EXHIBIT 1.1
GOVERNMENT PROPERTIES TRUST, INC.
SHARES OF COMMON STOCK
UNDERWRITING AGREEMENT
January ___, 2004
FRIEDMAN, BILLINGS, XXXXXX & CO., INC.
BB&T CAPITAL MARKETS, A DIVISION OF XXXXX
& XXXXXXXXXXXX, INC.
FLAGSTONE SECURITIES
as Representatives of the several Underwriters
c/o Friedman, Billings, Xxxxxx & Co., Inc.
0000 00xx Xxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Dear Sirs:
Government Properties Trust, Inc., a Maryland corporation (the
"Company"), confirms its agreement with each of the Underwriters listed on
Schedule I hereto (collectively, the "Underwriters"), for whom Friedman,
Billings, Xxxxxx & Co., Inc. ("FBRC"), BB&T Capital Markets, a Division of Xxxxx
& Xxxxxxxxxxxx, Inc. and Flagstone Securities are acting as Representatives (in
such capacity, the "Representatives"), with respect to (i) the sale by the
Company of 14,000,000 shares (the "Initial Shares") of common stock, par value
$0.01 per share, of the Company ("Common Stock"), and the purchase by the
Underwriters, acting severally and not jointly, of the respective number of
shares of Common Stock set forth opposite the names of the Underwriters in
Schedule I hereto, and (ii) the grant of the option described in Section 1(b)
hereof to purchase all or any part of 2,100,000 additional shares of Common
Stock to cover over-allotments (the "Option Shares"), if any, from the Company
to the Underwriters, acting severally and not jointly, in the respective numbers
of shares of Common Stock set forth opposite the names of the Underwriters in
Schedule I hereto. The Initial Shares and all or any part of the Option Shares
are hereinafter called, collectively, the "Shares."
At or before the Closing Time, as defined below, for the purchase and
sale of the Initial Shares, the Company will complete a reincorporation as
described in the Preliminary Prospectus, defined below, and the Prospectus, as
defined below, under the captain "Related Party Transactions - Corporate
Background" (the "Reincorporation" and the documents, agreements and instruments
relating to the Reincorporation being the "Reincorporation Agreements").
The Company understands that the Underwriters propose to make a public
offering of the Shares as soon as the Underwriters deem advisable after this
Agreement has been executed and delivered.
The Company has filed with the Securities and Exchange Commission (the
Commission"), a registration statement on Form S-11 (No. 333-109565) and a
related preliminary prospectus for the registration of the Shares under the
Securities Act of 1933, as amended (the "Securities Act"), and the rules and
regulations thereunder (the "Securities Act Regulations"). The Company has
prepared and filed such amendments thereto, if any, and such amended preliminary
prospectuses, if any, as may have been required to the date hereof, and agrees
to file such additional amendments thereto and such amended prospectuses as may
hereafter be required. The registration statement, as amended at the time it
became effective (including all information deemed to be a part of the
registration statement at the time it becomes effective pursuant to Rule 430A of
the Securities Act Regulations), is hereinafter called the "Registration
Statement," except that, if the Company files a post-effective amendment to such
registration statement that becomes effective prior to the Closing Time, as
defined below, "Registration Statement" shall refer to such registration
statement as so amended. Any registration statement filed pursuant to Rule
462(b) of the Securities Act Regulations is hereinafter called the "Rule 462(b)
Registration Statement," and after such filing the term "Registration Statement"
shall include the 462(b) Registration Statement. The term "Preliminary
Prospectus" means the preliminary prospectus, dated January 2, 2004, relating to
the Shares, as such prospectus shall have been amended or supplemented from time
to time prior to the date of the Prospectus. The term "'Prospectus" means the
final prospectus, as first filed with the Commission pursuant to Rule 424(b) of
the Securities Act Regulations, and any amendments thereof or supplements
thereto.
The Company and the Underwriters agree as follows:
1. SALE AND PURCHASE.
(a) Initial Shares. Upon the basis of the warranties and
representations and other terms and conditions herein set forth, at the purchase
price per share of $________, the Company agrees to sell to the Underwriters the
Initial Shares, and each Underwriter agrees, severally and not jointly, to
purchase from the Company the number of Initial Shares set forth in Schedule I
opposite such Underwriter's name, plus any additional number of Initial Shares
that such Underwriter may become obligated to purchase pursuant to the
provisions of Section 8 hereof, subject in each case, to such adjustments among
the Underwriters as the Representatives in their sole discretion shall make to
eliminate any sales or purchases of fractional shares.
(b) Option Shares. In addition, upon the basis of the warranties
and representations and other terms and conditions herein set forth, at the
purchase price per share set forth in paragraph (a), the Company hereby grants
an option to the Underwriters, acting severally and not jointly, to purchase
from the Company, all or any part of the Option Shares, plus any additional
number of Option Shares that such Underwriter may become obligated to purchase
pursuant to the provisions of Section 8 hereof. The option hereby granted will
expire 30 days after the date hereof and may be exercised in whole or in part
from time to time only for the purpose of covering over-allotments which may be
made in connection with the offering and distribution of the Initial Shares upon
notice by the Representatives to the Company setting forth the number of Option
Shares as to which the several Underwriters are then exercising the option and
the time and date of payment and delivery for such Option Shares. Any such time
and date of delivery (a "Date of Delivery") shall be determined by the
Representatives, but shall not be
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later than five full business days after the exercise of such option, nor in any
event prior to the Closing Time, as defined below. If the option is exercised as
to all or any portion of the Option Shares, the Company will sell that number of
Option Shares then being purchased, and each of the Underwriters, acting
severally and not jointly, will purchase that proportion of the total number of
Option Shares then being purchased which the number of Initial Shares set forth
in Schedule I opposite the name of such Underwriter bears to the total number of
Initial Shares, subject in each case to such adjustments among the Underwriters
as the Representatives in their sole discretion shall make to eliminate any
sales or purchases of fractional shares.
2. PAYMENT AND DELIVERY.
(a) Initial Shares. The Shares to be purchased by each
Underwriter hereunder shall be delivered by or on behalf of the Company to the
Representatives through the facilities of The Depository Trust Company ("DTC")
for the account of such Underwriter, against payment by or on behalf of such
Underwriter of the purchase price therefor by wire transfer of Federal
(same-day) funds to the account specified in writing to the Representatives by
the Company upon at least 48 hours' prior notice. The time and date of such
delivery and payment shall be 9:30 a.m., New York City time, on the third
(fourth, if pricing occurs after 4:30 p.m., New York City time) business day
after the date hereof (unless another time and date shall be agreed to by the
Representatives and the Company). The time at which such payment and delivery
are actually made is hereinafter sometimes called the "Closing Time" and the
date of delivery of both Initial Shares and Option Shares is hereinafter
sometimes called the "Date of Delivery."
(b) Option Shares. Any Option Shares to be purchased by each
Underwriter hereunder shall be delivered by or on behalf of the Company to the
Representatives through the facilities of DTC for the account of such
Underwriter, against payment by or on behalf of such Underwriter of the purchase
price therefor by wire transfer of Federal (same-day) funds to the account
specified in writing to the Representatives by the Company upon at least 48
hours' prior notice. The time and date of such delivery and payment shall be
9:30 a.m., New York City time, on the date specified by the Representatives in
the notice given by the Representatives to the Company of the Underwriters'
election to purchase such Option Shares or on such other time and date as the
Company and the Representatives may agree upon in writing.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to the Underwriters that:
(a) the Company is a wholly owned subsidiary of Gen-Net Lease
Income Trust, Inc. ("Gen-Net") and immediately after the consummation of the
Reincorporation will be the successor in interest of Gen-Net; the authorized
shares of capital stock of Gen-Net consists of 10,000,000 shares of common
stock; as of the date hereof, 975,552 shares of Gen-Net's common stock
(collectively, the "Gen-Net Common Stock") are issued and outstanding, all of
which have been duly and validly authorized and issued and are fully paid and
non-assessable and free of preemptive or other similar rights arising by
operation of law, under the organizational documents of Gen-Net or under any
agreement to which Gen-Net is a party or otherwise subject to; except as
disclosed in the Prospectus, there are no outstanding (i) shares of capital
stock of Gen-Net other than the Gen-Net Common Stock, (ii) securities or
obligations of Gen-Net
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convertible into or exchangeable or redeemable for any capital stock or other
equity interests of Gen-Net or any of its subsidiaries (each a "Gen-Net
Subsidiary"), (iii) warrants, rights or options to subscribe for or purchase
from Gen-Net any such capital stock or other equity interests or any such
convertible or exchangeable securities or obligations, or (iv) obligations of
Gen-Net to issue any shares of capital stock or other equity interests, any such
convertible or exchangeable or redeemable securities or obligation, or any such
warrants, rights or options; all of the outstanding shares of capital stock or
partnership or membership interests of the Gen-Net Subsidiaries are directly or
indirectly owned of record and beneficially by Gen-Net, free and clear of any
pledge, lien, encumbrance, security interest or other claim;
(b) the Company has an authorized capitalization, and will have
immediately after the Closing Time for the purchase and sale of the Initial
Shares, an actual capitalization, as set forth in the Prospectus; the
outstanding shares of capital stock or, as applicable partnership or membership
interests, of the Company and each subsidiary of the Company (each, a
"Subsidiary"), have been duly and validly authorized and issued and are fully
paid and, with respect to shares of capital stock, membership interests and
limited partnership interests, non-assessable, and all of the outstanding shares
of capital stock or partnership or membership interests of the Subsidiaries are
directly or indirectly owned of record and beneficially by the Company, free and
clear of any pledge, lien, encumbrance, security interest or other claim, and,
except as disclosed in the Prospectus, there are no outstanding (i) securities
or obligations of the Company or any of the Subsidiaries convertible into or
exchangeable or redeemable for any capital stock or other equity interests of
the Company or any such Subsidiary, (ii) warrants, rights or options to
subscribe for or purchase from the Company or any such Subsidiary any such
capital stock or other equity interests or any such convertible or exchangeable
securities or obligations, or (iii) obligations of the Company or any such
Subsidiary to issue any shares of capital stock or other equity interests, any
such convertible or exchangeable or redeemable securities or obligation, or any
such warrants, rights or options;
(c) each of Gen-Net, the Gen-Net Subsidiaries, the Company and
the Subsidiaries has been duly incorporated or organized and is validly existing
as a corporation, limited partnership or limited liability company, as
applicable, in good standing under the laws of its respective jurisdiction of
incorporation or organization with full corporate or other power and authority
to own its respective properties and to conduct its respective business as
described in the Registration Statement and Prospectus and, in the case of the
Company, to execute and deliver this Agreement and to consummate the
transactions contemplated herein;
(d) each of Gen-Net, the Gen-Net Subsidiaries, the Company and
the Subsidiaries is duly qualified or licensed and is in good standing in each
jurisdiction in which the nature or conduct of its business requires such
qualification or license and in which the failure, individually or in the
aggregate, to be so qualified or licensed could reasonably be expected have a
material adverse effect on the assets, business, operations, earnings,
properties or condition (financial or otherwise) of the Company and the
Subsidiaries taken as a whole (a "Material Adverse Effect"); except as disclosed
in the Prospectus, no Subsidiary is prohibited or restricted, directly or
indirectly, under its respective organizational documents or any other agreement
from paying dividends to the Company or from making any other distribution with
respect to such Subsidiary's capital stock or other equity interests or from
repaying to the Company or any other Subsidiary any amounts that may from time
to time become due under any loans or advances to
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such Subsidiary from the Company or such other Subsidiary, or from transferring
any such Subsidiary's property or assets to the Company or to any other
Subsidiary; other than as disclosed in the Prospectus, the Company does not own,
directly or indirectly, any capital stock or other equity securities of any
other corporation or any ownership interest in any partnership, joint venture or
other association; except as disclosed in the Prospectus, no Gen-Net Subsidiary
is prohibited or restricted, directly or indirectly, under its respective
organizational documents or any other agreement from paying dividends to Gen-Net
or from making any other distribution with respect to such Gen-Net Subsidiary's
capital stock or other equity interests or from repaying to Gen-Net or any other
Gen-Net Subsidiary any amounts that may from time to time become due under any
loans or advances to such Gen-Net Subsidiary from Gen-Net or such other Gen-Net
Subsidiary, or from transferring any such Gen-Net Subsidiary's property or
assets to Gen-Net or to any other Gen-Net Subsidiary; other than as disclosed in
the Prospectus, Gen-Net does not own, directly or indirectly, any capital stock
