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EXHIBIT 1.2
1,075,680 Shares
COMMERCIAL NET LEASE REALTY, INC.
Common Stock
UNDERWRITING AGREEMENT
September 11, 1997
XXXXX XXXXXX INC.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Commercial Net Lease Realty, Inc., a Maryland corporation (the
"Company"), proposes to issue and sell an aggregate of 1,075,680 shares (the
"Firm Shares" or the "Shares") of its common stock, $0.01 par value per share
(the "Common Stock"), to the several Underwriters named in Schedule I hereto
(the "Underwriters"). The Underwriters intend to deposit the Shares with the
trustee of The Equity Focus Trusts -- REIT Portfolio Series, 1997 (the
"Trust"), a registered unit investment trust under the Investment Company Act
of 1940, as amended, to which Xxxxx Xxxxxx Inc. acts as sponsor and depositor,
in exchange for units in the Trust.
The Company wishes to confirm as follows its agreement with the
several Underwriters in connection with the several purchases of the Shares by
the Underwriters.
1. Registration Statement and Prospectus. The Company has prepared and
filed with the Securities and Exchange Commission (the "Commission") in
accordance with the provisions of the Securities Act of 1933, as amended, and
the rules and regulations of the Commission thereunder (collectively, the
"Act"), a registration statement on Form S-3 under the Act (the "registration
statement"), including a prospectus relating to the Offered Securities (as
defined therein), and has filed with, or transmitted for filing to, or shall
promptly hereafter file with or transmit for filing to, the Commission a
supplement to the prospectus included in such registration statement (the
"Prospectus Supplement") specifically relating to the Shares and the plan of
distribution thereof pursuant to Rule 424 under the Act. The term
"Registration Statement" as used in this Agreement means the registration
statement (including all financial schedules and exhibits), as amended to the
date of this Agreement. If it is contemplated, at the time this Agreement is
executed, that a post-effective amendment to the registration statement will be
filed and must be declared effective before the offering of the Shares may
commence, the term "Registration Statement" as used in this Agreement means the
registration statement as amended by said post-effective amendment. The term
"Basic Prospectus" as used in this
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Agreement means the prospectus in the form included in the Registration
Statement. The term "Prospectus" means the Basic Prospectus, as amended or
supplemented by the Prospectus Supplement. The term "Prepricing Prospectus" as
used in this Agreement means a prospectus supplement subject to completion
specifically relating to the Shares which has heretofore been filed with the
Commission, together with the Basic Prospectus. If the Company has filed an
abbreviated registration statement to register additional Shares pursuant to
Rule 462(b) under the Act (including the exhibits thereto, the "Rule 462(b)
Registration Statement"), then any reference herein to the Registration
Statement shall also be deemed to include such Rule 462(b) Registration
Statement. Any reference in this Agreement to the registration statement, the
Registration Statement, the Basic Prospectus, any Prepricing Prospectus or the
Prospectus shall be deemed to refer to and include the documents incorporated
by reference therein pursuant to Item 12 of Form S-3 under the Act, and any
reference to any amendment or supplement to the registration statement, the
Registration Statement, the Basic Prospectus, any Prepricing Prospectus or the
Prospectus shall be deemed to refer to and include any documents filed by the
Company with the Commission after the date of the Basic Prospectus under the
Securities Exchange Act of 1934, as amended (the "Exchange Act") which, upon
filing, are incorporated by reference therein, as required by paragraph (b) of
Item 12 of Form S-3. As used herein, the term "Incorporated Documents" means
the documents which are incorporated by reference in the registration
statement, the Registration Statement, the Basic Prospectus, any Prepricing
Prospectus, the Prospectus, or any amendment or supplement thereto.
2. Agreement to Sell and Purchase. The Company hereby agrees, subject to
all the terms and conditions set forth herein, to issue and sell to each
Underwriter and, upon the basis of the representations, warranties and
agreements of the Company herein contained and subject to all the terms and
conditions set forth herein, each Underwriter agrees, severally and not jointly,
to purchase from the Company, at a purchase price of $15.378125 per Share (the
"purchase price per share"), the number of Firm Shares set forth opposite the
name of such Underwriter in Schedule I hereto (or such number of Firm Shares
increased as set forth in Section 10 hereof).
3. Terms of Public Offering. The Company has been advised by Xxxxx
Xxxxxx Inc. that the Underwriters propose to make a public offering of their
respective portions of the Shares as soon after this Agreement has become
effective as in their judgment is advisable and initially to offer the Shares
upon the terms set forth in the Prospectus.
4. Delivery of the Shares and Payment Therefor. Delivery to the
Underwriters of and payment for the Firm Shares shall be made at the office of
Xxxxx Xxxxxx Inc., 000 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, at 10:00
A.M., New York City time, on September 16, 1997 (the "Closing Date"). The place
of closing for the Firm Shares and the Closing Date may be varied by agreement
between the Underwriters and the Company.
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Certificates for the Firm Shares to be purchased hereunder shall be
registered in such names and in such denominations as the Underwriters shall
request prior to 9:30 A.M., New York City time, on the second business day
preceding the Closing Date. Such certificates shall be made available to the
Underwriters in New York City for inspection and packaging not later than 9:30
A.M., New York City time, on the business day next preceding the Closing Date.
The certificates evidencing the Firm Shares to be purchased hereunder shall be
delivered to the Underwriters on the Closing Date against payment of the
purchase price therefor by wire transfer of immediately available funds to an
account designated in writing by the Company.
5. Agreements of the Company. The Company agrees with the several
Underwriters as follows:
(a) If, at the time this Agreement is executed and delivered, it is
necessary for a posteffective 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 Underwriters promptly and, if requested by
the Underwriters, will confirm such advice in writing, when such post-effective
amendment has become effective.
(b) The Company will advise the Underwriters promptly and, if requested
by the Underwriters, will confirm such advice in writing: (i) of any request by
the Commission for amendment of or a supplement to the Registration Statement,
any Prepricing Prospectus or the Prospectus or for additional information; (ii)
of the issuance by the Commission of any stop order suspending the effectiveness
of the Registration Statement or of the suspension of qualification of the
Shares for offering or sale in any jurisdiction or the initiation of any
proceeding for such purpose; and (iii) within the period of time referred to in
the first sentence in subsection (f) below, of any change in the Company's
condition (financial or other), business, prospects, properties, net worth or
results of operations, or of the happening of any event, which makes any
statement of a material fact made in the Registration Statement or the
Prospectus (as then amended or supplemented) untrue or which requires the making
of any additions to or changes in the Registration Statement or the Prospectus
(as then amended or supplemented) in order to state a material fact required by
the Act to be stated therein or necessary in order to make the statements
therein not misleading, or of the necessity to amend or supplement the
Prospectus (as then amended or supplemented) to comply with the Act or any other
law. If at any time the Commission shall issue any stop order suspending the
effectiveness of the Registration Statement, the Company will make every
reasonable effort to obtain the withdrawal of such order at the earliest
possible time.
(c) The Company will furnish to the Underwriters, without charge, (i) two
signed copies of the registration statement and any Rule 462(b) Registration
Statement as originally filed with the Commission and of each amendment thereto,
including financial statements and all exhibits to the registration statement
and Rule 462(b) Registration Statement, (ii) such number of conformed copies of
the registration statement as originally filed and of each amendment thereto,
but without exhibits, as the Underwriters may request, (iii) such number of
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copies of the Incorporated Documents, without exhibits, as the Underwriters may
request, and (iv) two copies of the exhibits to the Incorporated Documents.
(d) The Company will not file any amendment to the Registration Statement
(including any filing under Rule 462(b)) or make any amendment or supplement to
the Prospectus or, prior to the end of the period of time referred to in the
first sentence in subsection (f) below, file any document which, upon filing
becomes an Incorporated Document, of which the Underwriters shall not previously
have been advised or to which, after the Underwriters shall have received a copy
of the document proposed to be filed, the Underwriters shall reasonably object;
and no such further document, when it is filed, will contain an untrue statement
of a material fact or will omit to state a material fact required to be stated
therein or necessary in order to make the statements therein not misleading.
(e) Prior to the execution and delivery of this Agreement, the Company
has delivered to the Underwriters, without charge, in such quantities as the
Underwriters have requested, copies of each form of the Prepricing Prospectus.
The Company consents to the use, in accordance with the provisions of the Act
and with the securities or Blue Sky laws of the jurisdictions in which the
Shares are offered by the several Underwriters and by dealers, prior to the date
of the Prospectus, of each Prepricing Prospectus so furnished by the Company.
