FORM OF PURCHASE AGREEMENT
EXHIBIT
10.1
FORM
OF PURCHASE AGREEMENT
This
Purchase Agreement (this “Agreement”), dated as
of October 15, 2009, is by and among Monmouth Real Estate Investment
Corporation, a Maryland corporation (the “Company”), each
Purchaser listed under the heading “Direct Purchasers” on Schedule A (each, a
“Direct
Purchaser”), each Investment Adviser listed under the heading “Investment
Advisers” on the signature pages hereto (each, an “Investment Adviser”)
who is entering into this Agreement on behalf of itself (as to paragraph 4 of
this Agreement) and those Purchasers which are a fund or individual or other
investment advisory client of such Investment Adviser listed under its
respective name on Schedule B (each, a
“Client”), and
each Broker-Dealer listed on Schedule C
(each, a “Broker-Dealer”) which
is entering into this Agreement on behalf of itself (as to paragraph 5 of this
Agreement) and those Purchasers which are customers for which it has power of
attorney to sign listed under its respective name on Schedule C (each, a
“Customer”). Each
of the Customers, Direct Purchasers and Clients are referred to herein as
individually, a “Purchaser” and
collectively, the “Purchasers.”
WHEREAS, the Purchasers desire
to purchase from the Company (or their Investment Advisers and Broker-Dealers
desire to purchase on their behalf from the Company), and the Company desires to
issue and sell to the Purchasers up to an aggregate of 1,800,000 shares (such
number of shares actually sold pursuant to this Agreement, the “Capital Shares”) of
the Company’s Common Stock, par value $0.01 per share (the “Common Stock”), with
the number of Capital Shares acquired by each Purchaser set forth opposite the
name of such Purchaser on Schedule A, Schedule B or Schedule C, as the
case may be.
NOW, THEREFORE, in
consideration of the mutual promises herein contained, the parties hereto agree
as follows:
1. Purchase and
Sale. Subject to the terms and conditions hereof, the
Investment Advisers and the Broker-Dealers (on behalf of Purchasers which are
Clients and Customers, respectively) and the other Purchasers hereby severally
and not jointly agree to purchase from the Company, and the Company agrees to
issue and sell to the several Purchasers, the number of Capital Shares set forth
next to such Purchaser’s name on Schedule A, Schedule B or
Schedule C, as
the case may be, at a price per share of $6.50 for an aggregate purchase amount
in an amount as set forth on Schedule D hereof
(the “Purchase
Price”) at the Closing (as defined below).
2. Representations and
Warranties of Purchaser. Each Purchaser represents and
warrants with respect to itself that:
(a) Due
Authorization. Such Purchaser has full power and authority to
enter into this Agreement and is duly authorized to purchase the Capital Shares
in the amount set forth opposite its name on Schedule A, Schedule B or Schedule C, as the
case may be. This Agreement has been duly authorized by such
Purchaser and duly executed and delivered by or on behalf of such
Purchaser. This Agreement constitutes a legal, valid and binding
agreement of such Purchaser, enforceable against such Purchaser in accordance
with its terms except as may be limited by (i) the effect of bankruptcy,
insolvency, reor-
ganization,
moratorium or other similar laws relating to or affecting the rights or remedies
of creditors or (ii) the effect of general principles of equity, whether
enforcement is considered in a proceeding in equity or at law and the discretion
of the court before which any proceeding therefor may be brought (the “Enforceability
Exceptions”).
(b) Prospectus and Prospectus
Supplement. Such Purchaser has received a copy of the Company’s Basic
Prospectus dated September 14, 2009 and the Prospectus Supplement dated October
15, 2009 (each as defined below).
(c) Ownership of Excess Shares
of Capital Stock. As of the date hereof and after giving
effect to the transaction contemplated hereby, such Purchaser, together with its
subsidiaries and affiliates, does not own directly or indirectly more than 9.8%
in number of shares or value, whichever is more restrictive, of any class
aggregate or series of the issued and outstanding capital stock of the
Company. Purchaser expressly acknowledges that the provisions of the
Company’s Articles of Incorporation, as amended or supplemented (the “Charter”), contain
limitations on the Purchaser’s ownership of the Company’s capital stock, which,
among other things, prohibit the direct or indirect ownership by Purchaser
(together with its subsidiaries and affiliates) of more than 9.8% in number of
shares or value, whichever is more restrictive, of the Company’s outstanding
capital stock and, in the event the shares of capital stock acquired by
Purchaser pursuant to this Agreement or otherwise exceed such limits, give the
Company certain repurchase rights on the terms set forth in the Company's
Charter and result in the conversion of certain shares capital stock held by the
Purchaser into Excess Stock which will be held for the benefit of a charitable
beneficiary on the terms set forth in the Company's Charter.
