whether filed
before or after the Registration Statement becomes effective, copies of all
exhibits and documents filed therewith and copies of all consents and
certificates of experts, as you may reasonably request. The copies of the
Registration Statement and each amendment thereto furnished to the Underwriters
will be identical to the electronically transmitted copies thereof filed with
the Commission pursuant to XXXXX, except to the extent permitted by Regulation
S-T.
(d) The Company will deliver to each Underwriter, at the Company's
expense, from time to time, as many copies of each Preliminary Prospectus as
such Underwriter may reasonably request, and the Company hereby consents to the
use of such copies for purposes permitted by the 1933 Act and the 1933 Act
Regulations. The Company will deliver to each Underwriter, at the Company's
expense, as soon as the Registration Statement shall have become effective, and
thereafter from time to time as requested during the period when the Prospectus
is required to be delivered under the 1933 Act and the 1933 Act Regulations,
such number of copies of the Prospectus (as supplemented or amended) as each
Underwriter may reasonably request. The Preliminary Prospectus and Prospectus,
and any supplements or amendments thereto furnished to the Underwriters will be
identical to the electronically transmitted copies thereof filed with the
Commission pursuant to XXXXX, except to the extent permitted by Regulation S-T.
(e) The Company will use its best efforts to comply with the 1933 Act
and the 1933 Act Regulations so as to permit the completion of the distribution
of the Shares as contemplated in this Agreement and in the Prospectus. In case
you are required to deliver a prospectus within nine months after the time of
issue of the Prospectus or any Term Sheet in connection with the offering or
sale of the Shares and if at such time any event shall have occurred as a result
of which the Prospectus or any Term Sheet as then amended or supplemented would
include an untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements therein, in light of the
circumstances under which they were made when such Prospectus or any Term Sheet
is delivered, not misleading, or, if for any reason it shall be necessary during
such period, in the opinion of counsel for the Underwriters or for the Company,
to amend or supplement the Prospectus or any Term Sheet in order to comply with
the 1933 Act or the 1933 Act Regulations, the Company will notify you and upon
your request prepare promptly and furnish without charge to each Underwriter and
to any dealer in securities as many copies as you may from time to time
reasonably request of an amended Prospectus or any Term Sheet or a supplement to
the Prospectus or any Term Sheet which will correct such statement or omission
or effect such compliance. In case any Underwriter is required to deliver a
prospectus in connection with sales of any of the Shares at any time nine months
or more after the time of
14
issue of the Prospectus or any Term Sheet, upon your request but at the expense
of such Underwriter, the Company will prepare and deliver to such Underwriter as
many copies as you may request of an amended or supplemented Prospectus or any
Term Sheet complying with the requirements of Section 10(a)(3) of the 1933 Act.
(f) The Company will use its best efforts, in cooperation with you, to
qualify the Shares for offering and sale under the applicable securities laws of
such states and other jurisdictions as you may designate and to maintain such
qualifications in effect for as long as may be necessary to complete the
distribution of the Shares; provided, however, that the Company shall not be
obligated to file any general consent to service of process or to qualify as a
foreign entity in any jurisdiction in which it is not otherwise so subject. The
Company will file such statements and reports as may be required by the laws of
each jurisdiction in which the Shares have been qualified as above provided.
(g) The Company will use the net proceeds received by it from the sale
of the Shares in the manner specified in the Prospectus under the caption "Use
of Proceeds."
(h) The Company will make generally available to its security holders
as soon as practicable, but in any event not later than the end of the fiscal
quarter first occurring after the first anniversary of the "effective date of
the Registration Statement" (as defined in Rule 158(c) of the 1933 Act
Regulations), an earnings statement (in reasonable detail but which need not be
audited) complying with the provisions of Section 11(a) of the 1933 Act and Rule
158 of the 1933 Act Regulations and covering a period of at least 12 months
beginning after the effective date of the Registration Statement.
(i) The Company, during the period when the Prospectus is required to
be delivered under the 1933 Act or the 1934 Act, will file all documents
required to be filed with the Commission pursuant to the 1934 Act within the
time periods required by the 1934 Act and the rules and regulations of the
Commission thereunder.
