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COMMERCIAL NET LEASE REALTY, INC.
__________ Shares
Common Stock
($.01 Par Value)
UNDERWRITING AGREEMENT
March ____, 1998
X.X. XXXXXXXX & CO., L.L.C.
J.C. Bradford Financial Center
000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
The undersigned, Commercial Net Lease Realty, Inc., a Maryland
corporation (the "Company") hereby confirms its agreement with you (the
"Underwriter") as follows:
1. Description of Shares. The Company proposes to issue and sell to
you __________ shares of its Common Stock, par value $.01 per share (the
"Shares"). The Shares are more fully described in the Prospectus hereinafter
defined.
2. Purchase, Sale and Delivery of Shares. On the basis of the
representations, warranties and agreements herein contained, but subject to the
terms and conditions herein set forth, the Company agrees to sell to you, and
you agree to purchase from the Company at a purchase price of $__________ per
share, __________ Shares.
The Company will deliver definitive certificates for the Shares at the
office of X.X. Xxxxxxxx & Co., L.L.C., X.X. Xxxxxxxx Financial Center, 000
Xxxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxxx 00000 ("Bradford's Office"), or such other
place as you and the Company may mutually agree upon (the "Place of Closing"),
for your account against payment to the Company of the purchase price for the
Shares sold to you by wire transfer of immediately available funds, at 9:00
a.m., Chicago time, on March ____, 1998, or at such other time and date not
later than three full business days thereafter as you and the Company may agree,
such time and date of payment and delivery being herein called the "Closing
Date."
The certificates for the Shares so to be delivered will be made
available to you for inspection at Bradford's Office (or such other place as you
and the Company may mutually agree upon) at least one full business day prior to
the Closing Date and will be in such names and denominations as you may request
at least one full business day prior to the Closing Date.
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3. Representations, Warranties and Agreements of the Company. (a)
The Company represents and warrants to and agrees with you that:
(i) The Company meets the requirements for use of Form S-3
under the Securities Act of 1933, as amended (the "Act"); a
registration statement (Registration No. 333-24773) on Form S-3,
including a prospectus relating to the registration of the Shares and
such other securities which may be offered from time to time in
accordance with Rule 415 under the Act, and such amendments to such
registration statement as may have been required to the date of this
Agreement, has been carefully prepared by the Company pursuant to and
in conformity with the requirements of the Act, and the Rules and
Regulations (the "Rules and Regulations") of the Securities and
Exchange Commission (the "Commission") thereunder, was filed with the
Commission under the Act, and was declared effective on April 22, 1997.
Copies of such registration statement, including any amendments
thereto, each related preliminary prospectus contained therein, the
exhibits, financial statements and schedules have heretofore been
delivered by the Company to you. A prospectus supplement (the
"Prospectus Supplement") setting forth the terms of the offering, sale
and plan of distribution of the Shares and additional information
concerning the Company and its business has been or will be so prepared
and will be filed pursuant to Rule 424(b) of the Rules and Regulations
on or before the second business day after the date hereof (or such
earlier time as may be required by the Rules and Regulations). The term
"Registration Statement" as used herein means the registration
statement, and the basic prospectus included therein, as amended at the
time it or any amendment thereto became effective under the Act, or at
the time any Annual Report on Form 10-K is filed by the Company with
the Commission (the "Effective Date"), including financial statements
and all exhibits and all documents incorporated by reference therein
pursuant to Item 12 of Form S-3 under the Act. Any document filed by
the Company under the Securities Exchange Act of 1934, as amended (the
"Exchange Act") after the effective date of the Registration Statement
or the date of the Prospectus Supplement and incorporated by reference
in the Prospectus shall be deemed to be included in the Registration
Statement and the Prospectus as of the date of such filing. The term
"Prospectus" as used herein means (i) the basic prospectus included in
the Registration Statement at the Effective Date, as supplemented by
the Prospectus Supplement as first filed with the Commission pursuant
to Rule 424(b) of the Rules and Regulations, except that, if such basic
prospectus is amended or supplemented subsequent to the Effective Date,
the term "Prospectus" shall refer to the basic prospectus as so amended
or supplemented and as further supplemented by the Prospectus
Supplement, (ii) if no such filing is required, the form of final
prospectus included in the Registration Statement at the Effective Date
or (iii) if a Term Sheet or Abbreviated Term Sheet (as such terms are
defined in Rule 434(b) and 434(c), respectively, of the Rules and
Regulations) is filed with the Commission pursuant to Rule 424(b)(7) of
the Rules and Regulations, the Term Sheet or Abbreviated Term Sheet and
the last Preliminary Prospectus filed with the Commission prior to the
time the Registration Statement became effective, taken together
(including, in each case, the documents incorporated by reference
therein pursuant to Item 12 of Form S-3 under the Act). The term
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"Preliminary Prospectus" as used herein shall mean a preliminary
prospectus included at any time in the Registration Statement.
(ii) The Commission has not issued, and is not to the
knowledge of the Company threatening to issue, an order preventing or
suspending the use of any Preliminary Prospectus or the Prospectus nor
instituted proceedings for that purpose. Each Preliminary Prospectus at
its date of issue, the Registration Statement at the Effective Date,
and the Prospectus at its date of issue and any amendments or
supplements thereto contains or will contain, as the case may be, all
statements which are required to be stated therein by, and in all
material respects conform or will conform, as the case may be, to the
requirements of, the Act and the Rules and Regulations. Neither the
Registration Statement nor any amendment thereto, as of the applicable
effective date, and neither the Prospectus nor any supplement thereto,
as of its applicable issue date or the Closing Date contains or will
contain, as the case may be, any untrue statement of a material fact or
omits or will omit to state any 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 the Company makes no representation or warranty as to
information contained in or omitted from the Registration Statement or
the Prospectus, or any such amendment or supplement, in reliance upon,
and in conformity with, written information furnished to the Company by
you specifically for use in the preparation thereof.
(iii) The documents incorporated by reference in the Prospectus
pursuant to Item 12 of Form S-3 under the Act, at the time they were
filed with the Commission, complied in all material respects with the
requirements of the Exchange Act, and the rules and regulations adopted
by the Commission thereunder (the "Exchange Act Rules and
Regulations"), and, when read together and with the other information
in the Prospectus, at the time the Registration Statement became
effective and at the Closing Date, did not or will not, as the case may
be, 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.
(iv) The filing of the Registration Statement and the
execution and delivery of this Agreement have been duly authorized by
the Board of Directors of the Company; this Agreement constitutes a
valid and legally binding obligation of the Company enforceable in
accordance with its terms (except to the extent the enforceability of
the indemnification and contribution provisions of Section 6 hereof may
be limited by public policy considerations as expressed in the Act as
construed by courts of competent jurisdiction, and except as
enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium and other laws affecting creditors' rights
generally and by general principles of equity); the issue and sale of
the Shares by the Company and the performance of this Agreement and the
consummation of the transactions herein contemplated will not result in
a violation of the Company's articles of incorporation or bylaws or
result in a breach or violation of any of the terms and provisions of,
or constitute a default under, or result in the creation or
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imposition of any lien, charge or encumbrance upon any properties or
assets of the Company or its subsidiaries under, any statute, or under
any indenture, mortgage, deed of trust, note, loan agreement, sale and
leaseback arrangement or other agreement or instrument to which the
Company or any of its subsidiaries is a party or by which they are
bound or to which any of the properties or assets of the Company or
its subsidiaries is subject, or any order, rule or regulation of any
court or governmental agency or body having jurisdiction over the
Company or its subsidiaries or their properties, except to such extent
as does not materially adversely affect the business of the Company
and its subsidiaries taken as a whole; no consent, approval,
authorization, order, registration or qualification of or with any
court or governmental agency or body is required for the consummation
of the transactions herein contemplated, except such as may be
required by the National Association of Securities Dealers, Inc. (the
"NASD") or under the Act or Rules and Regulations or any state
securities laws.
