NORTHSTAR REALTY FINANCE CORP.
SHARES OF COMMON STOCK
UNDERWRITING AGREEMENT
October , 2004
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FRIEDMAN, BILLINGS, XXXXXX & CO., INC.
DEUTSCHE BANK SECURITIES INC.
CREDIT SUISSE FIRST BOSTON LLC
JMP SECURITIES LLC
as Representatives of the several Underwriters
c/o Friedman, Billings, Xxxxxx & Co., Inc.
0000 00xx Xxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Dear Sirs:
NorthStar Realty Finance Corp., a Maryland corporation (the "Company"),
NorthStar Realty Finance Limited Partnership, a Delaware limited partnership
(the "Operating Partnership"), NorthStar Capital Investment Corp., a Maryland
corporation ("NCIC"), and NorthStar Partnership, L.P., a Delaware limited
partnership ("NPLP"), each confirms its agreement with each of the Underwriters
listed on Schedule I hereto (collectively, the "Underwriters"), for whom
Friedman, Billings, Xxxxxx & Co., Inc., Deutsche Bank Securities Inc., Credit
Suisse First Boston LLC and JMP Securities LLC are acting as Representatives (in
such capacity, collectively, the "Representatives"), with respect to (i) the
sale by the Company of 20,000,000 shares (the "Initial Shares") of Common Stock,
par value $0.01 per share, of the Company (the "Common Stock") and the purchase
by the Underwriters, acting severally and not jointly, of the respective number
of shares of Common Stock set forth opposite the names of each of the
Underwriters listed in Schedule I hereto, and (ii) the grant of the option
described in Section 1(b) hereof to purchase all or any part of 3,000,000
additional shares of Common Stock to cover over-allotments (the "Option
Shares"), if any, from the Company to the Underwriters, acting severally and not
jointly, in the respective numbers of shares of Common Stock set forth opposite
the names of the Underwriters in Schedule I hereto. The Initial Shares and all
or any part of the Option Shares are hereinafter called, collectively, the
"Shares."
The Company understands that the Underwriters propose to make a public
offering of the Shares as soon as the Underwriters deem advisable after this
Underwriting Agreement (the "Agreement") has been executed and delivered.
The Company will issue to Friedman, Billings, Xxxxxx & Co., Inc. for
its own account a number of shares of Common Stock equal to 0.25% of the number
of Initial Shares (the "FBR Restricted Shares") at the Closing Time (as defined
below).
The Company has filed a registration statement on Form S-11 (No.
333-114675), including a preliminary prospectus, with the Securities and
Exchange Commission (the "Commission") for the registration of the Shares under
the Securities Act of 1933, as amended (the "Securities Act"), and the rules and
regulations thereunder (the "Securities Act Regulations") and such amendments
thereto, including such amended preliminary prospectuses, as have been required
to the date hereof. Such registration statement has been declared effective
under the Securities Act by the Commission. The Company agrees to file such
post-effective amendments thereto, including such amended prospectuses as may
hereafter be required. Such registration statement as amended at the time it
became effective (including all information deemed to be a part of the
registration statement at the time it became effective pursuant to Rule 430A of
the Securities Act Regulations) is hereinafter called the "Registration
Statement," except that, if the Company files a post-effective amendment to such
registration statement which becomes effective prior to the Closing Time (as
defined below), "Registration Statement" shall refer to such registration
statement as so amended. Any registration statement filed pursuant to Rule
462(b) of the Securities Act Regulations is hereinafter called the "Rule 462(b)
Registration Statement," and after such filing the term "Registration Statement"
shall include the 462(b) Registration Statement. The preliminary prospectus,
dated as of October 6, 2004, included in the Registration Statement before it
became effective under the Securities Act and any prospectus filed with the
Commission by the Company with the consent of the Underwriters pursuant to Rule
424(a) of the Securities Act Regulations is hereinafter called the "Preliminary
Prospectus." The term "Prospectus" means the final prospectus, as first filed
with the Commission pursuant to paragraph (1) or (4) of Rule 424(b) of the
Securities Act Regulations, and any amendments thereof or supplements thereto.
The Commission has not issued any order preventing or suspending the use of any
Preliminary Prospectus.
At or before the Closing Time (as defined below), the Company, the
Operating Partnership, NCIC and the following direct or indirect majority-owned
subsidiaries of NCIC will complete a series of transactions described in the
Preliminary Prospectus and the Prospectus under the captions "Prospectus Summary
- The Formation Transactions" and "The Formation Transactions" (such
transactions being hereinafter called the "Formation Transactions"): (1) NPLP,
(2) NS Advisors Holdings LLC, a Delaware limited liability company ("NSA
Holdings"), (3) NorthStar Funding Managing Member Holdings LLC, a Delaware
limited liability company ("NFMM Holdings" and together with NPLP and NSA
Holdings, the "Transferors") and (4) Presidio Capital Investment Company, LLC, a
Delaware limited liability company ("PCIC"). As part of the Formation
Transactions, (1) the Company will contribute to the Operating Partnership the
net proceeds of the sale of the Shares to the Underwriters in exchange for units
of partnership interest in the Operating Partnership (the "OP Units"), (2) the
Transferors will contribute certain assets and related liabilities and rights
described in the Preliminary Prospectus and the Prospectus (the "Contributed
Assets") to the Operating Partnership in exchange for OP Units, (3) the
Operating Partnership will contribute certain of the Contributed Assets to NRFC
Private REIT Corp., a Maryland corporation and a subsidiary of the Operating
Partnership (the "Private REIT" and together with the
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Operating Partnership, the "Initial Subsidiaries") and (4) the Operating
Partnership will issue an aggregate of 766,700 OP Units which are structured as
profits interests (the "LTIP Units") and such additional number of LTIP Units
which equals 3% of any Option Shares that are issued and sold to the
Underwriters to NRF Employee LLC, a Delaware limited liability company of which
the managing member will be the Operating Partnership and the remaining members
will be employees of the Company or co-employees of the Company and NCIC. As
used in this Agreement, the term "Formation Agreements" collectively refers to:
(1) the Contribution Agreement among NSA Holdings, PCIC and the Operating
Partnership (the "NSA Holdings Contribution Agreement"); (2) the Contribution
Agreement among NPLP, NFMM Holdings and the Operating Partnership (the "NPLP and
NFMM Holdings Contribution Agreement" and together with the NSA Holdings
Contribution Agreement, the "Contribution Agreements"); (3) the Shared
Facilities and Services Agreement between NCIC and the Company; (4) the
Agreement of Limited Partnership of the Operating Partnership, dated as of
October __, 2004, by the Company as the sole general partner and as the initial
limited partner; (5) the Executive Employment Agreement, dated as of October __,
2004, between the Company and Xxxxx X. Xxxxxxxx; (6) the Executive Employment
Agreement, dated as of October __, 2004, between the Company and Xxxx X.
Xxxxxxx; (7) the Executive Employment Agreement, dated as of October __, 2004,
between the Company and Xxxx-Xxxxxx Xxxxxxxxxx; (8) the Executive Employment
Agreement, dated as of October __, 2004, between the Company and Xxxxxx X.
Xxxxxxx; (9) the Non-Competition Agreement by and among NCIC, NPLP, the Company
and the Operating Partnership; (10) the Restricted Stock Agreement between the
Company and W. Xxxxxx Xxxxxxx (the "Xxxxxxx Restricted Stock Agreement"); (11)
the Restricted Stock Agreement between the Company and Xxxxxxx Xxxxxxx (the
"Xxxxxxx Restricted Stock Agreement"); (12) the Restricted Stock Agreement
between the Company and Xxxxxxx Xxxxxxx (the "Butcher Restricted Stock
Agreement"); (13) the Restricted Stock Agreement between the Company and Xxxxxx
Xxxxxxxx (the "Xxxxxxxx Restricted Stock Agreement"); (14) the Restricted Stock
Agreement between the Company and Xxxxxx X. Xxxxxx (the "Minami Restricted Stock
Agreement"); (15) the Restricted Stock Agreement between the Company and Xxxxx
Xxxx (the "Xxxx Restricted Stock Agreement" and, together with the Xxxxxxx
Restricted Stock Agreement, the Xxxxxxx Restricted Stock Agreement, the Butcher
Restricted Stock Agreement, the Xxxxxxxx Restricted Stock Agreement and the
Minami Restricted Stock Agreement, the "Restricted Stock Agreements"); (16) the
LTIP Unit Vesting Agreement, dated as of October __, 2004, between the Operating
Partnership and NRF Employee LLC; (17) the Purchase and Sale Agreement between
the Operating Partnership and ALGM I Equity LLC; and (18) the Registration
Rights Agreement between the Company and the Transferors (the "Registration
Rights Agreement"), each such agreement to be entered into at the Closing Time
unless otherwise indicated.
1. Sale and Purchase.
(a) Initial Shares. Upon the basis of the warranties and representations
and other terms and conditions herein set forth, at the purchase price per share
of Common
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Stock of $________, the Company agrees to sell to the Underwriters the Initial
Shares and each Underwriter agrees, severally and not jointly, to purchase from
the Company the number of Initial Shares set forth in Schedule I opposite such
Underwriter's name, plus any additional number of Initial Shares which such
Underwriter may become obligated to purchase pursuant to the provisions of
Section 8 hereof, subject in each case, to such adjustments among the
Underwriters as the Representatives in their sole discretion shall make to
eliminate any sales or purchases of fractional shares. Notwithstanding the
foregoing, the purchase price per share of Common Stock paid by the Underwriters
to the Company in respect of any Initial Shares or Option Shares to be sold by
the Underwriters to Xx. Xxxxx X. Xxxxxxxx or Mr. W. Xxxxxx Xxxxxxx shall be
equal to the "Price to Public" of the Initial Shares set forth on the cover page
of the Prospectus.
(b) Option Shares. In addition, upon the basis of the warranties and
representations and other terms and conditions herein set forth, at the purchase
price per share of Common Stock set forth in paragraph (a) above, the Company
hereby grants an option to the Underwriters, acting severally and not jointly,
to purchase from the Company all or any part of the Option Shares, plus any
additional number of Option Shares which such Underwriter may become obligated
to purchase pursuant to the provisions of Section 8 hereof. The option hereby
granted will expire 30 days after the date hereof and may be exercised in whole
or in part from time to time within such 30-day period only for the purpose of
covering over-allotments which may be made in connection with the offering and
distribution of the Initial Shares upon notice by the Representatives to the
Company setting forth the number of Option Shares as to which the several
Underwriters are then exercising the option and the time and date of payment and
delivery for such Option Shares. Any such time and date of delivery (a "Date of
Delivery") shall be determined by the Representatives, but shall not be later
than five full business days after the exercise of such option, nor in any event
prior to the Closing Time (as defined below). If the option is exercised as to
all or any portion of the Option Shares, the Company will sell that number of
Option Shares then being purchased and each of the Underwriters, acting
severally and not jointly, will purchase that proportion of the total number of
Option Shares then being purchased which the number of Initial Shares set forth
in Schedule I opposite the name of such Underwriter bears to the total number of
Initial Shares, subject in each case to such adjustments among the Underwriters
as the Representatives in their sole discretion shall make to eliminate any
sales or purchases of fractional shares.
(c) FBR Restricted Shares. (i) Friedman, Billings, Xxxxxx & Co., Inc.
represents and warrants to the Company that it is a "qualified institutional
buyer" as such term is defined in Rule 144A under the Securities Act.
(ii) In further consideration of the efforts of Friedman, Billings,
Xxxxxx & Co., Inc. in connection with the sale and purchase of the Shares,
the Company agrees to issue and deliver to Friedman, Billings, Xxxxxx &
Co., Inc. the FBR Restricted Shares at the Closing Time (as defined below)
upon the basis of the representations and warranties of Friedman, Billings,
Xxxxxx & Co., Inc. herein,
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including, but not limited to, the representation contained in Section
1(c)(i) hereof, and the other terms and conditions set forth herein.
(iii) Friedman, Billings, Xxxxxx & Co., Inc. agrees not to sell,
transfer or otherwise dispose of the FBR Restricted Shares for a period of
180 days from the date of this Agreement; provided, however, that Friedman,
Billings, Xxxxxx & Co., Inc. shall be permitted to transfer any FBR
Restricted Shares to any of its officers, directors or employees.
2. Payment and Delivery.
(a) Initial Shares. The Initial Shares to be purchased by each Underwriter
hereunder, in definitive form, and in such authorized denominations and
registered in such names as the Representatives may request upon at least
forty-eight hours' prior notice to the Company shall be delivered by or on
behalf of the Company to the Representatives, including, at the option of the
Representatives, through the facilities of The Depository Trust Company ("DTC")
for the account of such Underwriter, against payment by or on behalf of such
Underwriter of the purchase price therefor by wire transfer of Federal
(same-day) funds to the account specified to the Representatives by the Company
upon at least forty-eight hours' prior notice. The Company will cause the
certificates representing the Initial Shares to be made available for checking
and packaging at least twenty-four hours prior to the Closing Time (as defined
below) with respect thereto at the office of Friedman, Billings, Xxxxxx & Co.,
Inc., 0000 00xx Xxxxxx Xxxxx, Xxxxxxxxx, Xxxxxxxx 00000, or at the office of DTC
or its designated custodian, as the case may be (the "Designated Office"). The
time and date of such delivery and payment shall be 9:30 a.m., New York City
time, on the third (fourth, if the determination of the purchase price of the
Initial Shares occurs after 4:30 p.m., New York City time) business day after
the date hereof (unless another time and date shall be agreed to by the
Representatives and the Company). The time and date at which such delivery and
payment are actually made is hereinafter called the "Closing Time."