(f) As soon after the execution and delivery of this Agreement as
possible and thereafter from time to time for such period as in the opinion of
counsel for the Underwriters a prospectus is required by the Act to be delivered
in connection with sales by any Underwriter or dealer, the Company will
expeditiously deliver to each Underwriter and each dealer, without charge, as
many copies of the Prospectus (and of any amendment or supplement thereto) as
the Underwriters may request. The Company consents to the use of the Prospectus
(and of any amendment or supplement thereto) in accordance with the provisions
of the Act and with the securities or Blue Sky laws of the jurisdictions in
which the Shares are offered by the several Underwriters and by all dealers to
whom Shares may be sold, both in connection with the offering and sale of the
Shares and for such period of time thereafter as the Prospectus is required by
the Act to be delivered in connection with sales by any Underwriter or dealer.
If during such period of time any event shall occur that in the judgment of the
Company or in the opinion of counsel for the Underwriters is required to be set
forth in the Prospectus (as then amended or supplemented) or should be set forth
therein in order to make the statements therein, in the light of the
circumstances when the Prospectus is delivered to a purchaser, not misleading,
or if it is necessary to supplement or amend the Prospectus (or to file under
the Exchange Act any document which, upon filing, becomes an Incorporated
Document) in order to comply with the Act or any other law, the Company will
forthwith prepare and, subject to the provisions of paragraph (d) above, file
with the Commission an appropriate supplement or amendment thereto (or to such
document), and will expeditiously furnish to the Underwriters and dealers a
reasonable number of copies thereof. In the event that the Company and the
Underwriters agree that the Prospectus should be amended or supplemented, the
Company, if requested by the Underwriters, will promptly issue a press release
announcing or disclosing the matters to be covered by the proposed amendment or
supplement.
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(g) The Company will cooperate with the Underwriters and with counsel for
the Underwriters in connection with the registration or qualification of the
Shares for offering and sale by the several Underwriters and by dealers under
the securities or Blue Sky laws of such jurisdictions as the Underwriters may
designate and will file such consents to service of process or other documents
necessary or appropriate in order to effect such registration or qualification;
provided that in no event shall the Company be obligated to qualify to do
business in any jurisdiction where it is not now so qualified or to take any
action which would subject it to service of process in suits, other than those
arising out of the offering or sale of the Shares, in any jurisdiction where it
is not now so subject.
(h) The Company will make generally available to its security holders a
consolidated earnings statement, which need not be audited, covering a 12-month
period commencing after the effective date of this Agreement and ending not
later than 15 months thereafter, as soon as practicable after the end of such
period, which consolidated earnings statement shall satisfy the provisions of
Section 11(a) of the Act.
(i) During the period of three years hereafter, the Company will furnish
to the Underwriters (i) as soon as available, if requested, a copy of each
report of the Company mailed to stockholders or filed with the Commission, and
(ii) from time to time such other information concerning the Company as the
Underwriters may request.
(j) If this Agreement shall terminate or shall be terminated after
execution pursuant to any provisions hereof (otherwise than pursuant to the
second paragraph of Section 10 hereof or by notice given by the Underwriters
terminating this Agreement pursuant to Section 10 or Section 11 hereof) or if
this Agreement shall be terminated by the Underwriters because of any failure or
refusal on the part of the Company to comply with the terms or fulfill any of
the conditions of this Agreement, the Company agrees to reimburse the
Underwriters for all out-of-pocket expenses (including fees and expenses of
counsel for the Underwriters) incurred by the Underwriters in connection
herewith.
(k) The Company will apply the net proceeds from the sale of the Shares
substantially in accordance with the description set forth in the Prospectus.
(l) If Rule 430A of the Act is employed, the Company will timely file the
Prospectus pursuant to Rule 424(b) under the Act and will advise the
Underwriters of the time and manner of such filing.
(m) Except as provided in this Agreement and except for the pending
sale of 2,570,000 shares of Common Stock to ABKB/LaSalle Securities Limited
Partnership, the Company will not sell, contract to sell or otherwise dispose
of any Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock, or grant any options or warrants to purchase
Common Stock, for a period of 180 days after the date of the Prospectus,
without the prior written consent of Xxxxx Xxxxxx Inc. (except that the Company
may at anytime grant options or warrants to purchase Common Stock in connection
with the grant of options to certain employees, officers and directors under
the Company's stock option plans or the issuance of Common Stock upon
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exercise of such options).
(n) The Company has furnished to the Underwriters "lock-up" letters, in
form and substance satisfactory to the Underwriters, signed by Xxxxx X. Xxxxxx,
Xx. and Xxxxxx X. Xxxxxx.
(o) Except as stated in this Agreement and in the Prepricing Prospectus
and Prospectus, the Company has not taken, nor will it take, directly or
indirectly, any action designed to or that might reasonably be expected to cause
or result in stabilization or manipulation of the price of the Common Stock to
facilitate the sale or resale of the Shares.
(p) The Company will use its best efforts to have the shares of Common
Stock which it agrees to sell under this Agreement listed, subject to notice of
issuance, on the New York Stock Exchange on or before the Closing Date.
(q) The Company will comply and will use its best efforts to cause its
tenants to comply in all material respects with all applicable Environmental
Laws (as hereinafter defined).
(r) The Company will use its best efforts to continue to qualify as a
real estate investment trust (a "REIT") under the Internal Revenue Code of 1986,
as amended (the "Code"), and to continue to have each of its subsidiaries comply
with all applicable laws and regulations necessary to maintain a status as a
"qualified REIT subsidiary" under the Code.
(s) If the Company elects to rely upon Rule 462(b), the Company shall
both file a Rule 462(b) Registration Statement with the Commission in compliance
with Rule 462(b) and pay the applicable fees in accordance with Rule 111 of the
Act by the earlier of (i) 10:00 P.M. New York City time on the date of this
Agreement, and (ii) the time confirmations are sent or given, as specified by
Rule 462(b)(2).
6. Representations and Warranties of the Company. The Company represents
and warrants to each Underwriter that:
(a) The Basic Prospectus and each Prepricing Prospectus included as part
of the registration statement as originally filed or as part of any amendment or
supplement thereto, or filed pursuant to Rule 424 under the Act, complied when
so filed in all material respects with the provisions of the Act.
(b) The Company and the transactions contemplated by this Agreement meet
the requirements for using Form S-3 under the Act. The Registration Statement
has become effective for the registration under the Act of the Shares; no stop
order suspending the effectiveness of the Registration Statement is in effect,
and, to the best of the Company's knowledge, no proceedings for such purpose are
pending before or threatened by the Commission. The Registration Statement
meets the requirements set forth in Rule 415(a)(1)(x) under the Act and complies
in all other material respects with such Rule. The registration
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statement in the form in which it became effective and also in such form as it
may be when any posteffective amendment thereto shall become effective and the
Prospectus and any supplement or amendment thereto when filed with the
Commission under Rule 424(b) under the Act, complied or will comply in all
material respects with the provisions of the Act and did not or will not at any
such times contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
made therein not misleading, except that this representation and warranty does
not apply to statements in or omissions from the registration statement or the
Prospectus made in reliance upon and in conformity with information relating to
any Underwriter furnished to the Company in writing by or on behalf of any
Underwriter expressly for use therein.
(c) The Incorporated Documents heretofore filed, when they were filed
(or, if any amendment with respect to any such document was filed, when such
amendment was filed), conformed in all material respects with the requirements
of the Exchange Act and the rules and regulations of the Commission thereunder;
no such document when it was filed (or, if an amendment with respect to any such
document was filed, when such amendment was filed), contained an untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements made therein, in
light of the circumstances under which they were made, not misleading.
(d) All the outstanding shares of Common Stock of the Company have been
duly authorized and validly issued, are fully paid and nonassessable and are
free of any preemptive or similar rights; the Shares have been duly authorized
and, when issued and delivered to the Underwriters against payment therefor in
accordance with the terms hereof, will be validly issued, fully paid and
nonassessable and free of any preemptive or similar rights; and the capital
stock of the Company conforms to the description thereof in the registration
statement and the Prospectus.
(e) Each of the Company and each of its subsidiaries is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Maryland with full corporate power and authority to own, lease and
operate its properties and to conduct its business as described in the
Registration Statement and the Prospectus, and is duly registered and qualified
to conduct its business and is in good standing in each jurisdiction or place
where the nature of its properties or the conduct of its business requires such
registration or qualification, except where the failure so to register or
qualify does not have a material adverse effect on the condition (financial or
other), business, properties, net worth or results of operations of the Company
and its subsidiaries. Neither the Company nor any of its subsidiaries does any
business in Cuba.
