EXHIBIT 1.1
PRIME GROUP REALTY TRUST
12,380,000 COMMON SHARES(1)
OF BENEFICIAL INTEREST
FORM OF
UNDERWRITING AGREEMENT
PRUDENTIAL SECURITIES INCORPORATED
FRIEDMAN, BILLINGS, XXXXXX & CO., INC.
XXXXX XXXXXX INC.
XXXXXX XXXXXX & COMPANY, INC.
November __, 1997
As Representatives of the several Underwriters
c/o Prudential Securities Incorporated
Xxx Xxx Xxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
Prime Group Realty Trust, a Maryland real estate
investment trust (the "Company"), and Prime Group Realty, L.P., a
Delaware limited partnership (the "Operating Partnership"), each
hereby confirms its agreement with the several underwriters named
in Schedule 1 hereto (the "Underwriters"), for whom you have been
duly authorized to act as representatives (in such capacities,
the "Representatives"), as set forth below. If you are the only
Underwriters, all references herein to the Representatives shall
be deemed to be to the Underwriters.
1. Securities. Subject to the terms and conditions
herein contained, the Company proposes to issue and sell to the
several Underwriters an aggregate of 12,380,000 Common Shares of
Beneficial Interest (the "Firm Securities"), par value $.01 per
share, of the Company (the "Common Shares"). The Company also
proposes to issue and sell to the several Underwriters not more
than 1,857,000 additional Common Shares if requested by the
Representatives as provided in Section 3 of this Agreement. Any
and all Common Shares to be purchased by the Underwriters
pursuant to such option are referred to herein as the "Option
Securities," and the Firm Securities and any Option Securities
are collectively referred to herein as the "Securities."
2. Representations and Warranties of the Company and
the Operating Partnership. The Company and the Operating
Partnership, jointly and severally, represent and warrant to, and
agree with, each of the several Underwriters that:
(a) A registration statement on Form S-11 (File
No. 333-33547) with respect to the Securities, including a
prospectus subject to completion, has been filed by the Company
with the Securities and Exchange Commission (the "Commission")
under the Securities Act of 1933, as amended (the "Act"), and one
_______________________
1 Plus an option to purchase from Prime Group Realty Trust up
to 1,857,000 additional shares to cover over-allotments.
or more amendments to such registration statement may have been
so filed. After the execution of this Agreement, the Company
will file with the Commission either (i) if such registration
statement, as it may have been amended, has been declared by the
Commission to be effective under the Act, either (A) if the
Company relies on Rule 434 under the Act, a Term Sheet (as
hereinafter defined) relating to the Securities, that shall
identify the Preliminary Prospectus (as hereinafter defined) that
it supplements containing such information as is required or
permitted by Rules 434, 430A and 424(b) under the Act or (B) if
the Company does not rely on Rule 434 under the Act, a prospectus
in the form most recently included in an amendment to such
registration statement (or, if no such amendment shall have been
filed, in such registration statement), with such changes or
insertions as are required by Rule 430A under the Act or
permitted by Rule 424(b) under the Act, and in the case of either
clause (i)(A) or (i)(B) of this sentence as have been provided to
and approved by the Representatives prior to the execution of
this Agreement, or (ii) if such registration statement, as it may
have been amended, has not been declared by the Commission to be
effective under the Act, an amendment to such registration
statement, including a form of prospectus, a copy of which
amendment has been furnished to and approved by the
Representatives prior to the execution of this Agreement. The
Company may also file a related registration statement with the
Commission pursuant to Rule 462(b) under the Act for the purpose
of registering certain additional Securities, which registration
shall be effective upon filing with the Commission. As used in
this Agreement, the term "Original Registration Statement" means
the registration statement initially filed relating to the
Securities, as amended at the time when it was or is declared
effective, including all financial schedules and exhibits thereto
and including any information omitted therefrom pursuant to Rule
430A under the Act and included in the Prospectus (as hereinafter
defined); the term "Rule 462(b) Registration Statement" means any
registration statement filed with the Commission pursuant to Rule
462(b) under the Act (including the Registration Statement (as
hereinafter defined) and any Preliminary Prospectus or Prospectus
incorporated therein at the time such Registration Statement
becomes effective); the term "Registration Statement" includes
both the Original Registration Statement and any Rule 462(b)
Registration Statement; the term "Preliminary Prospectus" means
each prospectus subject to completion filed with such
Registration Statement and any amendment or supplement thereto
(including the prospectus subject to completion, if any, included
in the Registration Statement or any amendment thereto at the
time it was or is declared effective); the term "Prospectus"
means:
(A) if the Company relies on Rule 434 under the Act, the
Term Sheet relating to the Securities that is first filed
pursuant to Rule 424(b)(7) under the Act, together with the
Preliminary Prospectus identified therein that such Term
Sheet supplements;
(B) if the Company does not rely on Rule 434 under the Act,
the prospectus first filed with the Commission pursuant to
Rule 424(b) under the Act; or
(C) if the Company does not rely on Rule 434 under the Act
and if no prospectus is required to be filed pursuant to
Rule 424(b) under the Act, the prospectus included in the
Registration Statement;
and the term "Term Sheet" means any term sheet that satisfies the
requirements of Rule 434 under the Act. Any reference herein to
the "date" of a Prospectus that includes a Term Sheet shall mean
the date of such Term Sheet.
(b) The Commission has not issued any order
preventing or suspending use of any Preliminary Prospectus. When
any Preliminary Prospectus was filed with the Commission it (i)
contained all statements required to be stated therein in
accordance with, and complied in all material respects with the
requirements of, the Act and the rules and regulations of the
Commission thereunder and (ii) did not include any untrue
statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading.
When the Registration Statement or any amendment thereto was or
is declared effective, it (i) contained or will contain all
statements required to be stated therein in accordance with, and
complied or will comply in all material respects with the
requirements of, the Act and the rules and regulations of the
Commission thereunder and (ii) did not or will not include any
untrue statement of a material fact or omit to state any material
fact necessary to make the statements therein not misleading.
When the Prospectus or any Term Sheet that is a part thereof or
any amendment or supplement to the Prospectus is filed with the
Commission pursuant to Rule 424(b) (or, if the Prospectus or part
thereof or such amendment or supplement is not required to be so
filed, when the Registration Statement or the amendment thereto
containing such amendment or supplement to the Prospectus was or
is declared effective) and on the Firm Closing Date and any
Option Closing Date (both as hereinafter defined), the
Prospectus, as amended or supplemented at any such time, (i)
contained or will contain all statements required to be stated
therein in accordance with, and complied or will comply in all
material respects with the requirements of, the Act and the rules
and regulations of the Commission thereunder and (ii) did not or
will not include any untrue statement of a material fact or omit
to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which
they were made, not misleading. The foregoing provisions of this
paragraph (b) do not apply to statements or omissions made in any
Preliminary Prospectus, the Registration Statement or any
amendment thereto or the Prospectus or any amendment or
supplement thereto in reliance upon and in conformity with
written information furnished to the Company by any Underwriter
through the Representatives specifically for use therein.
(c) If the Company has elected to rely on Rule
462(b) and the Rule 462(b) Registration Statement has not been
declared effective (i) the Company has filed a Rule 462(b)
Registration Statement in compliance with, and that is effective
upon filing with the Commission pursuant to, Rule 462(b) and has
received confirmation of the Commission's receipt and (ii) the
Company has given irrevocable instructions for transmission of
the applicable filing fee in connection with the filing of the
Rule 462(b) Registration Statement, in compliance with Rule 111
promulgated under the Act or the Commission has received payment
of such filing fee.
(d) The Company has been duly organized and is
validly existing as a trust in good standing under the laws of
Maryland and is duly qualified to transact business as a foreign
trust and is in good standing under the laws of all other
jurisdictions where the ownership or leasing of its properties or
the conduct of its business requires such qualification, except
where the failure to be so qualified does not amount to a
material liability or disability to the Company and its
subsidiaries, taken as a whole. Each of the Company's
subsidiaries (which are corporations) have been duly organized
and are validly existing as corporations in good standing under
the laws of their respective jurisdictions of incorporation and
are duly qualified to transact business as foreign corporations
and are in good standing under the laws of all other
jurisdictions where the ownership or leasing of their respective
properties or the conduct of their respective businesses requires
such qualification, except where the failure to be so qualified
does not amount to a material liability or disability to the
Company and its subsidiaries, taken as a whole. Each of the
Company's subsidiaries (which are partnerships), including the
Property Partnerships that are partnerships (as defined in the
Prospectus or, if the Prospectus is not in existence, the most
recent Preliminary Prospectus) have been duly organized and are
validly existing as partnerships in good standing under the laws
of their respective jurisdictions of organization and are duly
qualified to transact business as foreign partnerships and are in
good standing under the laws of all other jurisdictions where the
ownership or leasing of their respective properties or the
conduct of their respective businesses requires such
qualification, except where the failure to be so qualified does
not amount to a material liability or disability to the Company
and its subsidiaries, taken as a whole. Each of the Company's
subsidiaries (which are limited liability companies), including
the Property Partnerships that are limited liability companies
have been duly organized and are validly existing as limited
liability companies in good standing under the laws of their
respective jurisdictions of organization and are duly qualified
to transact business as foreign limited liability companies and
are in good standing under the laws of all other jurisdictions
where the ownership or leasing of their respective properties or
the conduct of their respective businesses requires such
qualification, except where the failure to be so qualified does
not amount to a material liability or disability to the Company
and its subsidiaries, taken as a whole.
(e) The Company and each of its subsidiaries have
full power (corporate or other) to own or lease their respective
properties and conduct their respective businesses as described
in the Registration Statement and the Prospectus or, if the
Prospectus is not in existence, the most recent Preliminary
Prospectus; and each of the Company and the Operating Partnership
has full power (corporate or other) to enter into this Agreement
and to carry out all the terms and provisions hereof to be
carried out by it.
(f) The issued shares of capital stock of each of
the Company's subsidiaries (which are corporations) have been
duly authorized and validly issued, are fully paid and
nonassessable and, except as otherwise set forth in the
Prospectus or, if the Prospectus is not in existence, the most
recent Preliminary Prospectus, are owned beneficially by the
Company free and clear of any security interests, liens,
encumbrances, equities or claims. The partnership agreements of
the Company's subsidiaries (which are partnerships) have been
duly authorized, executed and delivered by the general partners
thereof and constitute the valid and binding obligation of the
general partners thereof. Such partnership agreements, other
than the partnership agreement for the Operating Partnership and
the Property Partnership that holds [insert name of Tennessee
Property], reflect the Company and/or one or more of the
Company's subsidiaries as the sole beneficial owners of the
partnership interests in such partnerships.
(g) The Operating Partnership has been duly
organized and is validly existing as a limited partnership in
good standing under the laws of its jurisdiction of organization
and is duly qualified to transact business as a foreign limited
partnership and is in good standing under the laws of all other
jurisdictions where the ownership or leasing of its properties or
the conduct of its business requires such qualification, except
where the failure to be so qualified does not amount to a
material liability or disability to the Company and its
subsidiaries, taken as a whole. As of the Firm Closing Date, the
Company, the NAC General Partner (as defined in the Prospectus
or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus) and the limited partners of the Operating
Partnership will enter into an Agreement of Limited Partnership
of the Operating Partnership, substantially in the form of
Exhibit 10.1 to the Registration Statement, with such other
nonmaterial changes and revisions as are acceptable to the
Representatives (the "Operating Partnership Agreement"), which
agreement will be in full force and effect as of the Firm Closing
Date. All of the partnership interests in the Operating
Partnership (the "Common Units") and the Preferred Units (as
defined in the Prospectus, or if the Prospectus is not in
existence, the most recent Preliminary Prospectus) to be issued
in connection with the Formation Transactions (as defined in the
Prospectus, or if the Prospectus is not in existence, the most
recent Preliminary Prospectus) have been duly authorized for
issuance by the Operating Partnership to the holders or
prospective holders thereof, and, at the Firm Closing Date,
against the payment of consideration therefor in accordance with
the Operating Partnership Agreement, will be validly issued,
fully paid and owned in the amounts set forth on Schedule 2
hereto, and, in the case of the Common Units and the Preferred
Units to be issued to the Company, free and clear of any security
interests, liens, encumbrances, equities or claims. Immediately
after the Firm Closing Date, 9,064,343 Common Units of limited
partner interest, 13,307,100 Common Units of general partner
interest and 2,000,000 Preferred Units of the Operating
Partnership will be issued and outstanding. The Common Units and
Preferred Units conform in all material respects to the
description thereof contained in the Prospectus or, if the
Prospectus is not in existence, the most recent Preliminary
Prospectus. The Company is, and immediately after the Firm
Closing Date will be, the managing general partner of the
Operating Partnership.
(h) The Company has an authorized, issued and
outstanding capitalization as set forth in the Prospectus or, if
the Prospectus is not in existence, the most recent Preliminary
Prospectus. All of the issued shares of beneficial interest of
the Company have been duly authorized and validly issued and are
fully paid and nonassessable. The Firm Securities and the Option
Securities have been duly authorized and at the Firm Closing Date
or the related Option Closing Date (as the case may be), after
payment therefor in accordance herewith, will be validly issued,
fully paid and nonassessable. No holders of outstanding shares
of beneficial interest of the Company are entitled as such to any
preemptive or other rights to subscribe for any of the
Securities, and no holder of securities of the Company has any
right which has not been fully exercised or waived to require the
Company to register the offer or sale of any securities owned by
such holder under the Act in the public offering contemplated by
this Agreement.
(i) The capitalization of the Company conforms to
the description thereof contained in the Prospectus or, if the
Prospectus is not in existence, the most recent Preliminary
Prospectus.
(j) All of the issued and outstanding Common
Shares of the Company have been offered and sold in compliance
with all applicable laws (including, without limitation, federal
and state securities laws). Except as described in the
Prospectus (or, if the Prospectus does not exist, the most recent
Preliminary Prospectus), the Company has not issued or sold any
Common Shares during the six-month period preceding the initial
filing date of the Registration Statement including any sales
pursuant to Rule 144A under, or Regulation D or S of, the Act.