(b) Option Shares. Any Option Shares to be purchased by each Underwriter
hereunder, in definitive form, and in such authorized denominations and
registered in such names as the Representatives may request upon at least
forty-eight hours' prior notice to the Company shall be delivered by or on
behalf of the Company to the Representatives, including, at the option of the
Representatives, through the facilities of DTC for the account of such
Underwriter, against payment by or on behalf of such Underwriter of the purchase
price therefor by wire transfer of Federal (same-day) funds to the account
specified to the Representatives by the Company upon at least forty-eight hours'
prior notice. The Company will cause the certificates representing the Option
Shares to be made available for checking and packaging at least twenty-four
hours prior to the Date of Delivery with respect thereto at the Designated
Office. The time and date of such delivery and payment shall be 9:30 a.m., New
York City time, on the date specified by the Representatives in the notice given
by the Representatives to the
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Company of the Underwriters' election to purchase such Option Shares or on such
other time and date as the Company and the Representatives may agree upon in
writing.
(c) Directed Shares. It is understood that approximately 500,000 shares of
the Initial Shares (the "Directed Shares") initially will be reserved by the
Underwriters for offer and sale to employees and persons having business
relationships with the Company and/or NCIC their respective affiliates (the
"Directed Share Participants") upon the terms and conditions set forth in the
Prospectus and in accordance with the rules and regulations of the National
Association of Securities Dealers, Inc. (the "Directed Share Program"). Under no
circumstances will the Representatives or any Underwriter be liable to the
Company or to any Directed Share Participant for any action taken or omitted to
be taken in good faith in connection with such Directed Share Program. To the
extent that any Directed Shares are not confirmed for purchase by any Directed
Share Participant on or immediately after the date of this Agreement, such
Directed Shares may be offered to the public as part of the public offering of
the Shares contemplated herein.
(d) FBR Restricted Shares. The FBR Restricted Shares, represented by one or
more certificates as Friedman, Billings, Xxxxxx & Co., Inc. may specify, shall
be delivered by the Company to Friedman, Billings, Xxxxxx & Co., Inc. at the
Closing Time.
3. Representations and Warranties of the Company, the Operating
Partnership, NCIC and NPLP.
(a) The Company and the Operating Partnership, jointly and severally,
represent and warrant to the Underwriters, as of the date hereof and as of the
Closing Time, that:
(i) the Company has an authorized capitalization as set forth in the
Prospectus; the outstanding shares of capital stock of the Company and the
Private REIT have been duly and validly authorized and issued and are fully
paid and nonassessable; the outstanding partnership interests of the
Operating Partnership have been duly and validly authorized and issued;
(ii) all of the outstanding partnership interests of the Operating
Partnership are directly or indirectly owned of record and beneficially by
the Company and, at the Closing Time, will be directly or indirectly owned
of record and beneficially by the Company, the Transferors and the owners
of their outstanding equity interests as described in the Prospectus; all
of the outstanding shares of capital stock of the Private REIT are directly
and indirectly owned of record and beneficially by the Operating
Partnership and the Company, respectively;
(iii) except as disclosed in the Prospectus, there are no outstanding
(A) securities or obligations of the Company or the Initial Subsidiaries
convertible into or exchangeable for any capital stock of or partnership
interests, membership
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interests or other equity interests, as the case may be, in the Company or
any such Initial Subsidiary, (B) warrants, rights or options to subscribe
for or purchase from the Company or any Initial Subsidiary any such capital
stock or any such convertible or exchangeable securities or obligations, or
(C) obligations of the Company or any Initial Subsidiary to issue any
securities or obligations, any such convertible or exchangeable securities
or obligations, or any such warrants, rights or options; except for (1) the
OP Units to be issued to the Transferors or the LTIP Units to be issued to
NRFC Employee LLC, each at or before the Closing Time or (2) as disclosed
in the Prospectus, there will be no outstanding (A) securities or
obligations of the Company, any of the Initial Subsidiaries or the entities
listed on Schedule II hereto, each of which will become a subsidiary of the
Company upon consummation of the Formation Transactions (the "Contributed
Subsidiaries" and together with the Initial Subsidiaries, the "Closing
Subsidiaries") convertible into or exchangeable for any capital stock of or
partnership interests, membership interests or other equity interests, as
the case may be, in the Company or any such Closing Subsidiary, (B)
warrants, rights or options to subscribe for or purchase from the Company
or any Closing Subsidiary any such capital stock or any such convertible or
exchangeable securities or obligations, or (C) obligations of the Company
or any Closing Subsidiary to issue any securities or obligations, any such
convertible or exchangeable securities or obligations, or any such
warrants, rights or options at the Closing Time;
(iv) each of the Company and the Closing Subsidiaries has been duly
incorporated or organized and is validly existing as a corporation, general
or limited partnership or limited liability company, as the case may be, in
good standing under the laws of its respective jurisdiction of
incorporation or organization;
(v) each of the Company and the Initial Subsidiaries have the
corporate or partnership power and authority to own their respective
properties and conduct their respective businesses, each as described in
the Registration Statement and Prospectus, and, in the case of the Company
and the Operating Partnership, to execute and deliver this Agreement and
the Formation Agreements to which it is a party and to consummate the
transactions described in each such agreement;
(vi) the Company and the Closing Subsidiaries are duly qualified or
licensed and in good standing in each jurisdiction where such qualification
or license is required except where the failure, individually or in the
aggregate, to be so qualified or licensed could not reasonably be expected
to have a material adverse effect on the assets, business, operations,
earnings, prospects, properties or condition (financial or otherwise),
present or prospective, of the Company and the Closing Subsidiaries taken
as a whole (any such effect or change, where the context so requires, is
hereinafter called a "Material Adverse Effect" or "Material Adverse
Change");
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(vii) except as disclosed in the Prospectus, the Operating Partnership
is neither prohibited nor restricted, directly or indirectly, from paying
dividends to the Company, or from making any other distribution with
respect to the Operating Partnership's partnership interests or from
repaying to the Company or another subsidiary of the Company any amounts
which may from time to time become due under any loans or advances to the
Operating Partnership from the Company or another subsidiary of the
Company, or from transferring the Operating Partnership's property or
assets to the Company or another subsidiary of the Company;
(viii) except as disclosed in the Prospectus, the Private REIT is
neither prohibited nor restricted, directly or indirectly, from paying
dividends to the Operating Partnership, or from making any other
distribution with respect to the Private REIT's shares of capital stock or
from repaying to the Company, the Operating Partnership or another
subsidiary of the Company any amounts which may from time to time become
due under any loans or advances to the Private REIT from the Company, the
Operating Partnership or another subsidiary of the Company, or from
transferring the Private REIT's property or assets to the Company, the
Operating Partnership or another subsidiary of the Company;
(ix) except as disclosed in the Prospectus, at the Closing Time, no
Contributed Subsidiary will be prohibited or restricted, directly or
indirectly, from paying dividends to the Operating Partnership or the
Private REIT, to the extent such Contributed Subsidiary is a direct
subsidiary of the Operating Partnership or the Private REIT, or from making
any other distribution with respect to the outstanding membership interests
of such Contributed Subsidiary or from repaying to the Company, the
Operating Partnership or another subsidiary of the Company any amounts
which may from time to time become due under any loans or advances to such
Contributed Subsidiary from the Company, the Operating Partnership or
another subsidiary of the Company, or from transferring such Contributed
Subsidiary's property or assets to the Company, the Operating Partnership
or another subsidiary of the Company;
(x) the Company does not own, directly or indirectly, any capital
stock or other equity securities of any corporation or any ownership
interest in any partnership, joint venture or other entity other than as
disclosed in the Prospectus;
(xi) the Agreement of Limited Partnership of the Operating
Partnership, dated as of October __, 2004 (the "Partnership Agreement"),
has been duly and validly authorized, executed and delivered by the Company
and is a valid and binding agreement of the Company, enforceable in
accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors' rights generally or by general principles of equity;
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(xii) the Company is the sole general partner of the Operating
Partnership and, at the Closing Time, the Company will be the sole general
partner of the Operating Partnership and the holder of OP Units
representing an ownership interest in the Operating Partnership in the
percentage set forth in the Prospectus under the caption "The Formation
Transactions," free and clear of any pledge, lien, encumbrance, security
interest or other claim;
(xiii) neither the Company nor any Closing Subsidiary is in breach of
or in default under (nor has any event occurred which with notice, lapse of
time, or both would constitute a breach of, or default under), its
respective organizational documents, or in the performance or observance of
any obligation, agreement, covenant or condition contained in any license,
indenture, mortgage, deed of trust, loan or credit agreement or other
agreement or instrument to which the Company or any Closing Subsidiary is a
party or by which any of them or their respective properties or assets is
bound, except for such breaches or defaults which could not reasonably be
expected to have a Material Adverse Effect;
(xiv) the execution, delivery and performance of this Agreement and
the Formation Agreements and consummation of the transactions contemplated
herein and therein will not (A) conflict with, or result in any breach of,
or constitute a default under (nor constitute any event which with notice,
lapse of time, or both would constitute a breach of, or default under): (1)
any provision of the organizational documents of the Company or any Closing
Subsidiary, or (2) any provision of any license, indenture, mortgage, deed
of trust, loan or credit agreement or other agreement or instrument to
which the Company or any Closing Subsidiary is a party or by which any of
them or their respective assets or properties (including the Contributed
Assets) may be bound or affected, or under any federal, state, local or
foreign law, regulation or rule or any decree, judgment or order applicable
to the Company or any Closing Subsidiary, except in the case of this clause
(2) for such breaches or defaults which could not reasonably be expected to
have a Material Adverse Effect; or (B) result in the creation or imposition
of any lien, charge, claim or encumbrance upon any property or asset
(including the Contributed Assets) of the Company or any Closing
Subsidiary, except for such liens, charges, claims or encumbrances which
could not reasonably be expected to have a Material Adverse Effect;
(xv) this Agreement has been duly authorized, executed and delivered
by each of the Company and the Operating Partnership and is a legal, 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, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights
generally, and by general equitable principles, and except to the extent
that the indemnification and contribution provisions of Section 9 hereof
may be limited by federal or state securities laws and public policy
considerations in respect thereof;
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(xvi) the Formation Agreements to which the Company or the Operating
Partnership will be a party have been duly authorized by the Company and
the Operating Partnership (to the extent a party thereto) and, upon
execution and delivery thereof at the Closing Time, will be legal, valid
and binding agreements of the Company and the Operating Partnership (to the
extent a party thereto) enforceable against the Company and the Operating
Partnership in accordance with their respective terms, except as may be
limited by bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting creditors' rights generally, and by general equitable
principles;
(xvii) no approval, authorization, consent or order of or filing with
any federal, state, local or foreign governmental or regulatory commission,
board, body, authority or agency is required in connection with the
Company's or the Operating Partnership's execution, delivery and
performance of this Agreement, the consummation of the transactions
contemplated herein by the Company or the Operating Partnership, including
the Company's issuance, sale and delivery of the Shares or the Company's
issuance of the FBR Restricted Shares, or in connection with the execution,
delivery and performance of the Formation Agreements or the consummation of
the transactions contemplated therein by the Company or the Operating
Partnership, other than (A) such as have been obtained, or will have been
obtained at the Closing Time or the relevant Date of Delivery, as the case
may be, under the Securities Act and the Securities Exchange Act of 1934
(the "Exchange Act"), (B) any necessary qualification under the securities
or "blue sky" laws of the various jurisdictions in which the Shares are
being offered by the Underwriters or (C) with respect to the execution,
delivery and performance of the Formation Agreements and the consummation
of the transactions contemplated therein, such approvals, authorizations or
consents required to be obtained at the Closing Time as have been obtained
or will be obtained at the Closing Time;
(xviii) each of the Company and the Closing Subsidiaries has, and will
have upon consummation of the Formation Transactions, all necessary
licenses, authorizations, consents and approvals and has made all necessary
filings required under any federal, state, local or foreign law, regulation
or rule, and has obtained all necessary authorizations, consents and
approvals from other persons, required in order to conduct their respective
businesses as described in the Prospectus, except to the extent that any
failure to have any such licenses, authorizations, consents or approvals,
to make any such filings or to obtain any such authorizations, consents or
approvals could not, individually or in the aggregate, have a Material
Adverse Effect; neither the Company nor any of the Closing Subsidiaries is
in violation of, in default under, or has received any notice regarding a
possible violation, default or revocation of any such license,
authorization, consent or approval or any federal, state, local or foreign
law, regulation or rule or any decree, order or judgment applicable to the
Company or any of the Subsidiaries the effect of which could reasonably be
expected to result in a Material Adverse Change;
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(xix) the Registration Statement has been declared effective under the
Securities Act by the Commission; the Rule 462(b) Registration Statement,
if any, is effective; no stop order suspending the effectiveness or the use
of the Registration Statement, including any Rule 462(b) Registration
Statement, has been issued under the Securities Act and no proceedings for
that purpose have been instituted or are pending or, to the knowledge of
the Company, are threatened by the Commission; the Registration Statement
on Form 8-A filed by the Company with the Commission (the "8-A Registration
Statement") is effective under the Securities Act;
(xx) the Preliminary Prospectus, as of its date, complied, the