3. Representations and
Warranties of Company. The Company represents and warrants
that:
(a) The
Company meets the requirements for use of Form S-3 under the Securities Act of
1933, as amended (the “Act”) and meets the
requirements pursuant to the standards for such Form as (i) are in effect on the
date hereof and (ii) were in effect immediately prior to October 21,
1992. The Company’s Registration Statement (as defined below) was
declared effective by the SEC (as defined below) and the Company has filed such
post effective amendments thereto as may be required under applicable law prior
to the execution of this Agreement and each such post effective amendment became
effective. The SEC has not issued, nor to the Company’s knowledge,
has the SEC threatened to issue or intends to issue, a stop order with respect
to the Registration Statement, nor has it otherwise suspended or withdrawn the
effectiveness of the Registration Statement or, to the Company’s knowledge,
threatened to do so, either temporarily or permanently, nor, to the Company’s
knowledge, does it intend to do so. On the effective date, the
Registration Statement complied in all material respects with the requirements
of the Act and the rules and regulations promulgated under the Act (the “Regulations”); at the
effective date the Basic Prospectus (as defined below) complied, and at the
Closing the Prospectus (as defined below) will comply, in all material respects
with the requirements of the Act and the Regulations; each of the Basic
Prospectus and the Prospectus as of its date and at the Closing Date did not,
does not and 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
2
statements
therein not misleading; provided, however, that the
representations and warranties in this subsection shall not apply to statements
in or omissions from the Prospectus made in reliance upon and in conformity with
information furnished to the Company in writing by or on behalf of any of the
Purchasers, CSCA Capital Advisors, LLC, in its capacity as placement agent
(“Placement
Agent”), any Investment Advisers or Broker-Dealers, or any of their
respective affiliates, expressly for use in the Prospectus. As used in this
Agreement, the term “Registration
Statement” means the shelf registration statement on Form S 3 (File No.
333-161668) as declared effective by the Securities and Exchange Commission (the
“SEC”),
including exhibits, financial statements, schedules and documents incorporated
by reference therein. The term “Basic Prospectus”
means the prospectus included in the Registration Statement, as amended, or as
supplemented. The term “Prospectus
Supplement” means the prospectus supplement specifically relating to the
Capital Shares as to be filed with the SEC pursuant to Rule 424 under the Act in
connection with the sale of the Capital Shares hereunder. The term
“Prospectus”
means the Basic Prospectus and the Prospectus Supplement taken
together. The term “Preliminary
Prospectus” means any preliminary form of Prospectus Supplement used in
connection with the marketing of the Capital Shares. Any reference in
this Agreement to the Registration Statement, the Prospectus or any Preliminary
Prospectus shall be deemed to refer to and include the documents incorporated by
reference therein as of the date hereof or the date of the Prospectus or any
Preliminary Prospectus as the case may be, and any reference herein to any
amendment or supplement to the Registration Statement, the Prospectus or any
Preliminary Prospectus shall be deemed to refer to and include any documents
filed after the date of such documents and through the date of such amendment or
supplement under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and
so incorporated by reference.
(b) Since
the date as of which information is given in the Registration Statement and the
Prospectus, except as otherwise stated therein, (i) there has been no material
adverse change or any development which could reasonably be expected to give
rise to a prospective material adverse change in or affecting the condition,
financial or otherwise, or in the earnings, business affairs or, to the
Company’s knowledge, business prospects of the Company and the subsidiaries of
the Company, if any (the “Subsidiaries”),
considered as one enterprise, whether or not arising in the ordinary course of
business, (ii) there have been no transactions entered into by the Company or
any of its Subsidiaries, other than those in the ordinary course of business,
which are material with respect to the Company and its Subsidiaries considered
as one enterprise, and (iii) other than regular quarterly dividends, there has
been no dividend or distribution of any kind declared, paid or made by the
Company on any class of its shares of equity securities.
(c) The
Company has been duly organized as a corporation and is validly existing in good
standing under the laws of the State of Maryland. Each of the
Subsidiaries of the Company has been duly organized and is validly existing in
good standing under the laws of its jurisdiction of
organization. Each of the Company and its Subsidiaries has the
required power and authority to own and lease its properties and to conduct its
business as described in the Prospectus; and each of the Company and its
Subsidiaries is duly qualified to transact business in each jurisdiction in
which such qualification is required, whether by reason of the ownership or
leasing of property or the conduct of business, ex-
3
cept
where the failure to so qualify would not have a material adverse effect on the
condition, financial or otherwise, or the earnings, business affairs or, to the
Company’s knowledge, business prospects of the Company and its Subsidiaries
considered as one enterprise.
(d) As
of the date hereof, the authorized capital stock of the Company consists of
35,000,000 shares of Common Stock, par value $0.01 per share, 5,000,000 shares
of excess stock, par value $.01 per share, and 1,322,500 shares of 7.625%
Series A Cumulative Redeemable Preferred Stock (the “Series A Preferred
Stock”), par value $0.01 per share, $25 liquidation value per share, of
which 25,783,779 shares of Common Stock, no shares of excess stock and 1,322,500
shares of the Series A Preferred Stock are issued and outstanding (without
giving effect to any Capital Shares issued or to be issued as contemplated by
this Agreement) and 9,211,221 shares of Common Stock are authorized and
unissued. The issued and outstanding shares of the Company have been
duly authorized and validly issued and are fully paid and non-assessable; the
Capital Shares have been duly authorized, and when issued in accordance with the
terms of the Charter and delivered as contemplated hereby, will be validly
issued, fully paid and non-assessable and will be listed, subject to notice of
issuance, on the Nasdaq Global Select Market, effective as of the Closing; the
Common Stock, the excess stock and the Series A Preferred Stock of the
Company conform to all statements relating thereto contained in the Prospectus;
and the issuance of the Capital Shares is not subject to preemptive or other
similar rights.