(v) Neither the Company nor any of its subsidiaries has
sustained since the date of the latest audited financial statements
included or incorporated by reference in the Prospectus any material
loss or interference with its business from fire, explosion, flood or
other calamity, whether or not covered by insurance, or from any labor
dispute or court or governmental action, order or decree. Except as
contemplated in the Prospectus, subsequent to the respective dates as
of which information is given in the Registration Statement and the
Prospectus, the Company and its subsidiaries taken as a whole have not
incurred any material liabilities or material obligations, direct or
contingent, other than in the ordinary course of business, or entered
into any material transactions not in the ordinary course of business,
and there has not been any material change in the capital stock or
long-term debt of the Company and its subsidiaries taken as a whole or
any material adverse change in the condition (financial or other), net
worth, business, affairs, management, prospects or results of
operations of the Company and its subsidiaries taken as a whole. The
Company and its subsidiaries have filed all necessary federal, state
and foreign income and franchise tax returns and paid all taxes shown
as due thereon; all tax liabilities are adequately provided for on the
books of the Company and its subsidiaries except to such extent as
would not materially adversely affect the business of the Company and
its subsidiaries taken as a whole, the Company and its subsidiaries
have made all necessary payroll tax payments and are current and
up-to-date as of the date of this Agreement; and the Company and its
subsidiaries have no knowledge of any tax proceeding or action pending
or threatened against the Company or its subsidiaries which might
materially adversely affect their business or property.
(vi) Except as described in the Prospectus, there is not now
pending or, to the knowledge of the Company, threatened or
contemplated, any action, suit or proceeding to which the Company or
its subsidiaries is a party before or by any court or public,
regulatory or governmental agency or body which might be expected to
result (individually or in the aggregate) in any material adverse
change in the condition (financial or other), business or prospects of
the Company and its subsidiaries taken as a whole, or might be expected
to materially and adversely affect
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(individually or in the aggregate) the properties or assets thereof,
and there are no contracts or documents of the Company or its
subsidiaries which would be required to be filed as exhibits to the
Registration Statement by the Act or by the Rules and Regulations
which have not been filed as exhibits to the Registration Statement or
incorporated by reference therein.
(vii) The Company has duly and validly authorized capital stock
as described in the Prospectus; all outstanding shares of Common Stock
of the Company and the Shares conform, or when issued will conform, to
the description thereof in the Prospectus and have been, or, when
issued and paid for will be, duly authorized, validly issued, fully
paid and nonassessable; and the issuance of the Shares to be purchased
from the Company hereunder is not subject to preemptive rights.
(viii) Each of the Company and its subsidiaries have been duly
incorporated or formed, as the case may be, and is a validly existing
corporation, general or limited partnership, or other legal entity, as
the case may be, in good standing under the laws of the state or other
jurisdiction in which it is incorporated or formed, as the case may be.
The Company and its subsidiaries have full power and authority
(corporate and other) to own, lease and operate their properties and
conduct their businesses as described in the Prospectus; each of the
Company and its subsidiaries is duly qualified or registered to do
business and is in good standing in each state or other jurisdiction in
which its ownership or leasing of property or conduct of business
legally requires such qualification, except where the failure to be so
qualified would not have a material adverse effect on the ability of
the Company and its subsidiaries to conduct its or their business as
described in the Prospectus; and the outstanding shares of capital
stock or ownership interests of the Company's subsidiaries have been
duly authorized and validly issued, are fully paid and nonassessable
and are owned by the Company free and clear of any mortgage, pledge,
lien, encumbrance, charge or adverse claim and are not the subject of
any agreement or understanding with any person; no options, warrants or
other rights to purchase, agreement or other obligations to issue or
other rights to convert any obligations into shares of capital stock or
ownership interest in the subsidiaries are outstanding.
(ix) KPMG Peat Marwick LLP, the accounting firm which has
certified the financial statements filed with or incorporated by
reference in and as a part of the Registration Statement, is an
independent public accounting firm within the meaning of the Act and
the Rules and Regulations.
(x) The consolidated financial statements of the Company
together with the related schedules and notes thereto, set forth or
included or incorporated by reference in the Registration Statement and
Prospectus fairly present the financial condition of the Company and
its consolidated subsidiaries as of the dates indicated and the results
of operations, changes in financial position, shareholders' equity and
cash flows for the periods therein specified, in conformity with
generally accepted accounting principles consistently applied
throughout the periods involved (except as otherwise stated therein).
The summary and selected financial and statistical data included or
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incorporated by reference in the Registration Statement and the
Prospectus present fairly the information shown therein and, to the
extent based upon or derived from the financial statements, have been
compiled on a basis consistent with the financial statements presented
therein. Furthermore, all financial statements required by Rule 3-14 of
Regulation S-X ("Rule 3-14") have been included or incorporated by
reference in the Registration Statement and the Prospectus and any such
financial statements are in conformity with the requirements of Rule
3-14. No other financial statements are required to be set forth or to
be incorporated by reference in the Registration Statement or the
Prospectus under the Act or the Rules and Regulations thereunder.
(xi) Neither the Company nor any subsidiary is in default with
respect to any contract or agreement to which it is a party; provided
that this representation shall not apply to defaults which in the
aggregate are not materially adverse to the condition, financial or
other, or the business or prospects of the Company and its subsidiaries
taken as a whole.
(xii) Neither the Company nor any subsidiary is in violation of
any other laws, ordinances or governmental rules or regulations to
which it is subject, including, without limitation, Section 13 of the
Exchange Act, and neither the Company nor any subsidiary has failed to
obtain any license, permit, franchise, easement, consent, or other
governmental authorization necessary to the ownership, leasing and
operation of its properties or to the conduct of its business, which
violation or failure would materially adversely affect the business,
operations, affairs, properties, prospects, profits or condition
(financial or other) of the Company and its subsidiaries taken as a
whole. Neither the Company nor any subsidiary has, at any time during
the past five years, (A) made any unlawful contributions to any
candidate for any political office, or failed fully to disclose any
contribution in violation of law, or (B) made any payment to any state,
federal or foreign government official, or other person charged with
similar public or quasi-public duty (other than payment required or
permitted by applicable law).
(xiii) Except as otherwise communicated to you and your counsel,
there are no holders of securities of the Company having rights to
registration thereof or preemptive rights to purchase Common Stock of
the Company except as disclosed in the Prospectus. Holders of
registration rights have waived such rights with respect to the
offering being made by the Prospectus.
(xiv) Except as described in the Prospectus, the Company and
its subsidiaries own or possess, or can acquire on reasonable terms,
adequate patents, patent licenses, trademarks, service marks and trade
names necessary to conduct the business now operated by them, and
neither the Company nor any subsidiary has received any notice of
infringement of or conflict with asserted rights of others with respect
to any patents, patent licenses, trademarks, service marks or trade
names which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would materially adversely
affect the business, operations, affairs, properties, prospects,
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profits or condition (financial or other) of the Company and its
subsidiaries taken as a whole.