(f) The Company has no subsidiary or subsidiaries other than Net Lease
Realty I, Inc., Net Lease Realty II, Inc., Net Lease Realty III, Inc., and Net
Lease Realty IV, Inc., and does not control, directly or indirectly, any
corporation, partnership, joint venture, association or other business
association. The issued shares of capital stock of each of the Company's
subsidiaries have been duly authorized and validly issued, are fully paid and
non-assessable and are owned legally and beneficially by the Company free and
clear of any security interests, liens, encumbrances, equities or claims.
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(g) There are no legal or governmental proceedings pending or, to the
knowledge of the Company, threatened, against the Company or any of its
subsidiaries, or to which the Company or any properties of the Company or any of
its subsidiaries is subject, that are required to be described in the
Registration Statement or the Prospectus but are not described as required, and
there are no statutes, regulations, capital expenditures, contingencies or
agreements, contracts, indentures, leases or other instruments that are required
to be described in the Registration Statement or the Prospectus or to be filed
or incorporated by reference as an exhibit to the Registration Statement or any
Incorporated Document that are not described, filed or incorporated as required
by the Act or the Exchange Act.
(h) Neither the Company nor its subsidiaries is (A) in violation of (i)
its respective articles of incorporation or by-laws or (ii) to the best of the
Company's knowledge, any law, ordinance, administrative or governmental rule or
regulation applicable to the Company or its subsidiaries, which violation would
have a material adverse effect on the Company and its subsidiaries, or (iii) any
decree of any court or governmental agency or body having jurisdiction over the
Company or its subsidiaries, or (B) in default in any material respect in the
performance of any obligation, agreement or condition contained in any bond,
debenture, note or any other evidence of indebtedness or in any material
agreement, indenture, lease or other instrument to which the Company or its
subsidiaries is a party or by which the Company or its subsidiaries or any of
their respective properties may be bound.
(i) (A) To the best of the Company's knowledge, neither the Company nor
any of its subsidiaries is in violation of any municipal, state or federal law,
rule or regulation concerning any of the Properties (as defined in the
Prospectus) or the Acquisition Properties set forth in Part A of Schedule II
hereto which would have a material adverse effect on the Company and its
subsidiaries; (B) to the best of the Company's knowledge, each of the Properties
and the Acquisition Properties set forth in Part A of Schedule II hereto
complies with all applicable zoning laws, ordinances and regulations in all
material respects and, if and to the extent there is a failure to comply, such
failure does not materially impair the value of any of such properties and will
not result in a forfeiture or reversion of title thereof; (C) neither the
Company nor any of its subsidiaries has received from any governmental authority
any written notice of any condemnation of or zoning change affecting any of the
Properties or the Acquisition Properties set forth in Part A of Schedule II
hereto, and the Company does not know of any such condemnation or zoning change
which is threatened and which if consummated would have a material adverse
effect on the Company or any of such properties; (D) the leases under which the
Company leases the Properties and the Acquisition Properties set forth in Part A
of Schedule II hereto as lessor (the "Leases") are in full force and effect and
have been entered into in the ordinary course of business of the Company; (E)
the terms of the Advisory Agreement, dated as of April 1, 1993 and effective as
of January 1, 1997, between the Company and CNL Realty Advisors, Inc. (the
"Advisory Agreement") are fair and reasonable to the Company; (F) the Company
and each of its subsidiaries have complied with their respective obligations
under the Leases and the Advisory Agreement in all material respects and the
Company does not know of any default by any other party to the Leases and
Advisory Agreement which, alone or together with other such defaults, would have
a material adverse effect on the Company and its subsidiaries or any of the
properties subject to a Lease; and (G) all liens, charges, encumbrances, claims
or restrictions on or affecting
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the properties and assets (including the Properties and the Acquisition
Properties set forth in Part A of Schedule II hereto) of the Company and its
subsidiaries that are required to be disclosed in the Prospectus are disclosed
therein.
(j) Neither the issuance and sale of the Shares, the execution, delivery
or performance of this Agreement by the Company, nor the consummation by the
Company of the transactions contemplated hereby (i) requires any consent,
approval, authorization or other order of or registration or filing with, any
court, regulatory body, administrative agency or other governmental body, agency
or official (except such as may be required for the registration of the Shares
under the Act and compliance with the securities or Blue Sky laws of various
jurisdictions) or conflicts or will conflict with or constitutes or will
constitute a breach or violation of, or a default under, the articles of
incorporation or by-laws of the Company or any of its subsidiaries or (ii)
conflicts or will conflict with or constitutes or will constitute a breach of,
or a default under, any agreement, indenture, lease or other instrument to which
the Company or any of its subsidiaries is a party or by which the Company or any
properties of the Company or any of its subsidiaries may be bound (other than
the piggyback registration rights granted pursuant to the CNL Transaction (as
defined in the Prospectus), all of which have been waived in connection with the
transactions contemplated by this Agreement), or violates or will violate any
statute, law, regulation or filing or judgment, injunction, order or decree
applicable to the Company or any of its subsidiaries or any properties of the
Company or any of its subsidiaries, or will result in the creation or imposition
of any lien, charge or encumbrance upon any property or assets of the Company or
any of its subsidiaries pursuant to the terms of any agreement or instrument to
which the Company or any of its subsidiaries is a party or by which the Company
or any of its subsidiaries may be bound or to which any property or assets of
the Company or any of its subsidiaries is subject.
(k) To the Company's knowledge, the accountants, KPMG Peat Marwick LLP,
who have certified or shall certify the financial statements included or
incorporated by reference in the Registration Statement and the Prospectus (or
any amendment or supplement thereto) are independent public accountants as
required by the Act.
The financial statements, together with related schedules and notes,
included or incorporated by reference in the Registration Statement and the
Prospectus (and any amendment or supplement thereto), present fairly the
financial position, results of operations and changes in financial position of
the Company and its subsidiaries on the basis stated in the Registration
Statement and the Incorporated Documents at the respective dates or for the
respective periods to which they apply; such statements and related schedules
and notes have been prepared in accordance with generally accepted accounting
principles consistently applied throughout the periods involved, except as
disclosed therein; and the other financial and statistical information and data
included or incorporated by reference in the Registration Statement and the
Prospectus (and any amendment or supplement thereto) are accurately presented
and prepared on a basis consistent with such financial statements and the books
and records of the Company and its subsidiaries; and the pro forma financial
statements and other pro forma financial information included or incorporated by
reference in the Registration Statement and the Prospectus were prepared on the
basis of reasonable assumptions and comply in all material respects with the
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applicable requirements of Rule 11-02 of Regulation S-X and the pro forma
adjustments have been properly applied to the historical amounts in the
compilation of that data.
(l) The execution and delivery of, and the performance by the Company of
its obligations under, this Agreement have been duly and validly authorized by
the Company, and this Agreement has been duly executed and delivered by the
Company and constitutes the valid and legally binding agreement of the Company,
enforceable against the Company in accordance with its terms, except as rights
to indemnity and contribution hereunder may be limited by federal or state
securities laws.
(m) Except as disclosed in the Registration Statement and the Prospectus
(or any amendment or supplement thereto), subsequent to the respective dates as
of which such information is given in the Registration Statement and the
Prospectus (or any amendment or supplement thereto), the Company and its
subsidiaries have not incurred any liability or obligation, direct or
contingent, or entered into any transaction, not in the ordinary course of
business, that is material to the Company and its subsidiaries, and there has
not been any change in the capital stock, or material increase in the
short-term debt or long-term debt, of the Company and its subsidiaries, or any
material adverse change, or any development involving or which may reasonably
be expected to involve, a prospective material adverse change, in the condition
(financial or other), business, net worth or results of operations of the
Company and its subsidiaries.
(n) The Company and each of its subsidiaries have good and marketable
title to all property (real and personal) described in the Prospectus as being
owned by each of them (including the Properties and the Acquisition Properties
set forth in Part A of Schedule II hereto), free and clear of all liens, claims,
security interests or other encumbrances except such as are described in the
Registration Statement and the Prospectus or in a document filed as an exhibit
to the Registration Statement and all the property described in the Prospectus
as being held under lease by the Company or any of its subsidiaries is held by
it under valid, subsisting and enforceable leases.