(e) Neither
the Company nor any of its Subsidiaries is in violation of its organizational
documents or in default in the performance or observance of any obligation,
agreement, covenant or condition contained in any material contract, indenture,
mortgage, loan agreement, note, lease or other instrument or agreement to which
the Company or any of its Subsidiaries is a party or by which it or any of them
are bound, or to which any of the property or assets of the Company or any of
its Subsidiaries is subject, except where such violation or default would not
have a material adverse effect on the condition, financial or otherwise, or the
earnings, business affairs or, to the Company’s knowledge, business prospects of
the Company and its Subsidiaries considered as one enterprise; and the
execution, delivery and performance of this Agreement, and the issuance and
delivery of the Capital Shares and the consummation of the transactions
contemplated herein have been duly authorized by all necessary action and will
not conflict with or constitute a material breach of, or material default under,
or result in the creation or imposition of any lien, charge or encumbrance upon
any material property or assets of the Company or any of its Subsidiaries
pursuant to, any material contract, indenture, mortgage, loan agreement, note,
lease or other instrument or agreement to which the Company or any of its
Subsidiaries is a party or by which it or any of them are bound, or to which any
of the property or assets of the Company or any of its Subsidiaries is subject,
nor will any such action result in any violation of the provisions of the
Charter, by-laws or other organizational documents of the Company or any of its
Subsidiaries or any law, administrative regulation or administrative or court
decree applicable to the Company.
(f) The Company
is organized in conformity with the requirements for qualification and, as of
the date hereof and as of the Closing, operates in a manner that
quali-
4
fies it
as a “real estate investment trust” under the Internal Revenue Code of 1986, as
amended, and the rules and regulations thereunder and will be so qualified after
giving effect to the sale of the Capital Shares.
(g) The
Company is not required to be registered under the Investment Company Act of
1940, as amended.
(h) No
legal or governmental proceedings are pending to which the Company or any of its
Subsidiaries is a party or to which the property of the Company or any of its
Subsidiaries is subject that are required to be described in the Registration
Statement or the Prospectus and are not described therein, and to the knowledge
of the Company, no such proceedings have been threatened against the Company or
any of its Subsidiaries or with respect to any of their respective properties
that are required to be described in the Registration Statement or the
Prospectus and are not described therein.
(i) No
authorization, approval or consent of or filing with any court or United States
federal or state governmental authority or agency is necessary in connection
with the sale of the Capital Shares hereunder, except such as may be required
under the Act or the Regulations or state securities laws or real estate
syndication laws.
(j) The
Company and its Subsidiaries possess such certificates, authorities or permits
issued by the appropriate state, federal or foreign regulatory agencies or
bodies necessary to conduct the business now conducted by them, except where the
failure to possess such certificates, authority or permits would not have a
material adverse effect on the condition, financial or otherwise, or the
earnings, business affairs or, to the Company’s knowledge, business prospects of
the Company and its Subsidiaries considered as one
enterprise. Neither the Company nor any of its Subsidiaries has
received any notice of proceedings relating to the revocation or modification of
any such certificate, authority or permit which, singly or in the aggregate, if
the subject of an unfavorable decision, ruling or finding, would materially and
adversely affect the condition, financial or otherwise, or the earnings,
business affairs or, to the Company’s knowledge, business prospects of the
Company and its Subsidiaries considered as one enterprise, nor, to the knowledge
of the Company, are any such proceedings threatened or
contemplated.
(k) The
Company has full power and authority to enter into this Agreement, and this
Agreement has been duly authorized, executed and delivered by the Company and
constitutes a legal, valid and binding agreement of the Company, enforceable
against the Company in accordance with its terms except as may be limited by the
Enforceability Exceptions.
(l) As
of the dates set forth therein or incorporated by reference, the Company had
good and marketable title to all of the properties and assets reflected in the
audited financial statements contained in the Prospectus, subject to no lien,
mortgage, pledge or encumbrance of any kind except (i) those reflected in such
financial statements, (ii) as are otherwise described in the Prospectus, (iii)
as do not materially adversely affect the value of such property or interests or
interfere with the use made or proposed to be made of such property or interests
by the Company and each of its Subsidiaries or
5
(iv) those
which constitute customary provisions of mortgage loans secured by the Company’s
properties creating obligations of the Company with respect to proceeds of the
properties, environmental liabilities and other customary protections for the
mortgagees.
(m) Neither
the issuance, sale and delivery of the Capital Shares nor the application of the
proceeds thereof by the Company as described in the Prospectus will cause the
Company to violate or be in violation of Regulation T, U or X of the Board of
Governors of the Federal Reserve System or any other regulation of such Board of
Governors.
(n) The
statements set forth in the Basic Prospectus under the caption “Description of
Our Common Stock” in so far as such statements purport to summarize provisions
of laws or documents referred to therein, are correct in all material respects
and fairly present the information required to be presented
therein.
4. Representation and
Warranties of the Investment Advisers. To induce the Company
to enter into this Agreement, each of the Investment Advisers hereby represents
and warrants that:
(a) It
is an investment adviser duly registered with the SEC under the Investment
Advisers Act of 1940, as amended.