(xv) The Company and each of its subsidiaries has good and
marketable title to all properties and assets described in the
Prospectus as owned by it, free and clear of all liens, charges,
encumbrances or restrictions, except such as (i) are described in the
Prospectus or (ii) are not material to the business of the Company or
its subsidiaries, taken as a whole. The Company and each of its
subsidiaries has valid, subsisting and enforceable leases for the
properties described in the Prospectus as leased by it, with such
exceptions as are not material and do not materially interfere with the
use made and proposed to be made of such properties by the Company and
such subsidiaries; no tenant under any of the leases pursuant to which
the Company leases its properties has an option or right of first
refusal to purchase the premises demised under such lease; the use and
occupancy of each of the properties of the Company complies in all
material respects with all applicable codes and zoning laws and
regulations; the Company has no knowledge of any pending or threatened
condemnation or zoning change that will in any material respect affect
the size of, use of, improvements of, construction on, or access to any
of the properties of the Company; and the Company has no knowledge of
any pending or threatened proceeding or action that will in any manner
affect the size of, use of, improvements on, construction on, or access
to any of the properties of the Company.
(xvi) Title insurance in favor of the Company (or the
subsidiary which holds title to such property) is maintained with
respect to each of the properties owned by the Company in an amount at
least equal to the greater of (i) the cost of acquisition of such
property of (ii) the cost of construction by the Company of the
improvements located on such property (measured at the time of such
construction), except, in each case, where the failure to maintain such
title insurance would not materially adversely affect the business,
operations, affairs, properties, prospects, profits or conditions
(financial or other) of the Company and its subsidiaries taken as a
whole. Title insurance in favor of the mortgagee is maintained in an
amount equal to the maximum commitment of the related loan.
(xvii) (a) Except as disclosed in the Prospectus, the Company
has no knowledge of (a) the presence of any hazardous substances,
hazardous materials, toxic substances, pollutants or waste materials
(collectively, "Hazardous Materials") on any of its properties, except
that which is in compliance with all Environmental Laws or (b) any
spills, releases, discharges or disposals of Hazardous Materials that
have occurred or are presently occurring on or from its properties,
which presence or occurrence would individually or in the aggregate
materially adversely affect the business, operations, affairs,
properties, prospects, profits or conditions (financial or other) of
the Company and its subsidiaries taken as a whole.
(b) Except as disclosed in the Prospectus, the Company, its
subsidiaries and its properties (i) are in compliance with any and all
Environmental Laws, (ii) have received all permits, licenses or other
approvals required under applicable
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Environmental Laws to conduct its business 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 individually or in the aggregate materially
adversely affect the business, operations, affairs, properties,
prospects, profits or conditions (financial or other) of the Company
and its subsidiaries taken as a whole.
(c) The Company engages environmental consultants to perform
phase I environmental site assessments in accordance with the ASTM
Standard to identify any environmental conditions prior to the purchase
of its properties. On the basis of such phase I environmental site
assessments, or such additional investigations as may have been
performed based on the findings of a phase I assessment, and, except as
described in the Prospectus, the Company and its subsidiaries have
reasonably concluded that no such environmental conditions exist which
would, individually or in the aggregate, materially adversely affect
the business, operations, affairs, properties, prospects, profits or
conditions (financial or other) of the Company and its subsidiaries
taken as a whole.
(d) As used herein, "Hazardous Material" shall include,
without limitation any flammable explosives, radioactive materials,
hazardous materials, hazardous wastes, hazardous or toxic substances,
or related materials, asbestos, polychlorinated biphenyls ("PCBs"),
petroleum products and by-products and substances defined or listed as
"hazardous substances," "toxic substances," "hazardous waste," or
"hazardous materials" in any Federal, state or local Environmental Law.
(e) As used herein, "Environmental Law" shall mean all laws,
regulations or ordinances of any Federal, state or local governmental
authority having or claiming jurisdiction over any of its properties (a
"Governmental Authority") that are designed to protect public health
and the environment or regulate the handling of Hazardous Materials,
including, without limitation, the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as amended (42
U.S.C. Section 9601 et seq.) ("CERCLA"), the Hazardous Material
Transportation Act, as amended (49 U.S.C. Section 1801 et seq.), the
Resource Conservation and Recovery Act, as amended (42 U.S.C. Section
6901 et seq.), the Federal Water Pollution Control Act, as amended (33
U.S.C. Section 1251 et seq.), and the Clean Air Act, as amended (42
U.S.C. Section 7401 et seq.), and any and all analogous future federal
or present or future state or local laws.
(xviii) No labor disturbance exists with the employees of the
Company or its subsidiaries or is imminent which would materially
adversely affect the business, operations, affairs, properties,
prospects, profits or conditions (financial or other) of the Company
and its subsidiaries taken as a whole.
(xix) The Company has not taken and will not take, directly or
indirectly, any action designed to or which might reasonably be
expected to cause or result in
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stabilization or manipulation of the price of the Common Stock, and
the Company is not aware of any such action taken or to be taken by
affiliates of the Company.
(xx) The Company is not an "investment company" or a company
"controlled" by an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
(xxi) The mortgages and deeds of trust encumbering the
properties and assets described in the Prospectus are not convertible
nor does the Company hold a participating interest therein.
(xxii) Property and casualty insurance in favor of the Company
is maintained with respect to each of the properties owned by it in an
amount and on such terms as is reasonable and customary for businesses
of this type.
(xxiii) The Company has continuously been organized and operated
in conformity with the requirements for qualification as a real estate
investment trust under the Internal Revenue Code of 1986, as amended
(the "Code") for all taxable years commencing with its taxable year
ended December 31, 1984. The Company has filed an election to be taxed
as a real estate investment trust for all subsequent taxable years, and
no such election has been terminated. The Company's method of operation
will permit it to continue to meet the requirements for taxation as a
real estate investment trust under the Code. The Company intends to
continue to operate in a manner which would permit it to qualify as a
real estate investment trust under the Code.
(xxiv) Except as disclosed in the Prospectus, each entity
identified in the Prospectus as a tenant of any property, or a
subtenant thereof, has entered into a lease or a sublease, if
applicable, for the possession of such property; except as disclosed in
the Prospectus, each such lease is in full force and effect and neither
the Company nor any of its subsidiaries has notice of any defense to
the obligations of the tenant thereunder or any claim asserted or
threatened by any person or entity, which claim, if sustained, would
materially adversely affect the business, operations, affairs,
properties, prospects, profits or conditions (financial or other) of
the Company and its subsidiaries taken as a whole; and except as
disclosed in the Prospectus, the lessor under each lease has complied
with its obligations under such lease in all material respects and
neither the Company nor any of its subsidiaries has notice of any
default by the tenant under such lease which, individually or in the
aggregate with other such defaults, would materially adversely affect
the business, operations, affairs, properties, prospects, profits or
conditions (financial or other) of the Company and its subsidiaries
taken as a whole.
(xxv) Any certificate signed by any officer of the Company and
delivered to you or to your counsel shall be deemed a representation
and warranty by the Company to you as to the matters covered thereby.
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(xxvi) A registration statement relating to the Common Stock of
the Company has been declared effective by the Commission pursuant to
the Exchange Act and the Common Stock of the Company is duly registered
thereunder. The Shares have been listed on the New York Stock Exchange,
subject to notice of issuance or sale of the Shares, as the case may
be.