Registration Statement complies, any post-effective amendments or
supplements to the Registration Statement, when they become effective, will
comply and the Prospectus and any amendments or supplements thereto, when
they are filed with the Commission, will comply in all material respects
with the requirements of the Securities Act and the Securities Act
Regulations; the 8-A Registration Statement complies in all material
respects with the requirements of the Exchange Act and the rules and
regulations thereunder; neither the Registration Statement nor the 8-A
Registration Statement contained, in each case as of their respective
effective dates, and any post-effective amendments thereto will not
contain, as of their respective effective dates, an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading; the
Preliminary Prospectus, as of its date, did not contain and the Prospectus
or any amendment or supplement thereto, as of their respective dates, the
Closing Time and on each Date of Delivery (if any), will not contain an
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not
misleading; provided, however, that the Company makes no warranty or
representation with respect to any statement contained in the Registration
Statement, the Preliminary Prospectus or the Prospectus or any amendment or
supplement to any of the foregoing in reliance upon and in conformity with
the information concerning the Underwriters and furnished in writing by or
on behalf of the Underwriters through the Representatives to the Company
expressly for use in the Registration Statement, the Preliminary Prospectus
or the Prospectus (that information being limited to that described in the
penultimate sentence of the first paragraph of Section 9(b) hereof);
(xxi) the Preliminary Prospectus was and the Prospectus delivered to
the Underwriters for use in connection with the public offering of the
Shares contemplated herein will be identical to the versions of the
Preliminary Prospectus and Prospectus created to be transmitted to the
Commission for filing via the Electronic Data Gathering Analysis and
Retrieval System ("XXXXX"), except to the extent permitted by Regulation
S-T;
-11-
(xxii) except as disclosed in the Prospectus, there are no actions,
suits, proceedings, inquiries or investigations pending or, to the
knowledge of the Company, threatened against the Company or any Closing
Subsidiary or, to the extent that such proceeding affects the properties or
assets of the Company or any Closing Subsidiary, any of their respective
officers and directors or to which the properties, assets or rights of any
such entity (including any Contributed Assets) are subject, at law or in
equity, before or by any federal, state, local or foreign governmental or
regulatory commission, board, body, authority, arbitral panel or agency
which could result in a judgment, decree, award or order which could
reasonably be expected to have a Material Adverse Effect;
(xxiii) the combined financial statements of NorthStar Realty Finance
Corp. Predecessor, the consolidated balance sheet of the Company, the
consolidated financial statements of ALGM I Owners LLC and its subsidiaries
and the consolidated financial statements of NorthStar Funding LLC and its
subsidiaries which are included in the Registration Statement and the
Prospectus, in each case including the notes to such financial statements
(collectively, the "Historical Financial Statements") present fairly the
combined or consolidated, as applicable, financial position of NorthStar
Realty Finance Corp. Predecessor, the Company, ALGM I Owners LLC or
NorthStar Funding LLC (collectively, the "Covered Entities"), as
applicable, as of the dates indicated and the combined or consolidated, as
applicable, results of operations and changes in financial position and
cash flows of such Covered Entity for the periods specified; such
Historical Financial Statements have been prepared in conformity with
generally accepted accounting principles as applied in the United States
and on a consistent basis during the periods involved and in accordance
with Regulation S-X promulgated by the Commission; the financial statement
schedules included in the Registration Statement and the amounts in the
Prospectus under the captions "Prospectus Summary - Summary Selected Pro
Forma Consolidated and Historical Combined Financial Information" and
"Selected Pro Forma Consolidated and Historical Combined Financial
Information" fairly present the information shown therein and have been
compiled on a basis consistent with the Historical Financial Statements or
the Pro Forma Financial Statements (as defined below), as applicable; the
unaudited pro forma financial information (including the related notes)
which is included in the Registration Statement and the Prospectus (the
"Pro Forma Financial Statements") complies as to form in all material
respects with the applicable accounting requirements of the Securities Act
and the Securities Act Regulations, and management of the Company believes
that the assumptions underlying the pro forma adjustments contained therein
are reasonable; such pro forma adjustments have been properly applied to
the historical amounts in the compilation of the information and such
information fairly presents the financial position, results of operations
and other information purported to be shown therein at the respective dates
and for the respective periods specified; no pro forma financial
information, financial statements or supporting schedules other than the
Historical Financial Statements or the Pro
-12-
Forma Financial Information are required to be included in the Registration
Statement or the Prospectus;
(xxiv) Ernst & Young LLP, whose reports on the combined financial
statements of NorthStar Realty Finance Corp. Predecessor, the consolidated
balance sheet of the Company, the consolidated financial statements of ALGM
I Owners LLC and its subsidiaries, and the consolidated financial
statements of NorthStar Funding LLC and its subsidiaries constitute part of
the Registration Statement and Prospectus, is, and was during the periods
covered by its reports, an independent registered public accounting firm as
required by the Securities Act and the Securities Act Regulations;
(xxv) subsequent to the respective dates of the Historical Financial
Statements or the Pro Forma Financial Statements, and except as may be
otherwise disclosed in the Registration Statement or Prospectus, there has
not been (A) any Material Adverse Change or any development or transaction
that could reasonably be expected to result in a Material Adverse Change,
whether or not arising in the ordinary course of business, (B) any
transaction that is material to the Company and the Closing Subsidiaries
taken as a whole, contemplated or entered into by the Company or any of the
Closing Subsidiaries, (C) any obligation, contingent or otherwise, directly
or indirectly incurred by the Company or any Closing Subsidiary that is
material to the Company and the Closing Subsidiaries taken as a whole or
(D) any dividend or distribution of any kind declared, paid or made by the
Company on any class of its capital stock or any Subsidiary on any of its
equity interests;
(xxvi) the Common Stock, the OP Units and the LTIP Units described in
the Registration Statement and the Prospectus conform in all material
respects to the descriptions thereof contained in the Registration
Statement and the Prospectus;
(xxvii) there are no persons with registration or other similar rights
to have any equity or debt securities of the Company or the Closing
Subsidiaries, including securities which are convertible into or
exchangeable or redeemable for equity securities of the Company or the
Closing Subsidiaries, registered pursuant to the Registration Statement or
otherwise registered by the Company or the Operating Partnership under the
Securities Act, except for such registration or similar rights which are
fairly summarized in the Prospectus or granted pursuant to the Registration
Rights Agreement;
(xxviii) the Shares and the FBR Restricted Shares have been duly
authorized and, when issued and duly delivered against payment therefor as
contemplated by this Agreement, will be validly issued, fully paid and
non-assessable, free and clear of any pledge, lien, encumbrance, security
interest or other claim, and the issuance and sale of the Shares and the
FBR Restricted Shares by the Company is not subject to preemptive or other
similar rights arising
-13-
by operation of law, under the organizational documents of the Company or
any Closing Subsidiary or under any agreement to which the Company or any
Closing Subsidiary is a party or otherwise;
(xxix) the OP Units to be issued at the Closing Time (A) to the
Transferors, in accordance with the Contribution Agreements and the
Partnership Agreement and (B) to the Company pursuant to the Partnership
Agreement, have been duly authorized and, when issued and duly delivered in
accordance with the terms of the Contribution Agreements, as applicable,
and the Restated Partnership Agreement will be validly issued, free and
clear of any pledge, lien, encumbrance, security interest or other claim,
and the issuance of such OP Units is not subject to preemptive or other
similar rights arising by operation of law, under the organizational
documents of the Company or the Operating Partnership or under any
agreement to which the Company or any Closing Subsidiary is a party or
otherwise;
(xxx) the Common Stock has been registered under Section 12(b) of the
Exchange Act and approved for listing on the New York Stock Exchange (the
"NYSE"), subject to official notice of issuance;
(xxxi) the Company has not taken, directly or indirectly, any action
which is designed to or which has constituted or which might reasonably be
expected to cause or result in stabilization or manipulation of the price
of any security of the Company to facilitate the sale or resale of the
Shares;
(xxxii) neither the Company nor any of its affiliates (A) is required
to register as a "broker" or "dealer" in accordance with the provisions of
the Exchange Act, or the rules and regulations thereunder (the "Exchange
Act Regulations"), or (B) directly, or indirectly through one or more
intermediaries, controls or has any other association with (within the
meaning of Article I of the By-laws of the National Association of
Securities Dealers, Inc. (the "NASD")) any member firm of the NASD;
(xxxiii) the Company has not relied upon the Representatives or legal
counsel for the Representatives for any legal, tax or accounting advice in
connection with the offering and sale of the Shares;
(xxxiv) any certificate signed by any officer of the Company or the
Operating Partnership delivered to the Representatives or to counsel for
the Underwriters pursuant to the terms or provisions of this Agreement
shall be deemed a representation and warranty by the Company to each
Underwriter as to the matters covered thereby;
(xxxv) the form of certificate used to evidence the Common Stock
complies in all material respects with all applicable statutory
requirements, with
-14-
any applicable requirements of the organizational documents of the Company
and the requirements of the NYSE;
(xxxvi) the Company and the Closing Subsidiaries have, and will have
upon consummation of the Formation Transactions, good and marketable title
in fee simple to all real property, if any, and good title to all personal
property, if any, owned by them (or to be owned by them upon consummation
of the Formation Transactions), in each case free and clear of all liens,
security interests, pledges, charges, encumbrances, claims, restrictions,
mortgages and defects in such title (collectively, the "Encumbrances"),
except such Encumbrances that are disclosed in the Prospectus or could not
reasonably be expected to materially and adversely affect the value of such
property or interfere with the use made or proposed to be made of such
property by the Company and the Closing Subsidiaries; any real or personal
property leased by the Company or any Closing Subsidiary (or to be leased
by the Company or any Closing Subsidiary upon consummation of the Formation
Transactions) is held under a lease which is, and will be upon consummation
of the Formation Transactions, a valid and binding agreement, enforceable
against the Company or such Closing Subsidiary (to the extent a party
thereto) and, to the Company's knowledge, the other parties thereto, except
(A) as may be limited by bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting creditors' rights generally, and by general
principles of equity, (B) as otherwise disclosed in the Prospectus or (C)
for such exceptions that are not, individually or in the aggregate,
material to the Company or such Closing Subsidiary and would not reasonably
be expected to interfere with the use made or proposed to be made of such
property by the Company or such Closing Subsidiary;
(xxxvii) except as disclosed in the Prospectus, the mortgages, if any,
encumbering, or upon consummation of the Formation Transactions to be
encumbering, any real property owned in fee simple by the Company or a
Closing Subsidiary (or to be owned upon consummation of the Formation
Transactions) are not and will not be: (A) convertible (in the absence of
foreclosure) into an equity interest in such real property or in the
Company or any Closing Subsidiary, (B) cross-defaulted to any indebtedness
other than indebtedness of the Company or any of the Closing Subsidiaries
or (C) cross-collateralized to any property or assets not owned by the
Company or any of the Closing Subsidiaries;
(xxxviii) the descriptions of legal or governmental proceedings,
contracts, leases and other legal documents in the Registration Statement
and the Prospectus constitute fair and accurate summaries of such
proceedings or documents, and there are no legal or governmental
proceedings, contracts, leases or other documents of a character required
to be described in the Registration Statement or the Prospectus or filed as
exhibits to the Registration Statement which are not so described or filed;
all agreements between the Company or any of the Closing Subsidiaries and
third parties expressly referenced in the Prospectus are, and will be upon
consummation of the Formation Transactions,
-15-
legal, valid and binding obligations of the Company or the Closing
Subsidiaries, to the extent a party thereto, and, to the knowledge of the
Company, of the other parties thereto, enforceable against the Company or
Closing Subsidiaries in accordance with their respective terms, except to
the extent enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights
generally and by general equitable principles and neither the Company nor
any Closing Subsidiary is, or will be upon consummation of the Formation
Transactions, in breach or default under any such agreements;
(xxxix) the Company or the Closing Subsidiaries own or possess, and
upon consummation of the Formation Transactions will own or possess,
adequate licenses or other rights to use all material patents, trademarks,
service marks, trade names, copyrights, software licenses, trade secrets,
other intangible property rights and know-how (collectively "Intangibles")
necessary for the Company and the Closing Subsidiaries taken together as a
whole (the "Consolidated Company") to conduct the business of the
Consolidated Company as described in the Prospectus, and neither the
Company nor any Closing Subsidiary has received notice of infringement of
or conflict with (and the Company and the Closing Subsidiaries know of no
such infringement of or conflict with) asserted rights of others with
respect to any Intangibles which could reasonably be expected to have a
Material Adverse Effect;
(xl) the Company maintains a system of internal accounting controls
sufficient to provide reasonable assurance that, with respect to the
Consolidated Company, (A) transactions are executed in accordance with
management's general or specific authorizations; (B) transactions are
recorded as necessary to permit preparation of the consolidated financial
statements of the Company in conformity with generally accepted accounting
principles as applied in the United States and to maintain asset
accountability; (C) access to assets is permitted only in accordance with
management's general or specific authorization; and (D) the recorded
accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences;
(xli) the Company and each of the Closing Subsidiaries has filed on a
timely basis all necessary material federal, state, local and foreign
income and franchise tax returns required to be filed through the date
hereof and have paid all material taxes shown as due thereon and if due and
payable, any related or similar assessment, fine or penalty levied against
the Company or any of the Closing Subsidiaries; and no tax deficiency has
been asserted against any such entity, nor does any such entity know of any
tax deficiency which is likely to be asserted against any such entity
which, individually or in the aggregate, if determined adversely to any
such entity, could reasonably be expected to have a Material Adverse