(k) Except as disclosed in the Prospectus (or, if
the Prospectus is not in existence, the most recent Preliminary
Prospectus), there are no outstanding (A) securities, equity
interests or obligations of the Company or any of its
subsidiaries convertible into or exchangeable for any beneficial
interests, capital stock or other equity interests (as the case
may be) of the Company or any such subsidiary, (B) warrants,
rights or options to subscribe for or purchase from the Company
or any such subsidiary any such beneficial interests, capital
stock or other equity interests or any such convertible or
exchangeable securities, equity interests or obligations, or (C)
obligations of the Company or any such subsidiary to issue any
shares of beneficial interests, capital stock, other equity
interests, any such convertible or exchangeable securities,
equity interests or obligations, or any such warrants, rights or
options.
(l) The offer, issuance and exchange of the
Common Units in connection with the Formation Transactions were
or will be exempt from the registration requirements of the Act
and applicable state securities and blue sky laws. The Company
and the Operating Partnership reasonably believe that all persons
and entities to whom such Common Units have been issued or will
be issued on the Firm Closing Date were or will be at the time of
issuance "accredited investors" as that term is defined in Rule
501(a) under the Act.
(m) The pro forma condensed consolidated balance
sheet and the pro forma condensed consolidated statements of
operations of the Company (in each case, including the notes
thereto) included in the Registration Statement and the
Prospectus (or, if the Prospectus is not in existence, the most
recent Preliminary Prospectus) fairly present the financial
position of the Company at the dates therein specified. The
combined financial statements (including the notes thereto) of
the Prime Properties (as defined in the notes thereto) included
in the Registration Statement and the Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary
Prospectus) fairly present the financial position, the results of
operations and cash flows and changes in financial condition of
the Prime Properties, at the date and for the periods therein
specified. The combined statement of revenues and certain
expenses (including the notes thereto) of the Prime Industrial
Contribution Properties (as defined in the notes thereto)
included in the Registration Statement and the Prospectus (or, if
the Prospectus is not in existence, the most recent Preliminary
Prospectus) fairly present the combined revenues and certain
expenses of the Prime Industrial Contribution Properties for the
periods therein specified. The combined statement of revenues
and certain expenses (including the notes thereto) of the IBD
Contribution Properties (as defined in the notes thereto)
included in the Registration Statement and the Prospectus (or, if
the Prospectus is not in existence, the most recent Preliminary
Prospectus) fairly present the combined revenues and certain
expenses of the IBD Contribution Properties for the periods
therein specified. The combined statement of revenues and certain
expenses (including the notes thereto) of the NAC Contribution
Properties (as defined in the notes thereto) included in the
Registration Statement and the Prospectus (or, if the Prospectus
is not in existence, the most recent Preliminary Prospectus)
fairly present the combined revenues and certain expenses of the
NAC Contribution Properties for the periods therein specified.
The statement of revenues and certain expenses of Citibank Office
Plaza included in the Registration Statement and the Prospectus
(or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus) fairly present revenues and certain
expenses of Citibank Office Plaza for the periods therein
specified. The statement of revenues and certain expenses of
Salt Creek Office Center included in the Registration Statement
and the Prospectus (or, if the Prospectus is not in existence,
the most recent Preliminary Prospectus) fairly present revenues
and certain expenses of Salt Creek Office Center for the periods
therein specified. The statement of revenues and certain expenses
of 000 Xxxxxxx Xxxxxxxxx included in the Registration Statement
and the Prospectus (or, if the Prospectus is not in existence,
the most recent Preliminary Prospectus) fairly present revenues
and certain expenses of 000 Xxxxxxx Xxxxxxxxx for the periods
therein specified. The statement of revenues and certain
expenses of 000 Xxxxxxxx Xxxxxx included in the Registration
Statement and the Prospectus (or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus) fairly present
revenues and certain expenses of 000 Xxxxxxxx Xxxxxx for the
periods therein specified. All of the foregoing financial
statements (including the notes thereto) and schedules have been
prepared in accordance with generally accepted accounting
principles consistently applied for each of the periods
presented. The selected financial data set forth under the
caption "Selected Financial Data" in the Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary
Prospectus) fairly present, on the basis stated in the Prospectus
(or such Preliminary Prospectus), the information included
therein.
(n) The pro forma condensed consolidated balance
sheet and the pro forma condensed consolidated statements of
operations of the Company included in the Registration Statement
and the Prospectus (or, if the Prospectus is not in existence,
the most recent Preliminary Prospectus) comply in all material
respects with the applicable requirements of Rule 11-02 of
Regulation S-X of the Commission and the pro forma adjustments
have been properly applied to the historical amounts in the
compilation of such information and the assumptions used in the
preparation thereof are, in the opinion of the Company,
reasonable. Other than the historical and pro forma financial
statements (and schedules) included therein, no other historical
or pro forma financial statements (or schedules) are required to
be included in the Registration Statement or Prospectus.
(o) Ernst & Young LLP, who have certified certain
financial statements and schedules, and delivered their reports
with respect to the audited financial statements and schedules,
included in the Registration Statement and the Prospectus (or, if
the Prospectus is not in existence, the most recent Preliminary
Prospectus), are independent public accountants as required by
the Act and the applicable rules and regulations thereunder.
(p) The assumptions made by the Company disclosed
in the Prospectus (or, if the Prospectus is not in existence, the
most recent Preliminary Prospectus), under the caption
"Distribution Policy" are reasonable in light of the expected and
intended method of operation of the Company and the Operating
Partnership.
(q) The execution and delivery of this Agreement
have been duly authorized by the Company and the Operating
Partnership and this Agreement has been duly executed and
delivered by the Company and the Operating Partnership, and is
the valid and binding agreement of each of the Company and the
Operating Partnership, enforceable against the Company and the
Operating Partnership in accordance with its terms, subject to
the effect of bankruptcy, insolvency, moratorium, fraudulent
conveyance, reorganization and similar laws relating to
creditors' rights generally and to the application of equitable
principles in any proceeding, whether at law or in equity.
(r) No legal or governmental proceedings are
pending to which the Company or any of its subsidiaries is a
party or to which the property of the Company or any of its
subsidiaries is subject that are required to be described in the
Registration Statement or the Prospectus (or, if the Prospectus
is not in existence, the most recent Preliminary Prospectus) and
are not described therein, and no such proceedings have been
threatened against the Company or any of its subsidiaries or with
respect to any of their respective properties; and no contract or
other document is required to be described in the Registration
Statement or the Prospectus or to be filed as an exhibit to the
Registration Statement that is not described therein (or, if the
Prospectus is not in existence, the most recent Preliminary
Prospectus) or filed as required.
(s) The issuance, offering and sale of the
Securities to the Underwriters by the Company pursuant to this
Agreement, the compliance by the Company and the Operating
Partnership with the other provisions of this Agreement and the
consummation of the other transactions herein contemplated do not
(i) require the consent, approval, authorization, registration or
qualification of or with any governmental authority, except such
as have been obtained, such as may be required under state
securities or blue sky laws and, if the registration statement
filed with respect to the Securities (as amended) is not
effective under the Act as of the time of execution hereof, such
as may be required (and shall be obtained as provided in this
Agreement) under the Act, or (ii) conflict with or result in a
breach or violation of any of the terms and provisions of, or
constitute a default under, any indenture, mortgage, deed of
trust, material lease or other material agreement or material
instrument to which the Company or any of its subsidiaries is a
party or by which the Company or any of its subsidiaries or any
of their respective properties are bound, or the charter
documents or by-laws or certificate of limited partnership or
partnership agreement (as the case may be) of the Company or any
of its subsidiaries, or any statute or any judgment, decree,
order, rule or regulation of any court or other governmental
authority or any arbitrator applicable to the Company or any of
its subsidiaries.
(t) Each of the Company and its subsidiaries has
full power (corporate or other) to enter into and deliver (as
applicable) the agreements set forth on Schedule 3 hereto and all
other agreements and other documents related to the Formation
Transactions (collectively, the "Transaction Documents") to which
each is party and to carry out all the terms and provisions
thereof to be carried out by each, respectively. The execution
and delivery of each of the Transaction Documents have been duly
authorized by the Company and its subsidiaries (as applicable)
and the Transaction Documents have been or will be on the Firm
Closing Date duly executed and delivered by the Company and its
subsidiaries (as applicable), and each is the valid and binding
agreement of the Company and its subsidiaries (as applicable),
enforceable against the Company and its subsidiaries (as
applicable) in accordance with its terms, subject to the effect
of bankruptcy, insolvency, moratorium, fraudulent conveyance,
reorganization and similar laws relating to creditors' rights
generally and to the application of equitable principles in any
proceeding, whether at law or in equity.
(u) The execution and delivery of the Transaction
Documents, the compliance by the Company and its subsidiaries (as
applicable) with their respective obligations under the
Transaction Documents and the consummation of the Formation
Transactions do not (i) require the consent, approval,
authorization, registration or qualification of or with any
governmental authority, except such as have been obtained, such
as may be required under state securities or blue sky laws and,
if the Registration Statement filed with respect to the
Securities (as amended) is not effective under the Act as of the
time of execution hereof, such as may be required (and shall be
obtained as provided in this Agreement) under the Act, or (ii)
conflict with or result in a breach or violation of any of the
terms and provisions of, or constitute a default under, any
indenture, mortgage (except that (i) in connection with certain
mortgages to be assumed concurrently with the Closing as
described in the Prospectus, consents from the mortgage holders
will be required as a condition of Closing, and (ii) in
connection with mortgages to be repaid concurrently with the
Closing as described in the Prospectus, an agreement to
contribute may be a violation of such mortgages, but such
mortgages will be repaid concurrently with the Closing), deed of
trust, material lease or other material agreement or material
instrument to which the Company or any of its subsidiaries is a
party or by which the Company or any of its subsidiaries or any
of their respective properties are bound, or the charter
documents or by-laws or certificate of limited partnership or
partnership agreement (as the case may be) of the Company or any
of its subsidiaries, or any statute or any judgment, decree,
order, rule or regulation of any court or other governmental
authority or any arbitrator applicable to the Company or any of
its subsidiaries.
(v) Subsequent to the respective dates as of
which information is given in the Registration Statement and the
Prospectus (or, if the Prospectus is not in existence, the most
recent Preliminary Prospectus), neither the Company nor any of
its subsidiaries has sustained any material loss or interference
with their respective businesses or properties from fire, flood,
hurricane, accident or other calamity, whether or not covered by
insurance, or from any labor dispute or any legal or governmental
proceeding and there has not been any material adverse change, or
any development involving a prospective material adverse change,
in the condition (financial or otherwise), management, business
prospects, net worth, or results of operations of the Company and
its subsidiaries, taken as a whole, except in each case as
described in or contemplated by the Registration Statement and
the Prospectus (or, if the Prospectus is not in existence, the
most recent Preliminary Prospectus).
(w) The Company has not, directly or indirectly,
(i) taken any action designed to cause or to result in, or that
has constituted or which might reasonably be expected to
constitute, the stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of the
Securities or (ii) since the filing of the Registration Statement
(A) sold, bid for, purchased, or paid anyone any compensation for
soliciting purchases of, the Securities or (B) paid or agreed to
pay to any person any compensation for soliciting another to
purchase any other securities of the Company.
(x) The Company has not distributed and, prior to
the later of (i) the Closing Date and (ii) the completion of the
distribution of the Securities, will not distribute any offering
material in connection with the offering and sale of the
Securities other than the Registration Statement or any amendment
thereto, any Preliminary Prospectus or the Prospectus or any
amendment or supplement thereto, or other materials, if any,
permitted by the Act.
(y) Subsequent to the respective dates as of which information
is given in the Registration Statement and the Prospectus (or, if the Prospectus
is not in existence, the most recent Preliminary Prospectus), (1) the Company
and its subsidiaries have not incurred any material liability or obligation,
direct or contingent, nor entered into any material transaction not in the
ordinary course of business; (2) the Company has not purchased any shares of its
outstanding beneficial interests, nor declared, paid or otherwise made any
dividend or distribution of any kind on its shares of beneficial interests,
other than as described in Item 32 of Part II of the Registration Statement; and
(3) there has not been any material change in the beneficial interests, capital
stock or partnership interests (as the case may be), short-term debt or long-
term debt of the Company and its consolidated subsidiaries, except in each case
as described in or contemplated by the Prospectus (or, if the Prospectus is not
in existence, the most recent Preliminary Prospectus).
(z) Upon consummation of the Formation Transactions (including,
for purposes of this Agreement, the consummation of the issuance and sale of the
Firm Securities pursuant to Section 3 hereof), or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus), and the application of the
proceeds from such issuance and sale and such borrowings (which application
shall occur concurrently with such issuance and sale) as set forth under the
caption "Use of Proceeds" in the Registration Statement and the Prospectus (or,
if the Prospectus is not in existence, the most recent Preliminary Prospectus),
the Company or its subsidiaries will have good and marketable title in fee
simple to all items of real property comprising part of the Properties,
including the Acquisition Properties and the Contribution Properties (as such
terms are defined in the Registration Statement and the Prospectus, or, if the
Prospectus is not in existence, the most recent Preliminary Prospectus) and
marketable title to all personal property comprising part of the Properties, in
each case free and clear of any security interests, liens, encumbrances,
equities, claims and other defects, except such as do not materially and
adversely affect the value of such property and do not interfere with the use
made or proposed to be made of such property by the Company or such subsidiary,
and any real property and buildings comprising part of the Properties held under
lease by the Company or any such subsidiary are held under valid, subsisting and
enforceable leases, with such exceptions as are not material and do not
interfere with the use made or proposed to be made of such property and
buildings by the Company or such subsidiary, in each case except as described in
or contemplated by the Prospectus (or, if the Prospectus is not in existence,
the most recent Preliminary Prospectus).
(aa) No labor dispute with the employees of the Company or any
of its subsidiaries exists or is threatened or, to the best of the Company's
knowledge, imminent that could result in a material adverse change in the
condition (financial or otherwise), business prospects, net worth or results of
operations of the Company and its subsidiaries, taken as a whole, except as
described in or contemplated by the Prospectus (or, if the Prospectus is not in
existence, the most recent Preliminary
Prospectus).