(xxvii) The Agreement and Plan of Merger by and among the
Company, Net Lease Realty II, Inc., a wholly owned subsidiary of the
Company, CNL Realty Advisors, Inc. (the "Advisor") and the stockholders
of the Advisor has been consummated.
4. Additional Covenants. The Company covenants and agrees with you
that:
(a) The Company will (i) prepare a Prospectus Supplement
setting forth the number of Shares covered thereby and their terms not
otherwise specified in the Prospectus pursuant to which the Shares are
being issued, the name of the Underwriter and the number of Shares
which the Underwriter has agreed to purchase, the price at which the
Shares are to be purchased by the Underwriter from the Company and such
other information as the Underwriter and the Company deem appropriate
in connection with the offering of the Shares, and file the Prospectus
in a form approved by you pursuant to Rule 424(b) under the Act no
later than the Commission's close of business on the second business
day following the date of the determination of the offering price of
the Shares; (ii) not file any amendment to the Registration Statement
or supplement to the Prospectus of which you shall not previously have
been advised and furnished with a copy or to which you shall have
reasonably objected in writing or which is not in compliance with the
Rules and Regulations; and (iii) promptly notify you after it shall
have received notice thereof of the time when any amendment to the
Registration Statement becomes effective or when any supplement to the
Prospectus has been filed.
(b) The Company will advise you promptly, after it shall
receive notice or obtain knowledge thereof, of any request of the
Commission for amendment of the Registration Statement or for
supplement to the Prospectus or for any additional information, or of
the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or the use of the
Prospectus or of the institution or threatening of any proceedings for
that purpose, and the Company will use its best efforts to prevent the
issuance of any such stop order preventing or suspending the use of the
Prospectus and to obtain as soon as possible the lifting thereof, if
issued.
(c) The Company will cooperate with you and your counsel in
endeavoring to qualify the Shares for sale under the securities laws of
such jurisdictions as they may have designated and will make such
applications, file such documents, and furnish such information as may
be necessary for that purpose, provided the Company shall not be
required to qualify as a foreign corporation or to file a general
consent to service of process in any jurisdiction where it is not now
so qualified or required to
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file such a consent or to subject itself to taxation as doing business
in any jurisdiction where it is not now so taxed. The Company will,
from time to time, file such statements, reports, and other documents,
as are or may be required to continue such qualifications in effect
for so long a period as you may reasonably request.
(d) The Company will deliver to you, without charge as many
copies of the Prospectus (including all documents incorporated by
reference therein), or as it thereafter may be amended or supplemented,
as you may from time to time reasonably request. The Company consents
to the use of such Prospectus by you, both in connection with the
offering or sale of the Shares and for such other purposes and for such
period of time thereafter as the Prospectus is required by law to be
delivered in connection with the offering or sale of the Shares. The
Company will deliver to you at or before the Closing Date two conformed
copies of the Registration Statement and all amendments thereto
including all exhibits filed therewith or incorporated by reference
therein and all documents incorporated by reference in the Prospectus
and will deliver to you such number of copies of the Registration
Statement, without exhibits, and of all amendments thereto, as you may
reasonably request.
(e) If, during the period in which a prospectus is required
by law to be delivered by an underwriter or dealer, any event shall
occur as a result of which, in the judgment of the Company or in your
judgment or in the opinion of your counsel, it becomes necessary to
amend or supplement the Prospectus in order to make the statements
therein, in light of the circumstances existing at the time the
Prospectus is delivered to a purchaser, not misleading, or, if it is
necessary at any time to amend or supplement the Prospectus to comply
with any law, the Company promptly will prepare and file with the
Commission an appropriate amendment to the Registration Statement or
supplement to the Prospectus so that the Prospectus as so amended or
supplemented will not, in the light of the circumstances when it is so
delivered, be misleading, or so that the Prospectus will comply with
law.
(f) The Company will make generally available to its
shareholders and will file as an exhibit in a report pursuant to the
Exchange Act, as soon as it is practicable to do so, but in any event
not later than 15 months after the effective date of the Registration
Statement, an earnings statement in reasonable detail, covering a
period of at least 12 consecutive months beginning after the effective
date of the Registration Statement, which earnings statement shall
satisfy the requirements of Section 11(a) of the Act and Rule 158 of
the Rules and Regulations and will advise you in writing when such
statement has been so made available.
(g) The Company will, for a period of five years from the
Closing Date, deliver to you at your principal executive offices a
reasonable number of copies of annual reports, quarterly reports,
current reports and copies of all other documents, reports and
information furnished by the Company to its shareholders or filed with
any securities exchange pursuant to the requirements of such exchange
or with the Commission pursuant to the Act or the Exchange Act. The
Company will deliver to you similar reports with respect to any
significant subsidiaries, as that term is defined
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in the Rules and Regulations, which are not consolidated in the
Company financial statements. Any report, document or other
information required to be furnished under this paragraph (g) shall be
furnished as soon as practicable after such report, document or
information becomes available.
(h) The Company will apply the proceeds from the sale of the
Shares as set forth in the description under "Use of Proceeds" in the
Prospectus, which description complies in all respects with the
requirements of Item 504 of Regulation S-K.
(i) The Company will supply you with copies of all
correspondence to and from, and all documents issued to and by, the
Commission in connection with the registration of the Shares under the
Act.
(j) Prior to the Closing Date, the Company will furnish to
you, as soon as they have been prepared, copies of any unaudited
interim consolidated financial statements of the Company and its
subsidiaries for any periods subsequent to the periods covered by the
financial statements appearing in the Registration Statement and the
Prospectus.
(k) Prior to the Closing Date, the Company will not issue any
press releases or other communications directly or indirectly and will
hold no press conference, with respect to the Company or any of its
subsidiaries, the financial condition, results of operations, business,
properties, assets or liabilities of the Company or any of its
subsidiaries, or the offering of the Shares, without your prior written
consent.
(l) The Company will use its best efforts to obtain approval
for, and maintain the listing of the Shares on, the New York Stock
Exchange.
(m) The Company and its subsidiaries will maintain and keep
accurate books and records reflecting their assets and maintain
internal accounting controls which provide reasonable assurance that
(1) transactions are executed in accordance with management's
authorization, (2) transactions are recorded as necessary to permit the
preparation of the Company's consolidated financial statements and to
maintain accountability for the assets of the Company and its
subsidiaries, (3) access to the assets of the Company and its
subsidiaries is permitted only in accordance with management's
authorization, and (4) the recorded accounts of the assets of the
Company and its subsidiaries are compared with existing assets at
reasonable intervals.
(n) During any period in which a prospectus is required by
law to be delivered by an Underwriter or dealer, the Company will
promptly file all documents required to be filed with the Commission
pursuant to Sections 13, 14 or 15(d) of the Exchange Act.
(o) The Company will continue to elect to qualify as a "real
estate investment trust" under the Code, and will use its best efforts
to continue to meet the requirements to qualify as a "real estate
investment trust."
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5. Conditions of Underwriter's Obligation. Your obligations, as
Underwriter to purchase and pay for the Shares, as provided herein, shall be
subject to the accuracy in all material respects, as of the dare hereof and as
of the Closing Date, of the representations and warranties of the Company
contained herein, to the performance in all material respects by the Company of
its covenants and obligations hereunder, and to the following additional
conditions:
(a) All filings required by Rule 424 of the Rules and
Regulations shall have been made. No stop order suspending the
effectiveness of the Registration Statement, as amended from time to
time, shall have been issued and no proceeding for that purpose shall
have been initiated or, to your knowledge or the knowledge of the
Company, threatened or contemplated 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 reasonable satisfaction.