Effect; all material tax liabilities are adequately provided for on the
respective books of such entities;
-16-
(xlii) the Company maintains insurance, including title insurance (in
each case, issued by insurers of recognized financial responsibility) of
the types and in the amounts generally deemed adequate for the business of
the Consolidated Company and consistent with insurance coverage maintained
by similar companies in similar businesses, including, but not limited to,
directors and officers liability insurance, title insurance, insurance
covering real and personal property owned or leased by the Company and the
Closing Subsidiaries against theft, damage, destruction, environmental
liabilities, acts of vandalism, terrorism, earthquakes, floods and all
other risks customarily insured against, all of which insurance is in full
force and effect;
(xliii) the Company and the Closing Subsidiaries have received, and
will have upon consummation of the Formation Transactions, all permits,
licenses or other approvals required of them under applicable federal and
state occupational safety and health and environmental laws, regulations
and rules to conduct the business of the Consolidated Company, and the
Company and the Closing Subsidiaries are in compliance with all terms and
conditions of any such permits, licenses or approvals, except for any
failure to have required permits, licenses or other approvals or to comply
with the terms and conditions of such permits, licenses or approvals which
could not, individually or in the aggregate, result in a Material Adverse
Change;
(xliv) the Company and the Closing Subsidiaries are in compliance in
all material respects with all presently applicable provisions of the
Employee Retirement Income Security Act of 1974, as amended, including the
regulations and published interpretations thereunder ("ERISA"); no
"reportable event" (as defined in ERISA) has occurred with respect to any
"pension plan" (as defined in ERISA) for which the Company or any of the
Closing Subsidiaries would have any material liability; neither the Company
nor any of the Closing Subsidiaries has incurred and none of them expect to
incur any material liability under (A) Title IV of ERISA with respect to
termination of, or withdrawal from, any "pension plan" or (B) Section 412
or 4971 of the Internal Revenue Code of 1986, as amended, including the
regulations and published interpretations thereunder ("Code"); each
"pension plan" for which the Company or any of the Closing Subsidiaries
would have any liability that is intended to be qualified under Section
401(a) of the Code is so qualified in all material respects and nothing has
occurred, whether by action or by failure to act, which would cause the
loss of such qualification;
(xlv) none of the Company, any of the Closing Subsidiaries or, to the
knowledge of the Company, any officer, director, employee or agent
purporting to act on behalf of the Company or any of the Closing
Subsidiaries has at any time (A) made any contributions to any candidate
for political office, or failed to disclose fully any such contributions,
in violation of law, (B) made any payment of funds or received or retained
any funds in violation of any law, rule or
-17-
regulation or of a character required to be disclosed in the Prospectus, or
(C) engaged in any material transactions, maintained any bank account or
used any material corporate funds except for transactions, bank accounts
and funds which have been or are, as applicable, reflected in the books and
records of the Company and the Closing Subsidiaries;
(xlvi) except as disclosed in the Prospectus, there are no material
outstanding loans, advances or guarantees of indebtedness by the Company or
any of the Closing Subsidiaries to or for the benefit of any of the
officers or directors of the Company or any of the Closing Subsidiaries or
any of the members of the immediate families of any such officers or
directors;
(xlvii) all securities issued by the Company or any of the Initial
Subsidiaries have been issued and sold in compliance with (A) all
applicable federal and state securities laws and (B) the applicable
corporate or partnership law of the jurisdiction of incorporation of the
Company or Initial Subsidiary, as applicable; the issuance and sale of the
shares of common stock of the Private REIT, the LTIP Units and the 35,000
shares of restricted Common Stock to be issued to certain directors of the
Company as contemplated in the Registration Statement and Prospectus will
be exempt from registration or qualification under the Securities Act and
state securities laws;
(xlviii) assuming the accuracy of the representations, warranties and
agreements of Friedman, Billings, Xxxxxx & Co., Inc. contained in Section
1(c) hereof, the issuance of the FBR Restricted Shares will be exempt from
registration or qualification under the Securities Act and state securities
laws;
(xlix) assuming the accuracy of the representations, warranties and
agreements of the Transferors contained in the Contribution Agreements, the
issuance of the OP Units pursuant to the Contribution Agreements will be
exempt from registration or qualification under the Securities Act and
state securities laws;
(l) each of the real properties leased or owned or to be leased or
owned upon consummation of the Formation Transactions by the Company or any
of the Closing Subsidiaries (collectively, the "Properties") complies with
all applicable zoning laws, ordinances, regulations and deed restrictions
or other covenants in all material respects, except such failure to comply,
which does not materially impair the value of any of the Properties and
will not result in a forfeiture or reversion of title; none of the Company
or any Closing Subsidiary has received from any governmental authority any
written notice of any condemnation of or zoning change affecting any of the
Properties or any part thereof, and neither the Company nor any Closing
Subsidiary knows of any such condemnation or zoning
-18-
change which is threatened and which, individually or in the aggregate, if
consummated could reasonably be expected to have a Material Adverse Effect;
(li) to the best of the Company's knowledge, (A) no lessee of any
portion of any of the Properties is in default under any of the leases
governing such 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 leases, except such defaults that, individually or in the
aggregate, could not reasonably be expected to have a Material Adverse
Effect; and (B) no tenant under any lease pursuant to which any of the
Properties is leased has an option or right of first refusal to purchase
the Property leased thereunder or the premises or buildings which
constitute a part of such Property, except for such options or rights of
first refusal which, if exercised, could not reasonably be expected to have
a Material Adverse Effect or as provided by law;
(lii) none of the Company, any of the Closing Subsidiaries or any
Transferor has any liability under any applicable environmental, health,
safety or similar law or otherwise relating to any Hazardous Material (as
hereinafter defined) and there are no notices of potential liability or
claims pending or, to the knowledge of the Company, threatened against the
Company, any of the Closing Subsidiaries or any Transferor or concerning
any of the Properties under any applicable environmental, health, safety or
similar law or otherwise relating to any Hazardous Material, except for
such liabilities or claims which could not reasonably be expected to have a
Material Adverse Effect; none of the Company, any of the Closing
Subsidiaries, any Transferor or, to the knowledge of the Company, any other
person, has contaminated or caused conditions that threaten to contaminate
any of the Properties with Hazardous Materials, except for such
contamination or threats of contamination which could not reasonably be
expected to have a Material Adverse Effect; neither the Properties nor any
other land ever owned by the Company, any of the Closing Subsidiaries or
any Transferor is included on or, to the knowledge of the Company, is
proposed for inclusion on the National Priorities List pursuant to the
Comprehensive Environmental Response, Compensation, and Liability Act, 42
U.S.C. xx.xx. 9601 et seq., or any similar list or inventory of
contaminated properties.
As used herein, "Hazardous Material" shall mean any hazardous material,
hazardous waste, hazardous substance, hazardous constituent, toxic
substance, pollutant, contaminant, asbestos, petroleum, petroleum waste,
radioactive material, biohazardous material, explosive or any other
material, the presence of which in the environment is prohibited,
regulated, or serves as the basis of liability, as defined, listed, or
regulated by any applicable federal, state, or local environmental law,
ordinance, rule, or regulation;
(liii) in connection with the offer and sale of the Shares, the
Company has not offered shares of its Common Stock or any other securities
convertible
-19-
into or exchangeable or exercisable or redeemable for Common Stock in a
manner in violation of the Securities Act; the Company has not distributed
any prospectus or other offering material, other than the Preliminary
Prospectus and the Prospectus, in connection with the offer and sale of the
Shares;
(liv) the Company has complied and will comply with all the provisions
of Florida Statutes, Section 517.075 (Chapter 92-198, Laws of Florida); and
neither the Company nor any of the Closing Subsidiaries or affiliates does
business with the government of Cuba or with any person or affiliate
located in Cuba;
(lv) the Company has not incurred any liability for any finder's fees
or similar payments in connection with the transactions herein
contemplated;
(lvi) except as disclosed in the Prospectus, no relationship, direct
or indirect, exists between or among the Company or any of the Closing
Subsidiaries on the one hand, and the directors, officers, stockholders,
customers or suppliers of the Company or any of the Closing Subsidiaries on
the other hand, which is required by the Securities Act and the Securities
Act Regulations to be described in the Registration Statement and the
Prospectus and which is not so described;
(lvii) the Company, on a consolidated basis, is not and, after giving
effect to the offering and sale of the Shares and the Formation
Transactions, the Consolidated Company will not be an "investment company"
or an entity "controlled" by an "investment company", as such terms are
defined in the Investment Company Act of 1940, as amended (the "Investment
Company Act");
(lviii) the Company has not offered, or caused the Underwriters to
offer, Shares to any person pursuant to the Directed Share Program with the
specific intent to unlawfully influence (A) a customer, borrower, tenant or
supplier of the Company to alter the customer's or supplier's level or type
of business with the Company or (B) a trade journalist or publication to
write or publish favorable information about the Company or the business of
the Consolidated Company;
(lix) the statistical and market related data included in the
Registration Statement and Prospectus are based on or derived from sources
that the Company believes to be reliable and accurate; and
(lx) each of the Company and the Private REIT is organized in
conformity with the requirements for qualification as a real estate
investment trust (a "REIT") under the Code; the proposed method of
operation of the Company and the Closing Subsidiaries will enable each of
the Company and the Private REIT to meet the requirements for qualification
and taxation as a REIT under the Code; and each of the Company and the
Private REIT intends to continue to qualify as a REIT until the respective
Board of Directors of the Company
-20-
or the Private REIT determines that it is no longer in the best interests
of the Company or the Private REIT, as the case may be, to continue to
qualify as a REIT; neither the Company nor any of the Subsidiaries has
taken any action that could reasonably be expected to cause the Company or
the Private REIT to fail to qualify as a REIT under the Code at any time.
(b) NCIC and NPLP, jointly and severally with the Company and the Operating
Partnership, warrant and represent to the Underwriters that the representations
and warranties in paragraphs (v), (vi), (xiii), (xiv), (xxii), (xxiii), (xxiv),
(xxv), (xxvii), (xxxi), (xxxii), (xxxiii), (xxxiv), (xxxv), (xxxvii), (xxxix),
(xl), (xli), (xlii), (xliii), (xliv), (xlv), (xlvi), (xlvii), (li), (lii),
(liii), (liv), (lvi), (lvii), (lix) and (lx) of Section 3(a) hereof are true and
correct, provided, however, that any such representation or warranty or part
thereof (i) made to the knowledge of any person shall, for purposes of this
Section 3(b), be deemed to also have been made to the knowledge of NCIC and NPLP
and (ii) is made by NCIC and NPLP only as of the date hereof and as of the
Closing Time.
(c) NCIC and NPLP, jointly and severally, represent and warrant to the
Underwriters, as of the date hereof and as of the Closing Time, that:
(i) NCIC has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the state of Maryland with
full corporate power and authority to own its properties and to conduct its
business as described in the Prospectus and to execute and deliver this
Agreement and the Formation Agreements to which it is a party and to
consummate the transactions described in each such agreement;
(ii) NPLP has been duly organized and is validly existing as a limited
partnership in good standing under the laws of the state of Delaware with
full partnership power and authority to own its properties and to conduct
its business as described in the Prospectus and to execute and deliver this
Agreement and the Formation Agreements to which it is a party and to
consummate the transactions described in each such agreement;
(iii) the outstanding membership interests of each of the Contributed
Subsidiaries have been duly and validly authorized and issued and are
owned, directly or indirectly, by the Transferors and, at the Closing Time,
will be transferred to the Operating Partnership;
(iv) this Agreement has been duly authorized, executed and delivered
by each of NCIC and NPLP and is a legal, valid and binding agreement of
each of NCIC and NPLP enforceable against NCIC and NPLP in accordance with
its terms, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights
generally, and by general equitable principles, and except to the extent
that the indemnification and contribution provisions of Section 9 hereof
may be limited by federal or state securities laws and public policy
considerations in respect thereof;
-21-
(v) the Formation Agreements to which NCIC or the Transferors will be
a party have been duly authorized by NCIC and the Transferors (to the
extent a party thereto) and, upon execution and delivery thereof at the
Closing Time, will constitute legal, valid and binding agreements of NCIC
and the Transferors (to the extent a party thereto) enforceable against
NCIC and the Transferors (to the extent a party thereto) in accordance with
their respective terms, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights
generally, and by general equitable principles, and, at the Closing Time,
neither NCIC nor any of the Transferors will be in breach or default of its
obligations thereunder (nor will any event have occurred which with notice,
lapse of time, or both would constitute a breach of or default thereunder);
(vi) the execution, delivery and performance of this Agreement by NCIC
and NPLP and the execution, delivery and performance of the Formation
Agreements to which NCIC or the Transferors will be a party, and
consummation of the transactions contemplated herein and therein, will not
conflict with, or result in any breach of, or constitute a default under
(nor constitute any event which with notice, lapse of time, or both would
constitute a breach of, or default under), (A) any provision of the
organizational documents of NCIC or the Transferors, (B) any provision of
any license, indenture, mortgage, deed of trust, loan or credit agreement
or other agreement or instrument to which NCIC or any of the Transferors is
a party or by which any of them or their respective assets or properties
may be bound or affected, (C) any federal, state, local or foreign law,
regulation or rule binding upon or applicable to NCIC or a Transferor or
any of their respective properties or assets, or (D) any decree, judgment
or order applicable to NCIC or any Transferor, except, in the cases of (B),
(C) and (D) above, where such conflicts, breaches or defaults could not
reasonably be expected to have a material adverse effect on the assets,
business, operations, earnings, prospects, properties or condition
(financial or otherwise), present or prospective, of NCIC and the
Transferors taken as a whole; and
(vii) the representations and warranties of the Transferors made in
the Contribution Agreements are true and correct as of the date hereof and
will be true and correct when the OP Units are issued pursuant to the
Contribution Agreements.