(j) During a period of 180 days from the date of the Prospectus, the
Company will not, without your prior written consent (i) directly or indirectly,
offer, sell, contract to sell, sell any option or contract to purchase, purchase
any option or contract to sell, grant any option, right or warrant to purchase
or otherwise transfer or dispose of, any Common Share or securities convertible
into or exercisable or exchangeable for shares of Common Stock or file any
registration statement under the 1933 Act with respect to any of the foregoing,
or (ii) enter into any swap or any other agreement or other transaction that
transfers, in whole or in part, directly or indirectly, the economic consequence
of ownership of the Common Stock, whether any such swap or transaction described
in clause (i) or (ii) above is to be settled by delivery of shares of Common
Stock or such other securities, in cash or otherwise. The foregoing sentence
shall not apply to (A) any shares of Common Stock issued by the Company upon the
exercise of an option or warrant or the conversion of a security described in
the Prospectus, (B) any shares of Common Stock issued or options to purchase
shares of Common Stock granted pursuant to the Company's 2003 Equity Incentive
Plan, (C) any shares of Common Stock issued pursuant to any non-employee
director stock plan or dividend reinvestment plan, warrant or the conversion of
a security outstanding upon completion of the formation transactions described
in the Prospectus
15
or contributions to employee benefit plans in existence on the Closing Date; (D)
any Units issued in exchange for the properties and any real property or
interest in any real property acquired after the date hereof, or (E) any
securities issued by the Company in connection with any merger or acquisition by
the Company of securities or assets of a party that is not an affiliate of the
Company.
(k) The Company will maintain a transfer agent and, if necessary under
the jurisdiction of incorporation of the Company, a registrar (which may be the
same entity as the transfer agent) for its shares of Common Stock.
(l) The Company will use it best efforts to maintain the listing of its
Shares (including the Shares) on the Nasdaq National Market.
(m) The Company is familiar with the Investment Company Act of 1940, as
amended, and the rules and regulations thereunder, and will in the future
conduct its and the Operating Partnership's affairs, in such a manner so as to
ensure that the Company and the Operating Partnership will not be an "investment
company" within the meaning of the Investment Company Act of 1940 and the rules
and regulations thereunder.
(n) The Company will not, and will use its best efforts to cause its
officers, directors and affiliates not to, (i) take, directly or indirectly
prior to the termination of the underwriting syndicate contemplated by this
Agreement, any action designed to stabilize or manipulate the price of any
security of the Company, or which may cause or result in, or which might in the
future reasonably be expected to cause or result in, the stabilization or
manipulation of the price of any security of the Company, to facilitate the sale
or resale of any of the Shares, (ii) sell, bid for, purchase or pay anyone any
compensation for soliciting purchases of the Shares or (iii) pay or agree to pay
to any person any compensation for soliciting any order to purchase any other
securities of the Company.
(o) If at any time during the 30-day period after the Registration
Statement becomes effective, any publication or event relating to or affecting
the Company shall occur as a result of which in your reasonable opinion the
market price of the Common Stock has been or is likely to be materially affected
(regardless of whether such publication or event necessitates a supplement or
amendment of the Prospectus) and after written notice from you advising the
Company to the effect set forth above, the Company agrees to forthwith prepare,
consult with you concerning the substance of, and disseminate a press release or
other public statement, reasonably satisfactory to you, responding to or
commenting on such publication or event.
(p) The Company will file timely and accurate information with the
Commission in accordance with Rule 463 of the 1933 Act Regulations or any
successor provision.
(q) The Company will supply you with copies of all correspondence to
and from and all documents issued to and by the Commission or the Commission
staff in connection with the registration of the Shares under the 1933 Act.
16
(r) The Company shall provide the Underwriters and/or their counsel
with copies of or access to all closing documents in respect of the purchase of
each property as soon as practicable prior to the closing of the purchase of
such property.
Section 5. [Intentionally Omitted]
Section 6. Payment of Expenses.
(a) The Company will pay or cause to be paid and bear all costs, fees
and expenses incident to the performance of its obligations under this
Agreement, including (i) the preparation, printing and filing of the
Registration Statement (including financial statements and exhibits), as
originally filed and as amended, the Preliminary Prospectuses and the Prospectus
and any amendments or supplements thereto, and the cost of furnishing copies
thereof to the Underwriters; (ii) the preparation, printing and distribution of
this Agreement, any Agreement Among Underwriters, and Selected Dealer Agreement;
(iii) the issuance and delivery of the Shares to the Underwriters, including any
transfer taxes payable upon the sale of the Shares to the Underwriters (other
than transfer taxes on resales by the Underwriters); (iv) the fees and
disbursements of the Company's counsel and accountants; (v) the qualification of
the Shares under the applicable securities laws in accordance with Section 4(e)
hereof and any filing for review of the offering with the NASD, including filing
fees and the reasonable fees and disbursements of counsel for the Underwriters
in connection therewith; (vi) the transfer agent's and registrar's fees and all
miscellaneous expenses referred to in Item 31 of the Registration Statement;
(vii) costs related to travel and lodging incurred by the Company and its
representatives relating to meetings with and presentations to prospective
purchasers of the Shares and, with the prior approval of the Company, one half
of the cost of any aircraft chartered in connection with the road show; and
(viii) all other costs and expenses incident to the performance of the Company's
and the Operating Partnership's obligations hereunder (including costs incurred
in closing the purchase of the Option Shares, if any) that are not otherwise
specifically provided for in this section. The Company, upon your request, will
provide funds in advance for filing fees in connection with "blue sky"
qualifications and the NASD.