(b) You shall not have disclosed in writing to the Company on
or prior to the Closing Date, that the Registration Statement or
Prospectus or any amendment or supplement thereto contains an untrue
statement of fact which, in the opinion of your counsel, is material,
or omits to state a fact which, in the opinion of such counsel, is
material and is required to be stated therein or is necessary to make
the statements therein, in light of the circumstances under which they
were made, not misleading.
(c) On the Closing Date, you shall have received the opinion
of Xxxx Xxxxxxx Xxxxx & Xxxxxxxxxx, counsel for the Company, addressed
to you and dated the Closing Date, as to the matters set forth in
Schedule I attached hereto.
(d) You shall have received on the Closing Date, from Xxxxxxx
and Xxxxxx, your counsel, such opinion or opinions, dated the Closing
Date with respect to the incorporation of the Company, the validity of
the Shares, the Registration Statement, the Prospectus and other
related matters as you may reasonably require; the Company shall have
furnished to such counsel such documents as they reasonably request for
the purpose of enabling them to pass on such matters.
(e) You shall have received at or prior to the Closing Date
from Xxxxxxx and Xxxxxx a memorandum or memoranda, in form and
substance satisfactory to you, with respect to the qualification for
offering and sale by you of the Shares under state securities or Blue
Sky laws of such jurisdictions as you may have designated to the
Company.
(f) On the date of this Agreement and on the Closing Date,
you shall have received from KPMG Peat Marwick LLP, a letter or
letters, dated the date of this Agreement and the Closing Date,
respectively, in form and substance satisfactory to you, confirming
that they are independent public accountants with respect to the
Company within the meaning of the Act and the published Rules and
Regulations, and stating to the effect set forth in Schedule II hereto.
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(g) Except as contemplated in the Prospectus, (i) neither the
Company nor any of its subsidiaries shall have sustained since the date
of the latest audited financial statements included or incorporated by
reference in the Prospectus any loss or interference with its business
from fire, explosion, flood or other calamity, whether or not covered
by insurance, or from any labor dispute or court or governmental
action, order or decree; and (ii) subsequent to the respective dates as
of which information is given in the Registration Statement and the
Prospectus, neither the Company nor any of its subsidiaries shall have
incurred any liability or obligation, direct or contingent, or entered
into transactions, and there shall not have been any change in the
capital stock or long-term debt of the Company and its subsidiaries or
any change in the condition (financial or other), net worth, business,
affairs, management, prospects or results of operations of the Company
or its subsidiaries, the effect of which, in any such case described in
clause (i) or (ii), is in your judgment so material or adverse as to
make it impracticable or inadvisable to proceed with the public
offering or the delivery of the Shares being delivered on the Closing
Date on the terms and in the manner contemplated in the Prospectus.
(h) There shall not have occurred any of the following: (i) a
suspension or material limitation in trading in securities generally on
the New York Stock Exchange or the American Stock Exchange or the
establishing on such exchanges by the Commission or by such exchanges
of minimum or maximum prices which are not in force and effect on the
date hereof; (ii) a general moratorium on commercial banking activities
declared by either federal or state authorities; (iii) the outbreak or
escalation of hostilities involving the United States or the
declaration by the United States of a national emergency or war, if the
effect of any such event specified in this clause (iii) in your
judgment makes it impracticable or inadvisable to proceed with the
public offering or the delivery of the Shares in the manner
contemplated in the Prospectus; (iv) any calamity or crisis, change in
national, international or world affairs, act of God, change in the
international or domestic markets, or change in the existing financial,
political or economic conditions in the United States or elsewhere, if
the effect of any such event specified in this clause (iv) makes it
impracticable or inadvisable to proceed with the public offering or the
delivery of the Shares in the manner contemplated in the Prospectus; or
(v) the enactment, publication, decree, or other promulgation of any
federal or state statute, regulation, rule, or order of any court or
other governmental authority, or the taking of any action by any
federal, state or local government or agency in respect of fiscal or
monetary affairs, if the effect of any such event specified in this
clause (v) in your judgment makes it impracticable or inadvisable to
proceed with the public offering or the delivery of the Shares in the
manner contemplated in the Prospectus.
(i) You shall have received certificates, dated the Closing
Date and signed by the President and the Chief Financial Officer of the
Company stating that (i) they have carefully examined the Registration
Statement and the Prospectus as amended or supplemented and all
documents incorporated by reference therein and nothing has come to
their attention that would lead them to believe that either the
Registration Statement or the Prospectus, or any amendment or
supplement thereto or any
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documents incorporated by reference therein as of their respective
effective, issue or filing dates, contained, and the Prospectus as
amended or supplemented and all documents incorporated by reference
therein and when read together with the documents incorporated by
reference therein, at the Closing Date, contains any untrue statement
of a material fact, or omits to state a material fact required to be
stated therein or necessary in order to make the statements therein,
in light of the circumstances under which they were made, not
misleading, and, that (ii) all representations and warranties made
herein by the Company are true and correct in all material respects at
the Closing Date, with the same effect as if made on and as of the
Closing Date, and all agreements herein to be performed by the Company
on or prior to the Closing Date have been duly performed in all
material respects.
(j) The Company shall not have failed, refused, or been
unable, at or prior to the Closing Date to have performed in all
material respects any agreement on their part to be performed or any of
the conditions herein contained and required to be performed or
satisfied by them at or prior to the Closing Date.
(k) The Company shall have furnished to you at the Closing
Date such other certificates as you may have reasonably requested as to
the accuracy, on and as of the Closing Date, of the representations and
warranties of the Company herein and as to the performance by the
Company of their obligations hereunder.
(l) The Shares shall have been approved for trading upon
official notice of issuance on the New York Stock Exchange. All such
opinions, certificates, letters and documents will be in compliance
with the provisions hereof
only if they are reasonably satisfactory to you and to Xxxxxxx and Xxxxxx, your
counsel. The Company will furnish you with such conformed copies of such
opinions, certificates, letters and documents as you may request.
If any of the conditions specified above in this Section 5 shall not
have been satisfied at or prior to the Closing Date or waived by you in writing,
this Agreement may be terminated by you on notice to the Company.
6. Indemnification. (a) The Company will indemnify and hold you
harmless and each person, if any, who controls you within the meaning of the
Act, against any losses, claims, damages or liabilities, joint or several, to
which you or such controlling person may become subject, under the Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon an untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement, any
Preliminary Prospectus, the Prospectus, or any amendment or supplement thereto,
or in any blue sky application or other document executed by the Company or
based on any information furnished in writing by the Company, filed in any
jurisdiction in order to qualify any or all of the Shares under the securities
laws thereof ("Blue Sky Application"), 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
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circumstances under which they were made, not misleading; and will reimburse you
and each such controlling person for any legal or other expenses reasonably
incurred by you or such controlling person in connection with investigating or
defending any such loss, claim, damage, liability or action; provided, however,
that the Company 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, such Preliminary Prospectus or the Prospectus, or
such amendment or supplement, or any Blue Sky Application in reliance upon and
in conformity with written information furnished to the Company by you,
specifically for use in the preparation thereof; and provided, further, that if
any Preliminary Prospectus or the Prospectus contained any alleged untrue
statement or allegedly omitted to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading and
such statement or omission shall have been corrected in a revised Preliminary
Prospectus or in the Prospectus or in an amended or supplemented Prospectus, the
Company shall not be liable to you or controlling persons under this subsection
(a) with respect to such alleged untrue statement or alleged omission to the
extent that any such loss, claim, damage or liability of such person results
from the fact that you sold Shares to a person to whom there was not sent or
given, at or prior to the written confirmation of such sale, such revised
Preliminary Prospectus or Prospectus or amended or supplemented Prospectus. In
addition to its other obligations under this Section 6(a), the Company agrees
that, as an interim measure during the pendency of any claim, action,
investigation, inquiry or other proceeding arising out of or based upon any
statement or omission, or any alleged statement or omission, described in this
Section 6(a), it will reimburse you on a monthly basis for all reasonable legal
and other expenses incurred in connection with investigating or defending any
such claim, action, investigation, inquiry or other proceeding, notwithstanding
the absence of a judicial determination as to the propriety and enforceability
of the Company's obligation to reimburse you for such expenses and the
possibility that such payments might later be held to have been improper by a
court of competent jurisdiction. This indemnity agreement shall be in addition
to any liabilities which the Company may otherwise have.