(o) The purchase of the Acquisition Properties has been duly authorized
by the Board of Directors of the Company and each of the agreements pursuant to
which the Company has acquired the Acquisition Properties set forth in Part A of
Schedule II hereto (each, a "Purchase Agreement" and together, the "Purchase
Agreements") has been duly authorized, executed and delivered by the Company and
gives the Company the unconditional right, upon payment of the amount provided
in the applicable Purchase Agreement, to acquire the applicable Acquisition
Property.
(p) The Company has not distributed and, prior to the later to occur of
(i) the Closing Date and (ii) completion of the distribution of the Shares, will
not distribute any offering material in connection with the offering and sale of
the Shares other than the Registration Statement, the Prepricing Prospectus, the
Prospectus or other materials, if any, permitted by the Act. The Company has
not, directly or indirectly, (i) taken any action designed to cause or to result
in, or that has constituted or which might reasonably be expected to constitute,
the
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stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of the Shares or (ii) since the filing of the
Registration Statement (A) sold, bid for, purchased, or paid anyone any
compensation for soliciting purchases of, the Shares or (B) paid or agreed to
pay to any person any compensation for soliciting another to purchase any other
securities of the Company.
(q) The Company and its subsidiaries have such permits, licenses,
franchises and authorizations of governmental or regulatory authorities
("permits") as are necessary to own their respective properties and to conduct
their respective businesses in the manner described in the Prospectus, subject
to such qualifications as may be set forth in the Prospectus; the Company and
its subsidiaries have fulfilled and performed all their respective material
obligations with respect to such permits and no event has occurred which allows,
or after notice or lapse of time would allow, revocation or termination thereof
or result in any other material impairment of the rights of the holder of any
such permit, subject in each case to such qualification as may be set forth in
the Prospectus; and, except as described in the Prospectus, none of such permits
contains any restriction that is materially burdensome to the Company and its
subsidiaries.
(r) The Company and each of its subsidiaries maintain a system of
internal accounting controls sufficient to provide reasonable assurances that
(i) transactions are executed in accordance with management's general or
specific authorization; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain accountability for assets; (iii) access to
the financial and corporate books and records and assets is permitted only in
accordance with management's general or specific authorization; and (iv) the
recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(s) To the Company's knowledge, neither the Company and its subsidiaries
nor any employee or agent of the Company and its subsidiaries has made any
payment of funds of the Company or its subsidiaries or received or retained any
funds in violation of any law, rule or regulation, which payment, receipt or
retention of funds is of a character required to be disclosed in the Prospectus.
(t) No labor dispute with the employees of the Company and its
subsidiaries exists or is threatened or imminent that could result in a material
adverse change in the condition (financial or other), business, net worth or
results of operations of the Company and its subsidiaries.
(u) The Company has filed all tax returns required to be filed, which
returns are complete and correct, and the Company is not in default in the
payment of any taxes which were payable pursuant to said returns or any
assessments with respect thereto.
(v) No holder of any security of the Company has any right to require
registration of shares of Common Stock or any other security of the Company
because of the filing of the registration statement or consummation of the
transactions contemplated by this
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Agreement which has not been waived in connection with the transactions
contemplated by this Agreement.
(w) The Company and its subsidiaries own or possess all
patents, trademarks, trademark registrations, service marks, service xxxx
registrations, trade names, copyrights, licenses, inventions, trade secrets and
rights described in the Prospectus as being owned by them or necessary for the
conduct of their respective businesses, and the Company is not aware of any
claim to the contrary or any challenge by any other person to the rights of the
Company and its subsidiaries with respect to the foregoing.
(x) The Company is not now, and after sale of the Shares to be
sold by the Company hereunder and application of the net proceeds from such
sale as described in the Prospectus under the caption "Use of Proceeds" will
not be, an "investment company" within the meaning of the Investment Company
Act of 1940, as amended.
(y) (i) To the best of the Company's knowledge, the Company, its
subsidiaries, the Properties, the Acquisition Properties and the operations
conducted thereon comply and heretofore have complied with all applicable
Environmental Laws, except as disclosed in the Environmental Reports (defined
below) and not likely to have a material adverse effect on the relevant
Property or Acquisition Property.
(ii) The Company and its subsidiaries have not at any time and,
to the best of the Company's knowledge, no other party has at any time handled,
buried, stored, retained, refined, transported, processed, manufactured,
generated, produced, spilled, allowed to seep, leak, escape or xxxxx, or be
pumped, poured, emitted, emptied, discharged, injected, dumped, transferred or
otherwise disposed of or dealt with, Hazardous Materials (as defined below) on,
to, under or from the Properties or the Acquisition Properties, except as
disclosed in the environmental site assessment reports obtained by the Company
on or before the date hereof in connection with the purchase of any of the
Properties and the Acquisition Properties and provided to the Underwriters or
their counsel (collectively, the "Environmental Reports") and not likely to
have a material adverse effect on the relevant Property or Acquisition
Property. Neither the Company nor any of its subsidiaries intends to use the
Properties, the Acquisition Properties or any subsequently acquired properties
for the purpose of handling, burying, storing, retaining, refining,
transporting, processing, manufacturing, generating, producing, spilling,
seeping, leaking, escaping, leaching, pumping, pouring, emitting, emptying,
discharging, injecting, dumping, transferring or otherwise disposing of or
dealing with Hazardous Materials.
(iii) To the best of the Company's knowledge, no seepage, leak,
escape, xxxxx, discharge, injection, release, emission, spill, pumping, pouring,
emptying or dumping of Hazardous Materials into waters on or adjacent to the
Properties or the Acquisition Properties has occurred, is occurring or is
reasonably expected to occur, except as disclosed in the Environmental Reports
and not likely to have a material adverse effect on the relevant Property or
Acquisition Property.
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(iv) Neither the Company nor any of its subsidiaries has received
notice from any Governmental Authority or other person of, and does not have
knowledge of, any occurrence or circumstance which, with notice, passage of
time, or failure to act, would give rise to, any claim under or pursuant to any
Environmental Law or under common law pertaining to Hazardous Materials on or
originating from the Existing Properties or the Acquisition Properties or
arising out of the conduct of any party with respect to the Existing Properties
or the Acquisition Properties, except as disclosed in the Environmental Reports.
(v) To the best of the Company's knowledge, the Properties and the
Acquisition Properties are not included or proposed for inclusion on any
federal, state, or local lists of sites which require or might require
environmental cleanup, including, but not limited to, the National Priorities
List or CERCLIS List issued pursuant to CERCLA (as defined below) by the United
States Environmental Protection Agency.
As used herein, "Hazardous Material" shall include, without
limitation, any flammable explosives, radioactive materials, hazardous
materials, hazardous wastes, hazardous or toxic substances, or related
materials, asbestos, polychlorinated biphenyls ("PCBs"), petroleum products and
by-products and substances defined or listed as "hazardous substances," "toxic
substances," "hazardous waste," or "hazardous materials" in any Federal, state
or local Environmental Law.
As used herein, "Environmental Law" shall mean all laws, regulations
or ordinances of any Federal, state or local governmental authority having or
claiming jurisdiction over any of the Properties or the Acquisition Properties
(a "Governmental Authority") that are designed to protect public health and the
environment or regulate the handling of Hazardous Materials, including, without
limitation, the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended (42 U.S.C. Section 9601 et seq.) ("CERCLA"),
the Hazardous Material Transportation Act, as amended (49 U.S.C. Section 1801
et seq.), the Resource Conservation and Recovery Act, as amended (42 U.S.C.
Section 6901 et seq.), the Federal Water Pollution Control Act, as amended (33
U.S.C. Section 1251 et seq.), and the Clean Air Act, as amended (42 U.S.C.
Section 7401 et seq.), and any and all analogous future federal or present or
future state or local laws.
(z) The Company is organized in conformity with the requirements for
qualification as a real estate investment trust under Sections 856 through 860
of the Code and the rules and regulations thereunder; as of the close of any
taxable year, the Company has had no earnings and profits accumulated in a
non-REIT year within the meaning of Section 857(a)(3)(B) of the Code; and the
Company's past and proposed method of operation have enabled it, and will enable
it, to meet the requirements for taxation as a REIT under the Code for all years
of its taxable operations ending on or before December 31, 1997.
(aa) Each of the Company's subsidiaries is in compliance with all
requirements applicable to a "qualified REIT subsidiary" within the meaning of
Section 856(i) of the Code and all applicable regulations under the Code, and
the Company is not aware of any fact that would negatively impact such
qualifications.