or other equity securities of any other corporation or any ownership interest in
any partnership, joint venture or other association;
(e) Gen-Net, the Gen-Net Subsidiaries, the Company and the
Subsidiaries are, and, in the case of the Company and the Subsidiaries, will be
upon consummation of the Reincorporation, in compliance with all applicable
federal, state, local or foreign laws, regulations, rules, decrees, judgments
and orders, including those relating to transactions with affiliates, except
where any failures to be in compliance could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect;
(f) neither Gen-Net, any Gen-Net Subsidiary, the Company nor any
Subsidiary is in breach of or in default under (nor has any event occurred which
with notice, lapse of time, or both would constitute a breach of, or default
under) its respective organizational documents, or in the performance or
observance of any obligation, agreement, including the Reincorporation
Agreements, covenant or condition contained in any license, indenture, mortgage,
deed of trust, loan or credit agreement or other agreement or instrument to
which Gen-Net, any Gen-Net Subsidiary, the Company or any Subsidiary is a party
or by which any of them or their respective properties is bound, except for such
breaches or defaults that, individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect;
(g) the execution, delivery and performance of this Agreement and
the Reincorporation Agreements, and consummation of the transactions
contemplated herein or therein, will not (A) conflict with, or result in any
breach of, or constitute a default under (nor constitute any event which with
notice, lapse of time, or both would constitute a breach of, or default under),
(i) any provision of the organizational documents of Gen-Net, any Gen-Net
Subsidiary, the Company or any Subsidiary, or (ii) any provision of any license,
indenture, mortgage, deed of trust, loan or credit agreement or other agreement
or instrument to which Gen-Net, any Gen-Net Subsidiary, the Company or any
Subsidiary is a party or by which any of them or their respective assets or
properties (including those to be acquired upon consummation of the
Reincorporation) may be bound or affected, or under any federal, state, local or
foreign law, regulation or rule or any decree, judgment or order applicable to
Gen-Net, any Gen-Net Subsidiary, the Company or any Subsidiary, except in the
case of this clause (ii) for such breaches or defaults that, individually or in
the aggregate, could not reasonably be expected to have a Material Adverse
Effect; or (B) result in the creation or imposition of any lien, charge, claim
or encumbrance upon any property or asset of Gen-Net, any Gen-Net Subsidiary,
the
5
Company or any Subsidiary or any of the properties or assets to be acquired
pursuant to the Reincorporation;
(h) this Agreement has been duly authorized, executed and
delivered by the Company and is a legal, valid and binding agreement of the
Company enforceable in accordance with its terms, except as may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors' rights generally, and by general equitable principles, and except to
the extent that the indemnification and contribution provisions of Section 9
hereof may be limited by federal or state securities laws and public policy
considerations in respect thereof;
(i) no approval, authorization, consent or order of or filing
with any federal, state, local or foreign governmental or regulatory commission,
board, body, authority or agency or any other third party is required in
connection with the Company's execution, delivery and performance of this
Agreement, its consummation of the transactions contemplated herein or the
Company's sale and delivery of the Shares or in connection with the execution,
delivery and performance of the Reincorporation Agreements or the consummation
of the transactions contemplated therein by any party thereto, other than (i)
such as have been obtained, or will have been obtained at the Closing Time or
the relevant Date of Delivery, as the case may be, under the Securities Act and
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), (ii) such
approvals as have been obtained in connection with the approval of the listing
of the Shares and the shares of Common Stock to be issued in connection with the
Reincorporation (the "Reincorporation Shares") on the New York Stock Exchange,
(iii) any necessary qualification under the securities or blue sky laws of the
various jurisdictions in which the Shares are being offered by the Underwriters,
(iv) electing REIT status under the Internal Revenue Code of 1986, as amended,
including the regulations and published interpretations thereunder ("Code"), and
(v) such actions that if not obtained, individually or in the aggregate, could
not reasonably be expected to have a Material Adverse Effect;
(j) each of Gen-Net, the Gen-Net Subsidiaries, the Company and
the Subsidiaries has, and, in the case of the Company and the Subsidiaries, will
have upon consummation of the Reincorporation, all necessary licenses,
authorizations, consents and approvals and has made all necessary filings
required under any federal, state, local or foreign law, regulation or rule, and
has obtained all necessary authorizations, consents and approvals from other
persons, required in order to conduct their respective businesses as described
in the Prospectus, except to the extent that any failure to have any such
licenses, authorizations, consents or approvals, to make any such filings or to
obtain any such authorizations, consents or approvals could not, individually or
in the aggregate, reasonably be expected to have a Material Adverse Effect;
neither Gen-Net, any of the Gen-Net Subsidiaries, the Company nor any of the
Subsidiaries is in violation of, in default under, or has received any notice
regarding a possible violation, default or revocation of any such license,
authorization, consent or approval or any federal, state, local or foreign law,
regulation or rule or any decree, judgment or order applicable to Gen-Net, any
of the Gen-Net Subsidiaries, the Company or any of the Subsidiaries, the effect
of which could reasonably be expected to result in a Material Adverse Effect;
and no such license, authorization, consent or approval contains a materially
burdensome restriction that is not adequately disclosed in the Registration
Statement and the Prospectus; neither Gen-Net, any of the Gen-Net Subsidiaries,
the Company nor any of the Subsidiaries is required by any applicable law to
obtain accreditation or certification from any governmental agency or authority
6
in order to provide the products and services that it currently provides or that
it proposes to provide as set forth in the Prospectus except to the extent that
any failure to have such accreditation or certification could not, individually
or in the aggregate, reasonably be expected to have a Material Adverse Effect;
(k) each of the Registration Statement and any Rule 462(b)
Registration Statement has become effective under the Securities Act and no stop
order suspending the effectiveness of the Registration Statement or any Rule
462(b) Registration Statement has been issued under the Securities Act and no
proceedings for that purpose have been instituted or are pending or, to the
knowledge of the Company, are threatened by the Commission, and, to the
knowledge of the Company, the Company has complied to the Commission's
satisfaction with any request on the part of the Commission for additional
information;
(l) the Preliminary Prospectus and the Registration Statement
comply, and the Prospectus and any further amendments or supplements thereto
will, when they have become effective or are filed with the Commission, as the
case may be, comply, in all material respects with the requirements of the
Securities Act and the Securities Act Regulations; the Registration Statement
did not, and any amendment thereto will not, in each case as of the applicable
effective date, contain an untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make the
statements therein not misleading; and the Preliminary Prospectus does not, and
the Prospectus or any amendment or supplement thereto will not, as of the
applicable filing date and at the Closing Time and on each Date of Delivery (if
any), contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading;
provided, however, that the Company makes no warranty or representation with
respect to any statement contained in the Registration Statement, the
Preliminary Prospectus or the Prospectus, in reliance upon and in conformity
with the information concerning the Underwriters and furnished in writing by or
on behalf of the Underwriters through the Representatives to the Company
expressly for use in the Registration Statement, the Preliminary Prospectus or
the Prospectus (that information being limited to that described in the
penultimate sentence of the first paragraph of Section 9(b) hereof);
(m) the Preliminary Prospectus was and the Prospectus delivered
to the Underwriters for use in connection with this offering will be identical
to the respective version of the Preliminary Prospectus or Prospectus
transmitted to the Commission under the Securities Act for filing via the
Electronic Data Gathering Analysis and Retrieval System ("XXXXX"), except to the
extent permitted by Regulation S-T;
(n) there are no actions, suits, proceedings, inquiries or
investigations pending or, to the knowledge of Gen-Net and the Company,
threatened against Gen-Net, any Gen-Net Subsidiary, the Company or any
Subsidiary or any of their respective officers and directors or to which the
properties, assets or rights of any such entity (including any to be acquired
upon consummation of the Reincorporation) are subject, at law or in equity,
before or by any federal, state, local or foreign governmental or regulatory
commission, board, body, authority, arbitral panel or agency, where in any such
case (A) there is a reasonable possibility that such action, suit or proceeding
will be determined adversely to Gen-Net, such Gen-Net Subsidiary, the Company
7
or such Subsidiary and (B) if so determined adversely, could reasonably be
expected to result in a judgment, decree, award or order having a Material
Adverse Effect;
(o) the financial statements, including the related supporting
schedules and notes, included in the Registration Statement and the Prospectus
present fairly the consolidated financial position of the entities to which such
financial statements relate (the "Covered Entities") as of the dates indicated
and the consolidated results of operations and changes in financial position and
cash flows of the Covered Entities for the periods specified; such financial
statements have been prepared in conformity with generally accepted accounting
principles as applied in the United States and on a consistent basis during the
periods involved (except as may be expressly stated in the related notes
thereto) and in accordance with Regulation S-X promulgated by the Commission;
the financial data in the Prospectus under the captions "Summary - Summary
Financial Data," and "Selected Financial Information" fairly present the
information shown therein and have been compiled on a basis consistent with the
financial statements included in the Registration Statement and the Prospectus;
no other financial statements or supporting schedules are required to be
included in the Registration Statement; the unaudited pro forma financial
information (including the related notes) included in the Prospectus complies as
to form in all material respects with the applicable accounting requirements of
the Securities Act and the Securities Act Regulations, and management of the
Company believes that the assumptions underlying the pro forma adjustments are
reasonable; such pro forma information fairly presents with respect to the
Company and the Subsidiaries, the financial position, results of operations and
other information purported to be shown therein at the respective dates and for
the respective periods specified; no other pro forma financial information is
required to be included in the Registration Statement;
(p) Ernst & Young LLP, whose report on the audited consolidated
financial statements of the Company and report on the statement of revenue and
certain expenses of certain of the Company's properties are filed with the
Commission as part of the Registration Statement and Prospectus and who
delivered its opinions with respect thereto, are, and were during the periods
covered by their reports, independent public accountants as required by the
Securities Act and the Securities Act Regulations;
(q) Xxxxx & Xxxxxxxxxxx, P.L.L.C., whose reports on the
statements of revenue and direct operating expenses of certain of the Company's
properties are filed with the Commission as part of the Registration Statement
and Prospectus and who delivered its opinions with respect thereto, are, and
were during the periods covered by their reports, independent public accountants
as required by the Securities Act and the Securities Act Regulations;
(r) subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus, and except as may be
otherwise stated in the Registration Statement or Prospectus (including the
description of the Reincorporation contained therein), there has not been (i)
any change, or any development or event that reasonably could be expected to
result in a change, that has or reasonably could be expected to have a Material
Adverse Effect, whether or not arising in the ordinary course of business, (ii)
any transaction that is material to Gen-Net, the Gen-Net Subsidiaries, the
Company and the Subsidiaries taken as a whole entered into or agreed to be
entered into by Gen-Net, any of the Gen-Net Subsidiaries, the Company or any of
the Subsidiaries, (iii) any obligation, contingent or otherwise, directly or
8
indirectly incurred by Gen-Net, any Gen-Net Subsidiary, the Company or any
Subsidiary that is material to Gen-Net, the Gen-Net Subsidiaries, the Company
and Subsidiaries taken as a whole or (iv) any dividend or distribution of any
kind declared, paid or made by Gen-Net or the Company on any class of its
respective capital stock;
(s) the Shares conform in all material respects to the
description thereof contained in the Registration Statement and the Prospectus;
(t) there are no persons with registration or other similar
rights to have any equity or debt securities, including securities that are
convertible into or exchangeable or redeemable for equity securities, registered
pursuant to the Registration Statement or otherwise registered by Gen-Net or the
Company under the Securities Act except for those registration or similar rights
that have been waived with respect to the offering contemplated by this
Agreement, all of which registration or similar rights are fairly summarized in
the Prospectus;
(u) the Shares have been duly authorized and, when issued and