(b) If the sale of Shares provided for herein is not consummated (other
than as a result of a breach of this Agreement by one or more of the
Underwriters), the Company and the Operating Partnership will reimburse the
Underwriters on demand for all reasonable out-of-pocket expenses, including
fifty percent (50%) of the fees and disbursements of Underwriters' counsel,
reasonably incurred by the Underwriters in connection with the transactions
contemplated by this Agreement.
(c) [Intentionally Omitted]
Section 7. Conditions of Underwriters' Obligations. The obligations of
the Underwriters to purchase and pay for the Shares that they have severally
agreed to purchase pursuant to this Agreement (whether Firm Shares at the
Closing Time or, upon exercise of the
17
option granted in Section 3, Option Shares on the Date of Delivery) are subject
to the following conditions:
(a) The Registration Statement shall have become effective not later
than 5:30 P.M., prevailing Eastern time, on the date of this Agreement or, with
your consent, at a later time and date not later, however, than 5:30 P.M.,
prevailing Eastern time, on the first business day following the date hereof, or
at such later time or on such later date as you may agree to in writing; as of
such Closing Date the Registration Statement shall remain effective and no stop
order suspending the effectiveness of the Registration Statement shall have been
issued under the 1933 Act and no proceedings for that purpose shall have been
instituted or shall be pending or, to your knowledge or the knowledge of the
Company or the Operating Partnership, shall be contemplated by the Commission,
and any request on the part of the Commission for additional information shall
have been complied with to the reasonable satisfaction of counsel for the
Underwriters. If the Company has elected to rely upon Rule 430A, a prospectus
containing the Rule 430A Information shall have been filed with the Commission
in accordance with Rule 424(b) (or a post-effective amendment providing such
information shall have been filed and declared effective in accordance with the
requirements of Rule 430A) or, if the Company has elected to rely on Rule 434, a
Term Sheet shall have been filed with the Commission in accordance with Rule
424(b).
(b) You shall have received the favorable opinion, dated such Closing
Date, of Xxxxxx Godward LLP, counsel for the Company, together with signed or
reproduced copies of such opinions for each of the other Underwriters, in form
and substance satisfactory to you and counsel for the Underwriters covering such
matters as shall be customary for transactions of the nature contemplated by
this Agreement. In addition, you shall have received the favorable opinion,
dated such Closing Date, of Xxxxxx Godward LLP, together with signed or
reproduced copies of such opinion for each of the other Underwriters, in form
and substance satisfactory to you and counsel for the Underwriters, as to the
qualification of the Company as a REIT, the status of the Operating Partnership
as a partnership, and the lack of status of the Operating Partnership as a
publicly traded partnership, in each case for federal income tax purposes.
(c) You shall have received a favorable opinion from Bass, Xxxxx & Xxxx
PLC, counsel for the Underwriters, dated such Closing Date, with respect to the
Registration Statement, the Prospectus and other related matters as the
Underwriters may reasonably require, and the Company and the Operating
Partnership shall have furnished to such counsel such documents as they
reasonably request for the purpose of enabling them to pass upon such matters.
In giving such opinion such counsel may assume, as to all matters governed by
the laws of jurisdictions other than the federal law of the United States and
the law of the State of Tennessee, that the laws of such jurisdictions are
identical to the laws of the State of Tennessee. Such counsel may also state
that, insofar as such opinion involves factual matters, they have relied, to the
extent they deem proper, upon certificates of officers of the Company and its
Subsidiaries and certificates of public officials.