(ab) Upon consummation of the Formation
Transactions, the Company and its subsidiaries will own or
possess, or will be able to acquire on reasonable terms, all
material patents, patent applications, trademarks, service marks,
trade names, licenses, copyrights and proprietary or other
confidential information currently employed or proposed to be
employed by them in connection with the business now operated or
proposed to be operated by them as described in the Prospectus
(or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus), and neither the Company nor any such
subsidiary has received any notice of infringement of or conflict
with asserted rights of any third parry with respect to any of
the foregoing which, singly or in the aggregate, if the subject
of an unfavorable decision, ruling or finding, would result in a
material adverse change in the condition (financial or
otherwise), business prospects, net worth or results of
operations of the Company and its subsidiaries, taken as a whole,
except as described in or contemplated by the Prospectus (or, if
the Prospectus is not in existence, the most recent Preliminary
Prospectus).
(ac) Upon consummation of the Formation
Transactions, the Company and each of its subsidiaries will own
or possess all contract rights that are material to the
businesses now operated or proposed to be operated by them taken
as a whole as described in the Prospectus (or, if the Prospectus
is not in existence, the most recent Preliminary Prospectus),
including all such contract rights referred to in the Prospectus.
The Company has not received any written notices that any of such
contracts are not in full force and effect, and neither the
Company nor any such subsidiary has received written notice of
any material breach by any party under any of such contracts.
(ad) As of the Firm Closing Date, the Company and
each of its subsidiaries will be insured by insurers of
recognized financial responsibility against such losses and risks
and in such amounts as are prudent and customary in the
businesses in which they are or will be engaged as described in
the Prospectus (or, if the Prospectus is not in existence, the
most recent Preliminary Prospectus); and neither the Company nor
any such subsidiary has any reason to believe that it will not be
able to renew such insurance coverage as and when such coverage
expires or to obtain similar coverage from similar insurers as
may be necessary to continue its business at a cost that would
not materially and adversely affect the condition (financial or
otherwise), business prospects, net worth or results of
operations of the Company and its subsidiaries, taken as a whole,
except as described in or contemplated by the Prospectus (or, if
the Prospectus is not in existence, the most recent Preliminary
Prospectus).
(ae) No subsidiary of the Company is currently
prohibited, directly or indirectly, from paying any dividends to
the Company, from making any other distribution on such
subsidiary's capital stock or partnership interests, from
repaying to the Company any loans or advances to such subsidiary
from the Company or from transferring any of such subsidiary's
property or assets to the Company or any other subsidiary of the
Company, except as described in or contemplated by the Prospectus
(or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus).
(af) The Company and its subsidiaries will
possess as of the Firm Closing Date all certificates,
authorizations and permits issued by the appropriate federal,
state or foreign regulatory authorities necessary to conduct
their respective businesses, and neither the Company nor any such
subsidiary has received any written notice of proceedings
relating to the revocation or modification of any such
certificate, authorization or permit which, singly or in the
aggregate, if the subject of any unfavorable decision, ruling or
finding, would result in a material adverse change in the
condition (financial or otherwise), business prospects, net worth
or results of operations of the Company and its subsidiaries,
taken as a whole, except as described in or contemplated by the
Prospectus (or, if the Prospectus is not in existence, the most
recent Preliminary Prospectus).
(ag) The Company will conduct its operations in a
manner that will not subject it to registration as an investment
company under the Investment Company Act of 1940, as amended, and
the Formation Transactions and other transactions contemplated by
this Agreement will not cause the Company to become an investment
company subject to registration under such act.
(ah) Each of the Company and its subsidiaries has
filed all foreign, federal, state and local tax returns that are
required to be filed or has requested extensions thereof (except
in any case in which the failure so to file would not have a
material adverse effect on the Company and its subsidiaries,
taken as a whole) and has paid all taxes required to be paid by
it and any other assessment, fine or penalty levied against it,
to the extent that any of the foregoing is due and payable,
except for any such assessment, fine or penalty that is currently
being contested in good faith or as described in or contemplated
by the Prospectus (or, if the Prospectus is not in existence, the
most recent Preliminary Prospectus).
(ai) Neither the Company nor any of its
subsidiaries is in violation of any applicable federal or state
law or regulation relating to occupational safety and health or
to the storage, handling or transportation of hazardous or toxic
materials and the Company and its subsidiaries have received all
permits, licenses or other approvals required of them under
applicable federal and state occupational safety and health and
environmental laws and regulations to conduct their respective
businesses or the businesses proposed to be conducted by them as
described in the Prospectus (or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus), and the
Company and each such subsidiary is in compliance with all terms
and conditions of any such permit, license or approval, except
any such violation of law or regulation, failure to receive
required permits, licenses or other approvals or failure to
comply with the terms and conditions of such permits, licenses or
approvals which would not, singly or in the aggregate, result in
a material adverse change in the condition (financial or
otherwise), business prospects, net worth or results of
operations of the Company and its subsidiaries, taken as a whole,
except as described in or contemplated by the Prospectus (or, if
the Prospectus is not in existence, the most recent Preliminary
Prospectus).
(aj) Each certificate signed by any officer of
the Company and delivered to the Representatives or counsel for
the Underwriters on the Firm Closing Date or on the Option
Closing Date shall be deemed to be a representation and warranty
by the Company to each Underwriter as to the matters covered
thereby.
(ak) Except for the shares of capital stock of,
or partnership interests in (as applicable), each of the
subsidiaries owned by the Company and such subsidiaries, neither
the Company nor any such subsidiary owns any shares of stock or
any other equity securities of any corporation or has any equity
interest in any firm, partnership, association or other entity,
except as described in or contemplated by the Prospectus (or, if
the Prospectus is not in existence, the most recent Preliminary
Prospectus).
(al) The Company and each of its subsidiaries
maintain a system of internal accounting controls sufficient to
provide reasonable assurance that (1) transactions are executed
in accordance with management's general or specific
authorizations; (2) transactions are recorded as necessary to
permit preparation of financial statements in conformity with
generally accepted accounting principles and to maintain asset
accountability; (3) access to assets is permitted only in
accordance with management's general or specific authorization;
and (4) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate
action is taken with respect to any differences.
(am) No default exists, and no event has occurred
which, with notice or lapse of time or both, would constitute a
default in the due performance and observance of any term,
covenant or condition of any indenture, mortgage, deed of trust,
lease, partnership agreement or other agreement or instrument to
which the Company or any of its subsidiaries is a party or by
which the Company or any of its subsidiaries or any of their
respective properties is bound or may be affected in any material
adverse respect with regard to property, business or operations
of the Company and its subsidiaries.
(an) The Securities have been approved for
listing on the New York Stock Exchange, subject to official
notice of issuance.
(ao) Except as otherwise disclosed in the
Prospectus (or, if the Prospectus is not in existence, the most
recent Preliminary Prospectus), since January 1, 1990 no
foreclosures have been instituted and none are currently
threatened with respect to any property or assets directly or
indirectly owned (whether now or in the past) by The Prime Group,
Inc. or the Company or any of its subsidiaries. Except for the
assets of The Prime Group, Inc. that will not be transferred to
the Company in the Formation Transactions that are described
under the heading "Business and Properties Prime Assets Not
Acquired by the Company" in the Prospectus, or, if the Prospectus
is not in existence, the most recent Preliminary Prospectus (the
"Excluded Properties"), no director, executive officer or 5% or
more stockholder (each, a "Member") of The Prime Group, Inc.
owns or operates any real property other than the real properties
comprising part of the Properties.
(ap) Except as otherwise described in the
Prospectus (or, if the Prospectus is not in existence, the most
recent Preliminary Prospectus), (i) no proceeding or filing of a
petition seeking relief under Title 11 of the United States Code
or any other federal, state or foreign bankruptcy, insolvency,
liquidation or similar law has been commenced or instituted
(whether voluntary or involuntary) by or with respect to any
Member of The Prime Group, Inc., (ii) no Member of The Prime
Group, Inc. has applied for or consented to the appointment of a
receiver, trustee, custodian, sequestrator or similar official
for any such persons or for a substantial part of any such
persons' property or assets and (iii) no Member of The Prime
Group, Inc. has made a general assignment for the benefit of its
creditors.
(aq) No relationship, direct or indirect, exists
between or among the Company or the Operating Partnership on the
one hand, and the directors, officers, shareholders (in the case
of the Company), partners (in the case of the Operating
Partnership), tenants, customers or suppliers of the Company or
the Operating Partnership on the other hand, which is required to
be described in the Prospectus (or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus) which is not
so described.
(ar) The transfer of interests or other assets
pursuant to the agreements and instruments set forth on Schedule
4 hereto (the "Transfer Documents") does not violate the articles
or certificate of incorporation, by-laws, limited liability
company operating agreement, declaration of trust, certificate of
limited partnership, partnership agreement or other
organizational documents, as the case may be, of any Member of
The Prime Group, Inc. The Transfer Documents are sufficient to
effect the transfer to the Company or its subsidiaries of all
direct or indirect interests in the Properties and other assets
specified therein upon payment of the specified consideration
therefor. Pursuant to the Transfer Documents, the Properties and
other assets specified therein will be transferred to the Company
or its subsidiaries directly and not by way of a transfer of
interests in partnerships or other types of entities which,
immediately prior to the transfer, own the Properties and such
other assets, except in the case of the Prime Properties and
certain other Properties encumbered by tax-exempt bonds, in which
case the Transfer Documents provide that the interests in the
Property Partnerships subject to such encumbrances will be
transferred to the Company or its subsidiaries.
(as) Commencing with the Firm Closing Date, after
giving effect to the Formation Transactions, the Company will be
organized in conformity with the requirements for qualification
as a real estate investment trust (a "REIT") under the Internal
Revenue Code of 1986, as amended (the "Code"), and will have no
earnings and profits accumulated in a non-REIT year within the
meaning of Section 857(a)(3)(B) of the Code, and the proposed
method of operation of the Company and its subsidiaries will
enable the Company to meet the requirements for taxation as a
REIT under the Code beginning with its taxable year ending
December 31, 1997 and for its subsequent taxable years. All
statements in the Prospectus (or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus) regarding the
Company's qualification as a REIT are true, complete and correct
in all material respects.
(at) Except as disclosed in physical inspection
reports, leases, environmental reports and other written
materials previously provided by the Company to the
Representatives and their counsel, (i) the Company has not
received any written notice that any of the Properties is not in
compliance with all applicable codes, laws, ordinances and
regulations (including, without limitation, building and zoning
codes and laws and regulations relating to access to the
Properties) and deed restrictions or other covenants, except for
such failures to comply that would not materially impair the
value of any of the Properties or would not result in a
forfeiture or reversion of title; (ii) neither the Company nor
any of its subsidiaries has knowledge of any pending or
threatened litigation, moratorium, condemnation proceedings,
zoning change, or other similar proceeding or action that could
in any manner affect the size of, use of, improvements on,
construction on, access to or availability of utilities or other
necessary services to, the Properties, except such proceedings or
actions which are not reasonably expected to, singly or in the
aggregate, result in a material adverse change in the condition
(financial or otherwise), business prospects, net worth or
results of operations of the Company and its subsidiaries, taken
as a whole; (iii) all liens, charges, encumbrances, claims, or
restrictions on or affecting the properties and assets (including
the Properties) of the Company or any of its subsidiaries that
are required to be disclosed in the Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary
Prospectus) are disclosed therein; (iv) to the best of the
Company's knowledge, neither the Company, any of its
subsidiaries nor any tenant of any portion of any of the
Properties is in default under any of the ground leases (as
lessor), space leases (as lessor or lessee, as the case may be)
or other occupancy or license agreement relating to, or under any
of the mortgages which will remain in effect after the Closing or
other security documents or other agreements encumbering or
otherwise recorded against, the Properties and there is no event
which, but for the passage of time or the giving of notice or
both, would constitute a default under any of such documents or
agreements, except such defaults that would not, singly or in the
aggregate, result in a material adverse change in the condition
(financial or otherwise), business prospects, net worth or
results of operations of the Company and its subsidiaries; and
(v) except as described in the Prospectus (or, if the Prospectus
is not in existence, the most recent Preliminary Prospectus) and
except as otherwise provided by law, upon consummation of the
Formation Transactions, no tenant under any lease pursuant to
which the Company or any of its subsidiaries will lease the
Properties will have an option or right of first refusal to
purchase the premises leased thereunder or the building of which
such premises are a part.
(au) Except as otherwise disclosed in the
Prospectus (or, if the Prospectus is not in existence, the most
recent Preliminary Prospectus), the mortgages and deeds of trust
encumbering the properties and assets described in the Prospectus
(or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus) which will remain in effect after the
Closing are not convertible and neither the Company, any of its
subsidiaries nor any person affiliated therewith holds a
participating interest therein, and such mortgages and deeds of
trust are not cross-defaulted or cross-collateralized to any
property not owned directly or indirectly by the Company or any
of its subsidiaries.
(av) Each of the Properties is in substantial
compliance with all presently applicable provisions of the
Americans with Disabilities Act and no failure of the Company or
any of its subsidiaries to comply with all presently applicable
provisions of the Americans with Disabilities Act would result in
a material adverse change in the condition (financial or
otherwise), business prospects, net worth or results of
operations of the Company and its subsidiaries, taken as a whole.