duly delivered against payment therefor as contemplated by this Agreement, will
be validly issued, fully paid and non-assessable, free and clear of any pledge,
lien, encumbrance, security interest or other claim, and the issuance and sale
of the Shares by the Company is not subject to preemptive or other similar
rights arising by operation of law, under the organizational documents of the
Company or under any agreement to which the Company or any Subsidiary is a party
or otherwise subject to;
(v) the Shares have been registered under Section 12(b) of the
Exchange Act and the Shares and the Reincorporation Shares approved for listing
on the New York Stock Exchange, subject to official notice of issuance;
(w) the Company has not taken, and will not take, directly or
indirectly, any action that is designed to or that has constituted or that might
reasonably be expected to cause or result in stabilization or manipulation of
the price of any security of the Company to facilitate the sale or resale of the
Shares;
(x) neither Gen-Net, the Company nor any of their respective
affiliates (i) is required to register as a "broker" or "dealer" in accordance
with the provisions of the Exchange Act, or the rules and regulations thereunder
(the "Exchange Act Regulations"), or (ii) directly, or indirectly through one or
more intermediaries, controls or has any other association with (within the
meaning of Article I of the By-laws of the National Association of Securities
Dealers, Inc. (the "NASD")) any member firm of the NASD;
(y) neither Gen-Net nor the Company has relied upon the
Representatives or legal counsel for the Representatives for any legal, tax or
accounting advice in connection with this offering and sale of the Shares;
(z) any certificate signed by any officer of the Company or any
Subsidiary delivered to the Representatives or to counsel for the Underwriters
pursuant to or in connection with this Agreement shall be deemed a
representation and warranty by the Company to each Underwriter as to the matters
covered thereby;
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(aa) the form of certificate used to evidence the Common Stock
complies in all material respects with all applicable statutory requirements,
with any applicable requirements of the organizational documents of the Company
and the requirements of the New York Stock Exchange;
(bb) immediately prior to the consummation of the
Reincorporation, Gen-Net or the Gen-Net Subsidiaries have good and indefeasible
title in fee simple to, or a valid leasehold interest in, all real property
described in the Prospectus, and good title to all personal property owned by
them, in each case free and clear of all liens, security interests, pledges,
charges, encumbrances, encroachments, restrictions, mortgages and defects,
except such as are disclosed in the Prospectus or such as do not materially and
adversely affect the value of such property and do not interfere with the use
made or proposed to be made of such property by Gen-Net or the Gen-Net
Subsidiaries; any real property improvements, equipment and personal property
held under lease by Gen-Net or any of its subsidiaries are held under valid,
existing and enforceable leases, with such exceptions as are disclosed in the
Prospectus or are not material and do not interfere with the use made or
proposed to be made of such property improvements, equipment and personal
property by Gen-Net or such Gen-Net Subsidiary; upon consummation of the
Reincorporation, the Company or the Subsidiaries will have good and indefeasible
title in fee simple to, or a valid leasehold interest in, all real property
described in the Prospectus, and good title to all personal property owned (or
to be owned upon consummation of the Reincorporation) by them, in each case free
and clear of all liens, security interests, pledges, charges, encumbrances,
encroachments, restrictions, mortgages and defects, except such as are disclosed
in the Prospectus or such as do not materially and adversely affect the value of
such property and do not interfere with the use made or proposed to be made of
such property by the Company or the Subsidiaries; any real property
improvements, equipment and personal property held under lease (or to be held
under lease upon the consummation of the Reincorporation) by the Company or any
Subsidiary will be held under valid, existing and enforceable leases, with such
exceptions as are disclosed in the Prospectus or are not material and do not
interfere with the use made or proposed to be made of such property
improvements, equipment and personal property by the Company or such Subsidiary;
the Company or a Subsidiary will have obtained an owner's or leasehold title
insurance policy, from a title insurance company licensed to issue such policy,
on any real property owned in fee or leased (or to be so owned or leased upon
the consummation of the Reincorporation), as the case may be, by the Company or
any Subsidiary, that insures the Company's or the Subsidiary's fee or leasehold
interest, as the case may be, in such real property, which policies include only
commercially reasonable exceptions, and with coverages in amounts at least equal
to amounts that are generally deemed in the Company's industry to be
commercially reasonable in the markets where the Company's properties are
located, or a lender's title insurance policy insuring the lien of its mortgage
securing the real property with coverage equal to the maximum aggregate
principal amount of any indebtedness held by the Company or a Subsidiary and
secured by the real property;
(cc) all real property owned or leased by Gen-Net, any of the
Gen-Net Subsidiaries, the Company or a Subsidiary (or to be owned or leased upon
consummation of the Reincorporation) is free of material structural defects and
all building systems contained therein are in good working order in all material
respects, subject to ordinary wear and tear or, in each instance, Gen-Net or the
Company has created an adequate reserve to effect reasonably required repairs,
maintenance and capital expenditures; to the knowledge of Gen-Net and the
Company,
10
water, storm water, sanitary sewer, electricity and telephone service are all
available at the property lines of such property over duly dedicated streets or
perpetual easements of record benefiting such property; except as described in
the Prospectus, to the knowledge of Gen-Net and the Company, there is no pending
or threatened special assessment, tax reduction proceeding or other action that,
individually or in the aggregate, could reasonably be expected to increase or
decrease the real property taxes or assessments of any of such property, that,
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect;
(dd) the mortgages and deeds of trust encumbering, or upon
consummation of the Reincorporation to be encumbering, any real property owned
in fee or leased by Gen-Net, a Gen-Net Subsidiary, the Company or a Subsidiary
(or to be owned or leased upon consummation of the Reincorporation) (i) are not
convertible (in the absence of foreclosure) into an equity interest in the Real
Property or in Gen-Net, any Gen-Net Subsidiary, the Company or any Subsidiary,
and none of Gen-Net, the Gen-Net Subsidiaries, the Company or the Subsidiaries
hold a participating interest therein, (ii) except as set forth in the
Prospectus, are not and will not be cross-defaulted to any indebtedness other
than indebtedness of Gen-Net, any of the Gen-Net Subsidiaries, the Company or
any of the Subsidiaries and (iii) are not and will not be cross-collateralized
to any property not owned by Gen-Net, any of the Gen-Net Subsidiaries, the
Company or any of the Subsidiaries;
(ee) the descriptions in the Registration Statement and the
Prospectus of the legal or governmental proceedings, contracts, leases and other
legal documents therein described present fairly in all material respects the
information required to be shown, and there are no legal or governmental
proceedings, contracts, leases, or other documents of a character required to be
described in the Registration Statement or the Prospectus or to be filed as
exhibits to the Registration Statement that are not described or filed as
required; all agreements between Gen-Net, any of the Gen-Net Subsidiaries, the
Company or any of the Subsidiaries and third parties expressly referenced in the
Prospectus are legal, valid and binding obligations of Gen-Net, the Company or
one or more of Gen-Net Subsidiaries or the Subsidiaries, enforceable in
accordance with their respective terms, except to the extent enforceability may
be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors' rights generally and by general equitable principles and,
to the knowledge of Gen-Net and the Company, no party is in breach or default
under any such agreements;
(ff) Gen-Net, each Gen-Net Subsidiary, the Company and each
Subsidiary owns or possesses, and, in the case of the Company and the
Subsidiaries, upon completion of the Reincorporation will own or possess,
adequate licenses or other rights to use all patents, trademarks, service marks,
trade names, copyrights, software and design licenses, trade secrets,
manufacturing processes, other intangible property rights and know-how
(collectively "Intangibles") necessary to entitle Gen-net, each Gen-Net
Subsidiary, the Company and each Subsidiary to conduct its business in all
material respects as described in the Prospectus, and neither Gen-Net, any
Gen-Net Subsidiary, the Company nor any Subsidiary has received notice of
infringement of or conflict with (and neither Gen-Net nor the Company knows of
such infringement of or conflict with) asserted rights of others with respect to
any Intangibles that, individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect;
11
(gg) Gen-Net, each of the Gen-Net Subsidiaries, the Company and
each of the Subsidiaries maintain a system of internal accounting controls
sufficient to provide reasonable assurance that (i) transactions are executed in
accordance with management's general or specific authorizations; (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles as
applied in the United States and to maintain asset accountability; (iii) access
to assets is permitted only in accordance with management's general or specific
authorization; and (iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences;
(hh) each of Gen-Net, the Gen-Net Subsidiaries, the Company and
the Subsidiaries has filed on a timely basis (including in accordance with any
applicable extensions) all necessary federal, state, local and foreign income
and franchise tax returns required to be filed through the date hereof or have
properly requested extensions thereof, and have paid all taxes shown as due
thereon, and if due and payable, any related or similar assessment, fine or
penalty levied against Gen-Net, any of the Gen-Net Subsidiaries, the Company or
any of the Subsidiaries; no tax deficiency has been asserted against any such
entity, and Gen-Net, the Gen-Net Subsidiaries, the Company and the Subsidiaries
do not know of any tax deficiency that is likely to be asserted against any such
entity that, individually or in the aggregate, if determined adversely to any
such entity, could reasonably be expected to have a Material Adverse Effect; all
tax liabilities are adequately provided for on the respective books of Gen-Net,
the Gen-Net Subsidiaries, the Company and the Subsidiaries;
(ii) each of Gen-Net, the Gen-Net Subsidiaries, the Company and
the Subsidiaries maintains insurance (issued by insurers of recognized financial
responsibility) of the types and in the amounts generally deemed adequate for
their respective businesses and consistent with insurance coverage maintained by
similar companies in similar businesses, including, but not limited to,
insurance covering real and personal property owned or leased by Gen-Net, the
Gen-Net Subsidiaries, the Company and the Subsidiaries against theft, damage,
destruction, environmental liabilities, acts of vandalism, terrorism,
earthquakes, flood and all other risks customarily insured against, all of which
insurance is in full force and effect;
(jj) neither Gen-Net, any of the Gen-Net Subsidiaries, the
Company nor any of the Subsidiaries is in violation, or has received notice of
any violation with respect to, any applicable environmental, safety or similar
law, regulation or rule applicable to the business of Gen-Net, any of the
Gen-Net Subsidiaries, the Company or any of the Subsidiaries; Gen-Net, the
Gen-Net Subsidiaries, the Company and the Subsidiaries have received, and will
have upon completion of the Reincorporation, all permits, licenses or other
approvals required of them under applicable federal and state occupational
safety and health and environmental laws, regulations and rules to conduct their
respective businesses, and Gen-Net, the Gen-Net Subsidiaries, the Company and
the Subsidiaries are in compliance with all terms and conditions of any such
permit, license or approval, except any such violation of law, regulation or
rule, failure to receive required permits, licenses or other approvals or
failure to comply with the terms and conditions of such permits, licenses or
approvals that, individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect;
12
(kk) neither Gen-Net, any Gen-Net Subsidiary, the Company nor any
Subsidiary is in violation of or has received notice of any violation with
respect to any federal or state law, regulation or rule relating to
discrimination in the hiring, termination, promotion, employment or pay of
employees, nor any applicable federal or state wages and hours law, nor any
state law, regulation or rule precluding the denial of credit due to the
neighborhood in which a property is situated, the violation of any of which,
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect;
(ll) Gen-Net, each of the Gen-Net Subsidiaries, the Company and
each of the Subsidiaries are in compliance in all material respects with all
presently applicable provisions of the Employee Retirement Income Security Act
of 1974, as amended, including the regulations and published interpretations
thereunder ("ERISA"); no "reportable event" (as defined in ERISA) has occurred
with respect to any "pension plan" (as defined in ERISA) for which Gen-Net, any
of the Gen-Net Subsidiaries, the Company or any of the Subsidiaries would have
any material liability; Gen-Net, each of the Gen-Net Subsidiaries, the Company
and each of the Subsidiaries have not incurred and do not expect to incur
material liability under (i) Title IV of ERISA with respect to termination of,
or withdrawal from, any "pension plan" or (ii) Section 412 or 4971 of the Code;
and each "pension plan" for which Gen-Net, any of the Gen-Net Subsidiaries, the
Company or any of the Subsidiaries would have any material liability that is
intended to be qualified under Section 401(a) of the Code is so qualified in all
material respects and nothing has occurred, whether by action or by failure to