(b) It
has been duly authorized to act as investment adviser on behalf of each Client
on whose behalf it is signing this Agreement (as identified under the name of
such Investment Adviser on Schedule B hereto)
and has the sole authority to make the investment decision to purchase Capital
Shares hereunder on behalf of such Client. An investment in the
Capital Stock is a suitable investment for each Client.
(c) It
has the power and authority to enter into and execute this Agreement on behalf
of each of the Clients listed under its name on Schedule B
hereto.
(d) This
Agreement has been duly authorized, executed and delivered by it and, assuming
it has been duly authorized, executed and delivered by the Company, constitutes
a legal, valid and binding agreement of such Investment Adviser, enforceable
against it in accordance with its terms except as may be limited by the
Enforceability Exceptions.
(e) It
has received a copy of the Company’s Basic Prospectus dated September 14,
2009 and Prospectus Supplement dated October 15, 2009.
5. Representation and
Warranties of the Broker-Dealers. To induce the Company to
enter into this Agreement, each Broker-Dealer represents and warrants
that:
(a) It
is duly registered and in good standing as a broker-dealer under the Exchange
Act and is licensed or otherwise qualified to do business as a broker-dealer
with the National Association of Securities Dealers, Inc. and in all states in
which it will offer any Capital Shares pursuant to this Agreement.
6
(b) Assuming
the Prospectus complies with all relevant provisions of the Act in connection
with the offer and sales of Capital Stock, each Broker-Dealer will conduct all
offers and sales of Capital Stock in compliance with the Act, the Exchange Act
and all rules and regulations promulgated thereunder.
(c) It
has delivered a copy of the Prospectus to each Purchaser set forth under its
name on Schedule
C hereto.
(d) It
has been granted a duly authorized power-of-attorney to execute and deliver this
Agreement on behalf of each Customer on whose behalf it is signing this
Agreement (as identified under the name of such Broker-Dealer on Schedule C hereto)
and such power has not been revoked.
(e) This
Agreement has been duly authorized, executed and delivered by it and, assuming
it has been duly authorized, executed and delivered by the Company, constitutes
a legal, valid and binding agreement of such Broker-Dealer, enforceable against
it in accordance with its terms except as may be limited by the Enforceability
Exceptions.
6. Conditions to Obligations of
the Parties. (a) The Purchasers’ several obligation
to purchase the Capital Shares shall be subject to the following conditions
having been met:
(i) the
representations and warranties set forth in Section 3 of this Agreement shall be
true and correct with the same force and effect as though expressly made at and
as of the Closing,
(ii) the
Placement Agent shall have received an opinion from Xxxxxxx LLP, special
Maryland counsel to the Company, dated as of the date of the Closing, addressed
to the Placement Agent and the Purchasers substantially in the form attached
hereto as Exhibit
A.
(iii) the
Placement Agent shall have received an opinion from Husch Xxxxxxxxx Xxxxxxx LLP,
special securities counsel to the Company, dated as of the date of the Closing,
addressed to the Placement Agent and the Purchasers substantially in the form
attached hereto as Exhibit
B.
(iv) the
Placement Agent shall have received a comfort letter from PKF, Certified Public
Accountants, A Professional Corporation, dated as of the Closing, substantially
in the form attached hereto as Exhibit C,
and
(v) on
the Closing Date, the Company shall have delivered to the Placement Agent a
certificate of the Chief Executive Officer and Chief Financial Officer of the
Company, dated as of the Closing Date, setting forth that each of the
representations and warranties contained in this Agreement shall be true on and
as of the Closing Date as if made as of the Closing Date and each of the
conditions and covenants contained herein shall
have been complied with to the extent compliance is required prior to Closing,
and shall have delivered such other customary certificates as the Placement
Agent shall have reasonably requested.
7
(b) The
Company’s obligation to issue and sell the Capital Shares shall be subject to
the following conditions having been met:
(i) the
representations and warranties set forth in Sections 2, 4 and 5 of this
Agreement shall be true and correct with the same force and effect as though
expressly made at and as of the Closing and
(ii) the
Settlement Agent shall have received payment in full for the Purchase Price for
the Capital Shares by federal wire of immediately available funds, not less than
the aggregate amount of $9,750,000 prior to the payment of fees and
expenses.
7. Closing. Provided
that the conditions set forth in Section 6 hereto and the last sentence of this
Section 7 have been met or waived at such time, the transactions contemplated
hereby shall be consummated on October 20, 2009, or at such other time and date
as the parties hereto shall agree (each such time and date of payment and
delivery being herein called the “Closing”). At
the Closing, settlement shall occur through Xxxxxx & Co. LP, or an affiliate
thereof, on a delivery versus payment basis through the DTC ID
System.
8. Covenants. The
Company hereby covenants and agrees that subject to all Purchasers consummating
the purchase of the Capital Shares at the Closing, the Company will use the
proceeds of the offering contemplated hereby as set forth under the caption “Use
of Proceeds” in the Prospectus Supplement.
9. Termination. This
Agreement may be terminated, and the transactions contemplated hereby may be
abandoned, by written notice promptly given to the other parties hereto, at any
time prior to the Closing by the Company, on the one hand, or if the Closing
shall not have occurred on or prior to October 30, 2009 by any Purchaser on the
other; provided
that the Company or such Purchaser, as the case may be, shall not be entitled to
terminate this Agreement pursuant to this Section 9 if the failure of Closing to
occur on or prior to such dates results primarily from such party itself having
materially breached any representation, warranty or covenant contained in this
Agreement.