(d) As of such Closing Date,
18
(i) the Registration Statement, any 462(b) Registration
Statement, and the Prospectus, as they may then be amended or
supplemented, shall contain all statements that are required to be
stated therein under the 1933 Act and the 1933 Act Regulations and in
all respects shall conform to the requirements of the 1933 Act and the
1933 Act Regulations, the Company shall have complied in all respects
with Rule 430A (if it shall have elected to rely thereon) and neither
the Registration Statement, any 462(b) Registration Statement nor the
Prospectus, as they may then be amended or supplemented, shall 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, in light of the circumstances under which they were made, not
misleading;
(ii) there shall not have been any change in the capital stock
or long-term debt of the Company or the Operating Partnership or any
change, or any development involving a prospective change, in or
affecting the business, general affairs, management, condition
(financial or otherwise), stockholders' equity, results of operations,
properties or prospects of the Company or the Operating Partnership,
otherwise than as set forth in the Prospectus, the effect of which is,
in your judgment, so material and adverse as to make it impracticable
or inadvisable to proceed with the completion of the public offering of
the Shares;
(iii) no action, suit or proceeding at law or in equity before
or by any federal, state or other commission, court, board or
administrative agency shall be pending or, to the Company's knowledge,
threatened against the Company or the Operating Partnership that would
be required to be set forth in the Prospectus, other than as set forth
therein, wherein an unfavorable decision, ruling or finding would have
a Material Adverse Effect;
(iv) the Company and the Operating Partnership shall have
complied with all agreements and satisfied all conditions contained
herein in all material respects on their respective parts to be
performed or satisfied at or prior to such Closing Date; and
(v) the representations and warranties of the Company and the
Operating Partnership set forth in Section 1 shall be accurate in all
material respects as though expressly made at and as of such Closing
Date. You shall have received certificates, dated as of such Closing
Date, executed by the President and the Chief Financial Officer of the
Company to such effect and with respect to the following additional
matters:
(A) the Registration Statement has become effective
under the 1933 Act and no stop order suspending the
effectiveness of the Registration Statement or preventing or
suspending the use of the Prospectus has been issued, and no
proceedings for that purpose have been instituted or are
pending or, to their knowledge, threatened under the 1933 Act;
(B) they have reviewed the Registration Statement,
any 462(b) Registration Statement and the Prospectus and when
the Registration Statement and any 462(b) Registration
Statement became effective and at all times subsequent thereto
up to the delivery of such certificate, the Registration
19
Statement, any 462(b) Registration Statement and the
Prospectus and any amendments or supplements thereto contained
all statements and information required to be included therein
or necessary to make the statements therein in light of the
circumstances in which they were made, not misleading and
neither the Registration Statement, any 462(b) Registration
Statement, the Prospectus nor any amendment or supplement
thereto included any untrue statement of a material fact or
omitted to state any material fact required to be stated
therein or necessary in order to make the statements therein
not misleading, and, since the effective date of the
Registration Statement, there has occurred no event required
to be set forth in an amended or supplemented Prospectus that
has not been so set forth;
(C) all agreements herein to be performed by the
Company and the Operating Partnership, on or prior to such
Closing Date have been duly performed; and
(D) since the date of this Agreement or since the
respective dates as of which information is given in the
Prospectus, the Company has not experienced any event or
circumstance that would have a Material Adverse Effect.
(e) At the time of execution of this Agreement, you shall have received
from PricewaterhouseCoopers LLP a letter addressed to you and dated the date
hereof, in form and substance satisfactory to you and your counsel, together
with signed or reproduced copies of such letter(s) for each of the other
Underwriters, (i) confirming that they are independent public accountants with
respect to the Company and the Operating Partnership within the meaning of the
1933 Act and the 1933 Act Regulations, and are in compliance with the applicable
requirements relating to the qualification of accountants under Rule 2-01 of
Regulation S-X of the Commission, (ii) stating that, in their opinion, the
financial statements and any supplementary financial information and schedules
included in the Registration Statement and covered by their opinion therein
comply as to form in all material respects with the applicable accounting
requirements of the 1933 Act, the 1933 Act Regulations and applicable Staff
Accounting Bulletins and other official accounting pronouncements of the
Commission, and (iii) containing such other statements and information of the
type ordinarily included in accountants' "comfort letters" to underwriters with
respect to the financial statements and certain financial and other information
contained in the Registration Statement and the Prospectus.
(f) With respect to the letter of PricewaterhouseCoopers LLP delivered
to you and referred to in the preceding paragraph (e) (the
"PricewaterhouseCoopers Initial Letter"), you shall have received from
PricewaterhouseCoopers LLP a letter of such accountants, in form and substance
satisfactory to you, addressed to the Underwriters and dated as of such Closing
Date, together with signed or reproduced copies of such letter for each of the
other Underwriters, to the effect that they reaffirm all statements, conclusions
and findings set forth in the PricewaterhouseCoopers Initial Letter; except that
the specified date referred to shall be a date not more than three business days
prior to the Closing Time.
(g) Subsequent to the execution and delivery of this Agreement, there
shall not have occurred any of the following: (i) trading in securities
generally on the New York Stock
20
Exchange or the American Stock Exchange or in the over-the-counter market, or
trading in any securities of the Company on any exchange or in the
over-the-counter market, shall have been suspended or the settlement of such
trading generally shall have been materially disrupted or minimum prices shall
have been established on any such exchange or such market by the Commission, by
such exchange or by any other regulatory body or governmental authority having
jurisdiction, (ii) a banking moratorium shall have been declared by federal or
state authorities, (iii) the United States shall have become engaged in
hostilities, there shall have been an escalation in hostilities involving the
United States or there shall have been a declaration of a national emergency or
war by the United States which, in either case, is such as to make it, in your
reasonable judgment, impracticable or inadvisable to proceed with the completion
of the public offering of the shares or (iv) there shall have occurred such a
material adverse change in general economic, political or financial conditions,
including without limitation as a result of terrorist activities after the date
hereof, or the effect of international conditions on the financial markets in
the United States, which, in either case, shall be such as to make it, in your
reasonable judgment, impracticable or inadvisable to proceed with the completion
of the public offering the Shares.