(b) You will indemnify and hold harmless the Company, each of its
directors, each of its officers who have signed the Registration Statement and
each person, if any, who controls the Company within the meaning of the Act,
against any losses, claims, damages or liabilities, joint or several, to which
the Company or any such director, officer or controlling person may become
subject, under the Act 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, any Preliminary Prospectus, the Prospectus, any
amendment or supplement thereto, or any Blue Sky Application 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 under 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, such Preliminary Prospectus or the Prospectus, such
amendment or supplement, or any Blue Sky Application in reliance upon and in
conformity with written
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information furnished to the Company by you specifically for use in the
preparation thereof; and will reimburse any legal or other expenses reasonably
incurred by the Company or any such director, officer or controlling person in
connection with investigating or defending any such loss, claim, damage,
liability or action. In addition to your other obligations under this Section
6(b), you agree that, as an interim measure during the pendency of any claim,
action, investigation, inquiry or other proceeding arising out of or based upon
any statement or omission, or any alleged statement or omission, described in
this Section 6(b), you will reimburse the Company on a monthly basis for all
reasonable legal and other expenses incurred in connection with investigating
or defending any such claim, action, investigation, inquiry or other
proceeding, notwithstanding the absence of a judicial determination as to the
propriety and enforceability of your obligation to reimburse the Company for
such expenses and the possibility that such payments might later be held to
have been improper by a court of competent jurisdiction. This indemnity
agreement shall be in addition to any liabilities which you may otherwise have.
(c) Any party which proposes to assert the right to be indemnified
under this Section 6 shall, within ten days after receipt of notice of
commencement of any action, suit or proceeding against such party in respect of
which a claim is to be made against an indemnifying party under this Section 6,
notify each such indemnifying party of the commencement of such action, suit or
proceeding, enclosing a copy of all papers served, but the omission so to notify
such indemnifying party of any such action, suit or proceeding shall not relieve
such indemnifying party from any liability which it may have to any indemnified
party otherwise than under this Section 6. In case any such action, suit or
proceeding 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 in, and, to the extent that it shall wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel reasonably 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 at the expense of
the indemnifying party has been authorized by the indemnifying party, (ii) the
indemnified party shall have been advised by such counsel in a written opinion
that there may be a conflict of interest between the indemnifying party and the
indemnified party in the conduct of the defense, or certain aspects of the
defense, of such action (in which case the indemnifying party shall not have the
right to direct the defense of such action with respect to those matters or
aspects of the defense on which a conflict exists or may exist 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 to the extent applicable shall be borne by the
indemnifying party. An indemnifying party shall not be liable for any settlement
of any action or claim effected without its consent. Each indemnified party, as
a condition of such indemnity, shall cooperate in good faith with the
indemnifying party in the defense of any such action or claim.
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(d) If the indemnification provided for in this Section 6 is for any
reason, other than pursuant to the terms thereof, 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 to appeal) to be
unavailable to an indemnified party under subsections (a) or (b) above in
respect of any losses, claims, damages or liabilities (or actions in respect
thereof) referred to therein, then each indemnifying party shall, in lieu of
indemnifying such indemnified party, contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities (or actions in respect thereof) in such proportion as is appropriate
to reflect the relative benefits received by the Company and you from the
offering of the Shares. If, however, the allocation provided by the immediately
preceding sentence is not permitted by applicable law, then each indemnifying
party shall contribute to such amount paid or payable by such indemnified party
in such proportion as is appropriate to reflect not only such relative benefits
but also the relative fault, as applicable, of the Company and you in connection
with the statements or omissions which resulted in such losses, claims, damages
or liabilities (or actions in respect thereof), as well as other relevant
equitable considerations. The relative benefits received by, as applicable, the
Company and you 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 you, in
each case as set forth in the table on the cover page of the Prospectus. The
relative fault shall be determined by reference to, among other things, whether
the untrue statement of a material fact or the omission or alleged omission to
state a material fact relates to information supplied by the Company or you and
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission. The Company and you agree that
it would not be just and equitable if contributions pursuant to this subsection
(d) were determined by pro rata allocation or by any other method of allocation
which does not take account of the equitable considerations referred to above in
this subsection (d). The amount paid or payable by an indemnified party as a
result of the losses, claims, damages or liabilities (or actions in respect
thereof) referred to above in this subsection (d) shall be deemed to include any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this subsection (d), you shall not be required
to contribute any amount in excess of the underwriting discounts and commissions
applicable to the Shares purchased by you. 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.
7. Representations and Agreements to Survive Delivery. All
representations, warranties, and agreements of the Company contained herein or
in certificates delivered pursuant hereto, and your agreements contained in
Section 6 hereof, shall remain operative and in full force and effect regardless
of any termination or cancellation of this Agreement or any investigation made
by or on behalf of you or any controlling person, the Company or any of its
officers, directors or any controlling persons, and shall survive delivery of
the Shares to you hereunder.
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8. Effective Date and Termination. (a) This Agreement shall become
effective upon execution.
(b) This Agreement may be terminated by you at any time at or prior
to the Closing Date by notice to the Company if any condition specified in
Section 5 hereof shall not have been satisfied on or prior to the Closing Date.
Any such termination shall be without liability of any party to any other party
except as provided in Sections 6 and 9 hereof.
If you terminate this Agreement as provided in Sections 8(b), you shall
notify the Company by telephone or telegram, confirmed by letter.
9. Cost and Expenses. The Company will bear and pay the costs and
expenses incident to the registration of the Shares and public offering thereof,
including, without limitation, (a) the fees and expenses of the Company's
accountants and the fees and expenses of counsel for the Company, (b) the
preparation, printing, filing, delivery and shipping of the Registration
Statement, each Preliminary Prospectus, the Prospectus, and any amendments or
supplements thereto (c) the furnishing of copies of such documents to you, (d)
the registration or qualification of the Shares for offering and sale under the
securities laws of the various states, including the reasonable fees and
disbursements of your counsel relating to such registration or qualification,
(e) the fees payable to the NASD (if any) and the Commission in connection with
their review of the proposed offering of the Shares, (f) all printing and
engraving costs related to preparation of the certificates for the Shares,
including transfer agent and registrar fees, (g) all initial transfer taxes, if
any, (h) all fees and expenses relating to the authorization of the Shares for
trading on the New York Stock Exchange, (i) all travel expenses, including air
fare and accommodation expenses, of representatives of the Company in connection
with the offering of the Shares and (j) all of the other costs and expenses
incident to the performance by the Company of the registration and offering of
the Shares; provided, however, that you will bear and pay the fees and expenses
of your counsel (other than fees and disbursements relating to the registration
or qualification of the Shares for offering and sale under the securities laws
of the various states), your out-of-pocket expenses, and any advertising costs
and expenses incurred by you incident to the public offering of the Shares.