10. Notices. Except
as otherwise herein provided, all statements, requests, notices and agreements
shall be in writing and, if to the Purchasers, shall be sufficient in all
respects if delivered or sent by facsimile to 000-000-0000 or by certified mail
to CSCA Capital Advisors, LLC, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000,
Attention: Xxxxxxx Xxxxxx, and, if to the Company, shall be sufficient in all
respects if delivered or sent to the Company by facsimile to 000-000-0000 or by
certified mail to the Company at 0000 Xxxxx 0 Xxxxx, Xxxxx 0X, Xxxxxxxx, Xxx
Xxxxxx 00000, Attention: Xxxxxxx Xxxxxx.
11. Governing
Law. This Agreement shall be construed in accordance with and
governed by the substantive laws of the State of New York, without regard to
conflict of laws principles.
12. Entire
Agreement. This Agreement constitutes the entire agreement
between the parties hereto with respect to the subject matter hereof and may be
amended only in a writing that is executed by each of the parties
hereto.
8
13. Counterparts. This
Agreement may be executed in separate counterparts, each of which shall be
deemed an original, and all of which together shall be deemed to constitute one
and the same instrument. Executed counterparts may be delivered by
facsimile.
14. Construction. When
used herein, the phrase “to the knowledge of” the Company or “known to” the
Company or any similar phrase means the actual knowledge of the Chief Executive
Officer, Chief Financial Officer or Chief Operating Officer of the Company and
includes the knowledge that such officers would have obtained of the matter
represented after reasonable due and diligent inquiry of those employees of the
Company whom such officers reasonably believe would have actual knowledge of the
matters represented.
15. Free Writing Prospectus
Legend. The Company has filed a registration statement
(including a prospectus) with the SEC for the offering to which this
communication relates. Before you invest, you should read the prospectus in that
registration statement and other documents the Company has filed with the SEC
for more complete information about the Company and this offering. You may get
these documents for free by visiting XXXXX on the SEC Web site at xxx.xxx.xxx.
Alternatively, the Company or CSCA Capital Advisors, LLC will arrange to send
you the prospectus if you request it by calling 000-000-0000.
9
IN WITNESS WHEREOF, the
parties hereto have caused this Purchase Agreement to be executed and delivered
as of the date first above written.
| MONMOUTH REAL ESTATE INVESTMENT CORPORATION | |||
|
|
By:
|
||
| Name: | |||
| Title: | |||
DIRECT
PURCHASERS
[ ]
By:_____________________________
Name:
[ ]
Title: [ ]
INVESTMENT
ADVISERS
[ ]
on behalf of itself (solely
with
respect to paragraph 4) and each Client set
forth
under its name on Schedule B
By:_____________________________
Name:
[ ]
Title: [ ]
CUSTOMERS
Each of
the Several persons or entities listed under
the
heading “Account Name” on Attachment [ ] to
Schedule
C hereto
By: [ ],
as agent and attorney-in-fact
By:_____________________________
Name
Title:
[ ]
on behalf of itself and solely with
respect
to paragraph 5
By:_____________________________
Name
Title:
SCHEDULE
A
NAME
OF DIRECT
PURCHASERS NUMBER
OF SHARES
[ ] [ ]
Schedule A - Page
1
SCHEDULE
B
NAME
OF INVESTMENT
ADVISER NUMBER OF SHARES
[ ]
CLIENTS
[ ]
Schedule B - Page
1
SCHEDULE
C
NAME
OF BROKER
DEALER: NUMBER OF
SHARES
[ ]
Customers
for whom it is signing this
Agreement
as agent and attorney-in-fact:
The amount set forth
opposite such name on
Attachment [ ] to
Schedule C under
the heading “Amount” (in the
aggregate
[ ])
Each of
the several persons or entities set
forth
under the heading “Account Name” on
Attachment
[ ] to Schedule C hereto
Schedule C - Page
1
SCHEDULE
D
Aggregate
Purchase Amount
[ ] $[ ]
Schedule D - Page
1
EXHIBIT
A
Opinion of Xxxxxxx
LLP
• The
Company is a corporation duly incorporated and validly existing under and by
virtue of the laws of the State of Maryland and is in good standing with the
State Department of Assessments and Taxation of Maryland.
• The
Company has the requisite corporate power to own or lease its properties and to
conduct its business as described in the Basic Prospectus under the caption
"Monmouth Real Estate Investment Corporation", to enter into the Purchase
Agreement and the Placement Agent Agreement (collectively, the "Agreements") and
to carry out all the terms and provisions of the Agreements to be carried out by
it.
• The
authorized stock of the Company is as set forth in the Prospectus Supplement
under the heading "Description of our Capital Stock" and consists of 35,000,000
shares of Common Stock, par value $0.01 per share, 5,000,000 shares of excess
stock, par value $0.01 per share, and 1,322,500 shares of 7.625% Series A
Cumulative Redeemable Preferred Stock (the "Series A Preferred Stock), par value
$0.01 per share, $25 liquidation value per share.
• The
issuance and sale of the Capital Shares pursuant to the Purchase Agreement have
been duly authorized by all necessary corporate action of the Company and, when
issued and delivered by the Company against payment of the agreed consideration
therefor in accordance with the provisions of the Purchase Agreement, the
Capital Shares will be validly issued, fully paid and
non-assessable.