(aw) Except as otherwise disclosed in the
Prospectus (or, if the Prospectus is not in existence, the most
recent Preliminary Prospectus), (i) neither the Company, any
of its subsidiaries nor, to the best knowledge of the Company, any
other owners of the Properties at any time or any other party has
at any time, handled, stored, treated, transported, manufactured,
spilled, leaked, or discharged, dumped, transferred or otherwise
disposed of or dealt with, Hazardous Materials (as hereinafter
defined) on, to or from the Properties, other than by any such
action taken in compliance with all applicable Environmental
Statutes; (ii) neither the Company nor any of its subsidiaries
intends to use the Properties or any subsequently acquired
properties for the purpose of handling, storing, treating,
transporting, manufacturing, spilling, leaking, discharging,
dumping, transferring or otherwise disposing of or dealing with
Hazardous Materials; (iii) neither the Company nor any of its
subsidiaries knows of any seepage, leak, discharge, release,
emission, spill, or dumping of Hazardous Materials into waters on
or adjacent to the Properties or any other real property owned or
occupied by any such party, or onto lands from which Hazardous
Materials might seep, flow or drain into such waters; (iv) except
as described in the Prospectus (or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus), neither the
Company nor any of its subsidiaries has received any notice of,
or has any knowledge of any occurrence or circumstance which,
with notice or passage of time or both, would give rise to a
claim under or pursuant to any federal, state or local
environmental statute or regulation or under common law,
pertaining to Hazardous Materials on or originating from any of
the Properties or any assets described in the Prospectus (or, if
the Prospectus is not in existence, the most recent Preliminary
Prospectus) or any other real property owned or occupied by any
such party or arising out of the conduct of any such party,
including without limitation a claim under or pursuant to any
Environmental Statute (as hereinafter defined); (v) none of the
Properties is included or, to the best of the Company's
knowledge, proposed for inclusion on the National Priorities List
issued pursuant to CERCLA (as hereinafter defined) by the United
States Environmental Protection Agency (the "EPA") or, to the
best of the Company's knowledge, proposed for inclusion on any
similar list or inventory issued pursuant to any other
Environmental Statute or issued by any other Governmental
Authority (as hereinafter defined).
As used herein, "Hazardous Material" shall
include, without limitation, any flammable explosives,
radioactive materials, hazardous materials, hazardous wastes,
toxic substances, or related materials, asbestos or any hazardous
materials as defined by any federal, state or local environmental
law, ordinance, rule or regulation including, without limitation,
the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended, 42 U.S.C. SECTIONS 9601-9675
("CERCLA"), the Hazardous Materials Transportation Act, as
amended, 49 U.S.C. SECTIONS 1801-1819, the Resource Conservation and
Recovery Act, as amended, 42 U.S.C. SECTIONS 6901-6992K, the Emergency
Planning and Community Right-to-Know Act of 1986, 42 U.S.C.
SECTIONS 11001-11050, the Toxic Substances Control Act, 15 U.S.C.
SECTIONS 2601-2671, the Federal Insecticide, Fungicide and Rodenticide
Act, 7 U.S.C. SECTIONS 136-136y, the Clean Air Act, 42 U.S.C.
SECTIONS 7401-7642, the Clean Water Act (Federal Water Pollution
Control Act), 33 U.S.C. SECTIONS 1251-1387, the Safe Drinking Water
Act, 42 U.S.C. SECTIONS 300f-300j-26, and the Occupational Safety and
Health Act, 29 U.S.C. SECTIONS 651-678, as any of the above statutes
may be amended from time to time, and in the regulations
promulgated pursuant to each of the foregoing (individually, an
"Environmental Statute") or by any federal, state or local
governmental authority having or claiming jurisdiction over the
properties and assets described in the Prospectus (a
"Governmental Authority").
(ax) None of the environmental consultants which
prepared environmental and asbestos inspection reports with
respect to any of the Properties (including, for purposes of this
paragraph, the Excluded Properties), the engineering consultants
which prepared engineering inspection reports with respect to any
of the Properties or Xxxxx Consulting Group, real estate
advisors, which prepared regional economic overviews and market
analysis for The Prime Group, Inc., dated October , 1997, were
employed for such purpose on a contingent basis or has any
substantial interest in the Company or any of its subsidiaries
and none of them or any of their directors, officers or employees
is connected with the Company or any of its subsidiaries as a
promoter, selling agent, voting trustee, director, officer or
employee.
(ay) Except as set forth in the environmental and
engineering inspection reports prepared with respect to the
Properties (including, for purposes of this paragraph, the
Excluded Properties), neither the Company nor the Operating
Partnership is aware of any environmental or engineering
condition at any of the Properties that would result in a
material adverse change in the condition (financial or otherwise)
or business prospects, net worth or results of operations of the
Company and its subsidiaries, taken as a whole.
(az) No real estate transfer or similar taxes are
or will become due and payable by the Company or any of its
subsidiaries as a result of the acquisition by the Company or any
of its subsidiaries of any direct or indirect interest in any
Property in connection with the Formation Transactions, other
than customary documentary transfer taxes which will be paid in
full on or prior to the Firm Closing Date or as otherwise
disclosed in the Prospectus.
(ba) At the firm Closing Date, the Company or its
subsidiaries will have obtained title insurance on each of the
Properties which constitute real property (including ground
leasehold estates) in an amount (the "Insured Title Amount") at
least equal to the sum of (i) the purchase price, in the case of
the Acquisition Properties, (ii) $ [insert the amount
of borrowings permitted under the Primestone Loan and the Credit
Facility] and (iii) the costs of the other Properties, in the
amount reasonably determined by the Company.
(bb) At or prior to the Firm Closing Date, each
of the transactions constituting the Formation Transactions will
have occurred in the manner described in the Prospectus (or, if
the Prospectus is not in existence, the most recent Preliminary
Prospectus), including, without limitation, the acquisition of
all of the Acquisition Properties and the Contribution Properties
and the execution and delivery of the Credit Facility.
(bc) All of the representations and warranties of
the Company, the Operating Partnership, The Prime Group, Inc. and
the other limited partners of the Operating Partnership contained
in the Transaction Documents are true and correct in all material
respects.
Each reference in this Section 2 to "the condition
(financial or otherwise), management, business prospects, net
worth, or results of operations of the Company and its
subsidiaries" means the condition (financial or otherwise),
management, business prospects, net worth, or results of
operations of the Company and its subsidiaries, upon consummation
of the Formation Transactions.
3. Purchase, Sale and Delivery of the Securities. (a)
On the basis of the representations, warranties, agreements and
covenants herein contained and subject to the terms and
conditions herein set forth, the Company agrees to issue and sell
to each of the Underwriters, and each of the Underwriters,
severally and not jointly, agrees to purchase from the Company,
at a purchase price of $___ per Common Share, the number of Firm
Securities set forth opposite the name of such Underwriter in
Schedule 1 hereto. One or more certificates in definitive form
for the Firm Securities that the several Underwriters have agreed
to purchase hereunder, and in such denomination or denominations
and registered in such name or names as the Representatives
request upon notice to the Company at least 48 hours prior to the
Firm Closing Date, shall be delivered by or on behalf of the
Company to the Representatives for the respective accounts of the
Underwriters, against payment by or on behalf of the Underwriters
of the purchase price therefor by wire transfer in same-day funds
(the "Wired Funds") to the account of the Company. Such delivery
of and payment for the Firm Securities shall be made at the
offices of Winston & Xxxxxx, 00 Xxxx Xxxxxx Xxxxx, Xxxxxxx,
Xxxxxxxx, at 8:30 A.M., Chicago time, on November ___, 1997, or
at such other place, time or date as the Representatives and the
Company may agree upon or as the Representatives may determine
pursuant to Section 9 hereof, such time and date of delivery
against payment being herein referred to as the "Firm Closing
Date". The Company will make such certificate or certificates
for the Firm Securities available for checking and packaging by
the Representatives at the offices in New York, New York of the
Company's transfer agent or registrar or of Prudential Securities
Incorporated at least 24 hours prior to the Firm Closing Date.
(b) For the purpose of covering any
over-allotments in connection with the distribution and sale of
the Firm Securities as contemplated by the Prospectus, the
Company hereby grants to the several Underwriters an option to
purchase, severally and not jointly, the Option Securities. The
purchase price to be paid for any Option Securities shall be the
same price per share as the price per share for the Firm
Securities set forth above in paragraph (a) of this Section 3,
plus, if the purchase and sale of any Option Securities takes
place after the Firm Closing Date and after the Firm Securities
are trading "ex-dividend", an amount equal to the dividends
payable on such Option Securities. The option granted hereby may
be exercised as to all or any part of the Option Securities from
time to time within thirty days after the date of the Prospectus
(or, if such 30th day shall be a Saturday or Sunday or a holiday,
on the next business day thereafter when the New York Stock
Exchange is open for trading). The Underwriters shall not be
under any obligation to purchase any of the Option Securities
prior to the exercise of such option. The Representatives may
from time to time exercise the option granted hereby by giving
notice in writing or by telephone (confirmed in writing) to the
Company setting forth the aggregate number of Option Securities
as to which the several Underwriters are then exercising the
option and the date and time for delivery of and payment for such
Option Securities. Any such date of delivery shall be determined
by the Representatives but shall not be earlier than two business
days or later than five business days after such exercise of the
option and, in any event, shall not be earlier than the Firm
Closing Date. The time and date set forth in such notice, or
such other time on such other date as the Representatives and
Company may agree upon or as the Representatives may determine
pursuant to Section 9 hereof, is herein called the "Option
Closing Date" with respect to such Option Securities. Upon
exercise of the option as provided herein, the Company shall
become obligated to sell to each of the several Underwriters,
and, subject to the terms and conditions herein set forth, each
of the Underwriters (severally and not jointly) shall become
obligated to purchase from the Company, the same percentage of
the total number of the Option Securities as to which the several
Underwriters are then exercising the option as such Underwriter
is obligated to purchase of the aggregate number of Firm
Securities, as adjusted by the Representatives in such manner as
they deem advisable to avoid fractional shares. If the option is
exercised as to all or any portion of the Option Securities, one
or more certificates in definitive form for such Option
Securities, and payment therefor, shall be delivered on the
related Option Closing Date in the manner, and upon the terms and
conditions, set forth in paragraph (a) of this Section 3, except
that reference therein to the Firm Securities and the Firm
Closing Date shall be deemed, for purposes of this paragraph (b),
to refer to such Option Securities and Option Closing Date,
respectively.
(c) The Company hereby acknowledges that the wire
transfer by or on behalf of the Underwriters of the purchase
price for any Securities does not constitute closing of a
purchase and sale of the Securities. Only execution and delivery
of a receipt for Securities by the Underwriters indicates
completion of the closing of a purchase of the Securities from
the Company. Furthermore, in the event that the Underwriters
wire the Wired Funds to the Company prior to the completion of
the closing of a purchase of Securities, the Company hereby
acknowledges that until the Underwriters execute and deliver a
receipt for the Securities, by facsimile or otherwise, the
Company will not be entitled to the Wired Funds and shall return
the Wired Funds to the Underwriters as soon as practicable (by
wire transfer of same-day funds) upon demand. In the event that
the closing of a purchase of Securities is not completed and the
Wired Funds are not returned by the Company to the Underwriters
on the same day the Wired Funds were received by the Company, the
Company agrees to pay to the Underwriters in respect of each day
the Wired Funds are not returned by it, in same-day funds,
interest on the amount of such Wired Funds in an amount
representing the Underwriters' cost of financing as reasonably
determined by Prudential Securities Incorporated.
(d) It is understood that any of you,
individually and not as one of the Representatives, may (but
shall not be obligated to) make payment on behalf of any
Underwriter or Underwriters for any of the Securities to be
purchased by such Underwriter or Underwriters. No such payment
shall relieve such Underwriter or Underwriters from any of its or
their obligations hereunder.
4. Offering by the Underwriters. Upon your
authorization of the release of the Firm Securities, the several
Underwriters propose to offer the Firm Securities for sale to the
public upon the terms set forth in the Prospectus.
5. Covenants of the Company. Each of the Company and
the Operating Partnership covenants and agrees with each of the
Underwriters that:
(a) The Company will use its best efforts to
cause the Registration Statement, if not effective at the time of
execution of this Agreement, and any amendments thereto to become
effective as promptly as possible. If required, the Company will
file the Prospectus or any Term Sheet that constitutes a part
thereof and any amendment or supplement thereto with the
Commission in the manner and within the time period required by
Rules 434 and 424(b) under the Act. During any time when a
prospectus relating to the Securities is required to be delivered
under the Act, the Company (i) will comply with all requirements
imposed upon it by the Act and the rules and regulations of the
Commission thereunder to the extent necessary to permit the
continuance of sales of or dealings in the Securities in
accordance with the provisions hereof and of the Prospectus, as
then amended or supplemented, and (ii) will not file with the
Commission the Prospectus, Term Sheet or the amendment referred
to in the second sentence of Section 2(a) hereof, any amendment
or supplement to such Prospectus, Term Sheet or any amendment to
the Registration Statement or any Rule 462(b) Registration
Statement of which the Representatives previously have been
advised and furnished with a copy for a reasonable period of time
prior to the proposed filing and as to which filing the
Representatives shall not have given their consent. The Company
will prepare and file with the Commission, in accordance with the
rules and regulations of the Commission, promptly upon request by
the Representatives or counsel for the Underwriters, any
amendments to the Registration Statement or amendments or
supplements to the Prospectus that may be necessary or advisable
in connection with the distribution of the Securities by the
several Underwriters, and will use its best efforts to cause any
such amendment to the Registration Statement to be declared
effective by the Commission as promptly as possible. The Company
will advise the Representatives, promptly after receiving notice
thereof, of the time when the Registration Statement or any
amendment thereto has been filed or declared effective or the
Prospectus or any amendment or supplement thereto has been filed
and will provide evidence satisfactory to the Representatives of
each such filing or effectiveness.
(b) The Company will advise the Representatives,
promptly after receiving notice or obtaining knowledge thereof,
of (i) the issuance by the Commission of any stop order
suspending the effectiveness of the Original Registration
Statement or any Rule 462(b) Registration Statement or any
amendment thereto or any order preventing or suspending the use
of any Preliminary Prospectus or the Prospectus or any amendment
or supplement thereto, (ii) the suspension of the qualification
of the Securities for offering or sale in any jurisdiction, (iii)
the institution, threatening or contemplation of any proceeding
for any such purpose or (iv) any request made by the Commission
for amending the Original Registration Statement or any Rule
462(b) Registration Statement, for amending or supplementing the
Prospectus or for additional information. The Company will use
its best efforts to prevent the issuance of any such stop order
and, if any such stop order is issued, to obtain the withdrawal
thereof as promptly as possible.
(c) The Company will promptly from time to time
take such action as the Representatives may reasonably request to
qualify the Securities for offering and sale under the securities
or blue sky laws of such jurisdictions as the Representatives may
reasonably request and will continue to comply with such laws for
as long as may be necessary to complete the distribution of the
Securities, provided, however, that in connection therewith the
Company shall not be required to take any action that would
subject it to income taxation in such jurisdictions, to qualify
as a foreign corporation or to execute a general consent to
service of process in any jurisdiction.