act, that would cause the loss of such qualification;
(mm) neither Gen-Net, any of the Gen-Net Subsidiaries, the
Company nor any of the Subsidiaries nor, to Gen-Net's and the Company's
knowledge, any officer, director or agent purporting to act on behalf of
Gen-Net, any of the Gen-Net Subsidiaries, the Company or any of the Subsidiaries
has at any time (i) made any payment outside the ordinary course of business to
any investment officer or loan broker or person charged with similar duties of
any entity to which Gen-Net, any of the Gen-Net Subsidiaries, the Company or any
of the Subsidiaries sells or from which Gen-Net, any of the Gen-Net
Subsidiaries, the Company or any of the Subsidiaries buys loans or servicing
arrangements for the purpose of influencing such agent, officer, broker or
person to buy loans or servicing arrangements from or sell loans to Gen-Net, any
of the Gen-Net Subsidiaries, the Company or any of the Subsidiaries, or (ii)
engaged in any transactions, maintained any bank account or used any corporate
funds except for transactions, bank accounts and funds which have been and are
reflected in the normally maintained books and records of Gen-Net, the Gen-Net
Subsidiaries, the Company and the Subsidiaries;
(nn) except as otherwise disclosed in the Prospectus, there are
no material outstanding loans or advances or material guarantees of indebtedness
by Gen-net, any of the Gen-Net Subsidiaries, the Company or any of the
Subsidiaries to or for the benefit of any of the officers or directors of
Gen-Net, any of the Gen-Net Subsidiaries, the Company or any of the Subsidiaries
or any of the members of the families of any of them;
(oo) neither Gen-Net, any of the Gen-Net Subsidiaries, the
Company nor any of the Subsidiaries nor, to the knowledge of Gen-Net and the
Company, any employee or agent of Gen-Net, any of the Gen-Net Subsidiaries, the
Company or any of the Subsidiaries, has made any payment of funds of Gen-Net,
any of the Gen-Net Subsidiaries, the Company or of any
13
Subsidiary or received or retained any funds in material violation of any law,
rule or regulation or of a character required to be disclosed in the Prospectus;
(pp) all securities issued by Gen-Net, each of the Gen-Net
Subsidiaries, the Company and each of the Subsidiaries have been issued and sold
in compliance with all applicable federal and state securities laws and the laws
of the applicable jurisdiction of incorporation of the issuing entity, except
as, individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect; the issuance and sale of the Reincorporation Shares
will be exempt from registration or qualification under the Securities Act and
state securities laws;
(qq) except as otherwise disclosed in the Prospectus, (i) none of
Gen-Net, the Gen-Net Subsidiaries, the Company or the Subsidiaries or, to the
knowledge of Gen-Net and the Company, any other owners of the property at any
time or any other party has at any time, handled, stored, treated, transported,
manufactured, spilled, leaked, or discharged, dumped, transferred or otherwise
disposed of or dealt with, Hazardous Materials (as hereinafter defined) on, in,
under, to or from any real property leased, owned or controlled or to be leased,
owned or controlled upon consummation of the Reincorporation, including any real
property underlying any loan held or to be held by Gen-Net, the Gen-Net
Subsidiaries, the Company or the Subsidiaries (collectively, the "Real
Property"), except in connection with the ordinary use of residential, retail or
commercial properties owned by Gen-Net or the Company and other than by any such
action taken in material compliance with all applicable Environmental Statutes
(hereinafter defined); (ii) the Company does not intend to use the Real Property
or any subsequently acquired properties for the purpose of using, handling,
storing, treating, transporting, manufacturing, spilling, leaking, discharging,
dumping, transferring or otherwise disposing of or dealing with Hazardous
Materials except in connection with the ordinary use of residential, retail or
commercial properties owned by Gen-Net or the Company, and other than by any
such action taken in material compliance with all applicable Environmental
Statues; (iii) none of Gen-Net, the Gen-Net Subsidiaries, the Company or the
Subsidiaries knows of any seepage, leak, discharge, release, emission, spill, or
dumping of Hazardous Materials into waters on or adjacent to the Real Property
or any other real property owned or occupied by any such party, or onto lands
from which Hazardous Materials might seep, flow or drain into such waters; (iv)
none of Gen-Net, the Gen-Net Subsidiaries, the Company or the Subsidiaries has
received any notice of, or has any knowledge of any occurrence or circumstance
that, with notice or passage of time or both, would give rise to a claim under
or pursuant to any federal, state or local environmental statute, regulation or
rule under common law, pertaining to Hazardous Materials on or originating from
any of the Real Property or any assets described in the Prospectus or any other
real property owned or occupied by any such party or arising out of the conduct
of any such party, including without limitation a claim under or pursuant to any
Environmental Statute; (v) the Real Property is not included or, to Gen-Net's
and the Company's knowledge, proposed for inclusion on the National Priorities
List issued pursuant to CERCLA (as hereinafter defined) by the United States
Environmental Protection Agency (the "EPA") or, to Gen-Net's and the Company's
knowledge, proposed for inclusion on any similar list or inventory issued
pursuant to any other Environmental Statute or issued by any other Governmental
Authority (as hereinafter defined); (vi) in the operation of Gen-Net's and the
Company's businesses, Gen-Net and the Company acquire, before acquisition of any
real property, an environmental assessment of the real property and, to the
extent they become aware of any condition that could reasonably be
14
expected to result in liability associated with the presence or release of a
Hazardous Material, or any violation or potential violation of any Environmental
Statute, Gen-Net and the Company take all commercially reasonable action
necessary or advisable (including any capital improvements) for clean-up,
closure or other compliance with such Environmental Statute; as used herein,
"Hazardous Material" includes, without limitation any flammable explosives,
radioactive materials, hazardous materials, hazardous wastes, toxic substances,
or related materials, asbestos or any hazardous material as defined by any
federal, state or local environmental law, regulation or rule, including,
without limitation, the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended, 42 U.S.C. Sections 9601-9675 ("CERCLA"), the
Hazardous Materials Transportation Act, as amended, 49 U.S.C. Sections
1801-1819, the Resource Conservation and Recovery Act, as amended, 42 U.S.C.
Sections 6901-6992K, the Emergency Planning and Community Right-to-Know Act of
1986, 42 U.S.C. Sections 11001-11050, the Toxic Substances Control Act, 15
U.S.C. Sections 2601-2671, the Federal Insecticide, Fungicide and Rodenticide
Act, 7 U.S.C. Sections 136-136y, the Clean Air Act, 42 U.S.C. Sections
7401-7642, the Clean Water Act (Federal Water Pollution Control Act), 33 U.S.C.
Sections 1251-1387, the Safe Drinking Water Act, 42 U.S.C. Sections
300f-300j-26, and the Occupational Safety and Health Act, 29 U.S.C. Sections
651-678, as any of the above statutes may be amended from time to time, and in
the regulations promulgated pursuant to each of the foregoing (individually, an
"Environmental Statute" and collectively the "Environmental Statutes") or by any
federal, state or local governmental authority having or claiming jurisdiction
over the properties and assets described in the Prospectus (a "Governmental
Authority");
(rr) there are no costs or liabilities associated with the Real
Property pursuant to any Environmental Statute (including, without limitation,
any capital or operating expenditures required for clean-up, closure of
properties or compliance with any Environmental Statute or any permit, license
or approval, any related constraints on operating activities and any potential
liabilities to third parties) that, individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect;
(ss) none of the entities that prepared Phase I or other
environmental assessments with respect to the Real Property was employed for
such purpose on a contingent basis or has any substantial interest in Gen-Net,
any of the Gen-Net Subsidiaries, the Company or any of the Subsidiaries, and
none of their directors, officers or employees is connected with Gen-Net, any of
the Gen-Net Subsidiaries, the Company or any of the Subsidiaries as a promoter,
selling agent, trustee, officer, director or employee;
(tt) (i) none of Gen-Net, any Gen-Net Subsidiary, the Company or
any Subsidiary knows of any violation of any municipal, state or federal law,
rule or regulation (including those pertaining to environmental matters)
concerning the Real Property or any part thereof that, individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect; (ii)
the Real Property complies with all applicable zoning laws, ordinances,
regulations and deed restrictions or other covenants 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 the Real Property and will not result in a
forfeiture or reversion of title; (iii) none of Gen-Net, the Gen-Net
Subsidiaries, the Company or the Subsidiaries has received from any governmental
authority any written notice of any condemnation of or zoning change affecting
the Real
15
Property or any part thereof, and none of Gen-Net, the Gen-Net Subsidiaries, the
Company or the Subsidiaries knows of any such condemnation or zoning change that
is threatened and that, individually or in the aggregate, if consummated could
reasonably be expected to have a Material Adverse Effect; (iv) all liens,
charges, encumbrances, claims, or restrictions on or affecting the properties
and assets (including the Real Property and any other assets to be acquired upon
the Reincorporation) of Gen-Net, any of the Gen-Net Subsidiaries, the Company or
any of the Subsidiaries that are required to be described in the Prospectus are
disclosed therein; (v) no lessee of any portion of any of the Real Property is
in default under any leases and there is no event that, but for the passage of
time or the giving of notice or both would constitute a default under any of
such leases, except such defaults that, individually or in the aggregate, could
not reasonably be expected to have a Material Adverse Effect; and (vi) no tenant
under any lease pursuant to which the Real Property is leased has an option or
right of first refusal to purchase the premises leased thereunder or the
building of which such premises are a part, except as such options or rights of
first refusal that, individually or in the aggregate, if exercised, could not
reasonably be expected to have a Material Adverse Effect;
(uu) in connection with this offering, neither Gen-Net nor the
Company has offered and will offer its capital stock, Common Stock or any other
securities convertible into or exchangeable or exercisable or redeemable for its
capital stock or Common Stock in a manner in violation of the Securities Act;
neither Gen-Net nor the Company has distributed and will not distribute any
Prospectus or other offering material, other than the Preliminary Prospectus and
the Prospectus, in connection with the offer and sale of the Shares;
(vv) neither Gen-Net nor the Company has incurred any liability
for any finder's fees or similar payments in connection with the transactions
herein contemplated;
(ww) no relationship, direct or indirect, exists between or among
Gen-Net, any of the Gen-Net Subsidiaries, the Company or any of the Subsidiaries
on the one hand, and the directors, officers, stockholders, customers or
suppliers of Gen-Net, any of the Gen-Net Subsidiaries, the Company or any of the
Subsidiaries on the other hand, that is required by the Securities Act and the
Securities Act Regulations to be described in the Registration Statement and the
Prospectus and that is not so described;
(xx) neither the Company nor any of the Subsidiaries is and,
after giving effect to the offering and sale of the Shares or the
Reincorporation Shares, will be an "investment company" or an entity
"controlled" by an "investment company", as such terms are defined in the
Investment Company Act of 1940, as amended (the "Investment Company Act");
(yy) there are no existing or, to the knowledge of Gen-Net and
the Company, threatened labor disputes with the employees of Gen-Net, any of the
Gen-Net Subsidiaries, the Company or any of the Subsidiaries that could
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect;
(zz) the execution and delivery and performance of the
Reincorporation Agreements, and the consummation of the transactions
contemplated therein, has been duly authorized by all necessary corporate or
other action by Gen-Net, the Gen-Net Subsidiaries, the Company and the
Subsidiaries, including, but not limited to, any vote of the stockholders or
16
other holders of equity interests that may be required by applicable
organizational document, state law or the requirements of the New York Stock
Exchange and the Reincorporation Agreements are sufficient to effect the valid
transfer by Gen-Net to the Company of all real property and other assets
described in the Prospectus;
(aaa) the statistical and market related data included in the
Prospectus and the Registration Statement are based on or derived from sources
that the Company believes to be reliable and accurate;
(bbb) commencing with the taxable year ending December 31, 2003,
the Company will be organized and operated in conformity with the requirements
for qualification as a real estate investment trust ("REIT") under the Code, and
the current and proposed method of operation of the Company and the Subsidiaries
as described in the Prospectus will enable the Company to meet the requirements
for qualification and taxation as a REIT under the Code; the Company intends to
continue to qualify as a REIT under the Code for all subsequent years, and the
Company does not know of any event that could reasonably be expected to cause
the Company to fail to qualify as a REIT under the Code at any time; and
(ccc) the conduct of business by Gen-Net, the Gen-Net
Subsidiaries, the Company and the Subsidiaries as presently and proposed to be
conducted is not subject to continuing oversight, supervision, regulation or
examination by any governmental official or body of the United States or any
other jurisdiction wherein Gen-Net, the Gen-Net Subsidiaries, the Company or the
Subsidiaries conducts or proposes to conduct such business, except as described
in the Prospectus and except such regulation as is applicable to commercial
enterprises generally.