If this Agreement is terminated by you in accordance with the
provisions of Section 8(b), the Company shall reimburse you for all of your
out-of-pocket expenses, including the reasonable fees and disbursements of your
counsel.
10. Notices. All notices or communications hereunder, except as
herein otherwise specifically provided, shall be in writing and if sent to you
shall be mailed, delivered, sent by facsimile transmission, or telegraphed and
confirmed c/o X.X. Xxxxxxxx & Co. at 000 Xxxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxxx
00000, Attention: Syndicate, facsimile number (000) 000-0000, or if sent to the
Company shall be mailed, delivered, sent by facsimile transmission, or
telegraphed and confirmed to the Company at Xxxxx Xxxxxxx, Chief Financial
Officer, facsimile number (000) 000-0000.
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11. Parties. This Agreement shall inure to the benefit of and be
binding upon you and the Company and their respective successors and assigns.
Nothing expressed or mentioned in this Agreement is intended or shall be
construed to give any person, corporation or other entity, other than the
parties hereto and their respective successors and assigns and the controlling
persons, officers and directors referred to in Section 6, any legal or equitable
right, remedy or claim under or in respect of this Agreement or any provision
herein contained; this Agreement and all conditions and provisions hereof being
intended to be and being for the sole and exclusive benefit of the parties
hereto and their respective successors and assigns and said controlling persons
and said officers and directors, and for the benefit of no other person,
corporation or other entity. No purchaser of any of the Shares from you shall be
construed a successor or assign by reason merely of such purchase.
12. Counterparts. This Agreement may be executed by any one or more
of the parties hereto in any number of counterparts, each of which shall be
deemed to be an original, but all such counterparts shall together constitute
one and the same instrument.
13. Pronouns. Whenever a pronoun of any gender or number is used
herein, it shall, where appropriate, be deemed to include any other gender and
number.
14. Applicable Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of _________.
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If the foregoing is in accordance with your understanding, please so
indicate in the space provided below for that purpose, whereupon this letter
shall constitute a binding agreement between the Company and you.
COMMERCIAL NET LEASE REALTY, INC.
By:
------------------------------------
Title: Executive Vice President
Chief Financial Officer
Confirmed as of the date
first above written.
X.X. XXXXXXXX & CO., L.L.C.
By:
-------------------------------------
Title:
----------------------------------
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SCHEDULE I
(i) The Company has been duly organized and formed, as the case may
be, and, in the case of an entity that is not a general partnership, is validly
existing and in good standing under the laws of the states or other
jurisdictions in which it is incorporated, with full power and authority
(corporate and other) to own, lease and operate its properties and conduct their
business as described in the Prospectus; the Company is duly qualified to do
business as foreign corporations in good standing in each state or other
jurisdiction in which its ownership or leasing of property or conduct of
business legally requires such qualification, except where the failure to be so
qualified would not have a material adverse effect on the ability of the Company
to conduct its business as described in the Prospectus.
(ii) Each of the subsidiaries that is organized in the United States
is a corporation duly organized and validly existing in good standing under the
laws of the jurisdiction of its organization, with corporate power and authority
to own, lease, and operate its properties and to conduct its business as
described in the Registration Statement and the Prospectus.
(iii) The Company has duly and validly authorized capital stock as set
forth in the Prospectus; all outstanding shares of Common Stock of the Company
and the Shares conform to the description thereof in the Prospectus under the
heading "Description of Common Stock," and the outstanding shares of Common
Stock have been duly authorized and are validly issued, fully paid and
nonassessable; the Shares to be sold by the Company have been duly authorized
and, when delivered and paid for in accordance with this Agreement, will be
validly issued, fully paid and nonassessable, and the shareholders of the
Company have no preemptive rights with respect to the Shares.
(iv) Such counsel has been advised by the staff of the Commission that
the Registration Statement has become effective under the Act and, to the
knowledge of such counsel after due inquiry, no stop order suspending the
effectiveness of the Registration Statement has been issued and no proceedings
for that purpose have been instituted or are pending or contemplated under the
Act.
(v) The Registration Statement and the Prospectus, and each amendment
or supplement thereto, as of their respective effective or issue date, comply as
to form and appear on their face to be appropriately responsive in all material
respects to the requirements of Form S-3 under the Act and the applicable Rules
and Regulations (except that such counsel need express no opinion as to the
financial statements or other financial data) and, as of the date they were
filed with the Commission, the documents incorporated by reference in the
Prospectus appear on their face to be appropriately responsive in all material
respects with the requirements of the 1934 Act and the applicable 1934 Act Rules
and Regulations (except that such counsel need express no opinion as to the
financial statements or other financial data).
(vi) The descriptions in the Registration Statement and Prospectus of
contracts and other documents filed as exhibits to the Registration Statement
are accurate in all material
23
respects; all other material agreements between the Company and third parties
expressly referenced in the Prospectus are legal, valid and binding obligations
of the Company.
(vii) No authorization, approval, consent, order, registration or
qualification of or with of any court or governmental body, authority or agency
is required with respect to the Company in connection with the transactions
contemplated by this Agreement, except such as may be required under the Act or
the Rules and Regulations or as may be required by the NASD or under state
securities laws in connection with the purchase and distribution of the Shares
by you.
(viii) The filing of the Registration Statement has been duly authorized
by the Board of Directors of the Company. This Agreement has been duly
authorized, executed and delivered by the Company. The performance of this
Agreement and the consummation of the transactions herein contemplated will not
result in a violation of the Company's articles of incorporation or bylaws or
result in a breach or violation of any of the terms and provisions of, or
constitute a default under, or result in the creation or imposition of any lien,
charge or encumbrance upon any properties or assets of the Company and its
subsidiaries under, any statute, or under any indenture, mortgage, deed of
trust, note, loan agreement, sale and leaseback arrangement, or any other
agreement or instrument known to such counsel after due inquiry to which the
Company or any of its subsidiaries is a party or by which they are bound or to
which any of the properties or assets of the Company or its subsidiaries are
subject, or any order, rule or regulation known to such counsel after due
inquiry of any court or governmental agency or body having jurisdiction over the
Company or its subsidiaries or their properties, except, in the case of any such
violation, breach, default, creation or imposition, to such extent as does not
materially adversely affect the business of the Company and its subsidiaries
taken as a whole.
(ix) To the knowledge of such counsel after due inquiry, (A) there are
no material (individually, or in the aggregate) legal, governmental or
regulatory proceedings pending or threatened to which the Company or any
subsidiary is a party or of which the business or properties of the Company or
any subsidiary is the subject which are not disclosed in the Registration
Statement and Prospectus; (B) there are no contracts or documents of a character
required to be described in the Registration Statement or the Prospectus or to
be filed as an exhibit to the Registration Statement which are not described or
filed as required; and (C) there are no statutes or regulations required to be
described in the Registration Statement or Prospectus which are not described as
required.