(d) If, at any time prior to the later of (i) the
final date when a prospectus relating to the Securities is
required to be delivered under the Act or (ii) the Option Closing
Date, any event occurs as a result of which the Prospectus, as
then amended or supplemented, would include any untrue statement
of a material fact or omit to state a material fact necessary in
order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, or if
for any other reason it is necessary at any time to amend or
supplement the Prospectus to comply with the Act or the rules or
regulations of the Commission thereunder, the Company will
promptly notify the Representatives thereof and, subject to
Section 5(a) hereof, will prepare and file with the Commission,
at the Company's expense, an amendment to the Registration
Statement or an amendment or supplement to the Prospectus that
corrects such statement or omission or effects such compliance.
(e) The Company will, without charge, provide (i)
to the Representatives and to counsel for the Underwriters a
signed copy of the registration statement originally filed with
respect to the Securities and each amendment thereto (in each
case including exhibits thereto) or any Rule 462(b) Registration
Statement, certified by the Secretary or an Assistant Secretary
of the Company to be true and complete copies thereof as filed
with the Commission by electronic transmission, (ii) to each
other Underwriter, a conformed copy of such registration
statement or any Rule 462(b) Registration Statement and each
amendment thereto (in each case without exhibits thereto) and
(iii) so long as a prospectus relating to the Securities is
required to be delivered under the Act, as many copies of each
Preliminary Prospectus or the Prospectus or any amendment or
supplement thereto as the Representatives may reasonably request;
without limiting the application of clause (iii) of this
sentence, the Company, not later than (A) 6:00 P.M., New York
City time, on the date of determination of the public offering
price, if such determination occurred at or prior to 10:00 A.M.,
New York City time, on such date or (B) 2:00 P.M., New York City
time, on the business day following the date of determination of
the public offering price, if such determination occurred after
10:00 A.M., New York City time, on such date, will deliver to the
Underwriters, without charge, as many copies of the Prospectus
and any amendment or supplement thereto as the Representatives
may reasonably request for purposes of confirming orders that are
expected to settle on the Firm Closing Date.
(f) The Company, as soon as practicable, will
make generally available to its securityholders and to the
Representatives a consolidated earnings statement of the Company
and its subsidiaries that satisfies the provisions of Section
11(a) of the Act and Rule 158 thereunder.
(g) The Company will apply the net proceeds from
the sale of the Securities as set forth under "Use of Proceeds"
in the Prospectus.
(h) The Company will not, directly or indirectly,
without the prior written consent of Prudential Securities
Incorporated, on behalf of the Underwriters, offer, sell, offer
to sell, contract to sell, pledge, grant any option to purchase
or otherwise sell or dispose (or announce any offer, sale, offer
of sale, contract of sale, pledge, grant of any option to
purchase or other sale or disposition) of any Common Shares or
other shares of beneficial interest of the Company or Common
Units or other partnership interests of the Operating
Partnership, or any securities convertible into, or exchangeable
or exercisable for, Common Shares or other shares of beneficial
interest of the Company or Common Units or other partnership
interests of the Operating Partnership, for a period of 180 days
after the date hereof, except (i) pursuant to this Agreement,
(ii) pursuant to a dividend reinvestment plan of the Company,
(iii) pursuant to the Company's Share Incentive Plan, and (iv) in
connection with the acquisition by the Company or the Operating
Partnership of real property or interests in entities holding
real property, provided that the recipient or transferee of such
securities or interests agrees in writing to be subject to the
lock-up contained in this Section 5(h) (without giving effect to
clauses (i), (ii), (iii) and (iv)) for a period ending on the
date that is 180 days after the date hereof.
(i) The Company will not, directly or indirectly,
(i) take any action designed to cause or to result in, or that
has constituted or which might reasonably be expected to
constitute, the stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of the
Securities or (ii) (A) sell, bid for, purchase, or pay anyone any
compensation for soliciting purchases of, the Securities or (B)
pay or agree to pay to any person any compensation for soliciting
another to purchase any other securities of the Company.
(j) The Company will obtain the lock-up
agreements described in Section 7(f) hereof prior to the Firm
Closing Date.
(k) If at any time during the 25-day period after
the Registration Statement becomes effective or the period prior
to the Option Closing Date, any rumor, publication or event
relating to or affecting the Company shall occur as a result of
which in your opinion the market price of the Common Stock has
been or is likely to be materially affected (regardless of
whether such rumor, publication or event necessitates a
supplement to or amendment of the Prospectus), the Company will,
after notice from you advising the Company to the effect set
forth above, 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 rumor, publication or event.
(l) If the Company elects to rely on Rule 462(b),
the Company shall both file a Rule 462(b) Registration Statement
with the Commission in compliance with Rule 462(b) and pay the
applicable fees in accordance with Rule 111 promulgated under the
Act by the earlier of (i) 10:00 P.M. Eastern time on the date of
this Agreement and (ii) the time confirmations are sent or given,
as specified by Rule 462(b)(2).
(m) The Company will cause the Securities to be
duly authorized for listing by the New York Stock Exchange prior
to the Firm Closing Date, subject to official notice of issuance.
(n) The Company will use its best efforts to meet
the requirements to qualify, commencing with the taxable year
ending December 31, 1997, as a REIT under the Code.
(o) The Company will cause the Operating
Partnership to operate as a limited partnership in accordance
with the requirements of Delaware law.
6. Expenses. The Company will pay all costs and
expenses incident to the performance of its and the Operating
Partnership's obligations under this Agreement, whether or not
the transactions contemplated herein are consummated or this
Agreement is terminated pursuant to Section 11 hereof, including
all costs and expenses incident to (i) the printing or other
production of documents with respect to the transactions,
including any costs of printing the registration statement
originally filed with respect to the Securities and any amendment
thereto, any Rule 462(b) Registration Statement, any Preliminary
Prospectus and the Prospectus and any amendment or supplement
thereto, this Agreement and any blue sky memoranda, (ii) all
arrangements relating to the delivery to the Underwriters of
copies of the foregoing documents, (iii) the fees and
disbursements of the counsel, the accountants and any other
experts or advisors retained by the Company, (iv) preparation,
issuance and delivery to the Underwriters of any certificates
evidencing the Securities, including transfer agent's and
registrar's fees, (v) the qualification of the Securities under
state securities and blue sky laws, including filing fees and
fees and disbursements of counsel for the Underwriters relating
thereto, (vi) the filing fees of the Commission and the National
Association of Securities Dealers, Inc. relating to the
Securities, (vii) any listing of the Securities on the New York
Stock Exchange, (viii) any meetings with prospective investors in
the Securities (other than as shall have been specifically
approved by the Representatives to be paid for by the
Underwriters) and (ix) advertising relating to the offering of
the Securities (other than as shall have been specifically
approved by the Representatives to be paid for by the
Underwriters). If the sale of the Securities provided for herein
is not consummated because any condition to the obligations of
the Underwriters set forth in Section 7 hereof is not satisfied,
because this Agreement is terminated pursuant to Section 11
hereof or because of any failure, refusal or inability on the
part of the Company or the Operating Partnership to perform all
obligations and satisfy all conditions on its part to be
performed or satisfied hereunder other than by reason of a
default by any of the Underwriters, the Company will reimburse
the Underwriters severally upon demand for all reasonable out-of
pocket expenses (including reasonable counsel fees and
disbursements) that shall have been incurred by them in
connection with the proposed purchase and sale of the Securities.
The Company shall in no event be liable to any of the
Underwriters for the loss of anticipated profits from the
transactions covered by this Agreement.
7. Conditions of the Underwriters' Obligations. The
obligations of the several Underwriters to purchase and pay for
the Firm Securities shall be subject, in the Representatives'
sole discretion, to the accuracy of the representations and
warranties of the Company and the Operating Partnership contained
herein as of the date hereof and as of the Firm Closing Date, as
if made on and as of the Firm Closing Date, to the accuracy of
the statements of the Company's officers made pursuant to the
provisions hereof, to the performance by the Company and the
Operating Partnership of their respective covenants and
agreements hereunder and to the following additional conditions:
(a) If the Original Registration Statement or any
amendment thereto filed prior to the Firm Closing Date has not
been declared effective as of the time of execution hereof, the
Original Registration Statement or such amendment and, if the
Company has elected to rely upon Rule 462(b), the Rule 462(b)
Registration Statement shall have been declared effective not
later than the earlier of (i) 11:00 A.M., New York time, on the
date on which the amendment to the registration statement
originally filed with respect to the Securities or to the
Registration Statement, as the case may be, containing
information regarding the initial public offering price of the
Securities has been filed with the Commission and (ii) the time
confirmations are sent or given as specified by Rule 462(b)(2),
or with respect to the Original Registration Statement, or such
later time and date as shall have been consented to by the
Representatives; if required, the Prospectus or any Term Sheet
that constitutes a part thereof and any amendment or supplement
thereto shall have been filed with the Commission in the manner
and within the time period required by Rules 434 and 424(b) under
the Act; no stop order suspending the effectiveness of the
Registration Statement or any amendment thereto shall have been
issued, and no proceedings for that purpose shall have been
instituted or threatened or, to the knowledge of the Company or
the Representatives, shall be contemplated by the Commission; and
the Company shall have complied with any request of the
Commission for additional information (to be included in the
Registration Statement or the Prospectus or otherwise).
(b) The Representatives shall have received an
opinion, dated the Firm Closing Date, of Winston & Xxxxxx,
counsel for the Company and its subsidiaries, to the effect that:
(i) the Company has been duly organized and is
validly existing as a trust in good standing under the laws
of the state of Maryland and is duly qualified to transact
business as a foreign trust and is in good standing under
the laws of all other jurisdictions where the ownership or
leasing of its properties or the conduct of its business
requires such qualification, except where the failure to be
so qualified does not amount to a material liability or
disability to the Company and the Subsidiaries, taken as a
whole. The Operating Partnership has been duly organized
and is validly existing as a limited partnership in good
standing under the laws of the State of Delaware and is duly
qualified to transact business as a foreign limited
partnership and is in good standing under the laws of all
other jurisdictions where the ownership or leasing of its
properties or the conduct of its business requires such
qualification, except where the failure to be so qualified
does not amount to a material liability or disability to the
Company and the Subsidiaries, taken as a whole. Each of the
subsidiaries of the Company listed in Exhibit 22.1 to the
Registration Statement (the "Subsidiaries") has been duly
organized and is validly existing as a corporation in good
standing under the laws of its respective jurisdiction of
incorporation and is duly qualified to transact business as
a foreign corporation and is in good standing under the laws
of all other jurisdictions where the ownership or leasing of
their respective properties or the conduct of their
respective businesses requires such qualification, except
where the failure to be so qualified does not amount to a
material liability or disability to the Company and the
Subsidiaries, taken as a whole.
(ii) the Company and each of the Subsidiaries
have trust, corporate or partnership power (as the case may
be) to own or lease their respective properties and conduct
their respective businesses as described in the Registration
Statement and the Prospectus, and each of the Company and
the Operating Partnership has trust or partnership power (as
the case may be) to enter into this Agreement and to carry
out all the terms and provisions hereof to be carried out by
it;
(iii) the issued shares of capital stock of the
Services Company have been duly authorized and validly
issued, are fully paid and nonassessable and, except as
otherwise set forth in the Prospectus, are owned
beneficially by the Company free and clear of any perfected
security interests or any other security interests, liens,
encumbrances, equities or claims; the issued shares of
capital stock of the Finance Company have been duly
authorized and validly issued, are fully paid and
nonassessable and are owned of record and, to the knowledge
of such counsel, beneficially by the Company free and clear
of any perfected security interests or any other security
interests, liens, encumbrances, equities or claims; the
partnership agreement of the Finance Partnership has been
duly authorized, executed and delivered by the Finance
Company, as its general partner, and constitutes the valid
and binding obligation of the Finance Company, as its
general partner; such partnership agreement reflects the
Finance Company as the sole general partner of the Finance
Partnership and the Operating Partnership as the sole
limited partner of the Finance Partnership;
(iv) the authorized, issued and outstanding
capital stock of the Company is as set forth under the
caption "Capitalization" in the Prospectus; all necessary
and proper corporate proceedings have been taken in order to
authorize validly the Common Shares referred to therein; all
outstanding Common Shares (including the Firm Securities,
when issued and paid for by the Underwriters in accordance
with the terms of this Agreement) have been (or, in the case
of the Firm Securities, will be) duly and validly issued,
are fully paid and nonassessable, have been issued in
compliance with the registration requirements of federal
securities laws (or pursuant to an exemption therefrom),
were not issued in violation of or subject to, under the
Company's charter or Maryland law or any agreement to which
the Company is a party and which is known to such counsel,
any preemptive rights or other rights to subscribe for or
purchase any securities, and conform to the description
thereof contained in the Prospectus; no holders of
outstanding shares of capital stock of the Company are
entitled under the Company's charter or Maryland law or any
agreement to which the Company is a party and which is known
to such counsel, as such, to any preemptive or other rights
to subscribe for any of the Firm Securities; and no holders
of securities of the Company are entitled to have such
securities registered under the Registration Statement;
(v) the Common Units issued in connection with
the Formation Transactions, including, without limitation,
the Common Units issued to the Company, were duly authorized
for issuance by the Operating Partnership to the holders
thereof; the Common Units issued to the Company, upon
contribution of cash in the amount specified in the
Operating Partnership Agreement, will be validly issued; the
Common Units issued to the Limited Partners in connection
with the Formation Transactions, upon delivery of the
consideration specified in the [ ] Agreement
(identified on Schedule 3 hereto), will be validly issued.