4. CERTAIN COVENANTS.
The Company hereby agrees with each Underwriter:
(a) to furnish such information as may be required and otherwise
to cooperate in qualifying the Shares for offering and sale under the securities
or blue sky laws of such jurisdictions (both domestic and foreign) as the
Representatives may designate and to maintain such qualifications in effect as
long as reasonably requested by the Representatives for the distribution of the
Shares; provided that the Company shall not be required to qualify as a foreign
corporation or to take any action that would subject it to general service of
process in any such jurisdiction where it is not presently qualified or where it
would be subject to taxation as a foreign corporation;
(b) if, at the time this Agreement is executed and delivered, it
is necessary for a post-effective amendment to the Registration Statement to be
declared effective before the offering of the Shares may commence, the Company
will endeavor to cause such post-effective amendment to become effective as soon
as possible and will advise the Representatives promptly and, if requested by
the Representatives, will confirm such advice in writing, when such
post-effective amendment has become effective;
(c) to prepare the Prospectus in a form reasonably approved by
the Underwriters and file such Prospectus with the Commission pursuant to Rule
424(b) under the
17
Securities Act not later than 10:00 a.m. (New York City time), on the second day
following the execution and delivery of this Agreement or on such other day as
the parties may mutually agree and to furnish promptly (and with respect to the
initial delivery of such Prospectus, not later than 10:00 a.m. (New York City
time)) on the second day following the execution and delivery of this Agreement,
or on such other day as the parties may mutually agree, to the Underwriters
copies of the Prospectus (or of the Prospectus as amended or supplemented if the
Company shall have made any amendments or supplements thereto after the
effective date of the Registration Statement) in such quantities and at such
locations as the Underwriters may reasonably request for the purposes
contemplated by the Securities Act Regulations, which Prospectus and any
amendments or supplements thereto furnished to the Underwriters will be
identical to the version transmitted to the Commission for filing via XXXXX,
except to the extent permitted by Regulation S-T;
(d) to advise the Representatives promptly and, if requested by
the Representatives, to confirm such advice in writing, when the Registration
Statement has become effective and when any post-effective amendment thereto
becomes effective under the Securities Act Regulations;
(e) to advise the Representatives immediately, and, if requested
by the Representatives, confirming such advice in writing, of (i) the receipt of
any comments from, or any request by, the Commission for amendments or
supplements to the Registration Statement or Prospectus or for additional
information with respect thereto, or (ii) the issuance by the Commission of any
stop order suspending the effectiveness of the Registration Statement or of any
order preventing or suspending the use of any Preliminary Prospectus or the
Prospectus, or of the suspension of the qualification of the Shares for offering
or sale in any jurisdiction, or of the initiation or threatening of any
proceedings for any of such purposes and, if the Commission or any other
government agency or authority should issue any such order, to make every
reasonable effort to obtain the lifting or removal of such order as soon as
possible; and to advise the Representatives promptly of any proposal to amend or
supplement the Registration Statement or Prospectus and to file no such
amendment or supplement to which the Representatives shall reasonably object in
writing;
(f) to furnish to the Underwriters for a period of five years
from the date of this Agreement (i) as soon as available, copies of all annual,
quarterly and current reports or other communications supplied to holders of
shares of Common Stock not publicly available, (ii) as soon as practicable after
the filing thereof, copies of all reports filed by the Company with the
Commission, the NASD or any securities exchange not publicly available and (iii)
such other information not publicly available as the Underwriters may reasonably
request regarding the Company and the Subsidiaries;
(g) to advise the Underwriters promptly of the happening of any
event known to the Company within the time during which a Prospectus relating to
the Shares is required to be delivered under the Securities Act or the
Securities Act Regulations that, in the judgment of the Company or in the
reasonable opinion of the Representatives or counsel for the Underwriters, would
require the making of any change in the Prospectus then being used so that the
Prospectus would not include an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances
18
under which they were made, not misleading, or if it is necessary at any time to
amend or supplement the Prospectus to comply with the Securities Act and the
Securities Act Regulations and, during such time, to promptly prepare and
furnish to the Underwriters copies of the proposed amendment or supplement
before filing any such amendment or supplement with the Commission and
thereafter promptly furnish at the Company's own expense to the Underwriters and
to dealers, copies in such quantities and at such locations as the
Representatives may from time to time reasonably request of an appropriate
amendment to the Registration Statement or supplement to the Prospectus so that
the Prospectus as so amended or supplemented will not, in the light of the
circumstances when it is so delivered, be misleading, or so that the Prospectus
will comply with the Securities Act and the Securities Act Regulations;
(h) to file promptly with the Commission any amendment to the
Registration Statement or the Prospectus or any supplement to the Prospectus
that may, in the reasonable judgment of the Representatives, be required by the
Securities Act or requested by the Commission;
(i) prior to filing with the Commission any amendment to the
Registration Statement or supplement to the Prospectus or any Prospectus
pursuant to Rule 424 under the Securities Act, to furnish for review a copy
thereof to the Representatives and counsel for the Underwriters and not to file
any such proposed amendment or supplement to which the Representatives
reasonably object;
(j) to furnish promptly to the Representatives a signed copy of
the Registration Statement, as initially filed with the Commission, and of all
amendments or supplements thereto (including all exhibits filed therewith or
incorporated by reference therein) and such number of conformed copies of the
foregoing as the Representatives may reasonably request;
(k) to furnish to the Representatives, not less than one business
day before filing with the Commission subsequent to the effective date of the
Prospectus and during the period in which a Prospectus relating to the Shares is
required to be delivered under the Securities Act or the Securities Act
Regulations, a copy of any document proposed to be filed with the Commission
pursuant to Section 13, 14, or 15(d) of the Exchange Act and during such period
to file all such documents in the manner and within the time periods required by
the Exchange Act and the Exchange Act Regulations;
(l) to apply the net proceeds of the sale of the Shares in
accordance with its statements under the caption "Use of Proceeds" in the
Prospectus;
(m) to make generally available to its security holders and to
deliver to the Representatives as soon as practicable, but in any event not
later than 45 days after the end of the fiscal quarter first occurring after the
first anniversary of the effective date of the Registration Statement (or later
than 90 days, if such fiscal quarter is the last fiscal quarter of the Company's
fiscal year) an earnings statement satisfying the provisions of Section 11(a) of
the Securities Act (in such form, at the option of the Company, as complies with
Rule 158 under the Securities Act Regulations) covering a period of 12 months
beginning after the effective date of the Registration Statement;
19
(n) to use its commercially reasonable efforts to maintain the
listing of the Shares and the Reincorporation Shares on the New York Stock
Exchange until the third anniversary of the date hereof and during the time that
the Shares are listed on the New York Stock Exchange to file with the New York
Stock Exchange all documents and notices required by the New York Stock Exchange
of companies that have securities that are traded on the New York Stock
Exchange;
(o) to engage and maintain, at its expense, a registrar and
transfer agent for the Shares;
(p) to refrain during a period of 180 days from the date of the
Prospectus, without the prior written consent of the Representatives, from,
directly or indirectly, (i) offering, pledging, selling, contracting to sell,
selling any option or contract to purchase, purchasing any option or contract to
sell, granting any option for the sale of, or otherwise disposing of or
transferring (or entering into any transaction or device which is designed to,
or could be expected to, result in the disposition by any person at any time in
the future of), any share of Common Stock or any securities convertible into or
exercisable or exchangeable for Common Stock, or filing any registration
statement under the Securities Act with respect to any of the foregoing, or (ii)
entering into any swap or any other agreement or any transaction that transfers,
in whole or in part, directly or indirectly, the economic consequence of
ownership of Common Stock, whether any such swap or transaction described in
clause (i) or (ii) above is to be settled by delivery of Common Stock or such
other securities, in cash or otherwise; provided, however, that the foregoing
shall not apply to grants of stock options or restricted stock to employees,
consultants or directors pursuant to an employee benefit plan in existence on
the date hereof and described in the Prospectus (the "Employee Benefit Plan"),
provided that the grantees thereof agree not to sell, offer, dispose of or
otherwise transfer any such stock options (or the shares underlying such
options) or Common Stock during such 180-day period without the prior written
consent of the Representatives, provided, further, that during the three year
period immediately following the date of this Agreement, the aggregate number of
shares granted under the Employee Benefit Plan (whether in the form of
restricted stock, stock options or any other award permitted under the Employee
Benefit Plan) shall not exceed 2.5% of the Common Stock outstanding at any given
time; and during the three year period immediately following the date of this
Agreement, the Company agrees not to grant any shares of Common Stock or
securities convertible into Common Stock under any other employee benefit plan;
(q) not to, and to use its best efforts to cause its officers,
directors and affiliates not to, (i) take, directly or indirectly, prior to
termination of the underwriting syndicate contemplated by this Agreement, any
action designed to stabilize or manipulate the price of any security of the
Company, or which may cause or result in, or which might in the future
reasonably be expected to cause or result in, the stabilization or manipulation
of the price of any security of the Company, to facilitate the sale or resale of
any of the Shares, (ii) sell, bid for, purchase or pay anyone any compensation
for soliciting purchases of the Shares or (iii) pay or agree to pay to any
person any compensation for soliciting any order to purchase any other
securities of the Company;
20
(r) use its commercially reasonable efforts to cause each
executive officer and director of the Company to furnish to the Representatives,
prior to the first Date of Delivery, a letter or letters, substantially in the
form of Exhibit A hereto;
(s) that the Company shall obtain or maintain, as appropriate,
Directors and Officers liability insurance in the minimum amount of $5 million
which shall apply to the offering contemplated herein;
(t) that the Company will comply with all of the provisions of
any undertakings in the Registration Statement and will file with the Commission
such reports as may be required pursuant to Rule 463 of the Securities Act
Regulations;
(u) that the Company will use its commercially reasonable efforts
to meet the requirements to qualify as a REIT under the Code for each of the
taxable years in the period ending December 31, 2008;
(v) that the Company will disclose in each annual report
distributed to stockholders pursuant to Section 13(a) of the Exchange Act a per
share estimated value of the Common Stock, the method by which it was developed,
and the date of the data used to develop the estimated value to the extent
required by and in accordance with Rule 2710 of the NASD;
(w) that the Company will not invest, or otherwise use the
proceeds received by the Company from the sale of the Shares in such a manner as
would require the Company or any of its Subsidiaries to register as an
investment company under the Investment Company Act;
(x) that the Company will use commercially reasonable efforts to
effectuate the transactions contemplated by the Reincorporation Agreements.