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(bb) The Company and each of its subsidiaries are insured by
insurers of recognized financial responsibility against such losses and risks
and in such amounts as are prudent and customary in the businesses in which they
are engaged and the value of their properties; neither the Company nor any of
its subsidiaries has been refused any insurance coverage sought or applied for,
and the Company does not have any reason to believe that the Company and each of
its subsidiaries will not be able to renew its respective existing insurance
coverage as and when such coverage expires or to obtain similar coverage from
similar insurers as may be necessary to continue its respective businesses at a
cost that would not materially and adversely affect the condition (financial or
otherwise), business prospects, net worth or results of operations of the
Company and its subsidiaries.
(cc) The Company and its subsidiaries have title insurance on each
of the Properties and the Acquisition Properties set forth in Part A of Schedule
II hereto in an amount at least equal to the greater of (a) the cost of
acquisition of such property and (b) the replacement cost of the improvements
located on such property.
(dd) No subsidiary of the Company is currently prohibited directly
or indirectly, from paying any dividends to the Company, from making any other
distribution on such subsidiary's capital stock, from repaying to the Company
any loans or advances to such subsidiary from the Company or from transferring
and of such subsidiary's assets or property to the Company or any other
subsidiary of the Company, except as described in or contemplated by the
Prospectus.
7. Indemnification and Contribution. (a) The Company agrees to
indemnify and hold harmless each of the Underwriters and each person, if any,
who controls any Underwriter within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act from and against any and all losses, claims,
damages, liabilities and expenses (including reasonable costs of investigation)
arising out of or based upon any untrue statement or alleged untrue statement of
a material fact contained in any Prepricing Prospectus or in the Basic
Prospectus or in the Registration Statement or the Prospectus or in any
amendment or supplement thereto, or arising out of or based upon any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, except insofar as
such losses, claims, damages, liabilities or expenses arise out of or are based
upon any untrue statement or omission or alleged untrue statement or omission
which has been made therein or omitted therefrom in reliance upon and in
conformity with the information relating to such Underwriter furnished in
writing to the Company by or on behalf of any Underwriter expressly for use in
connection therewith; provided, however, that the indemnification contained in
this paragraph (a) with respect to any Prepricing Prospectus shall not inure to
the benefit of any Underwriter (or to the benefit of any person controlling such
Underwriter) to the extent that any such loss, claim, damage, liability or
expense results from the fact that such Underwriter sold Shares to any person as
to whom it shall be established that a copy of the Prospectus as then amended or
supplemented (excluding documents incorporated by reference) was not delivered
or sent to such person within the time required by the Act and the regulations
thereunder and such loss, claim, damage, liability or expense of such
Underwriter results from an untrue statement or
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alleged untrue statement or omission or alleged omission of a material fact
contained in such Prepricing Prospectus which was identified to such Underwriter
and was corrected in the Prospectus (excluding documents incorporated by
reference), provided that the Company has delivered the Prospectus to the
several Underwriters in requisite quantity on a timely basis to permit such
delivery or sending. The foregoing indemnity agreement shall be in addition to
any liability which the Company may otherwise have.
(b) If any action, suit or proceeding shall be brought against any
Underwriter or any person controlling any Underwriter in respect of which
indemnity may be sought against the Company, such Underwriter or such
controlling person shall promptly notify the Company and the Company shall
assume the defense thereof, including the employment of counsel and payment of
all fees and expenses. Such Underwriter or any such controlling person shall
have the right to employ separate counsel in any such action, suit or proceeding
and to participate in the defense thereof, but the fees and expenses of such
counsel shall be at the expense of such Underwriter or such controlling person
unless (i) the Company has agreed in writing to pay such fees and expenses, (ii)
the Company has failed to assume the defense and employ counsel, or (iii) the
named parties to any such action, suit or proceeding (including any impleaded
parties) include both such Underwriter or such controlling person and the
Company and such Underwriter or such controlling person shall have been advised
by its counsel that representation of such indemnified party and the Company by
the same counsel would be inappropriate under applicable standards of
professional conduct (whether or not such representation by the same counsel has
been proposed) due to actual or potential differing interests between them (in
which case the Company shall not have the right to assume the defense of such
action, suit or proceeding on behalf of such Underwriter or such controlling
person). It is understood, however, that the Company shall, in connection with
any one such action, suit or proceeding or separate but substantially similar or
related actions, suits or proceedings in the same jurisdiction arising out of
the same general allegations or circumstances, be liable for the reasonable fees
and expenses of only one separate firm of attorneys (in addition to any local
counsel) at any time for all such Underwriters and controlling persons not
having actual or potential differing interests with any Underwriter or among
themselves, which firm shall be designated in writing by Xxxxx Xxxxxx Inc., and
that all such fees and expenses shall be reimbursed as they are incurred. The
Company shall not be liable for any settlement of any such action, suit or
proceeding effected without its written consent, but if settled with such
written consent, or if there be a final judgment for the plaintiff in any such
action, suit or proceeding, the Company agrees to indemnify and hold harmless
any Underwriter, to the extent provided in the preceding paragraph, and any such
controlling person from and against any loss, claim, damage, liability or
expense by reason of such settlement or judgment.
(c) Each Underwriter agrees, severally and not jointly, to indemnify
and hold harmless the Company, its directors, its officers who sign the
Registration Statement, and any person who controls the Company within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act, to the same
extent as the foregoing indemnity from the Company to each Underwriter, but only
with respect to information relating to such Underwriter furnished in writing by
or on behalf of such Underwriter expressly for use in the Registration
Statement, the Prospectus or any Prepricing Prospectus, or any amendment or
supplement thereto. If any action, suit or proceeding shall be brought against
the Company, any of its directors, any such officer, or
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any such controlling person based on the Registration Statement, the Prospectus
or any Prepricing Prospectus, or any amendment or supplement thereto, and in
respect of which indemnity may be sought against any Underwriter pursuant to
this paragraph (c), such Underwriter shall have the rights and duties given to
the Company by paragraph (b) above (except that if the Company shall have
assumed the defense thereof such Underwriter shall not be required to do so, but
may employ separate counsel therein and participate in the defense thereof, but
the fees and expenses of such counsel shall be at such Underwriter's expense),
and the Company, its directors, any such officer, and any such controlling
person shall have the rights and duties given to the Underwriters by paragraph
(b) above. The foregoing indemnity agreement shall be in addition to any
liability which the Underwriters may otherwise have.
(d) If the indemnification provided for in this Section 7 is
unavailable to an indemnified party under paragraphs (a) or (c) hereof in
respect of any losses, claims, damages, liabilities or expenses referred to
therein, then an indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by such indemnified party
as a result of such losses, claims, damages, liabilities or expenses (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company on the one hand and the Underwriters on the other hand from the offering
of the Shares, or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) above but also the relative
fault of the Company on the one hand and the Underwriters on the other in
connection with the statements or omissions that resulted in such losses,
claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations. The relative benefits received by the Company on the
one hand and the Underwriters on the other shall be deemed to be in the same
proportion as the total net proceeds from the offering (before deducting
expenses) received by the Company bear to the total underwriting discounts and
commissions received by the Underwriters, in each case as set forth in the table
on the cover page of the Prospectus. The relative fault of the Company on the
one hand and the Underwriters on the other hand shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company on the one hand or by the
Underwriters on the other hand and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission.
(e) The Company and the Underwriters agree that it would not be just
and equitable if contribution pursuant to this Section 7 were determined by a
pro rata allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation that does not take account of
the equitable considerations referred to in paragraph (d) above. The amount
paid or payable by an indemnified party as a result of the losses, claims,
damages, liabilities and expenses referred to in paragraph (d) above shall be
deemed to include, subject to the limitations set forth above, any reasonable
legal or other expenses incurred by such indemnified party in connection with
investigating any claim or defending any such action, suit or proceeding.
Notwithstanding the provisions of this Section 7, no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price of the Shares underwritten by it and distributed to the public exceeds the
amount of any damages which such Underwriter has otherwise been required to pay
by reason of such untrue or alleged untrue statement or omission
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or alleged omission. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. The
Underwriters' obligations to contribute pursuant to this Section 7 are several
in proportion to the respective numbers of Firm Shares set forth opposite their
names in Schedule I hereto (or such numbers of Firm Shares increased as set
forth in Section 10 hereof) and not joint.
(f) No indemnifying party shall, without the prior written consent
of the indemnified party, effect any settlement of any pending or threatened
action, suit or proceeding in respect of which any indemnified party is or could
have been a party and indemnity could have been sought hereunder by such
indemnified party, unless such settlement includes an unconditional release of
such indemnified party from all liability on claims that are the subject matter
of such action, suit or proceeding.