(h) As of such Closing Date, counsel for the Underwriters shall have been
furnished with all such documents, certificates and opinions as they may
reasonably request for the purpose of enabling them to pass upon the issuance
and sale of the Shares as contemplated in this Agreement and the matters
referred to in Section 7(c) and in order to evidence the accuracy and
completeness of any of the representations and warranties or statements of the
Company and the Operating Partnership, the performance of any of the covenants
of the Company and the Operating Partnership, or the fulfillment of any of the
conditions herein contained; and all proceedings taken by the Company at or
prior to such Closing Date in connection with the authorization, issuance and
sale of the Shares as contemplated in this Agreement shall be reasonably
satisfactory in form and substance to you and to counsel for the Underwriters.
The Company will furnish you with such number of conformed copies of such
opinion, certificates, letters and documents as you shall request.
(i) The NASD, upon review of the terms of the public offering of the
Shares, shall not have objected to such offering, such terms or the
Underwriters' participation in the same.
(j) The Firm Shares and the Option Shares, if any, shall have been
approved for listing on the Nasdaq National Market upon official notice of the
issuance, sale and evidence of satisfactory distribution thereof pursuant to
this Agreement.
(k) Each person identified in the Prospectus as a person required to sign
an agreement not to sell shares of Common Stock after the date hereof shall have
signed and delivered such agreement, in form and substance reasonably
satisfactory to the Underwriters and their counsel.
If any of the conditions specified in this Section 7 shall not have been
fulfilled when and as required by this Agreement to be fulfilled, this Agreement
may be terminated by you on notice to the Company at any time at or prior to
such Closing Date, and such termination shall be
21
without liability of any party to any other party. Notwithstanding any such
termination, the provisions of Section 9 shall remain in effect and shall
survive the termination of this Agreement.
Section 8. [Intentionally Omitted]
Section 9. Indemnification and Contribution.
(a) The Company and the Operating Partnership, jointly and severally,
agree to indemnify and hold harmless each Underwriter, its partners, directors
and officers and each person, if any, who controls any Underwriter within the
meaning of Section 15 of the 1933 Act or Section 20 of the Exchange Act, and the
successors and assigns of all such persons, from and against any losses, claims,
damages or liabilities, joint or several, to which any such Underwriter or any
such other person may become subject under the 1933 Act, the Exchange Act,
common law or otherwise, insofar as such losses, claims, damages or liabilities
(or actions in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement, the Prospectus, or any amendment or supplement thereto,
or arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances in which they were made, not
misleading, and will reimburse each Underwriter and each such partner, director,
officer, employee and controlling person for any legal or other expenses
reasonably incurred by such Underwriter, partner, director, officer, employee or
controlling person in connection with investigating or defending any such loss,
claim, damage, liability or action; provided, however, that the Company and the
Operating Partnership shall not be liable in any such case to the extent that
any such loss, claim, damage or liability arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission
made in the Registration Statement or the Prospectus, or such amendment or
supplement, in reliance upon and in conformity with information furnished to the
Company or the Operating Partnership by you or by any Underwriter through you
expressly for use therein, it being understood and agreed that the only such
information furnished by you or by any Underwriter through you consists of the
information specified in Section 9(h) below; provided, further, that the Company
and the Operating Partnership will not be liable for any such losses, claims,
damages, or liabilities arising from the sale of the Shares to any person if a
copy of the Prospectus (as first filed pursuant to Rule 424(b)) or the
Prospectus as amended or supplemented by all amendments or supplements thereto
which has been furnished to the Underwriters (within a reasonable amount of time
prior to such sale) shall not have been sent, mailed or given to such person, at
or prior to the written confirmation of the sale of such Shares to such person,
but only if and to the extent that such Prospectus, if so sent or delivered,
would have cured the defect giving rise to, and been a complete defense against
the person asserting, such loss, claim, damage or liability. This indemnity
agreement shall be in addition to any liabilities that the Company and the
Operating Partnership may otherwise have.
(b) [Intentionally Omitted.]