5. PAYMENT OF EXPENSES.
(a) The Company agrees to pay all costs and expenses incident to
the performance of its obligations under this Agreement, whether or not the
transactions contemplated hereunder are consummated or this Agreement is
terminated, including expenses, fees and taxes in connection with: (i) the
preparation and filing of the Registration Statement, the Preliminary
Prospectus, the Prospectus, and any amendments or supplements thereto, and the
printing and furnishing of copies of each thereof to the Underwriters and to
dealers (including costs of mailing and shipment); (ii) the preparation,
issuance and delivery of the certificates for the Shares, if any, to the
Underwriters, including any stock or other transfer taxes or duties payable upon
the sale of the Shares to the Underwriters; (iii) the printing of this Agreement
and any dealer agreements and furnishing of copies of each to the Underwriters
and to dealers (including costs of mailing and shipment); (iv) the qualification
of the Shares for offering and sale under state and foreign laws that the
Company and the Representatives have mutually agreed are appropriate and the
determination of their eligibility for investment under state and foreign law as
aforesaid (including reasonable legal fees and other disbursements of counsel
for the Underwriters, not to exceed $ related thereto), and the printing
and furnishing of copies of any blue sky surveys or legal investment surveys to
the Underwriters and to dealers; (v) filing for review of the public offering of
the Shares by the NASD (including reasonable legal fees and filing fees and
other disbursements of counsel for the Underwriters, not to exceed $15,000,
relating thereto); (vi) the
21
fees and expenses of any transfer agent or registrar for the Shares and
miscellaneous expenses referred to in the Registration Statement; (vii) the fees
and expenses incurred in connection with the listing of the Shares on the New
York Stock Exchange; (viii) all costs and expenses incident to the travel and
accommodation of employees of the Company; (ix) preparing and distributing bound
volumes of transaction documents for the Representatives and its legal counsel;
and (x) the performance of the Company's other obligations hereunder. Upon the
request of the Representatives, the Company will provide funds in advance for
filing fees.
(b) The Company agrees to reimburse the Representatives for their
expenses, up to a maximum amount of $650,000 in connection with the performance
of their activities under this Agreement, including, but not limited to, costs
such as printing, facsimile, courier service, direct computer expenses,
accommodations and travel, including the reasonable fees and expenses of the
Underwriters' outside legal counsel and any other advisors, accountants,
appraisers, etc. (other than the fees and expenses of counsel with respect to
state and foreign securities or blue sky laws and obtaining the filing for
review of the public offering of the Shares by the NASD, all of which shall be
reimbursed by the Company pursuant to the provisions of subsection (a) above).
The fees and expenses of the Representatives and the other Underwriters payable
by the Company pursuant to this Section 5(b) and Section 5(a) above shall be
paid at the Closing Time from the proceeds of the sale of the Shares.
6. CONDITIONS OF THE UNDERWRITERS' OBLIGATIONS.
The obligations of the Underwriters hereunder to purchase Shares at the
Closing Time or on each Date of Delivery, as applicable, are subject to the
accuracy of the representations and warranties on the part of the Company
hereunder on the date hereof and at the Closing Time and on each Date of
Delivery, as applicable, the performance by the Company of its obligations
hereunder and the satisfaction of the following further conditions at the
Closing Time or on each Date of Delivery, as applicable:
(a) The Company shall furnish to the Underwriters at the Closing
Time and on each Date of Delivery an opinion of Blackwell, Sanders, Xxxxx
Xxxxxx, LLP, counsel for the Company, addressed to the Underwriters and dated
the Closing Time and each Date of Delivery and in form and substance
satisfactory to Winston & Xxxxxx LLP, counsel for the Underwriters, stating
that:
(i) the outstanding shares of capital stock, partnership
interests, membership interests or other equity interests, as
applicable, of the Subsidiaries have been duly and validly authorized
and issued and are fully paid and, with respect to shares of capital
stock, limited partnership interests and membership interests,
non-assessable, and all of the outstanding shares of capital stock,
partnership interests, membership interests or other equity interests,
as applicable, of the Subsidiaries are directly or indirectly owned of
record and beneficially by the Company, free and clear of any perfected
security interest, except as disclosed in the Prospectus; except as
disclosed in the Prospectus, and to such counsel's knowledge after due
inquiry, there are no outstanding (a) securities or obligations of the
Company or any of the Subsidiaries convertible into or exchangeable for
any capital stock, partnership interests, membership interests or other
equity interests, as applicable, of the Company or any such Subsidiary,
(b) warrants, rights or options to
22
subscribe for or purchase from the Company or any such Subsidiary any
such capital stock, partnership interests, membership interests or
other equity interests, as applicable, or any such convertible or
exchangeable securities or obligations, or (c) obligations of the
Company or any such Subsidiary to issue any shares of capital stock,
partnership interests, membership interests or other equity interests,
as applicable, or any such convertible or exchangeable securities or
obligation, or any such warrants, rights or options;
(ii) each of the Subsidiaries has been duly incorporated or
formed and is validly existing as a corporation, limited partnership or
limited liability company, as the case may be, and, based solely on
certificates of applicable public officials, copies of which are
attached to counsel's opinion letter (the "Public Documents"), in good
standing under the laws of its respective jurisdiction of incorporation
or formation with full corporate, limited partnership or limited
liability company power and authority to own its respective properties
and to conduct its respective businesses as described in the
Prospectus;
(iii) the Company and each of the Subsidiaries are duly
qualified and are in good standing in each in each jurisdiction in
which the nature or conduct of its business requires such qualification
or license and in which the failure, individually or in the aggregate,
to be so qualified or licensed could reasonably be expected have a
Material Adverse Effect; except as restricted by the agreements
evidencing the mortgage financings disclosed in the Prospectus, no
Subsidiary is prohibited or restricted, directly or indirectly, under
its respective organizational documents or, to such counsel's knowledge
after due inquiry, any other agreement from paying dividends to the
Company, or from making any other distribution with respect to such
Subsidiary's capital stock, partnership interests, membership interests
or other equity interests, as applicable, or from repaying to the
Company or any other Subsidiary any amounts which may from time to time
become due under any loans or advances to such Subsidiary from the
Company or such other Subsidiary, or from transferring any such
Subsidiary's property or assets to the Company or to any other
Subsidiary; other than the Subsidiaries or as disclosed in the
Prospectus and to such counsel's knowledge, the Company does not own,
directly or indirectly, any capital stock or other equity securities of
any other corporation or any ownership interest in any partnership,
joint venture or other association;
(iv) neither the Company nor any of the Subsidiaries is in
violation of any term or provision of its organizational documents, is
in breach of, or in default under (nor has any event occurred which
with notice, lapse of time, or both would constitute a breach of, or
default under), any license, indenture, mortgage, deed of trust, loan
or credit agreement or any other agreement or instrument identified on
a schedule to such counsel's opinion or under any law, regulation or
rule or any decree, judgment or order applicable to the Company or any
of the Subsidiaries, except such breaches or defaults that would not
have a Material Adverse Effect;
(v) the execution, delivery and performance of this Agreement
and the Reincorporation Agreements by the Company and the Subsidiaries
(to the extent a party thereto) and the consummation by the Company and
the Subsidiaries of the transactions
23
contemplated by this Agreement and the Reincorporation Agreements (to
the extent a party thereto) do not and will not conflict with, or
result in any breach of, or constitute a default under (nor constitute
any event which with notice, lapse of time, or both would constitute a
breach of or default under), (i) any provisions of the charter or
bylaws or other organizational documents of the Company or any
Subsidiary, (ii) any provision of any license, indenture, mortgage,
deed of trust, loan credit or other agreement or instrument identified
on a schedule to such counsel's opinion, (iii) any law or regulation
binding upon or applicable to the Company or any Subsidiary or any of
their respective properties or assets, or (iv) any decree, judgment or
order known to such counsel to be applicable to the Company or any
Subsidiary;
(vi) this Agreement has been duly authorized, executed and
delivered by the Company; each of the Reincorporation Agreements has
been duly authorized, executed and delivered by the Company and the
Subsidiaries (to the extent a party thereto); and this Agreement and
each of the Reincorporation Agreements is a legal, valid and binding
agreement of the Company and the Subsidiaries (to the extent a party
thereto) enforceable in accordance with its terms, except as may be
limited by bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting creditors' rights generally, and by general
principles of equity;
(vii) no approval, authorization, consent or order of or
filing with any federal or state governmental or regulatory commission,
board, body, authority or agency is required in connection with the
execution, delivery and performance of this Agreement or the
Reincorporation Agreements, the consummation of the transactions
contemplated herein or therein, and the sale and delivery of the Shares
by the Company as contemplated herein, other than such as have been
obtained or made under the Securities Act and the Securities Act
Regulations and the Exchange Act and Exchange Act Regulations, and
except as (A) may be required under the state securities or blue sky
laws of the various jurisdictions in which the Shares are being offered
by the Underwriters, or (B) may be required by the NASD;
(viii) the Company is not subject to registration as an
investment company under the Investment Company Act, and the
transactions contemplated by this Agreement will not cause the Company
to become an "investment company" or a company "controlled" by an
investment company within the meaning of the Investment Company Act;
(ix) the issuance and sale of the Initial Shares (or the
Option Shares, as applicable) by the Company is not subject to
preemptive or other similar rights arising under any agreement known to
such counsel to which the Company or any of the Subsidiaries is a
party;
(x) except as disclosed in the Prospectus, to such counsel's
knowledge, there are no persons with registration or other similar
rights to have any equity or debt securities, including securities that
are convertible into or exchangeable for equity securities, registered
pursuant to the Registration Statement or otherwise registered by the
Company under the Securities Act;
24
(xi) the Shares and the Reincorporation Shares have been
approved for listing on the New York Stock Exchange, subject only to
official notice of issuance;
(xii) the form of certificate used to evidence the Common
Stock complies in all material respects with the requirements of the
New York Stock Exchange;
(xiii) the Registration Statement has been declared effective
under the Securities Act and, to such counsel's knowledge, no stop
order suspending the effectiveness of the Registration Statement has
been issued and, to such counsel's knowledge, no proceedings with
respect thereto have been commenced or threatened; any required filing
of the Prospectus or any supplement thereto pursuant to Rule 424(b)
under the Securities Act has been made in the manner and the time
period required by Rule 424(b);
(xiv) as of the effective date of the Registration Statement,
the Registration Statement and, as of its issue date, the Prospectus
(except as to the financial statements, notes and related schedules and
other related financial and accounting data contained therein, as to
which such counsel need express no opinion) complied as to form in all
material respects with the requirements of the Securities Act and the
Securities Act Regulations (including Form S-11);
(xv) the following statements in the Prospectus, insofar as
such statements constitute a summary of the legal matters, proceedings
or documents referred to therein, constitute accurate summaries thereof
in all material respects: (1) the fourth sentence of "Risk
Factors--Risks Related to Our Business and Properties - We depend on
the U.S. government for a significant portion of our revenues. Any
failure by the U.S. government to perform its obligations or renew its
leases upon expiration may harm our cash flow and ability to pay
dividends," (2) the third sentence of "Risk Factors--Risks Related to
Our Business and Properties - Restrictive financial covenants in our
loan documents may restrict our operating or acquisition activities,
which may harm our financial condition and operating results, (3) the
fourth and sixth sentences of "Risk Factors--Risks Related to the Real
Estate Industry - Mortgage debt obligations expose us to increased risk
of property losses, which could harm our financial condition, cash flow
and ability to satisfy our other debt obligations and pay dividends,"
(4) the second, third, sixth and eighth sentences in the first
paragraph of "Risk Factors--Risks Related to the Real Estate Industry -
Compliance with environmental laws could materially increase our
operating expenses," (5) the second, third and sixth sentences of "Risk
Factors - Risks Related to the Real Estate Industry - Compliance with
the Americans with Disabilities Act and fire, safety and other
regulations may require us to make unexpected expenditures that
adversely impact our ability to pay dividends," (6) the first paragraph
of "Risk Factors--Tax Risks of Our Business and Structure -
Distribution requirements imposed by law limit our flexibility in
executing our business plan," (7) the first sentence of "Risk
Factors--Tax Risks of Our Business and Structure - Our disposal of
properties may have negative implications, including unfavorable tax
consequences," (8) the second and last sentences of "Risk Factors--Tax
Risks of Our Business and Structure - We have not yet elected to be
taxed as a REIT. If we fail to make such election or if we fail to
remain qualified as a REIT after our REIT election, our dividends will
not be deductible by us, and our income will be subject to taxation,"
(9) the first, second and fourth
25
sentences of "Risk Factors--Tax Risks of Our Business and Structure -
We may be subject to federal and state income taxes that would harm our
financial condition," (10) the first and second paragraphs of "Our
Business and Properties - Real Estate Industry Regulation," (11) the
third sentence of "Shares Available For Future Sale," and (12)
"Material United States Federal Income Tax Consequences";
(xvi) to such counsel's knowledge, there are no actions, suits
or proceedings, inquiries, or investigations pending or threatened
against the Company or any of the Subsidiaries or any of their
respective officers and directors (in such capacities) or to that the
properties, assets or rights of any such entity are subject, at law or
in equity, before or by any federal, state, local or foreign
governmental or regulatory commission, board, body, authority, arbitral
panel or agency that are required to be disclosed in the Prospectus but
are not so disclosed;
(xvii) to such counsel's knowledge, there are no contracts or
documents of a character that are required to be filed as exhibits to
the Registration Statement or required to be described in the
Prospectus that have not been so filed or described, and all such
descriptions, in all material respects, fairly and accurately set forth
the information called for with respect to such contracts and
documents;
(xviii) the issuance of the Common Stock in connection with
the Reincorporation was exempt from the registration requirements of
the Securities Act;
(xix) commencing with its taxable year ending December 31,
2003, the Company will be organized in conformity with the requirements
for qualification and taxation as a REIT under the Code, and its
present and proposed method of operation will enable it to meet the
requirements for qualification and taxation as a REIT under the Code.