(g) Any losses, claims, damages, liabilities or expenses for which
an indemnified party is entitled to indemnification or contribution under this
Section 7 shall be paid by the indemnifying party to the indemnified party as
such losses, claims, damages, liabilities or expenses are incurred. The
indemnity and contribution agreements contained in this Section 7 and the
representations and warranties of the Company set forth in this Agreement shall
remain operative and in full force and effect, regardless of (i) any
investigation made by or on behalf of any Underwriter or any person controlling
any Underwriter, the Company, its directors or officers, or any person
controlling the Company, (ii) acceptance of any Shares and payment therefor
hereunder, and (iii) any termination of this Agreement. A successor to any
Underwriter or any person controlling any Underwriter, or to the Company, its
directors or officers, or any person controlling the Company, shall be entitled
to the benefits of the indemnity, contribution and reimbursement agreements
contained in this Section 7.
8. Conditions of Underwriters' Obligations. The several
obligations of the Underwriters to purchase the Firm Shares hereunder are
subject to the following conditions:
(a) (i) 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, such
post-effective amendment shall have become effective not later than 5:30 P.M.,
New York City time, on the date hereof, or at such later date and time as shall
be consented to in writing by the Underwriters; if the Company has elected to
rely on Rule 462(b), the Rule 462(b) Registration Statement shall have become
effective not later than the earlier of (x) 10:00 P.M., New York City time, on
the date hereof, or (y) at such later date and time as shall be consented to in
writing by the Underwriters; and all filings, if any, required by Rules 424 and
430A under the Act shall have been timely made; (ii) no stop order suspending
the effectiveness of the registration statement shall have been issued and no
proceeding for that purpose shall have been instituted or, to the knowledge of
the Company or any Underwriter, threatened by the Commission; and (iii) any
request of the Commission for additional information (to be included in the
registration statement or the Prospectus or otherwise) shall have been complied
with to the satisfaction of the Underwriters.
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(b) Subsequent to the effective date of this Agreement, there shall
not have occurred (i) any change, or any development involving a prospective
change, in or affecting the condition (financial or other), business,
properties, net worth, or results of operations of the Company and its
subsidiaries not contemplated by the Prospectus (exclusive of any amendments or
supplements thereto subsequent to the date of this Agreement), which, in the
opinion of the Underwriters, would materially adversely affect the market for
the Shares, or (ii) any event or development relating to or involving the
Company and its subsidiaries or any officer or director of the Company and its
subsidiaries which makes any statement made in the Prospectus untrue or which,
in the opinion of the Company and its counsel or the Underwriters and their
counsel, requires the making of any addition to or change in the Prospectus in
order to state a material fact required by the Act or any other law to be stated
therein or necessary in order to make the statements therein not misleading, if
amending or supplementing the Prospectus to reflect such event or development
would, in the opinion of the Underwriters, adversely affect the market for the
Shares.
(c) The Underwriters shall have received on the Closing Date, an
opinion of Shaw, Pittman, Xxxxx & Xxxxxxxxxx, counsel for the Company, dated the
Closing Date and addressed to the Underwriters, to the effect that:
(i) Each of the Company and each of its subsidiaries is a
corporation duly incorporated and validly existing in good standing under the
laws of the State of Maryland with full corporate power and authority to own,
lease and operate its properties and to conduct its business as described in the
Registration Statement and the Prospectus (and any amendment or supplement
thereto), and, based solely on certificates of public officials and officers of
the Company and its subsidiaries, is duly registered and qualified to conduct
its business and is in good standing in each jurisdiction or place where the
nature of its properties or the conduct of its business requires such
registration or qualification, except where the failure so to register or
qualify does not have a material adverse effect on the condition (financial or
other), business, properties, net worth or results of operations of the Company
and its subsidiaries;
(ii) To the knowledge of such counsel, the Company has no
subsidiaries other than Net Lease Realty I, Inc., Net Lease Realty II, Inc., Net
Lease Realty III, Inc., and Net Lease Realty IV, Inc., and does not control,
directly or indirectly, any corporation, partnership, joint venture, association
or other business association. The issued shares of capital stock of each of
the Company's subsidiaries have been duly authorized and validly issued, are
fully paid and non-assessable and are owned legally and beneficially by the
Company and, to the knowledge of such counsel, free and clear of any security
interests, liens, encumbrances, equities or claims;
(iii) The authorized capital stock of the Company conforms in all
material respects as to legal matters to the description thereof contained in
the Prospectus under the caption "Description of Common Stock";
(iv) All the shares of capital stock of the Company outstanding
prior to the issuance of the Shares have been duly authorized and validly
issued, and are fully paid and nonassessable;
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(v) The Shares have been duly authorized and, when issued and
delivered to the Underwriters against payment therefor in accordance with the
terms hereof, will be validly issued, fully paid and nonassessable and free of
any preemptive rights under Maryland General Corporation Law;
(vi) To the knowledge of such counsel, based upon such inquiry as
such counsel deems appropriate, (a) the Shares, when issued and delivered in
accordance with the terms hereof, will be free of any contractual preemptive
right or other similar rights that entitle or will entitle any person to acquire
any Shares upon the issuance thereof by the Company and (b) no holder of
securities of the Company is entitled to have such securities registered under
the Registration Statement which right has not been waived in connection with
the transactions contemplated by this Agreement;
(vii) The form of certificates for the Shares conforms to the
requirements of the Maryland General Corporation Law;
(viii) The Registration Statement and all post-effective amendments,
if any, and the Rule 462(b) Registration Statement, if any, have become
effective under the Act and, to the knowledge of such counsel, no stop order
suspending the effectiveness of the Registration Statement has been issued and
no proceedings for that purpose are pending before or contemplated by the
Commission; and any required filing of the Prospectus pursuant to Rule 424(b)
has been made in accordance with Rule 424(b);
(ix) The Company has the corporate power and authority to enter
into this Agreement and the Purchase Agreements and to issue, sell and deliver
the Shares to the Underwriters as provided herein, and this Agreement and the
Purchase Agreements have been duly authorized, executed and delivered by the
Company and are valid, legal and binding agreements of the Company, enforceable
against the Company in accordance with their respective terms, except as
enforcement of rights to indemnity and contribution hereunder may be limited by
Federal or state securities laws or principles of public policy and subject to
the qualification that the enforceability of the Company's obligations
hereunder and thereunder may be limited by bankruptcy, fraudulent conveyance,
insolvency, reorganization, moratorium, and other laws relating to or affecting
creditors' rights generally, and by general equitable principles when applied
by a court of law or equity;
(x) To the knowledge of such counsel, neither the Company nor any
of its subsidiaries is (a) in violation of its respective articles of
incorporation or by-laws or (b) in default in the performance of any material
obligation, agreement or condition contained in any bond, debenture, note or
other evidence of indebtedness set forth on Schedule A attached to such opinion,
except as may be disclosed in the Prospectus;
(xi) Neither the offer, sale or delivery of the Shares, the
execution, delivery or performance by the Company of this Agreement, compliance
by the Company with the provisions hereof nor consummation by the Company of
the transactions contemplated hereby (a) conflicts
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or will conflict with or constitutes or will constitute a breach of, or a
default under, (1) the articles of incorporation or by-laws of the Company or
any of its subsidiaries or (2) any agreement, indenture, lease or other
instrument to which the Company or any of its subsidiaries is a party or by
which the Company or any properties of the Company or any of its subsidiaries is
bound (A) that is an exhibit to the Registration Statement or (B) which is known
to such counsel (other than the piggyback registration rights granted pursuant
to the CNL Transaction (as defined in the Prospectus), all of which have been
waived in connection with the transactions contemplated by this Agreement); or
(b) results or will result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Company or its subsidiaries,
pursuant to any agreement, indenture, lease or other instrument to which the
Company or any of its subsidiaries is a party or by which the Company or any
properties of the Company or any of its subsidiaries is bound (1) that is
incorporated by reference or an exhibit to the Registration Statement or (2)
which is known to such counsel; or (c) violates or will violate (1) any existing
federal or Maryland law, regulation or ruling (assuming compliance with all
applicable state securities and Blue Sky laws, regulations, rulings and orders)
or (2) to the knowledge of such counsel, any judgment, injunction, order or
decree applicable to the Company or its subsidiaries or any properties of the
Company or any of its subsidiaries;
(xii) No consent, approval, authorization or other order of, or
registration or filing with, any court, regulatory body, administrative agency
or other governmental body, agency, or official is required on the part of the
Company (except as have been obtained under the Act or such as may be required
under state securities or Blue Sky laws governing the purchase and distribution
of the Shares) for the valid issuance and sale of the Shares to the Underwriters
as contemplated by this Agreement;