(c) Each Underwriter, severally but not jointly, will indemnify and hold
harmless the Company and the Operating Partnership against any losses, claims,
damages or liabilities to
22
which the Company or the Operating Partnership may become subject under the 1933
Act, the Exchange Act, common law or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon any untrue statement or alleged untrue statement of any material fact
contained in the Registration Statement, the Prospectus, or any amendment or
supplement thereto, or arise out of or are based upon the omission or the
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances in
which they were made, not misleading, in each case to the extent, but only to
the extent, that such untrue statement or alleged untrue statement or omission
or alleged omission was made in the Registration Statement or the Prospectus, or
such amendment or supplement, or any Blue Sky Application, in reliance upon and
in conformity with information furnished to the Company by such Underwriter
expressly for use therein, it being understood and agreed that the only such
information furnished by any Underwriter consists of the information specified
in Section 9(h) below, and will reimburse the Company and the Operating
Partnership for any legal or other expenses reasonably incurred by the Company
or the Operating Partnership in connection with investigating or defending any
such loss, claim, damage, liability or action. This indemnity agreement shall be
in addition to any liabilities that the Underwriters may otherwise have.
The indemnity agreement in this Section 9(c) shall extend upon the same
terms and conditions to, and shall inure to the benefit of, each director of the
Company, each officer of the Company who signed the Registration Statement, and
each person, if any, who controls the Company within the meaning of Section 15
of the 1933 Act or Section 20 of the Exchange Act, to the same extent as such
agreement applies to the Company.
(d) Within ten days after receipt by an indemnified party under subsection
(a) or (c) above of notice of commencement of any action, such indemnified party
shall, if a claim in respect thereof is to be made against the indemnifying
party under such subsection, notify the indemnifying party in writing of the
commencement thereof; no indemnification provided in Section 9(a) or 9(c) shall
be available to any party who shall fail to give notice as provided in this
Section 9(d) if the party to whom notice was not given was unaware of the
proceeding to which such notice would have related and was prejudiced by the
failure to give such notice, but the omission so to notify the indemnifying
party will not relieve the indemnifying party from any liability that it may
have to any indemnified party otherwise than under this Section 9. In case any
such action shall be brought against any indemnified party and it shall notify
the indemnifying party of the commencement thereof, the indemnifying party shall
be entitled to participate therein, and, to the extent that it shall wish,
jointly with any other indemnifying party, similarly notified, to assume the
defense thereof, with counsel satisfactory to such indemnified party, and after
notice from the indemnifying party to such indemnified party of its election so
to assume the defense thereof the indemnifying party shall not be liable to such
indemnified party for any legal or other expenses, other than reasonable costs
of investigation, subsequently incurred by such indemnified party in connection
with the defense thereof. The indemnified party shall have the right to employ
its own counsel in any such action, but the fees and expenses of such counsel
shall be at the expense of such indemnified party unless (i) the employment of
counsel by such indemnified party has been authorized by the indemnifying party,
(ii) the defendants in any such action include both the indemnified party and
the indemnifying party and the indemnified party shall have reasonably concluded
that there may be a conflict of interest
23
between the indemnifying party and the indemnified party in the conduct of the
defense of such action (in which case the indemnifying party shall not have the
right to direct the defense of such action on behalf of the indemnified party)
or (iii) the indemnifying party shall not in fact have employed counsel to
assume the defense of such action, in any of which events such fees and expenses
shall be borne by the indemnifying party provided that the indemnifying party
shall not be liable for more than one separate counsel (together with any local
counsel). The indemnifying party shall not be liable for any settlement of any
proceeding effected without its written consent, but if settled with such
consent or if there be a final judgment for the plaintiff, the indemnifying
party agrees to indemnify the indemnified party from and against any loss or
liability by reason of such settlement or judgment.
(e) [Intentionally Omitted]
(f) In order to provide for just and equitable contribution in
circumstances under which the indemnity provided for in this Section 9 is for
any reason judicially determined (by the entry of a final judgment or decree by
a court of competent jurisdiction and the expiration of time to appeal or the
denial of the last right of appeal) to be unenforceable by the indemnified
parties although applicable in accordance with its terms, the Company, the
Operating Partnership and the Underwriters shall contribute to the aggregate
losses, liabilities, claims, damages and expenses of the nature contemplated by
such indemnity incurred by the Company, the Operating Partnership and one or
more of the Underwriters, as incurred, in such proportions that (i) the
Underwriters are responsible pro rata for that portion represented by the
underwriting discount appearing on the cover page of the Prospectus bears to the
public offering price (before deducting expenses) appearing thereon, and (ii)
the Company and the Operating Partnership are responsible for the balance;
provided, however, that no person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the 0000 Xxx) shall be entitled to contribution
from any person who was not guilty of such fraudulent misrepresentation;
provided, further, that if the allocation provided above is not permitted by
applicable law, the Company, the Operating Partnership and the Underwriters
shall contribute to the aggregate losses in such proportion as is appropriate to
reflect not only the relative benefits referred to above but also the relative
fault of the Company, the Operating Partnership and the Underwriters in
connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities, as well as any other relevant equitable
considerations. Relative fault 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, by the Operating Partnership or by the Underwriters and
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission. The amount paid or payable by
a party as a result of the losses, claims, damages or liabilities referred to
above shall be deemed to include any legal or other fees or expenses reasonably
incurred by such party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this subsection (f), no
Underwriter shall be required to contribute any amount in excess of the amount
by which the total price at which the Shares underwritten by it and distributed
to the public were offered 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. For purposes of this
Section 9(f), the partners, directors, officers and employees and each person,
if any, who controls an
24
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the Exchange Act shall have the same rights to contribution as such Underwriter,
and each director of the Company, each officer of the Company who signed the
Registration Statement and each person, if any, who controls the Company within
the meaning of Section 15 of the 1933 Act or Section 20 of the Exchange Act
shall have the same rights to contribution as the Company.