The issuance of the Common Units to the Limited Partners at
or prior to the Firm Closing Date as contemplated in the
[ ] Agreement is or was (as the case may be) exempt
from registration under the Act. The terms of the Common
Units conform in all material respects to the description
thereof and all statements related thereto contained in the
Prospectus. The issuances of securities described in Items
31 and 32 of the Registration Statement were not at the time
of issue, and are not as of the Firm Closing Date, required
to be registered under the Act;
(vi) the Formation Transactions constitute a
transaction in which the securities issued or exchanged are
not required to be and are not registered under the Act, and
therefore, pursuant to the exception provided by Item 901
(c)(2)(ii) of Regulation S-K under the Act ("Regulation
S-K"), do not constitute a "roll-up transaction" within the
meaning of Item 901 (c)(1) of Regulation S-K. For purposes
of this paragraph, "Formation Transactions" shall be limited
to (i) the formation of the Company, (ii) the formation of
the Operating Partnership, (iii) the formation,
capitalization and issuance of capital stock of the Services
Company and (iv) the contribution of the Properties to the
Operating Partnership in exchange for the Common Units
representing limited partnership interests therein pursuant
to the terms and conditions as set forth in the [ ]
Agreement.
(vii) except as disclosed in the Registration
Statement and the Prospectus, to the knowledge of such
counsel there are no outstanding (A) securities, equity
interests or obligations of the Company or any of the
Subsidiaries convertible into or exchangeable for any
capital stock or equity interests (as the case may be) of
the Company or any such Subsidiary, (B) warrants, rights or
options to subscribe for or purchase from the Company to any
such Subsidiary any such capital stock or equity interests
or any such convertible or exchangeable securities, equity
interests or obligations, or (C) obligations of the Company
or any such Subsidiary to issue an shares of capital stock,
equity interests, any such convertible or exchangeable
securities, equity interests or obligations, or any such
warrants, rights or options;
(viii) the statements set forth under the
headings "Business and Properties-Legal Proceedings",
"Description of Shares of Beneficial Interest", "Structure
and Formation of the Company", "Certain Relationships and
Transactions", "Partnership Agreement", "Certain Provisions
of Maryland Law and of the Company's Declaration of Trust
and Bylaws", "Partnership Agreement", "Shares Available for
Future Sale", "Certain Federal Income Tax Consequences" and
"ERISA Considerations" in the Prospectus, insofar as such
statements describe statutes, rules or regulations, legal
conclusions with respect to their application or provisions
of the organizational documents of the Company, the
Operating Partnership or the Services Company, have been
reviewed by such counsel, are correct in all material
respects and present fairly the information required to be
disclosed therein;
(ix) the execution and delivery of this Agreement
have been duly authorized by all necessary trust, corporate
or partnership (as the case may be) action of the Company
and the Operating Partnership, and this Agreement has been
duly executed and delivered by the Company and the Operating
Partnership;
(x) (A) no legal or governmental proceedings are
pending to which the Company or any of the Subsidiaries is a
party or to which the property of the Company or any of the
Subsidiaries is subject that are required to be described in
the Registration Statement or the Prospectus and are not
described therein, and no such proceedings have been
threatened against the Company or any of the Subsidiaries or
with respect to any of their respective properties and (B)
no contract or other document is required to be disclosed in
the Registration Statement or the Prospectus or to be filed
as an exhibit to the Registration Statement that is not
disclosed therein or filed as required;
(xi) the issuance, offering and sale of the
Securities to the Underwriters by the Company pursuant to
this Agreement, the compliance by the Company and the
Operating Partnership with the other provisions of this
Agreement and the consummation of the other transactions
herein contemplated do not (A) require the consent,
approval, authorization, registration or qualification of or
with any governmental authority, except such as have been
obtained and such as may be required under state securities
or blue sky laws, or (B) conflict with or result in a breach
or violation of any of the terms and provisions of, or
constitute a default under, any indenture, mortgage, deed of
trust, lease or other agreement or instrument known to such
counsel to which the Company or any of the Subsidiaries is a
party or by which the Company or any of the Subsidiaries or
any of their respective properties are bound (the "Material
Agreements"), or the charter documents or by-laws or
certificate of limited partnership or partnership agreement
(as the case may be) of the Company or any of the
Subsidiaries, or any provision of any statute, rule or
regulation or any judgment, decree or order of any court or
other governmental authority or any arbitrator known to such
counsel and applicable to the Company or the Subsidiaries;
(xii) each of the Company and the Subsidiaries
has the trust, corporate or partnership power (as the case
may be) to enter into and deliver (as applicable) the
agreements and instruments set forth on Schedule 5 hereto
(the "Operative Documents") to which it is party and to
carry out all the terms and provisions thereof to be carried
out by it. The execution and delivery of the Operative
Documents have been duly authorized by the Company and the
Subsidiaries (as applicable) and the Operative Documents
have been or will be on the Firm Closing Date duly executed
and delivered by the Company and the Subsidiaries (as
applicable), and each is the valid and binding agreement of
the Company and the Subsidiaries (as applicable),
enforceable against the Company and the Subsidiaries (as
applicable) in accordance with its terms, subject to the
effect of bankruptcy, insolvency, moratorium, fraudulent
conveyance, reorganization and similar laws relating to
creditors' rights generally and to the application of
equitable principles in any proceeding, whether at law or in
equity;
(xiii) the execution and delivery of the
Operative Documents, the compliance by the Company and the
Subsidiaries (as applicable) with their respective
obligations under the Operative Documents and the
consummation of the Formation Transactions do not (A)
require the consent, approval, authorization, registration
or qualification of or with any governmental authority,
except such as have been obtained under the Act, such as may
be required under state securities or blue sky laws and, if
the registration statement filed with respect to the
Securities (as amended) is not effective under the Act as of
the time of execution hereof, such as may be required (and
shall be obtained as provided in this Agreement) under the
Act, or (B) conflict with or result in a breach or violation
of any of the terms and provisions of, or constitute a
default under, any Material Agreement, or the charter
documents or by-laws or certificate of limited partnership
or partnership agreement (as the case may be) of the Company
or any of the Subsidiaries, or any provision of any statute,
rule or regulation, or any judgment, decree or order or any
court or governmental authority;
(xiv) none of the Company's subsidiaries is
currently contractually prohibited, directly or indirectly,
from paying any dividends to the Company, from making any
other distribution on such subsidiary's capital stock or
other equity interest, from repaying to the Company any
loans or advances to such subsidiary from the Company or
firm transferring any of such subsidiary's property or
assets to the Company or any of the other subsidiaries,
except as described in or contemplated by the Prospectus;
(xv) the Company and its subsidiaries possess all
certificates, authorizations, licenses and permits issued by
the appropriate federal, state, municipal or foreign
regulatory authorities necessary to conduct their respective
businesses, and neither the Company nor any of its
subsidiaries has received any notice of proceedings relating
to the revocation or modification of any such certificate,
authorization, license or permit which, singly or in the
aggregate, if the subject of an unfavorable decision, ruling
or finding, would, upon consummation of the Formation
Transactions, result in a material adverse change in the
condition (financial or otherwise), business prospects, net
worth or results of operations of the Company and its
subsidiaries, except as described in or contemplated by the
Prospectus;
(xvi) the Company is not, and after giving effect
to the Formation Transactions and the other transactions
contemplated by this Agreement will not be, an investment
company subject to registration under the Investment Company
Act of 1940, as amended;
(xvii) the transfer of interests or other assets
pursuant to the Transfer Documents does not violate the
articles or certificate of incorporation, by-laws, limited
liability company agreement, declaration of trust,
certificate of limited partnership, partnership agreement or
other organizational documents, as the case may be, of any
member of The Prime Group, Inc.; each of the Transfer
Documents has been duly authorized, executed and delivered
by The Prime Group, Inc. and the Contributors (as
applicable) and is a valid and binding agreement of The
Prime Group, Inc. and the Contributors (as applicable),
enforceable in accordance with its terms, subject to the
effect of bankruptcy, insolvency, moratorium, fraudulent
conveyance, reorganization and similar laws relating to
creditors rights generally and to the application of
equitable principles in any proceeding, whether at law or in
equity;
(xviii) the Registration Statement is effective
under the Act; any required filing of the Prospectus, or any
Term Sheet that constitutes a part thereof, pursuant to
Rules 424(b) and 434 has been made in the manner and within
the time period required thereby; and no stop order
suspending the effectiveness of the Registration Statement
or any amendment thereto has been issued, and no proceedings
for that purpose have been instituted or threatened or, to
the best knowledge of such counsel, are contemplated by the
Commission;
(xix) the Registration Statement originally filed
with respect to the Securities and each amendment thereto,
any Rule 462(b) Registration Statement and the Prospectus
(in each case, other than the financial statements and other
financial information contained therein, as to which such
counsel need express no opinion) comply as to form in all
material respects with the applicable requirements of the
Act and the rules and regulations of the Commission
thereunder,
(xx) if the Company elects to rely on Rule 434,
the Prospectus is not "materially different", as such term
is used in Rule 434, from the prospectus included in the
Registration Statement at the time of its effectiveness or
an effective post-effective amendment thereto (including
such information that is permitted to be omitted pursuant to
Rule 430A); and
(xxi) upon completion of the Formation
Transactions, the Company will be organized in conformity
with the requirements for qualification as a real estate
investment trust under the Code, and the proposed method of
operation of the Company and the Operating Partnership as
described in the Registration Statement and the Prospectus
and a certificate of a responsible officer of the Company
will enable the Company to meet the requirements for
taxation as a real estate investment trust under the Code
beginning with the year ended December 31, 1997.
In addition to rendering the legal opinions set forth
above, such counsel to the Company and its subsidiaries shall
also state that they have participated in conferences with
officers and other representatives of the Company,
representatives of the independent public accountants for the
Company, and representatives of the Underwriters, at which the
contents of the Registration Statement and the Prospectus and
related matters were discussed and, although such counsel is not
passing upon, and does not assume any responsibility for, the
accuracy, completeness or fairness of the statements contained in
the Registration Statement and the Prospectus and has not made
any independent check or verification thereof, during the course
of such participation (relying as to materiality to a large
extent upon the statements of officers and other representatives
of the Company) no facts came to the attention of such counsel
that caused such counsel to believe that the Registration
Statement, at the time it became effective, contained an untrue
statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading, or that the Prospectus, as of its date or
as of the Firm Closing Date, contained an untrue statement of a
material fact or omitted to state a material fact necessary to
make the statements therein, in light of the circumstances under
which they were made, not misleading; it being understood that
such counsel need express no belief with respect to the financial
statements schedules and other financial information included in
the Registration Statement or the Prospectus.
In rendering its legal opinion, such counsel may rely,
as to matters of fact, to the extent such counsel deems proper,
on certificates of responsible officers of the Company, the
Operating Partnership and public officials and, as to matters
involving the application of laws of any jurisdiction other than
the State of Illinois, the State of New York, the Delaware
General Corporation Law and the Delaware Revised Limited
Partnership Act or the United States, to the extent satisfactory
in form, and scope to counsel for the Underwriters, upon the
opinion of Miles and Stockbridge, a Professional Corporation, as
to Maryland law. Copies of such opinions shall be delivered to
the Representatives and counsel for the Underwriters.
References to the Registration Statement and the
Prospectus in this paragraph (b) shall include any amendment or
supplement thereto at the date of such opinion.
(c) The Representatives shall have received an
opinion, dated the Firm Closing Date, of Skadden, Arps, Slate,
Xxxxxxx & Xxxx LLP, counsel for the Underwriters, with respect to
the issuance and sale of the Firm Securities, the Registration
Statement and the Prospectus, and such other related matters as
the Representatives may reasonably require, and the Company shall
have furnished to such counsel such documents as they may
reasonably request for the purpose of enabling them to pass upon
such matters.
(d) The Representatives shall have received from
Ernst & Young LLP, a letter or letters dated, respectively, the
date hereof and the Firm Closing Date, in form and substance
satisfactory to the Representatives, to the effect that:
(i) they are independent accountants with respect
to the Company and its consolidated subsidiaries and the
Prime Properties, the Contribution Properties and the
Acquisition Properties within the meaning of the Act and the
applicable rules and regulations thereunder;
(ii) in their opinion, the audited consolidated
financial statements and schedules and pro forma financial
statements examined by them and included in the Registration
Statement and the Prospectus comply in form in all material
respects with the applicable accounting requirements of the
Act and the related published rules and regulations;
(iii) on the basis of a reading of the latest
available interim unaudited consolidated condensed financial
statements of the Company, the Prime Properties, the
Contribution Properties and the Acquisition Properties,
carrying out certain specified procedures (which do not
constitute an examination made in accordance with generally
accepted auditing standards) that would not necessarily
reveal matters of significance with respect to the comments
set forth in this paragraph (iii), a reading of the minute
books of the shareholders, the board of trustees and any
committees thereof of the Company and inquiries of certain
officials of the Company who have responsibility for
financial and accounting matters, nothing came to their
attention that caused them to believe that:
(A) at a specific date (not more than five business
days prior to the date of such letter), there were any
increases in debt or accumulated deficit of the Prime
Properties or any decreases in total assets of the
Prime Properties, in each case as compared with amounts
shown in the [June 30, 1997] combined balance sheet
included in the Registration Statement and the
Prospectus, or for the period from [_________], 1997 to
[________], 1997, there were any decreases, as compared
with the corresponding period of the previous year, in
rental income, total revenues or net income (as
applicable) of the Prime Properties, the Acquisition
Properties and the Contribution Properties, except in
all instances for changes, increases or decreases which
the Registration Statement and the Prospectus disclose
have occurred or may occur; and
(B) at a specific date (not more than five business
days prior to the date of such letter), with respect to
the Prime Properties, there were any increases in
borrowings as compared with amounts shown in the [June
30, 1997] balance sheet included in the Registration
Statement and the Prospectus, except in all instances
for changes or increases which the Registration
Statement and the Prospectus disclose have occurred or
may occur.