4. Certain Covenants:
The Company and the Operating Partnership, jointly and severally, agree
with the Underwriters:
(a) to furnish such information as may be required and otherwise to
cooperate in qualifying the Shares for offering and sale under the securities or
blue sky laws of such jurisdictions (both domestic and foreign) as the
Representatives may designate and to maintain such qualifications in effect as
long as requested by the Representatives for the distribution of the Shares,
provided that the Company shall not be required to qualify as a
-22-
foreign corporation or to consent to the service of process under the laws of
any such jurisdiction (except service of process with respect to the offering
and sale of the Shares);
(b) if, at the time this Agreement is executed and delivered, it is
necessary for a post-effective amendment to the Registration Statement to be
declared effective before the offering of the Shares may commence, the Company
will endeavor to cause such post-effective amendment to become effective as soon
as possible and will advise the Representatives promptly and, if requested by
the Representatives, will confirm such advice in writing, when such
post-effective amendment has become effective;
(c) to prepare the Prospectus in a form approved by the Underwriters and
file such Prospectus (or a term sheet as permitted by Rule 434) with the
Commission pursuant to Rule 424(b) under the Securities Act within the time
period set forth in Rule 424(b) and to furnish promptly (and with respect to the
initial delivery of such Prospectus, not later than the second business day
following the execution and delivery of this Agreement or on such other day as
the parties may mutually agree) to the Underwriters copies of the Prospectus (or
of the Prospectus as amended or supplemented if the Company shall have made any
amendments or supplements thereto after the effective date of the Registration
Statement) in such quantities and at such locations as the Underwriters may
reasonably request for the purposes contemplated by the Securities Act
Regulations, which Prospectus and any amendments or supplements thereto
furnished to the Underwriters will be identical to the version created to be
transmitted to the Commission for filing via XXXXX, except to the extent
permitted by Regulation S-T;
(d) to advise the Representatives promptly (and if required by the
Representatives, to confirm such advice in writing) when the Registration
Statement has become effective and when any post-effective amendment thereto
become effective under the Securities Act Regulations;
(e) to advise the Representatives immediately and, if requested by the
Representatives, confirming such advice in writing, of (1) the receipt of any
comments from, or any request by, the Commission for amendments or supplements
to the Registration Statement or Prospectus or for additional information with
respect thereto, or (2) the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or of any order
preventing or suspending the use of any Preliminary Prospectus or the
Prospectus, or of the suspension of the qualification of the Shares for offering
or sale in any jurisdiction, or of the initiation or threatening of any
proceedings for any of such purposes and, if the Commission or any other
government agency or authority should issue any such order, to make every
reasonable effort to obtain the lifting or removal of such order as soon as
possible and to advise the Representatives promptly of the lifting or removal of
such order; to advise the Representatives promptly of any proposal to amend or
supplement the Registration Statement or Prospectus and to file no such
amendment or supplement to which the Representatives, upon advice of counsel
after discussion with the Company and counsel for the Company, shall reasonably
object in writing;
-23-
(f) to furnish to the Underwriters for a period of two years from the date
of this Agreement (1) as soon as available, copies of all annual, quarterly and
current reports or other communications supplied to holders of shares of Common
Stock, (2) as soon as practicable after the filing thereof, copies of all
reports filed by the Company with the Commission or any national securities
exchange on which any class of securities of the Company are listed; and (3)
such additional information as the Underwriters from time to time reasonably
request (any financial statements so requested to be on a consolidated basis to
the extent the accounts of the Company and its subsidiaries are consolidated in
reports furnished to its security holders generally or to the Commission);
(g) to advise the Underwriters promptly of the happening of any event known
to the Company within the time during which a Prospectus relating to the Shares
is required to be delivered under the Securities Act or the Securities Act
Regulations which, in the judgment of the Company or in the reasonable opinion
of the Representatives or counsel for the Underwriters, would require the making
of any change in the Prospectus then being used so that the Prospectus would not
include an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading, or if
it is necessary at any time to amend or supplement the Prospectus to comply with
the Securities Act and the Securities Act Regulations and, during such time, to
promptly prepare and furnish to the Underwriters copies of the proposed
amendment or supplement before filing any such amendment or supplement with the
Commission and thereafter promptly furnish at the Company's own expense to the
Underwriters and to dealers, copies in such quantities and at such locations as
the Representatives may from time to time reasonably request of an appropriate
amendment to the Registration Statement or supplement to the Prospectus so that
the Prospectus as so amended or supplemented will not, in the light of the
circumstances when it is so delivered, be misleading, or so that the Prospectus
will comply with the Securities Act and the Securities Act Regulations;
(h) to file promptly with the Commission any amendment to the Registration
Statement or the Prospectus or any supplement to the Prospectus that may, in the
judgment of the Company or the Representatives, be required by the Securities
Act or requested by the Commission;
(i) prior to filing with the Commission any amendment to the Registration
Statement or supplement to the Prospectus or any Prospectus pursuant to Rule 424
under the Securities Act, to furnish a copy thereof to the Underwriters and
counsel for the Underwriters and obtain the consent of the Representatives to
the filing;
(j) to furnish promptly to the Representatives a signed copy of the
Registration Statement, as initially filed with the Commission, and of all
amendments or supplements thereto (including all exhibits filed therewith or
incorporated by reference therein);
-24-
(k) during the period referred to in paragraph (g) above, to furnish to the
Representatives, not less than two full business days before filing with the
Commission, a copy of any document proposed to be filed with the Commission
pursuant to Section 13, 14, or 15(d) of the Exchange Act and during such period
to file all such documents in the manner and within the time periods required by
the Exchange Act and the Exchange Act Regulations;
(l) to apply the net proceeds of the sale of the Shares in accordance with
the statements under the caption "Use of Proceeds" in the Prospectus;
(m) to make generally available to its security holders and to deliver to
the Representatives as soon as practicable, but in any event not later than the
end of the fiscal quarter first occurring after the first anniversary of the
effective date of the Registration Statement, an earnings statement complying
with the provisions of Section 11(a) of the Securities Act (in such form, at the
option of the Company, as complies with the provisions of Rule 158 of the
Securities Act Regulations) covering a period of 12 months beginning after the
effective date of the Registration Statement;
(n) to use its best efforts to maintain the listing of the Shares and the
FBR Restricted Shares on the NYSE and to file with the New York Stock Exchange
all documents and notices required by the NYSE of companies that have securities
that are listed on the NYSE;
(o) to engage and maintain, at its expense, a registrar and transfer agent
for the Common Stock;
(p) not to take, directly or indirectly, any action which is designed to or
which has constituted or which might reasonably be expected to cause or result
in stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of the Shares;
(q) in connection with the offer and sale of the Shares, not to offer
shares of Common Stock or any other securities convertible into or exchangeable
or exercisable or redeemable for Common Stock in a manner in violation of the
Securities Act;
(r) not to distribute any prospectus or other offering material, other than
the Preliminary Prospectus and the Prospectus, in connection with the offer and
sale of the Shares;
(s) to cause each of the Company and the Private REIT to properly and
timely elect to be taxed as a REIT under the Code commencing with the taxable
year ended December 31, 2004;
(t) to refrain during a period of 180 days from the date of the Prospectus,
without the prior written consent of Friedman, Billings, Xxxxxx & Co., Inc.,
from, directly or indirectly, (1) offering, pledging, selling, contracting to
sell, selling any option
-25-
or contract to purchase, purchasing any option or contract to sell, granting any
option for the sale of, or otherwise disposing of or transferring (or entering
into any transaction or device which is designed to, or could be expected to,
result in the disposition by any person at any time in the future of), any share
of Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock, or filing any registration statement under the
Securities Act with respect to any of the foregoing (other than any registration
statement on Form S-8 with respect to grants of stock options, restricted stock,
LTIP Units or other stock-based awards to employees, co-employees of the Company
and NCIC, consultants or directors pursuant to an employee benefit plan in
existence on the date hereof and described in the Prospectus), or (2) entering
into any swap or any other agreement or any transaction that transfers, in whole
or in part, directly or indirectly, the economic consequence of ownership of the
Common Stock, whether any such swap or transaction described in clause (1) or
(2) above is to be settled by delivery of Common Stock or such other securities,
in cash or otherwise. The foregoing sentence shall not apply to (A) the Shares
and the FBR Restricted Shares to be issued hereunder, (B) any shares of Common
Stock issued by the Company upon the exercise of an option outstanding on the
date hereof and referred to in the Prospectus, or (C) grants of stock options,
restricted stock or LTIP Units to employees, co-employees of the Company and
NCIC, consultants or directors of the Company pursuant to an employee benefit
plan of the Company in existence on the date hereof and described in the
Prospectus, provided that the grantees thereof agree not to sell, offer, dispose
of or otherwise transfer any such stock options (or the shares underlying such
options), restricted stock or LTIP Units or Common Stock during such 180-day
period without the prior written consent of Friedman, Billings, Xxxxxx & Co.,
Inc. on behalf of the Underwriters;
(u) not to, and to use its best efforts to cause its officers, directors
and affiliates not to, (1) take, directly or indirectly prior to termination of
the underwriting syndicate contemplated by this Agreement, any action designed
to stabilize or manipulate the price of any security of the Company, or which
may cause or result in, or which might in the future reasonably be expected to
cause or result in, the stabilization or manipulation of the price of any
security of the Company, to facilitate the sale or resale of any of the Shares,
(2) sell, bid for, purchase or, except as provided herein or in the letter
agreement, dated as of October 30, 2003, between the Company and Friedman,
Billings, Xxxxxx & Co., Inc. (the "Engagement Letter"), pay anyone any
compensation for soliciting purchases of the Shares or (3) pay or agree to pay
to any person any compensation for soliciting any order to purchase any other
securities of the Company;
(v) to cause each stockholder, officer and director of the Company (other
than purchasers of the Shares) to furnish to the Representatives, prior to the
Closing Time, a letter or letters, substantially in the form of Exhibit A
hereto, pursuant to which each such person shall agree not to, directly or
indirectly, (1) offer for sale, sell, pledge or otherwise dispose of (or enter
into any transaction or device which is designed to, or could be expected to,
result in the disposition by any person at any time in the future of) any shares
of Common Stock or securities convertible into or exchangeable for Common Stock
or (2) enter into any swap or other derivatives transaction that transfers to
another, in whole
-26-
or in part, any of the economic benefits or risks of ownership of such shares of
Common Stock, whether any such transaction described in clause (1) or (2) above
is to be settled by delivery of Common Stock or other securities, in cash or
otherwise, in the case of NCIC and the Transferors, for a period of 365 days
from the date of the Prospectus, and in each other case for a period of 180 days
from the date of the Prospectus, without the prior written consent of Friedman,
Billings, Xxxxxx & Co., Inc. on behalf of the Underwriters, and to direct the
transfer agent for the Common Stock to place stop transfer restrictions upon
such securities for such periods of time and to refrain from taking any actions
which could impede the ability of the Representatives to enforce the provisions
of such letter or letters;
(w) that the Engagement Letter, except for Sections 1, 4(a), 4(b) and 7
thereof and, only to the extent that the matters covered thereby are covered and
therefore superceded by Section 9 hereof, Appendix I thereto, shall survive the
execution and delivery of this Agreement to the extent not inconsistent herewith
and the consummation of the transactions contemplated herein;
(x) that the Company will comply with all of the provisions of any
undertakings in the Registration Statement and will file with the Commission
such reports as may be required pursuant to Rule 463 of the Securities Act
Regulations;
(y) that the Company and the Operating Partnership will use their best
efforts to allow each of the Company and the Private REIT to meet the
requirements to qualify as a REIT under the Code until the respective Board of
Directors of the Company or the Private REIT determines that it is no longer in
the best interests of the Company or the Private REIT, as the case may be, to
qualify as a REIT;
(z) that the Company and the Operating Partnership will use their best
efforts not to invest, or otherwise use the net proceeds received from the sale
of the Shares, in such a manner as would require the Company or any of its
subsidiaries to register as an investment company under the Investment Company
Act; and
(aa) that, in connection with the Directed Share Program, the Company will
(1) comply with all applicable securities and other applicable laws, rules and
regulations, including, without limitation, the rules and regulations of the
NASD, in each jurisdiction in which the Directed Shares are offered in
connection with the Directed Share Program, (2) pay any stamp duties, similar
taxes or duties or other taxes, if any, incurred by the Underwriters in
connection with the Directed Share Program, (3) ensure that the Directed Shares
will be restricted from sale, transfer, assignment, pledge or hypothecation (A)
to the extent required by the NASD or NASD rules and (B) in the case of the
directors, executive officers and stockholders of five percent (5%) or more of
the Company, for a minimum period of 180 days following the date of the
Prospectus; and that the Company will direct the transfer agent for the Common
Stock to place stop transfer restrictions upon such securities for such period
of time; and that, should the Company release, or seek to release, from such
restrictions any of the Directed Shares, the Company agrees to
-27-
reimburse the Underwriters for any reasonable expenses (including, without
limitation, legal expenses) they incur in connection with such release.
5. Payment of Expenses:
(a) The Company and the Operating Partnership agree to pay all costs and
expenses incident to the performance of their obligations under this Agreement,
whether or not the transactions contemplated hereunder are consummated or this
Agreement is terminated, including expenses, fees and taxes in connection with
(i) the preparation and filing of the Registration Statement, each Preliminary
Prospectus, the Prospectus, and any amendments or supplements thereto, and the
printing and furnishing of copies of each thereof to the Underwriters and to
dealers (including costs of mailing and shipment), (ii) the preparation,
issuance and delivery of the certificates for the Shares to the Underwriters,
including any stock or other transfer taxes or duties payable upon the sale of
the Shares to the Underwriters, (iii) the printing of this Agreement and any
dealer agreements and furnishing of copies of each to the Underwriters and to
dealers (including costs of mailing and shipment), (iv) the qualification of the
Shares for offering and sale under state laws that the Company and the
Representatives have mutually agreed are appropriate and the determination of
their eligibility for investment under state law as aforesaid, including the
filing fees and other disbursements of counsel for the Underwriters relating
thereto, and the printing and furnishing of copies of any blue sky surveys or
legal investment surveys to the Underwriters and to dealers, (v) filing for
review of the public offering of the Shares by the NASD, including the filing
fees and other disbursements of counsel for the Underwriters relating thereto,
(vi) the fees and expenses of any outside counsel and accountants for the
Company, any transfer agent or registrar for the Shares and miscellaneous
expenses of the Company referred to in the Registration Statement, (vii) the
fees and expenses incurred in connection with the listing of the Shares on the
NYSE, (viii) the costs and expenses of the road show (but excluding the costs
and expenses of travel and accommodations for the Underwriters), (ix) preparing
and distributing one set of bound volumes of transaction documents to each of
Friedman, Billings, Xxxxxx & Co., Inc. and its legal counsel and (x) the
performance of the Company's and the Operating Partnership's other obligations
hereunder. The travel and accommodation expenses of the Underwriters and their
counsel shall not be borne by or reimbursed by the Company. Upon the request of
the Representatives, the Company will provide funds in advance for filing fees.
(b) The Company agrees to reimburse Friedman, Billings, Xxxxxx & Co., Inc.
for the fees and expenses of the Underwriters' outside legal counsel up to a
maximum amount of $500,000 (or, in the event this Agreement is terminated, up to
a maximum amount of $250,000).
6. Conditions of the Underwriters' Obligations:
The obligations of the Underwriters hereunder to purchase Shares at the
Closing Time or on each Date of Delivery, as applicable, are subject to the
accuracy of the representations and warranties on the part of the Company, the
Operating Partnership,
-28-
NCIC and NPLP hereunder on the date hereof and at the Closing Time and on each
Date of Delivery, as applicable, the performance by the Company, the Operating
Partnership, NCIC and NPLP of their respective obligations hereunder and to the
satisfaction of the following further conditions at the Closing Time or on each
Date of Delivery, as applicable:
(a) The Company shall furnish to the Underwriters at the Closing Time and
on each Date of Delivery an opinion of Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP,
counsel for the Company and the Subsidiaries, addressed to the Underwriters and
dated the Closing Time and each Date of Delivery and in form and substance
satisfactory to King & Spalding LLP, counsel for the Underwriters, as set forth
in Exhibits B and C hereto.