• No
holders of outstanding shares of stock of the Company are entitled to any
preemptive or other similar rights under the Maryland General Corporation Law
(the "MGCL") or under the Charter or Bylaws of the Company to subscribe for or
purchase any of the Capital Shares.
• The
execution and delivery of the Agreements have been duly authorized by all
necessary corporate action on the part of the Company.
• The
execution, delivery and performance of the Agreements and the issuance and
delivery of the Capital Shares will not conflict with or result in a violation
of the provisions of the Charter or Bylaws of the Company, the laws of the State
of Maryland, or any decree, judgment or order of any Maryland governmental
authority applicable to the Company or any Maryland Subsidiaries.
• The
Capital Shares conform in all material respects to the description of the Common
Stock of the Company set forth under the subheadings "General" and
"Restrictions on Ownership and Transfer" in the section of the Basic Prospectus
entitled "Description of Capital Stock".
A-1
• The
Series A Preferred Stock conforms in all materials respects to the description
thereof set forth under the subheading "Series A Cumulative Redeemable Preferred
Stock" in the section of the Basic Prospectus entitled "Description of Capital
Stock".
• The
statements in the section of the Basic Prospectus entitled "Risk Factors" under
the heading "We are subject to restrictions that may impede our ability to
effect a change in control", insofar as such statements purport to summarize
provisions of the Charter or Bylaws of the Company or the MGCL, are accurate in
all material respects.
• No
authorization, approval or consent of any court or governmental authority of the
State of Maryland is necessary in connection with the consummation of the
transactions contemplated by the Agreements, except those, if any, which have
already been obtained or rendered (and except as may be required under the
securities laws of the State of Maryland, as to which we express no
opinion).
A-2
EXHIBIT
B
Opinion of Husch Xxxxxxxxx
Xxxxxxx LLP
• The
Registration Statement has been declared effective under the Act, and to our
knowledge, (a) no stop order suspending the effectiveness of the Registration
Statement or any part thereof has been issued, and (b) no proceedings for that
purpose have been instituted or are pending or threatened by the
SEC. The Prospectus has been filed with the SEC.
• The
Registration Statement and the Prospectus (other than the financial statements
and other financial data contained therein, as to which we express no opinion)
comply as to form in all material respects with the applicable requirements of
the Act and the Regulations.
• The
descriptions in the Registration Statement and the Prospectus of statutes, legal
and governmental proceedings, contracts and other legal documents, insofar as
they address legal matters, fairly summarize in all material respects the
information about legal matters required to be disclosed by the applicable Items
of the Registration Statement.
• Neither
the Company nor any of its Subsidiaries is an “investment company” or entity
controlled by an “investment company” within the meaning of the
Act.
• The
execution, delivery and performance of the Placement Agent Agreement and the
Purchase Agreement by the Company, and the issuance and delivery of the Capital
Shares, will not conflict with or constitute a material breach of any Material
Contract. For the purposes of this Section 2.5, “Material Contract”
means any agreement or instrument which the Company filed with the SEC as an
exhibit to the Registration Statement.
• To
our knowledge, no authorization, approval or consent of any court or United
States federal or state governmental authority or agency having jurisdiction
over the Company and its Subsidiaries and which govern transactions such as the
Transaction, is necessary in connection with the sale of the Capital Shares,
except such as may be required under the Act or the Regulations or under state
securities laws and real estate syndication laws as to which we express no
opinion.
• To
our knowledge, no legal or governmental proceedings are pending to which the
Company or any of its Subsidiaries is a party or to which the property of the
Company or any of its Subsidiaries is subject that are required to be described
in the Registration Statement or the Prospectus and are not described therein,
and to our knowledge no such proceedings have been threatened against the
Company or any of its Subsidiaries or with respect to any of their respective
properties that are required to be described in the Registration Statement or
the Prospectus and are not described therein.
• For
its taxable years ended September 30, 2005 through September 30, 2008, the
Company has continuously been organized and has operated in conformity with the
requirements for qualification as a “real estate investment trust” under the
Code.
B-1
• The
Company's current organization and method of operation will permit it to
continue to meet the requirements for taxation as a “real estate investment
trust” under the Code for its September 30, 2009 taxable year.
• The
federal income tax discussion described in the Prospectus under the caption
“Material United States Federal Income Tax Consequences”, to the extent such
discussion constitutes matters of law, summaries of legal matters or legal
conclusions, is correct in all material respects and fairly summarizes in all
material respects the federal income tax laws referred to therein.