(xiii) (a) The Registration Statement and the Prospectus and any
supplements or amendments thereto (except for the financial statements and the
notes thereto and the schedules and other financial and statistical data
included therein, as to which such counsel need not express any opinion) comply
as to form in all material respects with the requirements of the Act; and (b)
each of the Incorporated Documents (except for the financial statements and the
notes thereto and the schedules and other financial and statistical data
included therein, as to which counsel need not express any opinion) complies as
to form in all material respects with the Exchange Act and the rules and
regulations of the Commission thereunder;
(xiv) To the knowledge of such counsel, based upon such inquiry as
such counsel deems appropriate, other than as described or contemplated in the
Prospectus (or any supplement thereto), there are no legal or governmental
proceedings pending or threatened against the Company or any of its
subsidiaries, or to which the Company or any of its subsidiaries or any
properties of the Company and any of its subsidiaries is subject, which are
required to be described in the Registration Statement or Prospectus (or any
amendment or supplement thereto) and there are no agreements, contracts,
indentures, leases or other instruments that are required to be described in the
Registration Statement or the Prospectus (or any amendment or supplement
thereto) or to be filed or incorporated by reference as an exhibit to the
Registration Statement or any Incorporated Document that are not described,
filed or incorporated as required, as the case may be;
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(xv) To the knowledge of such counsel, neither the Company nor
any of its subsidiaries is in violation of any law, ordinance, administrative
or governmental rule or regulation applicable to the Company or its
subsidiaries or of any decree of any court or governmental agency or body
having jurisdiction over the Company or its subsidiaries;
(xvi) Such counsel is not aware of any certificates,
authorizations, licenses or permits required by any federal regulatory
authority which are necessary for the Company and its subsidiaries to conduct
their respective businesses other than any such certificates, authorizations,
licenses or permits which have been obtained; to the knowledge of such counsel,
neither the Company nor any of its subsidiaries has received any notice of
proceedings relating to the revocation or modification of any certificate,
authorization, license or permit issued by any federal, state, municipal or
foreign regulatory authority which, singly or in the aggregate, if the subject
of an unfavorable decision, ruling or finding, would result in a material
adverse change in the condition (financial or otherwise), business prospects,
net worth or results of operations of the Company or its subsidiaries;
(xvii) The Company is not subject to registration as an investment
company under the Investment Company Act of 1940, as amended, and the
transactions contemplated by this Agreement will not cause the Company to
become an investment company subject to registration under the Investment
Company Act of 1940, as amended;
(xviii) Commencing with the Company's initial taxable year, the
Company has qualified as a REIT under the Code for all taxable years ending on
or before December 31, 1996, and its past and proposed method of operation will
enable it to qualify as a REIT under the Code for its taxable year ending on
December 31, 1997; and each of the Company's subsidiaries is a "qualified REIT
subsidiary" within the meaning of Section 856(i) of the Code;
(xix) To the knowledge of such counsel, (a) neither the Company nor
any of its subsidiaries is in violation of any federal law or regulation
relating to occupational safety and health or to the environment, including,
without limitation, the storage, handling, transportation or disposal of
hazardous or toxic materials, (b) the Company and its subsidiaries have received
all permits, registrations, licenses and other approvals required of them under
applicable federal occupational safety and health and environmental laws and
regulations to conduct their respective businesses and (c) the Company and its
subsidiaries are in compliance with all terms and conditions of any such permit,
registration, license or approval, except any such violation of law or
regulation, failure to receive required permits, registrations, licenses or
other approvals or failure to comply with the terms and conditions of such
permits, registrations, licenses or approvals which would not, singly or in the
aggregate, result in a material adverse change in the condition (financial or
otherwise), business prospects, net worth or results of operations of the
Company or its subsidiaries;
(xx) The Shares have been approved for listing on the New York
Stock Exchange, subject to official notice of issuance;
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(xxi) The statements in the Prospectus, insofar as they are
descriptions of contracts or agreements or constitute statements of law or legal
conclusions, are accurate and present fairly the information required to be
shown in all material respects; and
(xxii) Although counsel has not undertaken, except as otherwise
indicated in their opinion, to determine independently, and does not assume any
responsibility for, the accuracy or completeness of the statements in the
Registration Statement, such counsel has participated in the preparation of the
Registration Statement and the Prospectus, including review and discussion of
the contents thereof (including review and discussion of the contents of all
Incorporated Documents), and nothing has come to the attention of such counsel
that has caused them to believe that the Registration Statement (including the
Incorporated Documents) at the time the Registration Statement became effective,
or the Prospectus, as of its date and as of the Closing Date or the Option
Closing Date, as the case may be, contained an untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary to make the statements therein not misleading or that any amendment or
supplement to the Prospectus, as of its respective date, and as of the Closing
Date or the Option Closing Date, as the case may be, contained any untrue
statement of a material fact or omitted to state a material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading (it being understood that such counsel need
express no opinion with respect to the financial statements and the notes
thereto and the schedules and other financial data included in the Registration
Statement or the Prospectus or any Incorporated Document).
(d) The Underwriters shall have received on the Closing Date an
opinion of Xxxxxxx Xxxx & Xxxxxxxxx, counsel for the Underwriters, dated the
Closing Date and addressed to the Underwriters, with respect to the matters
referred to in clauses (viii) and (xiii)(a) of the foregoing paragraph (c) and
such other related matters as the Underwriters may request.
(e) The Underwriters shall have received letters addressed to the
Underwriters and dated the date hereof and the Closing Date from KPMG Peat
Marwick LLP, independent certified public accountants, substantially in the
forms heretofore approved by the Underwriters.
(f) (i) No stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for that
purpose shall have been taken or, to the knowledge of the Company, shall be
contemplated by the Commission at or prior to the Closing Date; (ii) there
shall not have been any change in the capital stock of the Company nor any
material increase in the short-term or long-term debt of the Company and its
subsidiaries (other than in the ordinary course of business) from that set
forth or contemplated in the Registration Statement or the Prospectus (or any
amendment or supplement thereto); (iii) there shall not have been, since the
respective dates as of which information is given in the Registration Statement
and the Prospectus (or any amendment or supplement thereto), except as may
otherwise be stated in the Registration Statement and Prospectus (or any
amendment or supplement thereto), any material adverse change in the condition
(financial or other), business, prospects, properties, net worth or results of
operations of the Company and its subsidiaries; (iv) the Company and its
subsidiaries shall not have any liabilities or obligations, direct or
contingent (whether or not in the ordinary course of business), that are
material to the Company and its
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subsidiaries, other than those reflected in the Registration Statement or the
Prospectus (or any amendment or supplement thereto); and (v) all the
representations and warranties of the Company contained in this Agreement shall
be true and correct on and as of the date hereof and on and as of the Closing
Date as if made on and as of the Closing Date, provided, that, for purposes of
the representations and warranties to be made as of the Closing Date, the
references to Part A of Schedule II in Sections 6(i), (n), (o) and (cc) hereof
shall also be deemed to refer to Part B of Schedule II, and the Underwriters
shall have received a certificate, dated the Closing Date and signed by the
chief executive officer and the chief financial officer of the Company (or such
other officers as are acceptable to the Underwriters), to the effect set forth
in this Section 8(f) and in Section 8(g) hereof.
(g) The Company shall not have failed at or prior to the Closing
Date to have performed or complied with any of its agreements herein contained
and required to be performed or complied with by it hereunder at or prior to the
Closing Date.
(h) Prior to the Closing Date the Shares shall have been listed,
subject to notice of issuance, on the New York Stock Exchange.
(i) The Company shall have furnished or caused to be furnished to
the Underwriters such further certificates and documents as the Underwriters
shall have requested.
All such opinions, certificates, letters and other documents will be
in compliance with the provisions hereof only if they are satisfactory in form
and substance to the Underwriters and their counsel.
Any certificate or document signed by any officer of the Company and
delivered to the Underwriters, or to counsel for the Underwriters, shall be
deemed a representation and warranty by the Company to each Underwriter as to
the statements made therein.
The several obligations of the Underwriters to purchase Additional
Shares hereunder are subject to the satisfaction on and as of any Option Closing
Date of the conditions set forth in this Section 8, except that, if any Option
Closing Date is other than the Closing Date, the certificates, opinions and
letters referred to in paragraphs (c) through (g) shall be dated the Option
Closing Date in question and the opinions called for by paragraphs (c) and (d)
shall be revised to reflect the sale of Additional Shares.