(b) The Company shall furnish to the Underwriters at the Closing Time and
on each Date of Delivery an opinion of Xxxxxxx LLP, special Maryland counsel for
the Company, addressed to the Underwriters and dated the Closing Time and each
Date of Delivery and in form and substance satisfactory to King & Spalding LLP,
counsel for the Underwriters, stating that:
(i) the Company, NCIC and the Private REIT have been duly incorporated
or organized and are validly existing and in good standing with the State
Department of Assessments and Taxation of Maryland with the corporate power
and authority to own their respective properties and to conduct their
respective businesses as described in the Prospectus;
(ii) each of the Company and NCIC has corporate power to enter into
and perform this Agreement and the Formation Agreements (to the extent a
party thereto) and to consummate the transactions contemplated herein or
therein; this Agreement and the Formation Agreements have been duly
authorized, executed and, so far as is known to such counsel, delivered by
each of the Company and NCIC (to the extent a party thereto);
(iii) the issuance of the Shares has been duly authorized and when the
Shares have been issued and duly delivered against payment therefor as
contemplated by this Agreement, the Shares will be validly issued, fully
paid and nonassessable and the Underwriters will acquire good and
marketable title to the Shares, free and clear of any pledge, lien,
encumbrance, security interest or other claim arising under Maryland
General Corporation Law in connection with the issuance of the Shares;
(iv) the issuance of the FBR Restricted Shares has been duly
authorized and when the FBR Restricted Shares have been issued and duly
delivered as contemplated by this Agreement, the FBR Restricted Shares will
be validly issued, fully paid and non-assessable and Friedman, Billings,
Xxxxxx & Co., Inc. will acquire good and marketable title to the Shares,
free and clear of any pledge, lien, encumbrance, security interest, or
other claim arising under the Maryland
-29-
General Corporation Law in connection with the issuance of the FBR
Restricted Shares;
(v) the issuance of the shares of restricted Common Stock (the
"Director Restricted Shares") to each non-employee director and the
chairman of the board of the Company as contemplated by the Restricted
Stock Agreements has been duly authorized and when the Director Restricted
Shares have been issued and duly delivered as contemplated by the
Restricted Stock Agreements, the Director Restricted Shares will be validly
issued, fully paid and nonassessable and each such director of the Company
will acquire good and marketable title to his or her respective Director
Restricted Shares, free and clear of any pledge, lien, encumbrance,
security interest or other claim arising under Maryland General Corporation
Law in connection with the issuance of the Director Restricted Shares;
(vi) the statements under the captions "Prospectus Summary -
Restrictions on Ownership of Stock," "Risk Factors - Risks Related to Our
Company - Maryland takeover statutes may prevent a change of our control.
This could depress our stock price," "Risk Factors - Risks Related to Our
Company - Our authorized but unissued common and preferred stock and other
provisions of our charter and bylaws may prevent a change in our control,"
"Investment Policies and Policies with Respect to Certain Activities -
Interested Director, Officer and Employee Transactions," "Management -
Liability and Indemnification of Officers and Directors," "Description of
Stock" and "Important Provisions of Maryland Law and of Our Charter and
Bylaws" in the Registration Statement and the Prospectus, insofar as such
statements constitute summaries of the charter or bylaws of the Company or
Maryland law, constitute accurate summaries thereof in all material
respects;
(vii) the Company has an authorized capitalization as set forth in the
Prospectus under the caption "Capitalization"; the outstanding shares of
stock in the Company and the Private REIT have been duly authorized and are
validly issued, fully paid and nonassessable; the outstanding shares of
common stock of the Private REIT are owned of record by the Operating
Partnership;
(viii) the issuance and sale of the Shares, the FBR Restricted Shares
and the Director Restricted Shares by the Company is not subject to
preemptive or other similar rights arising by operation of law or under the
charter or bylaws of the Company;
(ix) the Shares, the FBR Restricted Shares and the Director Restricted
Shares conform in all material respects to the descriptions thereof
contained in the Registration Statement and Prospectus;
(x) the form of certificate used to represent the Common Stock
complies in all material respects with all applicable statutory
requirements and
-30-
with any applicable requirements of the charter and the bylaws of the
Company; and
(xi) the execution and delivery by the Company and NCIC of this
Agreement and each of the Formation Agreements to which the Company or NCIC
is a party and the consummation by the Company and NCIC of the transactions
contemplated hereby and thereby do not and will not conflict with the
charter or bylaws of the Company or NCIC.
(c) The Representatives shall have received from Ernst & Young LLP, letters
dated, respectively, as of the date of this Agreement, the Closing Time and each
Date of Delivery, as the case may be, addressed to the Representatives, in form
and substance satisfactory to the Representatives, relating to the Historical
Financial Statements of the Covered Entities and the Pro Forma Financial
Statements, and such other matters customarily covered by comfort letters issued
in connection with registered public offerings. In the event that the letters
referred to above set forth any changes in indebtedness, decreases in total
assets or retained earnings or increases in borrowings, it shall be a further
condition to the obligations of the Representatives that (i) 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 (ii)
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 Shares as contemplated by the Registration Statement.
(d) The Representatives shall have received at the Closing Time and on each
Date of Delivery the favorable opinion of King & Spalding LLP, dated the Closing
Time or such Date of Delivery, addressed to the Representatives and in form and
substance satisfactory to the Representatives.
(e) No amendment or supplement to the Registration Statement or Prospectus
shall have been filed to which the Representatives shall have objected in
writing.
(f) Prior to the Closing Time and each Date of Delivery (i) no stop order
suspending the effectiveness of the Registration Statement or any order
preventing or suspending the use of any Preliminary Prospectus or Prospectus
shall have been issued, and no proceedings for such purpose shall have been
initiated or threatened, by the Commission, and no suspension of the
qualification of the Shares for offering or sale in any jurisdiction, or the
initiation or threatening of any proceedings for any of such purposes, shall
have occurred; (ii) all requests for additional information on the part of the
Commission shall have been complied with to the reasonable satisfaction of the
Representatives; and (iii) the Registration Statement does not contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading and
the Prospectus, as of its date and as of the Closing Time or such Date of
Delivery, as the case may be, does not contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein, in the light of the circumstances under which
-31-
they were made, not misleading; provided, however, in each case, that the
Company makes no warranty or representation with respect to any statement
contained in the Registration Statement or the Prospectus or any amendment or
supplement to any of the foregoing in reliance upon and in conformity with the
information concerning the Underwriters and furnished in writing by or on behalf
of the Underwriters through the Representatives to the Company expressly for use
in the Registration Statement or the Prospectus (that information being limited
to that described in the penultimate sentence of the first paragraph of Section
9(b) hereof).
(g) All filings with the Commission required by Rule 424 and Rule 430A
under the Securities Act to have been filed by the Closing Time shall have been
made within the applicable time period prescribed for such filing by such Rules.
(h) Between the time of execution of this Agreement and the Closing Time or
the relevant Date of Delivery, (i) there shall not have been any Material
Adverse Change, and (ii) no transaction which is material and unfavorable to the
Company shall have been entered into by the Company or any of the Closing
Subsidiaries, in each case, which in the Representatives' sole judgment, makes
it impracticable or inadvisable to proceed with the public offering of the
Shares as contemplated by the Registration Statement.
(i) At the Closing Time, each of the Formation Agreements shall have been
executed and delivered by the Company, the Operating Partnership, NCIC and the
Transferors (to the extent a party thereto).
(j) The Shares shall have been approved for listing on the NYSE.
(k) The NASD shall not have raised any objection with respect to the
fairness and reasonableness of the underwriting terms and arrangements.
(l) The Representatives shall have received lock-up agreements from each
officer, director and stockholder of the Company as provided in Section 4(v), in
the form of Exhibit A attached hereto, and such letter agreements shall be in
full force and effect.
(m) The Representatives shall have received, at the Closing Time and on
each Date of Delivery, a certificate of the Company's Chief Executive Officer
and Chief Financial Officer, 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 Closing Time or such Date of Delivery, as applicable, and the
Company and the Operating Partnership have complied with all of their
respective obligations hereunder and satisfied all of the conditions on
their part to be performed or satisfied at or prior to the Closing Time or
such Date of Delivery, as applicable;
(ii) no stop order suspending the effectiveness of the Registration
Statement or any post-effective amendment thereto has been issued and no
-32-
proceedings for that purpose have been instituted or are pending or
threatened under the Securities Act;
(iii) at the time Registration Statement was declared effective and,
giving effect to any amendments or supplements thereto, all times
subsequent thereto up to the Closing Date or such Date of Delivery, as
applicable, the Registration Statement and Prospectus contained all
material information required to be included therein by the Securities Act
and the Securities Act Regulations and in all material respects conformed
to the requirements of the Securities Act and the Securities Act
Regulations; the Registration Statement, as of its effective date, did not
and, as of the Closing Time or such Date of Delivery, as applicable, does
not contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading and the Prospectus, as of its date, did
not and, as of the Closing Time or the Date of Delivery, as applicable,
does not contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, provided, however, in each case, that the Company
makes no warranty or representation with respect to any statement contained
in the Registration Statement or the Prospectus or any amendment or
supplement to any of the foregoing in reliance upon and in conformity with
the information concerning the Underwriters and furnished in writing by or
on behalf of the Underwriters through the Representatives to the Company
expressly for use in the Registration Statement or the Prospectus (that
information being limited to that described in the penultimate sentence of
the first paragraph of Section 9(b) hereof); and since the effective date
of the Registration Statement, there has occurred no event required to be
set forth in an amendment or supplemented Prospectus which has not been so
set forth; and
(iv) subsequent to the respective dates as of which information is
given in the Registration Statement and Prospectus, there has not been (A)
any Material Adverse Change, (B) any transaction that is material to the
Consolidated Company (other than the Formation Transactions) (C) any
obligation, direct or contingent, that is material to the Consolidated
Company, incurred by the Company or the Closing Subsidiaries, (D) any
change in the capital stock or outstanding indebtedness of the Company or
any Closing Subsidiary that is material to the Consolidated Company, (E)
any dividend or distribution of any kind declared, paid or made on the
capital stock or other equity interests of the Company or any Closing
Subsidiary, or (F) any loss or damage (whether or not insured) to the
Properties which has been sustained or will have been sustained which could
reasonably be expected to have a Material Adverse Effect.
(n) The Representatives shall have received, at the Closing Time and on
each Date of Delivery, a certificate of NCIC's Chief Executive Officer and Chief
Financial Officer, to the effect that:
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(i) the representations and warranties of NCIC and NPLP in this
Agreement are true and correct, as if made on and as of the Closing Time or
such Date of Delivery, as applicable, and NCIC and the Transferors have
complied with all of their respective obligations hereunder and satisfied
all of the conditions on their part to be performed or satisfied at or
prior to the Closing Time or such Date of Delivery, as applicable; and
(ii) subsequent to the respective dates as of which information is
given in the Registration Statement and Prospectus, there has not been (A)
any Material Adverse Change, (B) any transaction that is material to the
Consolidated Company (other than the Formation Transactions) (C) any
obligation, direct or contingent, that is material to the Consolidated
Company, incurred by the Company or the Closing Subsidiaries, (D) any
change in the capital stock or outstanding indebtedness of the Company or
any Closing Subsidiary that is material to the Consolidated Company, (E)
any dividend or distribution of any kind declared, paid or made on the
capital stock or other equity interests of the Company or any Closing
Subsidiary, or (F) any loss or damage (whether or not insured) to the
Properties which has been sustained or will have been sustained which could
reasonably be expected to have a Material Adverse Effect.
(o) The Company, the Operating Partnership, NCIC and NPLP shall have
furnished to the Underwriters such other documents and certificates as to the
accuracy and completeness of any statement in the Registration Statement and the
Prospectus, the representations, warranties and statements of the Company, the
Operating Partnership, NCIC and NPLP contained herein, and the performance by
the Company, the Operating Partnership, NCIC and NPLP of their covenants
contained herein, and the fulfillment of any conditions contained herein, as of
the Closing Time or any Date of Delivery, as the Underwriters may reasonably
request.
7. Termination:
The obligations of the several Underwriters hereunder shall be subject to
termination in the absolute discretion of the Representatives, at any time prior
to the Closing Time or any Date of Delivery, (a) if any of the conditions
specified in Section 6 shall not have been fulfilled when and as required by
this Agreement to be fulfilled, or (b) if there has been since the respective
dates as of which information is given in the Registration Statement, any
Material Adverse Change, or any development involving a prospective Material
Adverse Change, or material change in management of the Company or any Closing
Subsidiary, whether or not arising in the ordinary course of business, or (c) if
there has occurred any outbreak or escalation of hostilities or other national
or international calamity or crisis (including, without limitation, any
terrorist or similar attack) or change in national or international economic,
political or other conditions the effect of which on the financial markets of
the United States is such as to make it, in the judgment of the Representatives,
impracticable to market the Shares or enforce contracts for the sale of the
Shares, or (d) if trading in any securities of the
-34-
Company has been suspended by the Commission or by the NYSE, or if trading
generally on the NYSE, the American Stock Exchange or in the Nasdaq
over-the-counter market has been suspended (including an automatic halt in
trading pursuant to market-decline triggers, other than those in which solely
program trading is temporarily halted), or limitations on prices for trading
(other than limitations on hours or numbers of days of trading) have been fixed,
or maximum ranges for prices for securities have been required, by such exchange
or the NASD or the over-the-counter market or by order of the Commission or any
other governmental authority, or (e) a general banking moratorium shall have
been declared by any federal, Maryland or New York authority or (f) if there has
been any downgrade in the rating of any of the Company's debt securities or
preferred stock by any "nationally recognized statistical rating organization"
(as defined for purposes of Rule 436(g) under the Securities Act), or (g) any
federal, state, local or foreign statute, regulation, rule or order of any court
or other governmental authority has been enacted, published, decreed or
otherwise promulgated which, in the reasonable opinion of the Representatives,
materially adversely affects or will materially adversely affect the business or
operations of the Consolidated Company, or (h) any action has been taken by any
federal, state or local government or agency in respect of its monetary or
fiscal affairs which, in the reasonable opinion of the Representatives, could
reasonably be expected to have a material adverse effect on the securities
markets in the United States.