(iv) they have carried out certain specified
procedures, not constituting an audit, with respect to
certain amounts, percentages and financial information
identified by the Representatives that are derived from the
general accounting records of the Company and its
consolidated subsidiaries and are included in the
Registration Statement and the Prospectus and have compared
such amounts, percentages and financial information with
such records of the Company and its consolidated
subsidiaries and with information derived from such records
and have found them to be in agreement, excluding any
questions of legal interpretation; and
(v) on the basis of a reading of the unaudited
pro forma condensed consolidated financial statements
included in the Registration Statement and the Prospectus,
carrying out certain specified procedures that would not
necessarily reveal matters of significance with respect to
the comments set forth in this paragraph (v), inquiries of
certain officials of the Company and its consolidated
subsidiaries who have responsibility for financial and
accounting matters and proving the arithmetic accuracy of
the application of the pro forma adjustments to the
historical amounts in the unaudited pro forma condensed
consolidated financial statements, nothing came to their
attention that caused them to believe that the unaudited pro
forma condensed consolidated financial statements do not
comply in form in all material respects with the applicable
accounting requirements of Rule 11-02 of Regulation S-X or
that the pro forma adjustments have not been properly
applied to the historical amounts in the compilation of such
statements.
In the event that the letters referred to above set
forth any such changes, decreases or increases, it shall be a
further condition to the obligations of the Underwriters under
this Agreement that (A) such letters shall be accompanied by a
written explanation of the Company as to the significance
thereof, unless the Representatives deem such explanation
unnecessary, and (B) such changes, decreases or increases do not,
in the sole judgment of the Representatives, make it impractical
or inadvisable to proceed with the purchase and delivery of the
Securities as contemplated by the Registration Statement, as
amended as of the date hereof.
References to the Registration Statement and the
Prospectus in this paragraph (d) with respect to either letter
referred to above shall include any amendment or supplement
thereto at the date of such letter.
(e) The Representatives shall have received a
certificate, dated the Firm Closing Date, of the chief executive
officer and the principal financial or accounting officer of the
Company to the effect that:
(i) the representations and warranties of the
Company and the Operating Partnership in this Agreement are
true and correct as if made on and as of the Firm Closing
Date; the Registration Statement, as amended as of the Firm
Closing Date, does not include any untrue statement of a
material fact or omit to state any material fact necessary
to make the statements therein not misleading, and the
Prospectus, as amended or supplemented as of the Firm
Closing Date, does not include any untrue statement of a
material fact or omit to state any material fact necessary
in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
and each of the Company and the Operating Partnership has
performed all covenants and agreements and satisfied all
conditions on its part to be performed or satisfied at or
prior to the Firm Closing Date;
(ii) no stop order suspending the effectiveness
of the Registration Statement or any amendment thereto has
been issued, and no proceedings for that purpose have been
instituted or threatened or, to the best of the Company's or
the Operating Partnership's knowledge, are contemplated by
the Commission; and
(iii) 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 has sustained any material loss or interference
with their respective businesses or properties from fire,
flood, hurricane, accident or other calamity, whether or not
covered by insurance, or from any labor dispute or any legal
or governmental proceeding, and there has not been any
material adverse change, or any development involving a
prospective material adverse change, in the condition
(financial or otherwise), management, business prospects,
net worth or results of operations of the Company and its
subsidiaries, taken as a whole, except in each case as
described in or contemplated by the Registration Statement
and the Prospectus (exclusive of any amendment or supplement
thereto).
(f) The Representatives shall have received from
each Limited Partner an agreement to the effect that such person
will not, directly or indirectly, without the prior written
consent of Prudential Securities Incorporated, on behalf of the
Underwriters, offer, sell, offer to sell, contract to sell,
pledge, grant any option to purchase or otherwise sell or dispose
(or announce any offer, sale, offer of sale, contract of sale,
pledge, grant of an option to purchase or other sale or
disposition) of any Common Shares or other shares of beneficial
interest of the Company or Common Units or other partnership
interests of the Operating Partnership, or any securities
convertible into, or exchangeable or exercisable for, Common
Shares or other shares of beneficial interest of the Company or
Common Units or other partnership interests of the Operating
Partnership, for a period of (x) two years after the date of this
Agreement in the case of The Prime Group, Inc. and (y) one year
after the date of this Agreement in the case of the other Limited
Partners.
(g) On or before the Firm Closing Date, the
Representatives and counsel for the Underwriters shall have
received such further certificates, documents or other
information as they may have reasonably requested from the
Company.
(h) Prior to the commencement of the offering of
the Securities, the Securities shall have been approved for
listing on the New York Stock Exchange, subject to official
notice of issuance.
(i) The Formation Transactions shall have been
consummated or shall occur simultaneously with the closing of the
purchase and sale of the Firm Securities hereunder.
(j) On or before the Firm Closing Date, all
necessary consents to the Formation Transactions shall have been
obtained.
(k) On or before the Firm Closing Date, the
Company and the Operating Partnership shall have delivered to you
with respect to each of the Properties copies of:
(i) an owner policy or polices of title insurance
insuring that each of the Property Partnerships owns fee
simple title to the real property (other than the land in
which the applicable Property Partnership is acquiring a
ground leasehold estate) comprising part of the related
Property and owns and holds a valid ground leasehold estate
in the land comprising part of the related Property in which
such Property Partnership is acquiring a ground leasehold
estate, in an amount at least equal to the Insured Title
Amount, which policies shall be issued by a title insurance
company or companies as previously disclosed to you and your
counsel (any such person or persons, the "Title Company"),
and contain as exceptions to title only those exceptions
acceptable to the Representatives;
(ii) an as-built survey of each of the Properties
in form satisfactory to you;
(iii) all assignments of tenant leases, service
contracts and similar rights owned, immediately prior to the
Closing, (i) by Prime, in the case of the Prime Properties
and the Prime Contribution Properties, (ii) by the NAC
Contributors, in the case of the NAC Contribution
Properties, (iii) by the IBD Contributors, in the case of
the IBD Contribution Properties, and (iv) the respective
sellers of the Acquisition Properties, in the case of the
Acquisition Properties;
(iv) all tenant estoppels, third party consents,
waivers, licenses, permits, authorizations, agreements,
certificates and the like required to be delivered to the
Company pursuant to the applicable acquisition, contribution
or formation agreements;
(v) all certificates of occupancy, zoning
compliance letters and evidence of utility availability for
each of the Properties, to the extent not included in the
title insurance policies and surveys delivered pursuant to
clauses (i) and (ii);
(vi) policies or certificates of insurance
(including earthquake insurance) relating to each of the
Properties evidencing coverages and in amounts as are
prudent and customary in the businesses in which they are or
will be engaged;
(vii) UCC, judgment and tax lien searches
confirming that the personal property comprising part of the
Properties is subject to no liens, charges, encumbrances,
claims or restrictions;
(viii) checks payable to the appropriate public
officials in payment of all recording costs and transfer
taxes (or checks or wire transfers to the Title Company in
respect of such amounts) due in respect of the recording of
any instruments to be recorded in connection with the
Formation Transactions, together with a check or wire
transfer for the Title Company in payment of the Title
Company's premium, search and examination charges, survey
costs and any other amounts due in connection with the
issuance of its policy (or commitment); and
(ix) if any of the Properties is subject to an
existing mortgage which is contemplated by the Prospectus
(or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus) to be paid and satisfied in full
concurrently with the Closing , a current payoff letter from
the holder of such existing mortgage indicating the
principal amount required to satisfy all amounts then
secured by such existing mortgage and the additional amount
required for each day after the date of such letter
necessary to satisfy all obligations secured thereby.
All opinions, certificates, letters and documents
delivered pursuant to this Agreement will comply with the
provisions hereof only if they are reasonably satisfactory in all
material respects to the Representatives and counsel for the
Underwriters. The Company shall furnish to the Representatives
such conformed copies of such opinions, certificates, letters and
documents in such quantities as the Representatives and counsel
for the Underwriters shall reasonably request.
The respective obligations of the several Underwriters
to purchase and pay for any Option Securities shall be subject,
in their discretion, to each of the foregoing conditions to
purchase the Firm Securities, except that all references to the
Firm Securities and the Firm Closing Date shall be deemed to
refer to such Option Securities and the related Option Closing
Date, respectively.
8. Indemnification and Contribution. (a) Each of the
Company and the Operating Partnership, jointly and severally,
agrees to indemnify and hold harmless each Underwriter and each
person, if any, who controls any Underwriter within the meaning
of Section 15 of the Act or Section 20 of the Securities Exchange
Act of 1934 (the "Exchange Act"), against any losses, claims,
damages or liabilities, joint or several, to which such
Underwriter 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:
(i) any untrue statement or alleged untrue
statement made by the Company or the Operating Partnership
in Section 2 of this Agreement,
(ii) any untrue statement or alleged untrue
statement of any material fact contained in (A) the
Registration Statement or any amendment thereto, any
Preliminary Prospectus or the Prospectus or any amendment or
supplement thereto or (B) any application or other document,
or any amendment or supplement thereto, executed by the
Company or based upon written information furnished by or on
behalf of the Company filed in any jurisdiction in order to
qualify the Securities under the securities or blue sky laws
thereof or filed with the Commission or any securities
association or securities exchange (each an "Application"),
(iii) the omission or alleged omission to state
in the Registration Statement or any amendment thereto, any
Preliminary Prospectus or the Prospectus or any amendment or
supplement thereto, or any Application a material fact
required to be stated therein or necessary to make the
statements therein not misleading or
(iv) any untrue statement or alleged untrue
statement of any material fact contained in any audio or
visual materials used in connection with the marketing of
the Securities, including, without limitation, slides,
videos, films and tape recordings,
and will reimburse, as incurred, each Underwriter and each such
controlling person for any legal or other expenses reasonably
incurred by such Underwriter or such controlling person in
connection with investigating, defending against or appearing as
a third-party witness in connection with any such loss, claim,
damage, liability or action; provided, however, that neither the
Company nor the Operating Partnership will be liable in any such
case to the extent that any such loss, claim, damage or liability
arises out of or is based upon any untrue statement or alleged
untrue statement or omission or alleged omission made in such
registration statement or any amendment thereto, any Preliminary
Prospectus, the Prospectus or any amendment or supplement thereto
or any Application in reliance upon and in conformity with
written information furnished to the Company by such Underwriter
through the Representatives specifically for use therein; and
provided, further, that neither the Company nor the Operating
Partnership will be liable to any Underwriter or any person
controlling such Underwriter with respect to any such untrue
statement or omission made in any Preliminary Prospectus that is
corrected in the Prospectus (or any amendment or supplement
thereto) if the person asserting any such loss, claim, damage or
liability purchased Securities from such Underwriter but was not
sent or given a copy of the Prospectus (as amended or
supplemented) at or prior to the written confirmation of the sale
of such Securities to such person in any case where such delivery
of the Prospectus (as amended or supplemented) is required by the
Act, unless such failure to deliver the Prospectus (as amended or
supplemented) was a result of noncompliance by the Company or the
Operating Partnership with Section 5(d) and (e) of this
Agreement. This indemnity agreement will be in addition to any
liability which the Company or the Operating Partnership may
otherwise have. Neither the Company nor the Operating
Partnership will, without the prior written consent of the
Underwriter or Underwriters purchasing, in the aggregate, more
than fifty percent (50%) of the Securities, settle or compromise
or consent to the entry of any judgment in any pending or
threatened claim, action, suit or proceeding in respect of which
indemnification may be sought hereunder (whether or not any such
Underwriter or any person who controls any such Underwriter
within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act is a party to such claim, action, suit or
proceeding), unless such settlement, compromise or consent
includes an unconditional release of all of the Underwriters and
such controlling persons from all liability arising out of such
claim, action, suit or proceeding.
(b) Each Underwriter, severally and not jointly,
will indemnify and hold harmless the Company, each of its
trustees (including any person who, with his or her consent, is
named in the Registration Statement as about to become a trustee
of the Company), each of its officers who signed the Registration
Statement and each person, if any, who controls the Company
within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act against any losses, claims, damages or liabilities
to which the Company or any such trustee, 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 (i) any untrue
statement or alleged untrue statement of any material fact
contained in the Registration Statement or any amendment thereto,
any Preliminary Prospectus or the Prospectus or any amendment or
supplement thereto, or any Application or (ii) the omission or
the alleged omission to state therein a material fact required to
be stated in the Registration Statement or any amendment thereto,
any Preliminary Prospectus or the Prospectus or any amendment or
supplement thereto, or any Application or necessary to make the
statements therein 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
reliance upon and in conformity with written information
furnished to the Company by such Underwriter through the
Representatives specifically for use therein; and, subject to the
limitation set forth immediately preceding this clause, will
reimburse, as incurred, any legal or other expenses reasonably
incurred by the Company or any such trustee, officer or
controlling person in connection with investigating or defending
any such loss, claim, damage, liability or any action in respect
thereof. This indemnity agreement will be in addition to any
liability which such Underwriter may otherwise have. No
Underwriter will, without the prior written consent of the
Company, settle or compromise or consent to the entry of any
judgment in any pending or threatened claim, action, suit or
proceeding in respect of which indemnification may be sought
hereunder (whether or not the Company, any of its trustees or
officers who signed the Registration Statement or any person who
controls the Company within the meaning of Section 15 of the Act
or Section 20 of the Exchange Act is a party to such claim,
action, suit or proceeding), unless such settlement, compromise
or consent includes an unconditional release of the Company, its
trustees and officers who signed the Registration Statement and
such controlling persons from all liability arising out of such
claim, action, suit or proceeding.
(c) Promptly after receipt by an indemnified
party under this Section 8 of notice of the commencement of any
action, such indemnified party will, if a claim in respect
thereof is to be made against the indemnifying party under this
Section 8, notify the indemnifying party of the commencement
thereof; but the omission so to notify the indemnifying party
will not relieve it from (i) any liability which it may have to
any indemnified party under this Section 8 except to the extent
that the indemnifying party has been materially prejudiced as a
result thereof or (ii) any liability which it may have to any
indemnified party otherwise than under this Section 8. In case
any such action is brought against any indemnified party, and it
notifies the indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate therein and,
to the extent that it may wish, jointly with any other
indemnifying party similarly notified, to assume the defense
thereof, with counsel satisfactory to such indemnified party;
provided, however, that if 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 one or more legal defenses available to it and/or other
indemnified parties which are different from or additional to
those available to the indemnifying party, the indemnifying party
shall not have the right to direct the defense of such action on
behalf of such indemnified party or parties and such indemnified
party or parties shall have the right to select separate counsel
to defend such action on behalf of such indemnified party or
parties. After notice from the indemnifying party to such
indemnified party of its election so to assume the defense
thereof and approval by such indemnified party of counsel
appointed to defend such action, the indemnifying party will not
be liable to such indemnified party under this Section 8 for any
legal or other expenses, other than reasonable costs of
investigation, subsequently incurred by such indemnified party in
connection with the defense thereof, unless (i) the indemnified
party shall have employed separate counsel in accordance with the
proviso to the next preceding sentence (it being understood,
however, that in connection with such action the indemnifying
party shall not be liable for the expenses of more than one
separate counsel (in addition to local counsel) in any one action
or separate but substantially similar actions in the same
jurisdiction arising out of the same general allegations or
circumstances, designated by the Representatives in the case of
paragraph (a) of this Section 8, representing the indemnified
parties under such paragraph (a) who are parties to such action
or actions) or (ii) the indemnifying party does not promptly
retain counsel satisfactory to the indemnified party or (iii) the
indemnifying party has authorized the employment of counsel for
the indemnified party at the expense of the indemnifying party.