9. Expenses. The Company agrees to pay the following costs and
expenses and all other costs and expenses incident to the performance by the
Company of its obligations hereunder: (i) the preparation, printing or
reproduction, and filing with the Commission of the registration statement
(including financial statements and exhibits thereto), each Prepricing
Prospectus, the Prospectus, and each amendment or supplement to any of them;
(ii) the printing (or reproduction) and delivery (including postage, air freight
charges and charges for counting and packaging) of such copies of the
registration statement, each Prepricing Prospectus, the Prospectus, the
Incorporated Documents, and all amendments or supplements to any of them, as may
be reasonably requested for use in connection with the offering and sale of the
Shares; (iii)
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the preparation, printing, authentication, issuance and delivery of certificates
for the Shares, including any stamp taxes in connection with the original
issuance and sale of the Shares; (iv) the printing (or reproduction) and
delivery of this Agreement, the preliminary and supplemental Blue Sky memoranda
and all other agreements or documents printed (or reproduced) and delivered in
connection with the offering of the Shares; (v) the listing of the Shares on the
New York Stock Exchange; (vi) the registration or qualification of the Shares
for offer and sale under the securities or Blue Sky laws of the several states
as provided in Section 5(g) hereof (including the reasonable fees, expenses and
disbursements of counsel for the Underwriters relating to the preparation,
printing or reproduction, and delivery of the preliminary and supplemental Blue
Sky memoranda and such registration and qualification); (vii) the filing fees
and the fees and expenses of counsel for the Underwriters in connection with any
filings required to be made with the National Association of Securities Dealers,
Inc.; (viii) the transportation and other expenses incurred by or on behalf of
Company representatives in connection with presentations to prospective
purchasers of the Shares; and (ix) the fees and expenses of the Company's
accountants and the fees and expenses of counsel (including local and special
counsel) for the Company.
10. Effective Date of Agreement. This Agreement shall become
effective: (i) upon the execution and delivery hereof by the parties hereto; or
(ii) if, at the time this Agreement is executed and delivered, it is necessary
for a post-effective amendment to the registration statement to be declared
effective before the offering of the Shares may commence, when notification of
the effectiveness of such post-effective amendment has been released by the
Commission. Until such time as this Agreement shall have become effective, it
may be terminated by the Company, by notifying the Underwriters, or by the
Underwriters, by notifying the Company.
If any one or more of the Underwriters shall fail or refuse to
purchase Shares which it or they are obligated to purchase hereunder on the
Closing Date, and the aggregate number of Shares which such defaulting
Underwriter or Underwriters are obligated but fail or refuse to purchase is not
more than one-tenth of the aggregate number of Shares which the Underwriters
are obligated to purchase on the Closing Date, each non-defaulting Underwriter
shall be obligated, severally, in the proportion which the number of Firm
Shares set forth opposite its name in Schedule I hereto bears to the aggregate
number of Firm Shares set forth opposite the names of all non-defaulting
Underwriters or in such other proportion as the Underwriters may specify in
accordance with Section 20 of the Master Agreement Among Underwriters of Xxxxx
Xxxxxx Inc., to purchase the Shares which such defaulting Underwriter or
Underwriters are obligated, but fail or refuse, to purchase. If any one or
more of the Underwriters shall fail or refuse to purchase Shares which it or
they are obligated to purchase on the Closing Date and the aggregate number of
Shares with respect to which such default occurs is more than one-tenth of the
aggregate number of Shares which the Underwriters are obligated to purchase on
the Closing Date and arrangements satisfactory to the Underwriters and the
Company for the purchase of such Shares by one or more non-defaulting
Underwriters or other party or parties approved by the Underwriters and the
Company are not made within 36 hours after such default, this Agreement will
terminate without liability on the part of any non-defaulting Underwriter or
the Company. In any such case which does not result in termination of this
Agreement, either the Underwriters or the Company shall have the right to
postpone the Closing Date, but in no event for longer than
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seven days, in order that the required changes, if any, in the Registration
Statement and the Prospectus or any other documents or arrangements may be
effected. Any action taken under this paragraph shall not relieve any
defaulting Underwriter from liability in respect of any such default of any such
Underwriter under this Agreement. The term "Underwriter" as used in this
Agreement includes, for all purposes of this Agreement, any party not listed in
Schedule I hereto who, with the approval of the Underwriters and the approval of
the Company, purchases Shares which a defaulting Underwriter is obligated, but
fails or refuses, to purchase.
Any notice under this Section 10 may be given by telegram, telecopy or
telephone but shall be subsequently confirmed by letter.
11. Termination of Agreement. This Agreement shall be subject to
termination in the absolute discretion of the Underwriters, without liability on
the part of any Underwriter to the Company by notice to the Company, if prior to
the Closing Date (i) trading in securities generally on the New York Stock
Exchange, the American Stock Exchange or the Nasdaq National Market shall have
been suspended or materially limited, (ii) a general moratorium on commercial
banking activities in New York or Florida shall have been declared by either
federal or state authorities, or (iii) there shall have occurred any outbreak or
escalation of hostilities or other international or domestic calamity, crisis or
change in political, financial or economic conditions, the effect of which on
the financial markets of the United States is such as to make it, in the
judgment of the Underwriters, impracticable or inadvisable (x) to commence or
continue the offering of the Shares at the offering price to the public set
forth on the cover page of the Prospectus or (y) to enforce contracts for the
sale of the units of the Trust. Notice of such termination may be given to
the Company by telegram, telecopy or telephone and shall be subsequently
confirmed by letter.
12. Information Furnished by the Underwriters. The statements set
forth in the last paragraph on the cover page, the stabilization legend on the
inside front cover, and the statements in the first and third paragraphs under
the caption "Underwriting" in any Prepricing Prospectus and in the Prospectus
Supplement, constitute the only information furnished by or on behalf of the
Underwriters as such information is referred to in Sections 6(b) and 7 hereof.
13. Miscellaneous. Except as otherwise provided in Sections 5, 10
and 11 hereof, notice given pursuant to any provision of this Agreement shall be
in writing and shall be delivered (i) if to the Company, at the office of the
Company at 000 Xxxx Xxxxx Xxxxxx, Xxxxx 000, Xxxxxxx, Xxxxxxx 00000, Attention:
Xxxxx X. Xxxxxx, Xx., Chairman and Chief Executive Officer; or (ii) if to any
Underwriter, care of Xxxxx Xxxxxx Inc., 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000, Attention: Manager, Investment Banking Division.
This Agreement has been and is made solely for the benefit of the
several Underwriters, the Company, its directors and officers, and the other
controlling persons referred to in Section 7 hereof and their respective
successors and assigns, to the extent provided herein, and no other person shall
acquire or have any right under or by virtue of this Agreement. Neither the
term "successor" nor the term "successors and assigns" as used in this Agreement
shall include a purchaser from any Underwriter of any of the Shares in his
status as such purchaser.
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14. Applicable Law; Counterparts. This Agreement shall be governed
by and construed in accordance with the laws of the State of New York applicable
to contracts made and to be performed within the State of New York.
This Agreement may be signed in various counterparts which together
constitute one and the same instrument. If signed in counterparts, this
Agreement shall not become effective unless at least one counterpart hereof
shall have been executed and delivered on behalf of each party hereto.
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Please confirm that the foregoing correctly sets forth the agreement
between the Company and the several Underwriters.
Very truly yours,
COMMERCIAL NET LEASE REALTY, INC.
By /s/ XXXXX X. XXXXXX, XX.
------------------------
Chairman of the Board
XXXXX XXXXXX INC.
By /s/ XXXX XXXXXXXXX
-----------------------
Managing Director
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SCHEDULE I
COMMERCIAL NET LEASE REALTY, INC.
Number of
Underwriter Firm Shares
----------- -----------
Xxxxx Xxxxxx Inc.............................................. 1,075,680
-----------
Total......................................................... 1,075,680
29
SCHEDULE II
ACQUISITION PROPERTIES
Land/
Retailer Xxxx Xxxx Xxxxx Xxxxxx Xxxxxxx
-------------------------------------------------------------------------------------------------------
Part A
------
Properties acquired from July 1, 1997 through September 11, 1997:
Best Buy Land & Rockville MD 1200 Rockville Pike
Building
Best Buy Land & Xxxxxxx XX 00000 Fair Lakes Parkway
Building
Part B
------
Properties to be acquired from September 12, 1997 through September 16, 1997:
NONE.