If the Representatives elect to terminate this Agreement as provided in
this Section 7, the Company, NCIC and the Underwriters shall be notified
promptly by telephone, promptly confirmed by facsimile.
If the sale to the Underwriters of the Shares, as contemplated by this
Agreement, is not carried out by the Underwriters for any reason permitted under
this Agreement or if such sale is not carried out because the Company shall be
unable to comply in all material respects with any of the terms of this
Agreement, the Company shall not be under any obligation or liability under this
Agreement (except to the extent provided in Sections 5 and 9 hereof) and the
Underwriters shall be under no obligation or liability to the Company under this
Agreement (except to the extent provided in Section 9 hereof) or to one another
hereunder.
8. Increase in Underwriters' Commitments:
If any Underwriter shall default at the Closing Time or on any Date of
Delivery in its obligation to take up and pay for the Shares to be purchased by
it under this Agreement on such date, the Representatives shall have the right,
within 48 hours after such default, to make arrangements for one or more of the
non-defaulting Underwriters, or any other underwriters, to purchase all, but not
less than all, of the Shares which such Underwriter shall have agreed but failed
to take up and pay for (the "Defaulted Shares"). Absent the completion of such
arrangements within such 48-hour period, (a) if the total number of Defaulted
Shares does not exceed 10% of the total number of Shares to be purchased on such
date, each non-defaulting Underwriter shall take up and pay for (in addition to
the number of Shares which it is otherwise obligated to purchase on such date
-35-
pursuant to this Agreement) the portion of the total number of Shares agreed to
be purchased by the defaulting Underwriter on such date in the proportion that
its underwriting obligations hereunder bears to the underwriting obligations of
all non-defaulting Underwriters; and (b) if the total number of Defaulted Shares
exceeds 10% of such total, the Representatives may terminate this Agreement by
notice to the Company, without liability of any party to any other party except
that the provisions of Sections 5 and 9 hereof shall at all times be effective
and shall survive such termination.
Without relieving any defaulting Underwriter from its obligations
hereunder, the Company agrees with the non-defaulting Underwriters that it will
not sell any Shares hereunder on such date unless all of the Shares to be
purchased on such date are purchased on such date by the Underwriters (or by
substituted Underwriters selected by the Representatives with the approval of
the Company or selected by the Company with the approval of the
Representatives).
If a new Underwriter or Underwriters are substituted for a defaulting
Underwriter in accordance with the foregoing provision, the Company or the
non-defaulting Underwriters shall have the right to postpone the Closing Time or
the relevant Date of Delivery for a period not exceeding five business days in
order that any necessary changes in the Registration Statement and Prospectus
and other documents may be effected.
The term "Underwriter" as used in this Agreement shall refer to and include
any Underwriter substituted under this Section 8 with the same effect as if such
substituted Underwriter had originally been named in this Agreement.
9. Indemnity and Contribution by the Company, the Operating Partnership,
NCIC, NPLP and the Underwriters:
(a) (i) The Company and the Operating Partnership, jointly and
severally, agree to indemnify, defend and hold harmless each Underwriter
and any person who controls any Underwriter within the meaning of Section
15 of the Securities Act or Section 20 of the Exchange Act, from and
against any loss, expense, liability, damage or claim (including the
reasonable cost of investigation) which, jointly or severally, any such
Underwriter or controlling person may incur under the Securities Act, the
Exchange Act or otherwise, insofar as such loss, expense, liability, damage
or claim arises out of or is based upon (1) any breach of any
representation, warranty or covenant of the Company or the Operating
Partnership contained herein, (2) any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement (or in
the Registration Statement as amended by any post-effective amendment
thereof by the Company) or the Prospectus (the term Prospectus for the
purpose of this Section 9 being deemed to include the Preliminary
Prospectus and the Prospectus as of their respective dates and as amended
or supplemented by the Company), or (3) any omission or alleged omission to
state a material fact required to be stated in any such Registration
Statement or Prospectus or necessary to make the statements made therein
(with respect to the Prospectus only, in the light of the circumstances
-36-
under which they were made) not misleading; except, in the case of each of
clauses (2) and (3), insofar as any such loss, expense, liability, damage
or claim arises out of or is based upon (A) any untrue statement or alleged
untrue statement of a material fact or any omission or alleged omission of
a material fact required to be stated therein or necessary to make the
statements therein (in the case of the Prospectus, in the light of the
circumstances under which they were made) not misleading, in each such
case, to the extent contained in and in conformity with information
furnished in writing by such Underwriter through the Representatives to the
Company expressly for use in the Registration Statement (or in the
Registration Statement as amended by any post-effective amendment thereof
by the Company) or the Prospectus (that information being limited to that
described in Section 9(b) hereof), or (B) the failure by or on behalf of
the Underwriters to send or give a copy of the Prospectus, dated as of the
date of this Agreement and any further amendments or supplements thereto,
to the person asserting any untrue statement or alleged untrue statement of
a material fact or any omission or alleged omission of a material fact
required to be stated therein or necessary to make the statements therein
(in the case of the Prospectus, in the light of the circumstances under
which they were made) not misleading at or prior to the written
confirmation of the sale of Shares to such person if such statement or
omission was corrected in the Prospectus, dated as of the date of this
Agreement and any further amendments or supplements thereto, unless such
failure to deliver the Prospectus, dated as of the date of this Agreement
and any further amendments or supplements thereto, was a result of
noncompliance by the Company with its obligations under this Agreement. The
indemnity agreement set forth in this Section 9(a)(i) shall be in addition
to any liability which the Company and the Operating Partnership may
otherwise have.
(ii) NCIC and NPLP, jointly and severally, agree to indemnify, defend
and hold harmless each Underwriter and any person who controls any
Underwriter within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act, from and against any loss, expense,
liability, damage or claim (including the reasonable cost of investigation)
which, jointly or severally, any such Underwriter or controlling person may
incur under the Securities Act, the Exchange Act or otherwise, insofar as
such loss, expense, liability, damage or claim arises out of or is based
upon any breach of any representation, warranty or covenant of NCIC or NPLP
contained herein.
(iii) From the date of this Agreement to the Closing Time (it being
expressly understood and agreed that this Section 9(a)(iii) shall terminate
in its entirety at the Closing Time and that each Underwriter and any
person who controls any Underwriter within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act shall rely on Sections
9(a)(i) and 9(a)(ii) with respect to any claims for indemnification arising
under this Agreement after the Closing Time), NCIC and NPLP, jointly and
severally, agree to indemnify, defend and hold harmless each Underwriter
and any person who controls any Underwriter
-37-
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act, from and against any loss, expense, liability, damage or
claim (including the reasonable cost of investigation) which, jointly or
severally, any such Underwriter or controlling person may incur under the
Securities Act, the Exchange Act or otherwise, insofar as such loss,
expense, liability, damage or claim arises out of or is based upon (1) any
breach of any representation, warranty or covenant of the Company or the
Operating Partnership contained herein, (2) any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement
(or in the Registration Statement as amended by any post-effective
amendment thereof by the Company) or the Prospectus (the term Prospectus
for the purpose of this Section 9 being deemed to include the Preliminary
Prospectus and the Prospectus as of its date and as amended or supplemented
by the Company), or (3) any omission or alleged omission to state a
material fact required to be stated in any such Registration Statement or
Prospectus or necessary to make the statements made therein (with respect
to the Prospectus only, in the light of the circumstances under which they
were made) not misleading, except, in the case of each of clauses (2) and
(3), insofar as any such loss, expense, liability, damage or claim arises
out of or is based upon (A) any untrue statement or alleged untrue
statement of a material fact or any omission or alleged omission of a
material fact required to be stated therein or necessary to make the
statements therein (in the case of the Prospectus, in the light of the
circumstances under which they were made) not misleading, in each such
case, to the extent contained in and in conformity with information
furnished in writing by such Underwriter through the Representatives to the
Company expressly for use in the Registration Statement (or in the
Registration Statement as amended by any post-effective amendment thereof
by the Company) or the Prospectus (that information being limited to that
described in Section 9(b) hereof), or (B) the failure by or on behalf of
the Underwriters to send or give a copy of the Prospectus, dated as of the
date of this Agreement and any further amendments or supplements thereto,
to the person asserting any untrue statement or alleged untrue statement of
a material fact or any omission or alleged omission of a material fact
required to be stated therein or necessary to make the statements therein
(in the case of the Prospectus, in the light of the circumstances under
which they were made) not misleading at or prior to the written
confirmation of the sale of Shares to such person if such statement or
omission was corrected in the Prospectus, dated as of the date of this
Agreement and any further amendments or supplements thereto, unless such
failure to deliver the Prospectus, dated as of the date of this Agreement
and any further amendments or supplements thereto, was a result of
noncompliance by the Company with its obligations under this Agreement.
The indemnity agreements set forth in paragraphs (ii) and (iii) in
this Section 9(a) shall be in addition to any liability which NCIC and NPLP
may otherwise have.
-38-
(iv) If any action is brought against an Underwriter or controlling
person in respect of which indemnity may be sought against the Company, the
Operating Partnership, NCIC or NPLP pursuant to the foregoing paragraphs
(i), (ii) or (iii) of this Section 9(a), such Underwriter shall promptly
notify the Company, the Operating Partnership, NCIC or NPLP, as the case
may be, in writing of the institution of such action, and the Company, the
Operating Partnership, NCIC or NPLP, as the case may be, shall assume the
defense of such action, including the employment of counsel and payment of
expenses; provided, however, that any failure or delay to so notify the
Company, the Operating Partnership, NCIC or NPLP, as the case may be, will
not relieve the Company, the Operating Partnership, NCIC or NPLP of any
obligation hereunder, except to the extent that their ability to defend is
actually impaired by such failure or delay. Such Underwriter or controlling
person shall have the right to employ its or their own counsel in any such
case, but the fees and expenses of such counsel shall be at the expense of
such Underwriter or such controlling person unless the employment of such
counsel shall have been authorized in writing by the Company, the Operating
Partnership, NCIC or NPLP, as the case may be, in connection with the
defense of such action, or the Company, the Operating Partnership, NCIC or
NPLP, as the case may be, shall not have employed counsel reasonably
satisfactory to the Underwriter or controlling person, as the case maybe,
to have charge of the defense of such action within a reasonable time or
such indemnified party or parties shall have reasonably concluded (based on
the advice of counsel) that there may be defenses available to it or them
which are different from or additional to those available to the Company,
the Operating Partnership, NCIC or NPLP (in which case none of the Company,
the Operating Partnership, NCIC or NPLP shall have the right to direct the
defense of such action on behalf of the indemnified party or parties), in
any of which events such fees and expenses shall be borne by the Company,
the Operating Partnership, NCIC or NPLP, as the case may be, and paid as
incurred (it being understood, however, that none of the Company, the
Operating Partnership, NCIC or NPLP shall be liable for the expenses of
more than one separate firm of attorneys for the Underwriters or
controlling persons in any one action or series of related actions in the
same jurisdiction (other than local counsel in any such jurisdiction)
representing the indemnified parties who are parties to such action).
Anything in this paragraph to the contrary notwithstanding, none of the
Company, the Operating Partnership, NCIC or NPLP shall be liable for any
settlement of any such claim or action effected without its consent.
(b) Each Underwriter agrees, severally and not jointly, to indemnify,
defend and hold harmless the Company, the Operating Partnership, NCIC, NPLP, the
Company's directors, the Company's officers that signed the Registration
Statement, and any person who controls the Company within the meaning of Section
15 of the Securities Act or Section 20 of the Exchange Act, from and against any
loss, expense, liability, damage or claim (including the reasonable cost of
investigation) which, jointly or severally, the Company, the Operating
Partnership, NCIC, NPLP or any such person may incur under
-39-
the Securities Act, the Exchange Act or otherwise, but only insofar as such
loss, expense, liability, damage or claim arises out of or is based upon (A) any
untrue statement or alleged untrue statement of a material fact contained in and
in conformity with information furnished in writing by such Underwriter through
the Representatives to the Company expressly for use in the Registration
Statement (or in the Registration Statement as amended by any post-effective
amendment thereof by the Company) or the Prospectus, or (B) any omission or
alleged omission to state a material fact in connection with such information
required to be stated in any such Registration Statement or the Prospectus or
necessary to make such information (with respect to the Prospectus only, in the
light of the circumstances under which made) not misleading. The statements set
forth in the table in the first paragraph, the first two sentences of the
seventh paragraph, the eleventh through seventeenth paragraphs and the
twenty-first paragraph under the caption "Underwriting" in the Prospectus (to
the extent such statements relate to the Underwriters) constitute the only
information furnished by or on behalf of any Underwriter through the
Representatives to the Company for purposes of Section 3(a)(xx) and this Section
9. The indemnity agreement set forth in this Section 9(b) shall be in addition
to any liabilities that such Underwriter may otherwise have.
If any action is brought against the Company, the Operating Partnership,
NCIC, NPLP or any such person in respect of which indemnity may be sought
against any Underwriter pursuant to the foregoing paragraph, the Company, the
Operating Partnership, NCIC, NPLP or such person shall promptly notify the
Representatives in writing of the institution of such action and the
Representatives, on behalf of the Underwriters, shall assume the defense of such
action, including the employment of counsel and payment of expenses. The
Company, the Operating Partnership, NCIC, NPLP or such person shall have the
right to employ its own counsel in any such case, but the fees and expenses of
such counsel shall be at the expense of the Company, the Operating Partnership,
NCIC, NPLP or such person unless the employment of such counsel shall have been
authorized in writing by the Representatives in connection with the defense of
such action or the Representatives shall not have employed counsel to have
charge of the defense of such action within a reasonable time or such
indemnified party or parties shall have reasonably concluded (based on the
advice of counsel) that there may be defenses available to it or them which are
different from or additional to those available to the Underwriters (in which
case the Representatives shall not have the right to direct the defense of such
action on behalf of the indemnified party or parties), in any of which events
such fees and expenses shall be borne by such Underwriter and paid as incurred
(it being understood, however, that the Underwriters shall not be liable for the
expenses of more than one separate firm of attorneys in any one action or series
of related actions in the same jurisdiction (other than local counsel in any
such jurisdiction) representing the indemnified parties who are parties to such
action). Anything in this paragraph to the contrary notwithstanding, no
Underwriter shall be liable for any settlement of any such claim or action
effected without the written consent of the Representatives.