(x) To the knowledge of such counsel after due inquiry, the Company
and each of its subsidiaries hold all licenses, certificates, permits and
approvals from all state, federal and other regulatory authorities, and have
satisfied in all material respects the requirements imposed by regulatory
bodies, administrative agencies or other governmental bodies, agencies or
officials, that are required for the Company and its subsidiaries lawfully to
own, lease and operate its properties and conduct its business as described in
the Prospectus, and, to the knowledge of such counsel after due inquiry, each of
the Company and its subsidiaries is conducting its business in compliance in all
material respects with all of the laws, rules and regulations of each
jurisdiction in which it conducts its business.
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(xi) The statements made in the Prospectus under the captions
"Description of Debt Securities," "Description of Common Stock," "Description of
Common Stock Warrants," "ERISA Considerations" and "Federal Income Tax
Considerations" to the extent that they constitute summaries of documents
referred to therein or matters of law or legal conclusions, have been reviewed
by such counsel and are accurate summaries and fairly present the information
disclosed therein.
(xii) The Company is not an "investment company" or a company
"controlled" by an "investment company" within the meaning of the Investment
Company Act of 1940, as amended.
(xiii) CNL Realty was a "real estate investment trust" as defined by
section 856(a) for its taxable years ended December 31, 1984 through December
31, 1997, and its proposed method of operation will enable it to meet the
requirements for qualification and taxation as a REIT for its taxable year
ending December 31, 1998 and for all future taxable years.
(xiv) 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) company 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) complies as to form in all material
respects with the Exchange Act and the rules and regulations of the Commission
thereunder;
(xv) Although such counsel has not undertaken to determine
independently, and does not assume any responsibility for, the accuracy or
completeness of the statements in the Registration Statement, such counsel has
participated in the preparation of the Registration Statement and the
Prospectus, including review and discussion of the contents thereof (including
review and discussion of the contents of all incorporated documents), and
nothing has come to the attention of such counsel that has caused them to
believe that the Registration Statement (including the incorporated documents)
at the time the Registration Statement became effective, or the Prospectus, as
of its date and as of the Closing Date, 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 no misleading or that any amendment
or supplement to Prospectus, as of its respective date, and as of the Closing
Date, contained any untrue statement of a material fact or omitted to state a
material fact necessary in order to make the statements therein, in the light of
circumstances under which they were made, not misleading (it being understood
that such counsel need express no opinion with respect to the financial
statements and the notes thereto and the schedules and other financial and
statistical data included in the Registration Statement or the Prospectus or any
incorporated document).
(xvi) To such counsel's knowledge, except as described in the
Prospectus, there are no outstanding options, warrants or other rights calling
for the issuance of any shares of
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capital stock of the Company or any security convertible into or exchangeable
or exercisable for capital stock of the Company.
(xvii) To such counsel's knowledge, no holder of any security of the
Company has any right to require registration of shares of Common Stock or any
other security of the Company because of the filing of the Registration
Statement or consummation of the transactions by this Agreement.
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SCHEDULE II
Pursuant to Section 5(f) of the Underwriting Agreement, KPMG Peat
Marwick LLP shall furnish letters to you to the effect that:
(i) They are independent certified public accountants with
respect to the Company and its subsidiaries within the meaning of the
Act and the applicable Rules and Regulations thereunder.
(ii) In their opinion, the financial statements and any
supplementary financial information and schedules audited (and, if
applicable, prospective financial statements and/or pro forma financial
information examined) by them and included or incorporated by reference
in the Prospectus or the Registration Statement comply as to form in
all material respects with the applicable accounting requirements of
the Act and the applicable Rules and Regulations with respect to
registration statements on Form S-3; and, if applicable, they have made
a review in accordance with standards established by the American
Institute of Certified Public Accountants of the unaudited consolidated
interim financial statements, selected financial data, pro forma
financial information, prospective financial statements and/or
condensed financial statements derived from audited financial
statements of the Company for the periods specified in such letter, as
indicated in their reports thereon, copies of which have been furnished
to you.
(iii) On the basis of limited procedures, not constituting an
audit in accordance with generally accepted auditing standards,
consisting of a reading of the unaudited financial statements and other
information referred to below, performing the procedures specified by
the AICPA for a review of interim financial information as discussed in
SAS No. 71, Interim Financial Information, on the latest available
interim financial statements of the Company and its subsidiaries,
inspection of the minute books of the Company and its subsidiaries
since the date of the latest audited financial statements included in
the Prospectus, inquiries of officials of the Company and its
subsidiaries responsible for financial and accounting matters and such
other inquiries and procedures as may be specified in such letter,
nothing came to their attention that caused them to believe that:
(A) any material modifications should be made to the
unaudited statements of consolidated income, statements of
consolidated financial position and statements of consolidated
cash flows included in the Prospectus for them to be in
conformity with generally accepted accounting principles, or
the unaudited statements of consolidated income, statements of
consolidated financial position and statements of consolidated
cash flows included in the Prospectus do not comply as to form
in all material respects with the applicable accounting
requirements of the Act and the related published Rules and
Regulations thereunder.
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(B) any other unaudited income statement data and
balance sheet items included in the Prospectus do not agree
with the corresponding items in the unaudited consolidated
financial statements from which such data and items were
derived, and any such unaudited data and items were not
determined on a basis substantially consistent with the basis
for the corresponding amounts in the audited consolidated
financial statements included in the Prospectus.
(C) the unaudited financial statements which were
not included in the Prospectus but from which were derived any
unaudited condensed financial statements referred to in Clause
(A) and any unaudited income statement data and balance sheet
items included in the Prospectus and referred to in Clause (B)
were not determined on a basis substantially consistent with
the basis for the audited consolidated financial statements
included in the Prospectus.
(D) any unaudited pro forma consolidated condensed
financial statements included in the Prospectus do not comply
as to form in all material respects with the applicable
accounting requirements of the Act and the published rules and
regulations thereunder or the pro forma adjustments have not
been properly applied to the historical amounts in the
compilation of those statements.
(E) as of a specified date not more than five days
prior to the date of such letter, there have been any changes
in the consolidated capital stock or any increase in the
consolidated long-term debt of the Company and its
subsidiaries, or any decreases in consolidated working
capital, net current assets or net assets, or any changes in
any other items specified by you, in each case as compared
with amounts shown in the latest balance sheet included in the
Prospectus, except in each case for changes, increases or
decreases which the Prospectus discloses have occurred or may
occur or which are described in such letter.
(F) for the period from the date of the latest
financial statements included in the Prospectus to the
specified date referred to in Clause (E) there were any
decreases in consolidated net revenues or operating profit or
the total or per share amounts of consolidated net income or
any changes in any other items specified by you, in each case
as compared with the comparable period of the preceding year
and with any other period of corresponding length specified by
you, except in each case for changes, decreases or increases
which the Prospectus discloses have occurred or may occur or
which are described in such letter.
(iv) In addition to the audit referred to in their report(s)
included or incorporated by reference in the Prospectus and the
limited procedures, inspection of minute books, inquiries and other
procedures referred to in paragraph (iii) above, they have carried out
certain specified procedures, not constituting an audit in accordance
with generally accepted auditing standards, with respect to certain
amounts, percentages and financial information specified by you, which
are derived
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from the general accounting records of the Company and its
subsidiaries for the periods covered by their reports and any interim
or other periods since the latest period covered by their reports,
which appear in the Prospectus, or in Part II of, or in exhibits and
schedules to, the Registration Statement specified by you, and have
compared certain of such amounts, percentages and financial
information with the accounting records of the Company and its
subsidiaries and have found them to be in agreement.