In addition, such counsel shall state that they have participated in
conferences with officers and other representatives of the Company, independent
public accountants of the Company, and representatives of the Representatives,
at which the contents of the Registration Statement and Prospectus were
discussed and, although such counsel is not passing upon and does not assume
responsibility for the accuracy, completeness or fairness of the statements
contained in the Registration Statement or Prospectus (except as and to the
extent expressly specified above), no facts have come to such counsel's
attention that have led such counsel to believe that the Registration Statement,
at the time such Registration Statement became effective, contained any 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, as of its date or as of the date of such counsel's opinion, the Prospectus
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,
in light of the circumstances under which they were made, not misleading. Such
counsel, however, need not express a belief with respect to the financial
statements and notes and related schedules and other related financial and
accounting data included in the Registration Statement or in the Prospectus or
any further amendment or supplement thereto.
26
(b) The Company shall furnish to the Underwriters at the Closing
Time and on each Date of Delivery an opinion of Miles & Stockbridge P.C.,
special Maryland counsel of the Company, addressed to the Underwriters and dated
the Closing Time and each Date of Delivery and in form and substance reasonably
satisfactory to Winston & Xxxxxx LLP, counsel for the Underwriters, stating
that:
(i) The Company is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Maryland
with corporate power to own, lease and operate its properties, to
conduct the business to be conducted by it as described in the
Prospectus and to execute the Underwriting Agreement, the agreement and
plan of merger between the Company and Gen-Net (the "Merger Agreement")
and the articles of merger (the "Articles of Merger");
(ii) The authorized capital stock of the Company is as set
forth under the caption "Capitalization" in the Prospectus; all
outstanding shares of the Common Stock (other than the Shares) are duly
authorized and validly issued, fully paid and non-assessable and, to
our knowledge, the Company has not issued any outstanding stock,
outstanding securities convertible into or exchangeable for, or
outstanding warrants or other rights to purchase or to subscribe for,
any shares of stock or other securities of the Company, except as
described in the Prospectus;
(iii) The execution and delivery of the Underwriting Agreement
and the Merger Agreement by the Company and the performance of its
obligations thereunder have been duly authorized by the Company;
(iv) The Shares have been duly authorized and, when issued and
delivered to the Underwriters against payment therefor in accordance
with the terms of the Underwriting Agreement, will be validly issued,
fully paid and non-assessable;
(v) The shares of the Common Stock (the "Merger Shares")
issued upon effectiveness of the merger (the "Merger") of the Gen-Net
Trust with and into the Company pursuant to the Merger Agreement have
been duly authorized and are validly issued, fully paid and
non-assessable;
(vi) The issuance of the Merger Shares was not, and the
issuance of the Shares will not be, subject to preemptive or other
similar rights entitling any person to purchase or acquire any of the
Merger Shares or the Shares, as the case may be, upon the issuance
thereof by the Company which arise under the Maryland General
Corporation Law or under the charter or the bylaws of the Company;
(vii) The form of the certificate evidencing the Common Stock
conforms to the requirements of the Maryland General Corporation Law
and the charter and the bylaws of the Company;
(viii) The Common Stock conforms as to legal matters in all
material respects to the description thereof contained in the
Prospectus under the caption "Description of Common Stock." The
statements under the captions "Risk Factors--Risks Related to Our
Organization and Structure- Our rights and the rights of our
stockholders to take
27
action against directors and officers are limited, which could limit
your recourse in the event of actions they take or fail to take which
are not in your best interests," "Risk Factors--Risk Factors Related to
Our Organization and Structure--Our ownership limitations may restrict
business combination opportunities," "Risk Factors--Risk Factors
Related to Our Organization and Structure--Provisions of our charter
documents could deter a takeover, which could inhibit your ability to
receive an acquisition premium for your shares," "Risk Factors--Risk
Factors Related to Our Organization and Structure--Maryland law may
discourage a third party from acquiring us, which could inhibit your
ability to receive an acquisition premium for your shares," "Management
- Corporate Governance," "Material Provisions of Maryland Law and of
Our Charter and Bylaws" and under Item 34 of the Registration Statement
to the extent that such information constitutes matters or summaries of
law or summaries of the Company's charter or bylaws or constitutes
legal conclusions, has been reviewed by us and is correct in all
material respects;
(ix) The execution, delivery and performance of the
Underwriting Agreement and the Merger Agreement by the Company, the
execution of the Articles of Merger by the Company and the filing of
the Articles of Merger with the SDAT do not violate the Maryland
General Corporation Law or the charter or the bylaws of the Company. To
our knowledge, there are no court or administrative orders, judgments
or decrees of any court or other governmental authority of the State of
Maryland that name the Company or are specifically directed to the
Company or any of its property;
(x) No approval or consent of, or registration or filing with,
any court, regulatory body, administrative agency or other governmental
body, agency or official of the State of Maryland is required to be
obtained or made by the Company under the Maryland General Corporation
Law in connection with the execution, delivery and performance by the
Company of the Underwriting Agreement or the Merger Agreement or the
consummation of the Merger, except for filing the Articles of Merger
with the SDAT which has been done;
(xi) The Articles of Merger have been accepted for record by
the SDAT and the Merger is effective in accordance with the Maryland
General Corporation Law.
(c) The Company shall furnish to the Underwriters at the Closing
Time an opinion of Xxxxx & Lardner, special Michigan counsel of Gen-Net,
addressed to the Underwriters and dated as of the Closing Time and in form and
substance reasonably satisfactory to Winston & Xxxxxx LLP, counsel for the
Underwriters, stating that:
(i) immediately prior to the effectiveness of the
Reincorporation:
(1) Gen-Net was a corporation duly incorporated
and validly existing and in good standing
under the laws of the State of Michigan;
(2) Gen-Net had the corporate power and
authority to own its properties and to
conduct its businesses as described in the
28
Prospectus and, as applicable, to execute,
deliver and perform the Reincorporation
Agreements;
(3) the authorized capital stock of Gen-Net was
as set forth in footnote (a) under the
caption "Capitalization" in the Prospectus;
all outstanding shares of common stock of
Gen-Net were duly authorized and validly
issued, fully paid and non-assessable; to
the knowledge of such counsel, Gen-Net had
not issued any outstanding stock or any
outstanding securities convertible into or
exchangeable for, or outstanding options,
warrants or other rights to purchase or to
subscribe for, any shares of stock or other
securities of Gen-Net, except as described
in the Prospectus;
(4) no holder of outstanding shares of common
stock of Gen-Net had any statutory
preemptive right under the Michigan Business
Corporation Act or any similar right under
the articles of incorporation or bylaws of
Gen-Net to subscribe for any of the Shares;
(5) the execution, delivery and performance by
the Gen-Net of the Reincorporation
Agreements to which it is a party did not
(i) violate the articles of incorporation or
bylaws of Gen-Net, (ii) violate any
provision of the Michigan Business
Corporation Act, or (iii) violate any
Michigan court or administrative order,
judgment, or decree known to such counsel
and listed on a schedule to be delivered
with the opinion that names Gen-Net and is
specifically directed to it or any of its
property;
(6) other than the filings referred to in clause
(ii) below, no approval or consent of, or
registration or filing with, any Michigan
regulatory agency was required to be
obtained or made by Gen-Net under the
Michigan Business Corporation Act in
connection with the execution, delivery and
performance by Gen-Net of the
Reincorporation Agreements to which it is a
party; and
(ii) the certificate of merger executed by Gen-Net and the
Company evidencing the consummation of the Reincorporation has been
filed with the Michigan Department of Labor & Economic Growth,
Corporation Division and the Reincorporation is effective in accordance
with the Michigan Business Corporation Act.
(d) The Representatives shall have received from Ernst & Young
LLP, letters dated, respectively, as of the date of this Agreement, the Closing
Time and each Date of Delivery, as the case may be, addressed to the
Representatives, in form and substance satisfactory to the Representatives,
relating to the combined financial statements, including pro forma financial
statements, of the Company (and its accounting predecessor), and such other
matters customarily covered by comfort letters issued in connection with
registered public offerings.
29
(e) The Representatives shall have received from Xxxxx &
Xxxxxxxxxxx, P.L.L.C., letters dated, respectively, as of the date of this
Agreement, the Closing Time and each Date of Delivery, as the case may be,
addressed to the Representatives, in form and substance satisfactory to the
Representatives, relating to the combined financial statements, including pro
forma financial statements, of the Company (and its accounting predecessor), and
such other matters customarily covered by comfort letters issued in connection
with registered public offerings.