In
connection with our representation of the Company with respect to the offering
of the Capital Shares, we have reviewed and relied upon certain corporate
records and documents, letters from counsel for the Company and accountants, and
oral and written statements of officers (specifically including but not limited
to the Secretary’s Certificate) and other representatives of the Company and
others as to the existence and consequence of certain factual and other matters,
and have participated in conferences with officers and other representatives of
the Company and representatives of the Placement Agent, including counsel for
the Placement Agent, during which conferences and conversations the contents of
the Registration Statement and the Prospectus and any amendment or supplement
thereto and related matters were discussed; and, based upon such participation
and review, and relying as to materiality in part upon the factual statements of
officers and other representatives of the Company and representatives of the
Placement Agent, nothing has come to our attention that causes us to believe
that the Prospectus (except for the financial statements and related data and
other financial or accounting data contained or incorporated by reference
therein or omitted therefrom, as to which we do not comment), as of its date and
the Closing Date, contained or contains an untrue statement of a material fact
or omitted or omits to state a material fact necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
B-2
EXHIBIT
C
Comfort
Letter
|
1.
|
We
are an independent registered public accounting firm with respect to the
Company within the meaning of the Act and the applicable rules and
regulations adopted by the Securities and Exchange Commission (the “SEC”)
and the Public Company Accounting Oversight Board (United States) (the
“PCAOB”).
|
|
2.
|
In
our opinion, the consolidated financial statements and financial statement
schedule audited by us and included in the Company’s Annual Report on Form
10-K at September 30, 2008, and incorporated by reference in the
Registration Statement comply as to form in all material respects with the
applicable accounting requirements of the Act and the Securities Exchange
Act of 1934 (the “Exchange Act”) and the related rules and regulations
adopted by the SEC.
|
|
3.
|
We
have not audited any financial statements of the Company as of any date or
for any period subsequent to September 30, 2008; although we have
conducted an audit for the year ended September 30, 2008, the purpose, and
therefore the scope, of the audit was to enable us to express our opinion
on the consolidated financial statements as of September 30, 2008, and for
the year then ended, but not on the consolidated financial statements for
any interim period within that year. Therefore, we are unable
to and do not express any opinion on (i) the unaudited consolidated
balance sheet at December 31, 2008 and the unaudited consolidated
statement of income and cash flows for the three-month period ended
December 31, 2008, all incorporated by reference in the Registration
Statement from the Company’s Quarterly Report on Form 10-Q for the quarter
ended December 31, 2008; (ii) the unaudited consolidated balance sheet at
March 31, 2009, the unaudited consolidated statements of operations for
the three-month and six-month periods ended March 31, 2009, and the
unaudited consolidated statements of cash flows for the six-month period
ended March 31, 2009, all incorporated by reference in the Registration
Statement from the Company’s Quarterly Report on Form 10-Q for the quarter
ended March 31, 2009; (iii) the unaudited consolidated balance sheet at
June 30, 2009, the unaudited consolidated statements of operations for the
three-month and nine-month periods ended June 30, 2009, and the unaudited
consolidated statements of cash flows for the nine-month period ended June
30, 2009, all incorporated by reference in the Registration Statement from
the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30,
2009; or (iv) the financial position, results of operations or cash flows
as of any date or for any period subsequent to September 30,
2008.
|
|
4.
|
For
purposes of this letter, we have read all minutes of meetings of the
stockholders, the Board of Directors, and Audit Committee of the Company as
set forth in the minute books from October 1, 2008 to the date hereof,
officials of the Company having advised us that the minutes of all such
meetings through that date were set forth therein; we have carried
out other procedures to October 12, 2009 as follows (our work did not
extend to the period from October 12, 2009 to October 14, 2009
inclusive).
|
|
|
a.
|
With
respect to the three-month period ended December 31, 2008, the three-month
and six-month periods ended March 31, 2009 and the three-month and
nine-month periods ended June 30, 2009 we
have:
|
|
|
(i)
|
Performed
the procedures specified by the PCAOB for a review of interim financial
information as described in PCAOB Interim Standard AU 722, Interim Financial
Information, on (i) the unaudited consolidated balance sheet at
December 31, 2008 and the unaudited consolidated statements of income and
cash flows for the three-month period ended December 31, 2008, all
incorporated by reference in the Registration Statement from the Company’s
Quarterly Report on Form 10-Q for the quarter ended December 31, 2008;
(ii) the unaudited consolidated balance sheet at March 31, 2009, the
unaudited consolidated statements of operations for the three-month and
six-month periods ended March 31, 2009, and the unaudited consolidated
statement of cash flows for the six-month period ended March
31,
|
|
|
|
|
|
C-1
2009, all
incorporated by reference in the Registration Statement from the Company’s
Quarterly Report on Form 10-Q for the quarter ended March 31, 2009; and (iii)
the unaudited consolidated balance sheet at June 30, 2009, the unaudited
consolidated statements of operations for the three-month and nine-month periods
ended June 30, 2009, and the unaudited consolidated statement of cash flows for
the nine-month period ended June 30, 2009, all incorporated by reference in the
Registration Statement.
|
|
a.
|
Inquired
of certain officials of the Company who have responsibility for financial
and accounting matters whether the unaudited consolidated financial
statements referred to in item a.(i) above comply as to form in all
material respects with the applicable accounting requirements of the
Exchange Act as it applies to Form 10-Q and the related rules and
regulations adopted by the SEC.
|
The
foregoing procedures do not constitute an audit conducted in accordance with the
standards of the PCAOB. Also, they would not necessarily reveal matters of
significance with respect to the comments in the following paragraph.