-40-
(c) If the indemnification provided for in this Section 9 is unavailable or
insufficient to hold harmless an indemnified party under subsections (a) and (b)
of this Section 9 in respect of any losses, expenses, liabilities, damages or
claims referred to therein, then each applicable indemnifying party, in lieu of
indemnifying such indemnified party, shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, expenses,
liabilities, damages or claims (i) in such proportion as is appropriate to
reflect, as applicable, (A) the relative benefits received by the Company and
the Operating Partnership on the one hand and by the Underwriters on the other
hand, each from the offering of the Shares, or (B) the relative benefits
received by NCIC and NPLP from the consummation of the Formation Transactions on
the one hand and by the Underwriters from the offering of the Shares on the
other hand, or (ii) if (but only if) the allocation provided by clause (i) above
is not permitted by applicable law, in such proportion as is appropriate to
reflect not only the relative benefits referred to in clause (i) above but also
the relative fault of the Company, the Operating Partnership, NCIC and NPLP on
the one hand and of the Underwriters on the other hand in connection with the
statements or omissions which resulted in such losses, expenses, liabilities,
damages or claims, as well as any other relevant equitable considerations. The
relative benefits received by the Company and the Operating Partnership on the
one hand and by the Underwriters on the other hand shall be deemed to be in the
same proportion as the total proceeds from the offering of the Shares (net of
underwriting discounts and commissions but before deducting expenses) received
by the Company (which, for purposes of this subsection, account for the relative
benefits received by the Company and the Operating Partnership) bear to the
underwriting discounts and commissions received by the Underwriters. The
relative benefits received NCIC and NPLP on the one hand and by the Underwriters
on the other hand shall be deemed to be in the same proportion as the book
value, as of the date of this Agreement, of the OP Units received by the
Transferors (which, for purposes of this subsection, account for the relative
benefits received by NCIC and NPLP) bear to the underwriting discounts and
commissions received by the Underwriters in connection with the offering of the
Shares. The relative fault of the Company and the Operating Partnership or NCIC
and NPLP, as applicable, on the one hand and of the Underwriters on the other
hand shall be determined by reference to, among other things, whether the untrue
statement or alleged untrue statement of a material fact or omission or alleged
omission relates to information supplied by the Company and/or the Operating
Partnership or NCIC and/or NPLP, as applicable, or by the Underwriters and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The amount paid or payable by a
party as a result of the losses, claims, damages and liabilities referred to
above shall be deemed to include any legal or other fees or expenses reasonably
incurred by such party in connection with investigating or defending any claim
or action.
(d) The Company, the Operating Partnership, NCIC, NPLP and the Underwriters
agree that it would not be just and equitable if contribution pursuant to this
Section 9 were determined by pro rata allocation (even if the Underwriters were
treated as one entity for such purpose) or by any other method of allocation
which does not take
-41-
account of the equitable considerations referred to in clause (i) and, if
applicable, clause (ii) of subsection (c) above. Notwithstanding the provisions
of this Section 9, no Underwriter shall be required to contribute any amount in
excess of the underwriting discounts and commissions applicable to the Shares
purchased by such Underwriter. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations to contribute pursuant to this
Section 9 are several in proportion to their respective underwriting commitments
and not joint.
(e) The Company and the Operating Partnership, jointly and severally, agree
to indemnify and hold harmless each Underwriter and its affiliates and each
person, if any, who controls each Underwriter and its affiliates within the
meaning of either Section 15 of the Securities Act or Section 20 of the Exchange
Act, from and against any and all losses, claims, damages and liabilities
(including, without limitation, any legal or other expenses reasonably incurred
in connection with defending or investigating any such action or claim) (i)
caused by any untrue statement or alleged untrue statement of a material fact
contained in any material prepared by or with the approval of the Company for
distribution to participants in connection with the Directed Share Program, or
caused by any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading; (ii) as a result of the failure of any participant to pay for and
accept delivery of Directed Shares that the participant has agreed to purchase;
or (iii) related to, arising out of, or in connection with the Directed Share
Program. Nothing in this paragraph (e) shall be interpreted as limiting or
otherwise modifying the obligations of the Underwriters set forth in Section 8.
10. Survival:
The indemnity and contribution agreements contained in Section 9 and the
covenants, warranties and representations of the Company, the Operating
Partnership, NCIC and NPLP contained in Sections 3, 4 and 5 of this Agreement
shall remain in full force and effect regardless of any investigation made by or
on behalf of any Underwriter, or any person who controls any Underwriter within
the meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act, or by or on behalf of the Company, its directors and officers, the
Operating Partnership, NCIC, NPLP or any person who controls the Company , the
Operating Partnership, NCIC or NPLP within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, and shall survive any
termination of this Agreement or the sale and delivery of the Shares. The
Company, the Operating Partnership, NCIC and NPLP and each Underwriter agree
promptly to notify the others of the commencement of any litigation or
proceeding against it and, in the case of the Company or the Operating
Partnership, against any of their respective officers and directors, in
connection with the sale and delivery of the Shares, or in connection with the
Registration Statement or Prospectus.
-42-
11. Notices:
Except as otherwise herein provided, all statements, requests, notices and
agreements shall be in writing or by telegram and, if to the Underwriters, shall
be sufficient in all respects if delivered to Friedman, Billings, Xxxxxx & Co.,
Inc., 0000 00xx Xxxxxx Xxxxx, Xxxxxxxxx, Xxxxxxxx 00000, Attention: Syndicate
Department; if to the Company or the Operating Partnership, shall be sufficient
in all respects if delivered to the Company at the offices of the Company at 000
Xxxxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000; or if to NCIC or NPLP,
shall be sufficient in all respects if delivered to NCIC at the offices of NCIC
at 000 Xxxxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000.
12. Governing Law; Headings:
THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
The section headings in this Agreement have been inserted as a matter of
convenience of reference and are not a part of this Agreement.
13. Parties at Interest:
The Agreement herein set forth has been and is made solely for the benefit
of the Underwriters, the Company, the Operating Partnership, NCIC, NPLP and the
controlling persons, directors and officers referred to in Sections 9 and 10
hereof, and their respective successors, assigns, executors and administrators.
No other person, partnership, association or corporation (including a purchaser,
as such purchaser, from any of the Underwriters) shall acquire or have any right
under or by virtue of this Agreement.
14. Counterparts and Facsimile Signatures:
This Agreement may be signed by the parties in counterparts which together
shall constitute one and the same agreement among the parties. A facsimile
signature shall constitute an original signature for all purposes.
-43-
If the foregoing correctly sets forth the understanding among the
Company, the Operating Partnership, NCIC, NPLP and the Underwriters, please so
indicate in the space provided below for the purpose, whereupon this Agreement
shall constitute a binding agreement among the Company, the Operating
Partnership, NCIC, NPLP and the Underwriters.
Very truly yours,
NORTHSTAR REALTY FINANCE CORP.
By:
------------------------------
Name:
Title:
NORTHSTAR REALTY FINANCE LIMITED
PARTNERSHIP
By: NorthStar Realty Finance Corp., its
sole general partner
By:
------------------------------
Name:
Title:
NORTHSTAR CAPITAL INVESTMENT CORP.
By:
------------------------------
Name:
Title:
NORTHSTAR PARTNERSHIP, L.P.
By: NorthStar Capital Investment Corp.,
its sole general partner
By:
------------------------------
Name:
Title:
Accepted and agreed to as
of the date first above written:
FRIEDMAN, BILLINGS, XXXXXX & CO., INC.
By:
-------------------------------
Name:
Title:
DEUTSCHE BANK SECURITIES INC.
By:
-------------------------------
Name:
Title:
CREDIT SUISSE FIRST BOSTON LLC
By:
-------------------------------
Name:
Title:
JMP SECURITIES LLC
By:
-------------------------------
Name:
Title:
For themselves and as Representatives of the other
Underwriters named on Schedule I hereto.
Schedule I
Underwriter Number of Initial
-----------
Shares to be Purchased
Friedman, Billings, Xxxxxx & Co., Inc. [ ]
----------
Deutsche Bank Securities Inc. [ ]
----------
Credit Suisse First Boston LLC [ ]
----------
JMP Securities LLC [ ]
----------
Total......................................... 20,000,000
==========
Schedule II
Contributed Subsidiaries
------------------------
ALGM I Owners LLC
1552 Lonsdale LLC
729 Demitasse LLC
ALGM Leasehold II LLC
ALGM Leasehold III LLC
ALGM Leasehold VI LLC
ALGM Leasehold VIII LLC
ALGM Leasehold IX LLC
ALGM Leasehold X LLC
NS Advisors LLC
NS CDO Holdings II, LLC
N-Star Real Estate CDO II Ltd.
NorthStar Funding Managing Member LLC
NorthStar Funding Management LLC
NorthStar Funding Investor Member LLC
NS CDO Holdings I, LLC
N-Star Real Estate CDO I Ltd.
Exhibit A
FORM OF LOCK-UP LETTER
, 2004
---------- ---
Friedman, Billings, Xxxxxx & Co., Inc.
Deutsche Bank Securities Inc.
Credit Suisse First Boston Corporation
JMP Securities LLC
as Representatives of the several Underwriters
c/o Friedman, Billings, Xxxxxx & Co., Inc.
0000 00xx Xxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Dear Sirs:
The undersigned understands that Friedman, Billings, Xxxxxx & Co.,
Inc., Deutsche Bank Securities Inc., Credit Suisse First Boston LLC and JMP
Securities LLC (collectively, the "Representatives") propose to enter into an
Underwriting Agreement (the "Underwriting Agreement"), as Representatives of the
several underwriters named in Schedule I of the Underwriting Agreement (the
"Underwriters"), with NorthStar Realty Finance Corp., a Maryland corporation
(the "Company"), NorthStar Realty Finance Limited Partnership, a Delaware
limited partnership (the "Operating Partnership"), NorthStar Capital Investment
Corp., a Maryland corporation ("NCIC"), and NorthStar Partnership, L.P., a
Delaware limited partnership ("NPLP"), providing for the public offering (the
"Public Offering") by (inter alia) the Underwriters of shares (the "Shares") of
common stock, par value $0.01 per share, of the Company (the "Common Stock").
To induce the Underwriters to continue its efforts in connection with
the Public Offering, the undersigned hereby agrees that, without the prior
written consent of Friedman, Billings, Xxxxxx & Co., Inc., it will not, during
the period commencing on the date hereof and ending on the [180th] [365th] day
anniversary of the date of the final prospectus relating to the Public Offering
(such period, the "Lock-Up Period" and such prospectus, the "Prospectus"), (1)
offer, pledge, sell, loan, contract to sell, sell any option or contract to
purchase, purchase any option or contract to sell, grant any option, right or
warrant to purchase, or otherwise transfer or dispose of, directly or
indirectly, any of the following (whether now owned by the undersigned or
hereafter acquired): (a) Common Stock, (b) any securities convertible into or
exercisable or exchangeable for any shares of Common Stock, including any units
of limited partnership interest ("Units") issued by the Operating Partnership or
(c) any rights to purchase or otherwise acquire Common Stock held by the
undersigned or acquired by the undersigned after the date hereof, or that may be
deemed to be beneficially owned by the undersigned; (2) enter into any swap or
other arrangement that transfers to another, in whole or in part, any of the
economic consequences of ownership of the Common Stock or Units, whether any
such transaction
described in clause (1) or (2) above is to be settled by delivery of Common
Stock or such other securities, in cash or otherwise; or (3) redeem any Units.
The undersigned further agrees that it will not publicly disclose the intention
to make any such offer, sale, pledge, redemption or disposition or to enter into
any transaction described in the preceding sentence during the Lock-Up Period
without, in each case, the prior written consent of Friedman, Billings, Xxxxxx &
Co., Inc. In addition, the undersigned agrees that, without prior written
consent of Friedman, Billings, Xxxxxx & Co., Inc., it will not, during the
Lock-Up Period, make any demand for or exercise any right with respect to, the
registration under the Securities Act of 1933, as amended (the "Securities
Act"), of any shares of Common Stock or any security convertible into or
exercisable or exchangeable for Common Stock.
In furtherance of the foregoing, the Company and its transfer agent and
registrar are hereby authorized to decline to make any transfer that would
constitute a violation or breach of this letter. This letter shall be binding on
the undersigned and the respective successors, heirs, personal representatives
and assigns of the undersigned.
The Company is not a party to or an intended beneficiary of this
lock-up agreement and has no right or obligation to enforce any of its terms.
The parties hereto acknowledge that the preceding sentence is included herein to
ensure compliance with the requirement of Section 856(a)(2) of the Internal
Revenue Code of 1986, as amended (the "Code") that the shares of stock of a
"real estate investment trust" under the Code be transferable.
Whether or not the Public Offering actually occurs depends on a number
of factors, including market conditions. Any Public Offering will only be made
pursuant to an Underwriting Agreement, the terms of which are subject to
agreement between the Company, the Operating Partnership, NCIC, NPLP and the
Representatives. The terms of this lock-up agreement shall expire in the event
the Public Offering is not consummated on or before December 1, 2004.
Very truly yours,
(Printed or Typed Name)
By:
----------------------------------
(SEAL)
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Title:
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Exhibit B-1
Corporate Opinion of Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
[Intentionally Omitted.]
Exhibit B-2
Negative Assurance Letter of Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
[Intentionally Omitted.]
Exhibit C
Tax Opinion of Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
[Intentionally Omitted.]