(g) [Intentionally Omitted]
(h) For purposes of this Section 9, the Underwriters severally confirm,
and the Company and the Operating Partnership acknowledge, that the second
paragraph below the pricing table on the prospectus cover, the second and fifth
paragraphs under the caption "Underwriting" and the information set forth under
the headings "Stabilization, Short Positions and Penalty Bids" and "Electronic
Distribution" under the caption "Underwriting" in the Prospectus constitutes the
only information furnished by the Underwriters to the Company for inclusion in
the Prospectus or the Registration Statement.
Section 10. Representations and Agreements to Survive Delivery. The
representations, warranties, covenants, indemnities, agreements and other
statements of the Company and the Operating Partnership set forth in or made
pursuant to this Agreement will remain operative and in full force and effect
regardless of any investigation made by or on behalf of the Company, the
Operating Partnership, any Underwriter or any representative, officer, director
or any controlling person with respect to an Underwriter, the Company, or the
Operating Partnership, and will survive delivery of and payment for the Shares
or termination of this Agreement.
Section 11. Effective Date of Agreement and Termination.
(a) This Agreement shall become effective (i) if at the time of execution
of this Agreement the Registration Statement has not become effective, upon the
effectiveness of the Registration Statement, or (ii) if at the time of execution
of this Agreement, the Registration Statement has been declared effective,
immediately upon execution of this Agreement.
(b) You may terminate this Agreement by notice to the Company at any time
at or prior to the Closing Date in accordance with the last paragraph of Section
7 of this Agreement.
(c) If this Agreement is terminated pursuant to this Section 11, such
termination shall be without liability of any party to any other party, except
that, notwithstanding any such termination, (i) the provisions of Section 6 and
Section 9 shall remain in effect, and (ii) if any Shares have been purchased
hereunder, the representations and warranties in Section 1 and all obligations
under Section 4 shall also remain in effect.
Section 12. Default by One or More of the Underwriters.
(a) If any Underwriter shall default in its obligation to purchase the
Firm Shares which it has agreed to purchase hereunder, you may in your
discretion arrange for you or another party or other parties to purchase such
Firm Shares on the terms contained herein. If within 36 hours after such default
by any Underwriter you do not arrange for the purchase of such Firm
25
Shares, then the Company shall be entitled to a further period of 36 hours
within which to procure another party or other parties satisfactory to you to
purchase such Firm Shares on such terms. In the event that, within the
respective prescribed periods, you notify the Company that you have so arranged
for the purchase of such Firm Shares, or the Company notifies you that it has so
arranged for the purchase of such Firm Shares, you or the Company shall have the
right to postpone the Closing Time for a period of not more than seven days in
order to effect whatever changes may thereby be made necessary in the
Registration Statement or the Prospectus, or in any other documents or
arrangements, and the Company agrees to file promptly any amendments to the
Registration Statement or the Prospectus which in your opinion may thereby be
made necessary. The term "Underwriter" as used in this Agreement shall include
any persons substituted under this Section 12 with like effect as if such person
had originally been a party to this Agreement with respect to such Firm Shares.
(b) If, after giving effect to any arrangements for the purchase of the
Firm Shares of a defaulting Underwriter or Underwriters made by you or the
Company as provided in subsection (a) above, the aggregate number of Firm Shares
which remains unpurchased does not exceed 10% of the Firm Shares, then the
Company shall have the right to require each non-defaulting Underwriter to
purchase the Firm Shares which such Underwriter agreed to purchase hereunder
and, in addition, to require each non-defaulting Underwriter to purchase its pro
rata share (based on the number of Firm Shares which such Underwriter agreed to
purchase hereunder) of the Firm Shares of such defaulting Underwriter or
Underwriters for which such arrangements have not been made.