Accordingly, we make no representations regarding the sufficiency of the
foregoing procedures for your purposes.
|
5.
|
Nothing
came to our attention as a result of the foregoing procedures, however,
that caused us to believe that:
|
|
|
a.
|
Any
material modifications should be made to the unaudited consolidated
financial statements described in item 3 above, incorporated by reference
in the Registration Statement, for them to be in conformity with
accounting principles generally accepted in the United States of
America.
|
|
|
b.
|
The
unaudited consolidated financial statements described in item 3 above do
not comply as to form in all material respects with the applicable
accounting requirements of the Exchange Act as it applies to Form 10-Q and
the related rules and regulations adopted by the
SEC.
|
|
|
6.
|
Company
officials have advised us that no consolidated financial statements as of
any date or for any period subsequent to June 30, 2009, are available;
accordingly, the procedures carried out by us with respect to changes in
financial statement items after June 30, 2009 have, of necessity, been
even more limited than those with respect to the periods referred to in
item 3. We have inquired of certain officials of the Company who have
responsibility for financial and accounting matters whether (a) at October
12, 2009, there was any change in the capital stock, increase in long-term
debt or any decreases in consolidated net current assets or consolidated
shareholders’ equity of the Company as compared with amounts shown on the
June 30, 2009, unaudited consolidated balance sheet included in the
Registration Statement or (b) for the period from July 1, 2009 to October
12, 2009 there were any decreases, as compared with the corresponding
period in the preceding year, in consolidated rental and reimbursement
revenue or in the total or per-share amounts of net income
(loss). On the basis of these inquiries and our reading of the
minutes as described in item 4, nothing came to our attention that caused
us to believe that there was any such change, increase, or decrease,
except in all instances for changes, increases, or decreases that the
Registration Statement discloses have occurred or may
occur.
|
|
7.
|
Our
audit of the consolidated financial statements for the periods referred to
in the introductory paragraph of this letter comprised audit tests and
procedures deemed necessary for the purpose of expressing an opinion on
such financial statements taken as a whole. For none of the periods
referred to therein, or any other period, did we perform audit tests for
the purpose of expressing an opinion on individual balances of accounts or
summaries of selected transactions such as those enumerated above, and,
accordingly, we express no opinion
thereon.
|
|
8.
|
However,
for purposes of this letter we also read the items identified by you on
the attached copies of selected pages of the Company’s Annual Report on
Form 10-K for the year ended September 30, 2008 and the Company’s
Quarterly Reports on Form 10-Q for the quarterly periods ended
December
|
|
|
|
B-2
31, 2008,
March 31, 2009 and June 30, 2009, and have performed the following additional
procedures, identified in the letters below:
|
|
A.
|
Compared
the corresponding amounts or percentage in, or amounts or percentages
combined, to the Company’s September 30, 2008 audited financial statements
incorporated by reference in the Registration Statement and found them to
be in agreement.
|
|
|
B.
|
Compared
the corresponding amounts or percentage in, or amounts or percentages
combined, to the Company’s December 31, 2008, March 31, 2009, or June 30,
2009; unaudited financial statements incorporated by reference in the
Registration Statement and found them to be in
agreement.
|
|
|
C.
|
Compared
the amount or percentage with an agreement, a schedule or report prepared
by the Company from its accounting records and found them to be in
agreement.
|
|
|
D.
|
Compared
the corresponding amounts or percentage in, or amounts or percentages
combined, to the Company’s September 30, 2006 or 2005 financial statements
not audited by us, and not incorporated by reference in the Registration
Statement, and found them to be in agreement. Accordingly, we
provide no opinion or any other assurance on such amounts or
percentages.
|
|
|
E.
|
Not
used.
|
|
|
F.
|
Recalculated
the indicated amounts or percentage and found it to be in
agreement. Such recalculations were based upon consolidated
financial statements audited and reviewed by us as well as consolidated
financial statements not audited or reviewed by
us. Accordingly, we provide no opinion or other assurance on
any amounts or percentages for periods prior to September 30, 2008 which
were not audited or reviewed by us.
|
|
|
G.
|
Compared
the corresponding amounts or percentage in, or amounts or percentages
combined, to the Company’s September 30, 2007 or 2006 consolidated
financial statements not audited by us, but incorporated by reference in
the Registration Statement and found them to be in
agreement. Accordingly, we provide no opinion or any other
assurance on such amounts or
percentages.
|
|
|
H.
|
Compared
the corresponding amounts or percentage in, or amounts or percentages
combined, to the Company’s unaudited financial statements for periods
prior to September 30, 2008 incorporated by reference in the Registration
Statement and found them to be in agreement. Such consolidated
financial statements were not reviewed by us and accordingly, we provide
no level of assurance on such amounts or
percentages.
|
|
|
I.
|
Proved
the arithmetic accuracy of Funds From Operations (“FFO”). FFO
does not represent cash generated from operating activities in accordance
with U.S. generally accepted accounting principles and we make no comment
as to the sufficiency of the individual adjustments included to arrive at
FFO nor do we make any comment as to the sufficiency of the disclosures or
the suitability of this measure for valuation or other
purposes.
|
|
|
J.
|
Proved
the arithmetic accuracy of the percentages of amounts. No other
conclusions or verifications should be
inferred.
|
|
9.
|
It
should be understood that we make no representations regarding questions
of legal interpretation or regarding the sufficiency for your purposes of
the procedures enumerated in the preceding paragraph; also, such
procedures would not necessarily reveal any material misstatement of the
amounts or percentages listed above. Further, we have addressed ourselves
solely to the foregoing data as set forth in the registration statement
and make no representations regarding the adequacy of disclosure or
regarding whether any material facts have been
omitted.
|
B-3