After such notice from the indemnifying party to such indemnified
party, the indemnifying party will not be liable for the costs
and expenses of any settlement of such action effected by such
indemnified party without the consent of the indemnifying party.
(d) In circumstances in which the indemnity
agreement provided for in the preceding paragraphs of this
Section 8 is unavailable or insufficient, for any reason, to hold
harmless an indemnified party in respect of any losses, claims,
damages or liabilities (or actions in respect thereof), each
indemnifying party, in order to provide for just and equitable
contribution, shall 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 (i) the relative benefits
received by the indemnifying party or parties on the one hand and
the indemnified party on the other from the offering of the
Securities or (ii) if the allocation provided by the foregoing
clause (i) is not permitted by applicable law, not only such
relative benefits but also the relative fault of the indemnifying
party or parties on the one hand and the indemnified party on the
other in connection with the statements or omissions or alleged
statements or omissions that resulted in such losses, claims,
damages or liabilities (or actions in respect thereof), as well
as any other relevant equitable considerations. The relative
benefits received by the Company and the Operating Partnership on
the one hand and the Underwriters on the other shall be deemed to
be in the same proportion as the total proceeds from the offering
of the Securities (before deducting expenses) received by the
Company bear to the total underwriting discounts and commissions
received by the Underwriters. The relative fault of the parties
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 or the Underwriters, the
parties' relative intents, knowledge, access to information and
opportunity to correct or prevent such statement or omission, and
any other equitable considerations appropriate in the
circumstances. The Company and the Operating Partnership and the
Underwriters agree that it would not be equitable if the amount
of such contribution were determined by pro rata or per capita
allocation (even if the Underwriters were treated as one entity
for such purpose) or by any other method of allocation that does
not take into account the equitable considerations referred to
above in this paragraph (d). Notwithstanding any other provision
of this paragraph (d), no Underwriter shall be obligated to make
contributions hereunder that in the aggregate exceed the total
public offering price of the Securities purchased by such
Underwriter under this Agreement, less the aggregate amount of
any damages that such Underwriter has otherwise been required to
pay in respect of the same or any substantially similar claim,
and no person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who was not guilty of such
fraudulent misrepresentation. The Underwriters' obligations to
contribute hereunder are several in proportion to their
respective underwriting obligations and not joint, and
contributions among Underwriters shall be governed by the
provisions of the Prudential Securities Incorporated Master
Agreement Among Underwriters. For purposes of this paragraph
(d), each person, if any, who controls an Underwriter within the
meaning of Section 15 of the Act or Section 20 of the Exchange
Act shall have the same rights to contribution as such
Underwriter, and the Company and the Operating Partnership shall
be deemed one party and jointly and severally liable for any
obligations to contribute hereunder 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 Act or Section 20 of the
Exchange Act, shall have the same rights to contribution as the
Company and the Operating Partnership.
9. Default of Underwriters. If one or more
Underwriters default in their obligations to purchase Firm
Securities or Option Securities hereunder and the aggregate
number of such Securities that such defaulting Underwriter or
Underwriters agreed but failed to purchase is ten percent or less
of the aggregate number of Firm Securities or Option Securities
to be purchased by all of the Underwriters at such time
hereunder, the other Underwriters may make arrangements
satisfactory to the Representatives for the purchase of such
Securities by other persons (who may include one or more of the
non-defaulting Underwriters, including the Representatives), but
if no such arrangements are made by the Firm Closing Date or the
related Option Closing Date, as the case may be, the other
Underwriters shall be obligated severally in proportion to their
respective commitments hereunder to purchase the Firm Securities
or Option Securities that such defaulting Underwriter or
Underwriters agreed but failed to purchase. If one or more
Underwriters so default with respect to an aggregate number of
Securities that is more than ten percent of the aggregate number
of Firm Securities or Option Securities, as the case may be, to
be purchased by all of the Underwriters at such time hereunder,
and if arrangements satisfactory to the Representatives are not
made within 36 hours after such default for the purchase by other
persons (who may include one or more of the non-defaulting
Underwriters, including the Representatives) of the Securities
with respect to which such default occurs, this Agreement will
terminate without liability on the part of any non-defaulting
Underwriter or the Company or the Operating Partnership other
than as provided in Section 10 hereof. In the event of any
default by one or more Underwriters as described in this Section
9, the Representatives shall have the right to postpone the Firm
Closing Date or the Option Closing Date, as the case may be,
established as provided in Section 3 hereof for not more than
seven business days in order that any necessary changes may be
made in the arrangements or documents for the purchase and
delivery of the Firm Securities or Option Securities, as the case
may be. As used in this Agreement, the term "Underwriter"
includes any person substituted for an Underwriter under this
Section 9. Nothing herein shall relieve any defaulting
Underwriter from liability for its default.
10. Survival. The respective representations,
warranties, agreements, covenants, indemnities and other
statements of the Company, its officers, the Operating
Partnership and the several Underwriters set forth in this
Agreement or made by or on behalf of them, respectively, pursuant
to this Agreement shall remain in full force and effect,
regardless of (i) any investigation made by or on behalf of the
Company, any of its officers or directors, the Operating
Partnership, any Underwriter or any controlling person referred
to in Section 8 hereof and (ii) delivery of and payment for the
Securities. The respective agreements, covenants, indemnities
and other statements set forth in Sections 6 and 8 hereof shall
remain in full force and effect, regardless of any termination or
cancellation of this Agreement.
11. Termination. (a) This Agreement may be
terminated with respect to the Firm Securities or any Option
Securities in the sole discretion of the Representatives by
notice to the Company given prior to the Firm Closing Date or the
related Option Closing Date, respectively, in the event that the
Company or the Operating Partnership shall have failed, refused
or been unable to perform all obligations and satisfy all
conditions on its part to be performed or satisfied hereunder at
or prior thereto or, if at or prior to the Firm Closing Date or
such Option Closing Date, respectively,
(i) the Company or any of its subsidiaries shall
have, in the sole judgment of the Representatives, sustained
any material loss or interference with their respective
businesses or properties from fire, flood, hurricane,
accident or other calamity, whether or not covered by
insurance, or from any labor dispute or any legal or
governmental proceeding or there shall have been any
material adverse change, or any development involving a
prospective material adverse change (including without
limitation a change in management or control of the
Company), in the condition (financial or otherwise),
business prospects, net worth or results of operations of
the Company and its subsidiaries, taken as whole, except in
each case as described in or contemplated by the
Registration Statement and the Prospectus (exclusive of any
amendment or supplement thereto);
(ii) trading in the Common Stock shall have been
suspended by the Commission or the New York Stock Exchange
or trading in securities generally on the New York Stock
Exchange shall have been suspended or minimum or maximum
prices shall have been established on such exchange;
(iii) a banking moratorium shall have been
declared by New York, Illinois or United States authorities;
or
(iv) there shall have been (A) an outbreak or
escalation of hostilities between the United States and any
foreign power, (B) an outbreak or escalation of any other
insurrection or armed conflict involving the United States
or (C) any other calamity or crisis or material adverse
change in general economic, political or financial
conditions having an effect on the U.S. financial markets
that, in the sole judgment of the Representatives, makes it
impractical or inadvisable to proceed with the public
offering or the delivery of the Securities as contemplated
by the Registration Statement, as amended as of the date
hereof.
(b) Termination of this Agreement pursuant to
this Section 11 shall be without liability of any party to any
other party except as provided in Sections 6 and 10 hereof.
12. Information Supplied by Underwriters. The
statements set forth in the last paragraph on the front cover
page and under the heading "Underwriting" in any Preliminary
Prospectus or the Prospectus (to the extent such statements
relate to the Underwriters) constitute the only information
furnished by any Underwriter through the Representatives to the
Company for the purposes of Sections 2(b) and 8 hereof. The
Underwriters confirm that such statements (to such extent) are
correct.
13. Notices. All communications hereunder shall be in
writing and, if sent to any of the Underwriters, shall be
delivered or sent by mail, telex or facsimile transmission and
confirmed in writing to Prudential Securities Incorporated, Xxx
Xxx Xxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Equity
Transactions Group; and if sent to the Company, shall be
delivered or sent by mail, telex or facsimile transmission and
confirmed in writing to the Company at 00 X. Xxxxxx Xxxxx, Xxxxx
0000, Xxxxxxx, Xxxxxxxx 00000, Attention: Chief Executive
Officer, with a copy to the Company at 00 X. Xxxxxx Xxxxx, Xxxxx
0000, Xxxxxxx, Xxxxxxxx 00000, Attention: General Counsel.
14. Successors. This Agreement shall inure to the
benefit of and shall be binding upon the several Underwriters,
the Company, the Operating Partnership and their respective
successors and legal representatives, and nothing expressed or
mentioned in this Agreement is intended or shall be construed to
give any other person any legal or equitable right, remedy or
claim under or in respect of this Agreement, or any provisions
herein contained, this Agreement and all conditions and
provisions hereof being intended to be and being for the sole and
exclusive benefit of such persons and for the benefit of no other
person except that (i) the indemnities of the Company and the
Operating Partnership contained in Section 8 of this Agreement
shall also be for the benefit of any person or persons who
control any Underwriter within the meaning of Section 15 of the
Act or Section 20 of the Exchange Act and (ii) the indemnities of
the Underwriters contained in Section 8 of this Agreement shall
also be for the benefit of the directors of the Company, the
officers of the Company who have signed the Registration
Statement and any person or persons who control the Company
within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act. No purchaser of Securities from any Underwriter
shall be deemed a successor because of such purchase.
15. Applicable Law. The validity and interpretation
of this Agreement, and the terms and conditions set forth herein,
shall be governed by and construed in accordance with the laws of
the State of New York, without giving effect to any provisions
relating to conflicts of laws.
16. Consent to Jurisdiction and Service of Process.
All judicial proceedings arising out of or relating to this
Agreement may be brought in any state or federal court of
competent jurisdiction in the State of New York, and by execution
and delivery of this Agreement, each of the Company and the
Operating Partnership accepts for itself and in connection with
its properties, generally and unconditionally, the nonexclusive
jurisdiction of the aforesaid courts and waives any defense of
forum non conveniens and irrevocably agrees to be bound by any
judgment rendered thereby in connection with this Agreement. The
Company designates and appoints The Corporation Trust Inc. and
the Operating Partnership designates and appoints The Corporation
Trust Company, and such other persons as may hereafter be
selected by each of the Company and the Operating Partnership
irrevocably agreeing in writing to so serve, as its agent to
receive on its behalf service of all process in any such
proceedings in any such court, such service being hereby
acknowledged by each of the Company and the Operating Partnership
to be effective and binding service in every respect. A copy of
any such process so served shall be mailed by registered mail to
each of the Company and the Operating Partnership at its address
provided in Section 13 hereof; provided, however, that, unless
otherwise provided by applicable law, any failure to mail such
copy shall not affect the validity of service of such process.
If any agent appointed by the Company or the Operating
Partnership refuses to accept service, each of the Company and
the Operating Partnership hereby agrees that service of process
sufficient for personal jurisdiction in any action against the
Company or the Operating Partnership in the State of New York may
be made by registered or certified mail, return receipt
requested, to the Company or the Operating Partnership at its
address provided in Section 13 hereof, and each of the Company
and the Operating Partnership hereby acknowledges that such
service shall be effective and binding in every respect. Nothing
herein shall affect the right to serve process in any other
manner permitted by law or shall limit the right of any
Underwriter to bring proceedings against each of the Company and
the Operating Partnership in the courts of any other
jurisdiction.
17. Counterparts. This Agreement may be executed in
two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the
same instrument.
If the foregoing correctly sets forth our
understanding, please indicate your acceptance thereof in the
space provided below for that purpose, whereupon this letter
shall constitute an agreement binding the Company, the Operating
Partnership and each of the several Underwriters.
Very truly yours,
PRIME GROUP REALTY TRUST
By:_______________________
Name:
Title:
PRIME GROUP REALTY, L.P.
By: Prime Group Realty Trust,
its managing general partner
By: __________________________
Name:
Title:
The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.
PRUDENTIAL SECURITIES INCORPORATED
FRIEDMAN, BILLINGS, XXXXXX & CO., INC.
XXXXX XXXXXX INC.
XXXXXX XXXXXX & COMPANY, INC.
By: PRUDENTIAL SECURITIES INCORPORATED
By:_____________________________________
Name: Xxxx-Xxxxxx Canfin
Title: Managing Director
For itself and on behalf of the Representatives as
Representatives of the other several Underwriters
named in Schedule I hereto
SCHEDULE 1
UNDERWRITERS
Number of
Firm Securities
Underwriter to be Purchased
Prudential Securities Incorporated..............
Xxxxxxxx, Billlings, Xxxxxx & Co., Inc..........
Xxxxx Xxxxxx Inc................................
Xxxxxx Xxxxxx & Company, Inc....................
Total...........................................
SCHEDULE 2
PARTNERS OF OPERATING PARTNERSHIP
Number of Percentage of
General Partner Common Units All Units
Prime Group Realty Trust
Limited Partners
___________ _______
Total 100%
=========== =======
SCHEDULE 3
TRANSACTION DOCUMENTS
SCHEDULE 4
TRANSFER DOCUMENTS
SCHEDULE 5
OPERATIVE DOCUMENTS