(c) If, after giving effect to any arrangements for the purchase of the
Firm Shares of a defaulting Underwriter or Underwriters made by you or the
Company as provided in subsection (a) above, the number of Firm Shares which
remains unpurchased exceeds 10% of the Firm Shares, or if the Company shall not
exercise the right described in subsection (b) above to require non-defaulting
Underwriters to purchase Firm Shares of a defaulting Underwriter or
Underwriters, then this Agreement shall thereupon terminate, without liability
on the part of any non-defaulting Underwriter or the Company except for the
expenses to be borne by the Company, and the Underwriters as provided in Section
6 hereof and the indemnity and contribution agreements in Section 9 hereof.
(d) Nothing herein shall relieve a defaulting Underwriter from liability
for its default.
Section 13. Default by the Company. If the Company shall fail at the
Closing Time to sell and deliver the respective aggregate number of Firm Shares
that it is obligated to sell, then this Agreement shall terminate without any
liability on the part of any non-defaulting party, except to the extent provided
in Section 6 and except that the provisions of Section 9 shall remain in effect.
Section 14. Notices. All notices and other communications under this
Agreement shall be in writing and shall be deemed to have been duly given if
mailed, delivered or transmitted by any standard form of telecommunication.
Notices to the Underwriters shall be directed c/x Xxxxxx, Xxxxx Xxxxx,
Incorporated, 0000 Xxxxxxxxxxx Xxxx, Xxxxx 000, XxXxxx, Xxxxxxxx 00000,
Attention: Xx. Xxxx X. Xxxxxx, Xx., Senior Vice President (with a copy sent in
the same manner
26
to Bass, Xxxxx & Xxxx PLC, 000 Xxxxxxx Xxxxx, Xxxxx 000, Xxxxxxx, Xxxxxxxxx
00000, Attention: Xxxx X. Good, Esq.); and notices to the Company or the
Operating Partnership shall be directed to Gladstone Commercial Corporation,
0000 Xxxxxx Xxxx., Xxxxxx Xxxxx, XxXxxx, Xxxxxxxx 00000, Attention: Xxxxx
Xxxxxxxxx, Chairman and Chief Executive Officer (with a copy sent in the same
manner to Xxxxxx Godward LLP, One Freedom Square, Reston Town Center, 00000
Xxxxxxx Xxxxx, Xxxxxx, Xxxxxxxx 00000, Attention: Xxxxxx X. Xxxxxx, Esq.). Each
notice hereunder shall be effective upon receipt by the party to which it is
addressed.
Section 15. Parties. This Agreement is made solely for the benefit of the
Underwriters, the Company and the Operating Partnership and, to the extent so
provided, the partners, directors, directors and employees of the Underwriters
and any person controlling any of the Underwriters, the directors of the
Company, the officers of the Company who have signed the Registration Statement
and any person controlling the Company, and their respective executors,
administrators, successors and assigns and, subject to the provisions of Section
12, no other person shall acquire or have any right under or by virtue of this
Agreement. The term "successors and assigns" shall not include any purchaser, as
such purchaser, from any of the several Underwriters of the Shares.
Section 16. Governing Law and Time. This Agreement shall be governed by,
and construed in accordance with, the laws of the State of Maryland. Specified
time of the day refers to United States Eastern Time, unless otherwise
specified.
Section 17. Counterparts. This Agreement may be executed in any number of
counterparts and when a counterpart has been executed by each party, all such
counterparts taken together shall constitute one and the same agreement.
27
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us a counterpart hereof, whereupon this
instrument will become a binding agreement among the Company, and the several
Underwriters in accordance with its terms.
Very truly yours,
Gladstone Commercial Corporation
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Gladstone Commercial Limited Partnership
By: Gladstone Commercial Corporation
Its General Partner
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Xxxxxx, Xxxxx Xxxxx, Incorporated
Xxxxxxxxx & Company, Inc.
J.J.B. Xxxxxxxx, X.X. Xxxxx, Inc.
Xxxxxx, Xxxxxxxx & Company, Incorporated
By: Xxxxxx, Xxxxx Xxxxx, Incorporated
As representatives of the underwriters
listed above
By:
---------------------------
Name:
-------------------------
Title:
------------------------
28
Schedule I
Name Number of Shares
---- ----------------
Xxxxxx, Xxxxx Xxxxx, Incorporated.....................
Xxxxxxxxx & Company, Inc. ............................
J.J.B. Xxxxxxxx, X.X. Xxxxx, Inc......................
Xxxxxx, Xxxxxxxx & Company, Incorporated..............
Total................................................. 5,500,000
SCHEDULE I
29
SCHEDULE II
LIST OF SUBSIDIARIES
Gladstone Commercial Partners, LLC
30