(f) The Representatives shall have received at the Closing Time
and on each Date of Delivery the favorable opinion of Winston & Xxxxxx LLP,
dated the Closing Time or such Date of Delivery, addressed to the
Representatives and in form and substance reasonably satisfactory to the
Representatives.
(g) 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 Representatives; and no amendment or
supplement to the Registration Statement or Prospectus shall have been filed to
which the Underwriters shall have reasonably objected in writing.
(h) Prior to the Closing Time and each Date of Delivery (i) no
stop order suspending the effectiveness of the Registration Statement or any
order preventing or suspending the use of any Preliminary Prospectus or
Prospectus has been issued, and no proceedings for such purpose shall have been
initiated or threatened, by the Commission, and no suspension of the
qualification of the Shares for offering or sale in any jurisdiction, or the
initiation or threatening of any proceedings for any of such purposes, has
occurred; (ii) all requests for additional information on the part of the
Commission shall have been complied with to the reasonable satisfaction of the
Representatives; and (iii) the Registration Statement and the Prospectus shall
not contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading.
(i) All filings with the Commission required by Rule 424 and Rule
430A under the Securities Act to have been filed by the Closing Time shall have
been made within the applicable time period prescribed for such filing by such
Rule.
(j) Between the time of execution of this Agreement and the
Closing Time or the relevant Date of Delivery (i) there shall not have been any
change, or any development or event that could reasonably be expected to result
in a change, that has or reasonably could be expected to have a Material Adverse
Effect, whether or not arising in the ordinary course of business, and (ii) no
transaction that is material and unfavorable to the Company shall have been
entered into by the Company or any of the Subsidiaries, in each case, that in
the Representatives' sole judgment, makes it impracticable or inadvisable to
proceed with the public offering of the Shares as contemplated by the
Registration Statement.
30
(k) The Shares and the Reincorporation Shares shall have been
approved for listing on the New York Stock Exchange, subject only to official
notice of issuance.
(l) The NASD shall not have raised any objection with respect to
the fairness and reasonableness of the underwriting terms and arrangements.
(m) The Representatives shall have received lock-up agreements
from each executive officer and director of the Company in the form of Exhibit A
attached hereto, and such letter agreements shall be in full force and effect.
(n) The Representatives shall have received at or before the
applicable Closing Time and on the applicable Date of Delivery, a certificate of
the Company's Chief Executive Officer to the effect that:
(i) the representations and warranties of the Company in this
Agreement are true and correct, as if made on and as of such date, and
the Company has complied with all the agreements and satisfied all the
conditions on their part to be performed or satisfied at or prior to
the date hereof;
(ii) no stop order suspending the effectiveness of the
Registration Statement or any post-effective amendment thereto has been
issued and no proceedings for that purpose have been instituted or are
pending or threatened under the Securities Act;
(iii) subsequent to the respective dates as of which
information is given in the Registration Statement and Prospectus,
there has not been (a) any change, or any development or event that
reasonably could be expected to result in a change, that has or
reasonably could be expected to have a Material Adverse Effect, whether
or not arising in the ordinary course of business, (b) any transaction
that is material to the Company and the Subsidiaries considered as one
enterprise (other than the Reincorporation), (c) any obligation, direct
or contingent, that is material to the Company and the Subsidiaries
considered as one enterprise, incurred by the Company or the
Subsidiaries, except pursuant to the Reincorporation, (d) any change in
the capital stock or outstanding indebtedness of the Company or any
Subsidiary that is material to the Company and the Subsidiaries
considered as one enterprise, (e) any dividend or distribution of any
kind declared, paid or made on the capital stock or other equity
interests of the Company or any Subsidiary, or (f) any loss or damage
(whether or not insured) to the property of the Company or any
Subsidiary (including the properties to be contributed as part of the
Reincorporation) that has been sustained or will have been sustained
that has or may reasonably be expected to have a Material Adverse
Effect; and
(iv) the transactions contemplated under the Reincorporation
Agreements have been consummated and the Reincorporation is effective
under applicable law.
(o) The Company shall have furnished to the Underwriters such
other documents and certificates as to the accuracy and completeness of any
statement in the Registration Statement and the Prospectus, the representations,
warranties and statements of the Company contained herein, and the performance
by the Company of its covenants contained
31
herein, and the fulfillment of any conditions contained herein, as of the
Closing Time or any Date of Delivery, as the Underwriters may reasonably
request.
(p) The Reincorporation and the other transactions contemplated
by the Reincorporation Agreements shall have been consummated or shall occur
simultaneously with the Closing Time.
(q) The Representatives shall have received a representation
letter from Genesis Financial Group, Inc. in form and substance reasonably
satisfactory to the Representatives and its counsel and such letter agreement
shall be in full force and effect.
(r) The Company shall (i) simultaneously with the Closing Time
use a portion of the net proceeds of the sale of the Shares to repay in full the
outstanding indebtedness owed to an affiliate of FBRC described under the
caption "Use of Proceeds" in the Prospectus and (ii) as soon as practicable
after the Closing Time use a portion of the net proceeds of the sale of the
Shares to repay in full the other outstanding indebtedness described under the
caption "Use of Proceeds" in the Prospectus.
7. TERMINATION.
The obligations of the several Underwriters hereunder shall be subject
to termination in the absolute discretion of the Representatives, at any time
prior to any Closing Time or Date of Delivery, (i) if any of the conditions
specified in Section 6 shall not have been fulfilled when and as required by
this Agreement to be fulfilled, or (ii) if, in the judgment of the
Representatives, there has been since the respective dates as of which
information is given in the Registration Statement, any change, or any
development or event that reasonably could be expected to result in a change,
that has or reasonably could be expected to have a Material Adverse Effect, or
any material change in management of the Company or any Subsidiary, whether or
not arising in the ordinary course of business, or (iii) if there has occurred
any outbreak or escalation of hostilities or other national or international
calamity or crisis (including, without limitation, any terrorist or similar
attack) or change in national or international economic, political or other
conditions, the effect of which on the financial markets of the United States is
such as to make it, in the judgment of the Representatives, impracticable to
market the Shares or enforce contracts for the sale of the Shares, or (iv) if
trading in any securities of the Company has been suspended by the Commission or
by the New York Stock Exchange, or if trading generally on the New York Stock
Exchange, the American Stock Exchange or in the Nasdaq over-the-counter market
has been suspended (including an automatic halt in trading pursuant to
market-decline triggers, other than those in which solely program trading is
temporarily halted), or limitations on prices for trading (other than
limitations on hours or numbers of days of trading) have been fixed, or maximum
ranges for prices for securities have been required, by such exchange or the
NASD or the over-the-counter market or by order of the Commission or any other
governmental authority, or (v) a general banking moratorium shall have been
declared by any federal, Maryland, New York or Nebraska authorities, or (vi) any
federal or state statute, regulation, rule or order of any court or other
governmental authority has been enacted, published, decreed or otherwise
promulgated that, in the reasonable opinion of the Representatives, will have a
Material Adverse Effect.
32
If the Representatives elect to terminate this Agreement as provided in
this Section 7, the Company and the Underwriters shall be notified promptly by
telephone, promptly confirmed by facsimile.
If the sale to the Underwriters of the Shares, as contemplated by this
Agreement, is not carried out by the Underwriters for any reason permitted under
this Agreement or if such sale is not carried out because the Company shall be
unable to comply in all material respects with any of the terms of this
Agreement, the Company shall not be under any obligation or liability under this
Agreement (except to the extent provided in Sections 5 and 9 hereof) and the
Underwriters shall be under no obligation or liability to the Company under this
Agreement (except to the extent provided in Section 9 hereof) or to one another
hereunder.
8. INCREASE IN UNDERWRITERS' COMMITMENTS.
If any Underwriter shall default at the Closing Time or on a Date of
Delivery in its obligation to take up and pay for the Shares to be purchased by
it under this Agreement on such date, the Representatives shall have the right,
within 48 hours after such default, to make arrangements for one or more of the
non-defaulting Underwriters, or any other underwriters, to purchase all, but not
less than all, of the Shares which such Underwriter shall have agreed but failed
to take up and pay for (the "Defaulted Shares"). Absent the completion of such
arrangements within such 48-hour period, (i) if the total number of Defaulted
Shares does not exceed 10% of the total number of Shares to be purchased on such
date, each non-defaulting Underwriter shall take up and pay for (in addition to
the number of Shares which it is otherwise obligated to purchase on such date
pursuant to this Agreement) the portion of the total number of Shares agreed to
be purchased by the defaulting Underwriter on such date in the proportion that
its underwriting obligations hereunder bears to the underwriting obligations of
all non-defaulting Underwriters; and (ii) if the total number of Defaulted
Shares exceeds 10% of such total, the Representatives may terminate this
Agreement by notice to the Company, without liability of any party to any other
party (other than the defaulting Underwriter), except that the provisions of
Sections 5 and 9 hereof shall at all times be effective and shall survive such
termination.
Without relieving any defaulting Underwriter from its obligations
hereunder, the Company agrees with the non-defaulting Underwriters that it will
not sell any Shares hereunder on such date unless all of the Shares to be
purchased on such date are purchased on such date by the Underwriters (or by
substituted Underwriters selected by the Representatives with the approval of
the Company or selected by the Company with the approval of the
Representatives).
If a new Underwriter or Underwriters are substituted for a defaulting
Underwriter in accordance with the foregoing provision, the Company or the
non-defaulting Underwriters shall have the right to postpone the Closing Time or
the relevant Date of Delivery for a period not exceeding five business days in
order that any necessary changes in the Registration Statement and Prospectus
and other documents may be effected.
The term "Underwriter" as used in this Agreement shall refer to and
include any Underwriter substituted under this Section 8 with the same effect as
if such substituted Underwriter had originally been named in this Agreement.
33
9. INDEMNITY AND CONTRIBUTION BY THE COMPANY AND THE UNDERWRITERS.
(a) The Company agrees to indemnify, defend and hold harmless
each Underwriter and any person who controls any Underwriter within the meaning
of Section 15 of the Securities Act or Section 20 of the Exchange Act, from and
against any loss, expense, liability, damage or claim (including the reasonable
cost of investigation) that, jointly or severally, any such Underwriter or
controlling person may incur under the Securities Act, the Exchange Act or
otherwise, insofar as such loss, expense, liability, damage or claim arises out
of or is based upon (A) any breach of any representation, warranty or covenant
of the Company contained herein, (B) any failure on the part of the Company to
comply with any applicable law, rule or regulation relating to the offering of
securities being made pursuant to the Prospectus, (C) any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement (or in the Registration Statement as amended by any post-effective
amendment thereof by the Company), the Prospectus (the term Prospectus for the
purpose of this Section 9 being deemed to include the Preliminary Prospectus and
any other preliminary prospectus, the Prospectus and any prospectus wrapper
material distributed to residents of Canada), or (D) any omission or alleged
omission to state a material fact required to be stated in any such Registration
Statement or Prospectus or necessary to make the statements made therein, in the
light of the circumstances under which they were made, not misleading; except
insofar as any such loss, expense, liability, damage or claim arises out of or
is based upon any untrue statement or alleged untrue statement or omission or
alleged omission of a material fact contained in and in conformity with
information furnished in writing by the Underwriters through the Representatives
to the Company expressly for use in such Registration Statement or Prospectus;
and except that, with respect to the Preliminary Prospectus or other preliminary
prospectus, the foregoing indemnity agreement shall not inure to the benefit of
any Underwriter from whom the person asserting any loss, expense, liability,
damage or claim purchased Shares, or any person controlling such Underwriter, if
copies of the Prospectus were timely delivered to the Underwriter pursuant to
Section 1 hereof and a copy of the Prospectus (as then amended or supplemented
if the Company shall have furnished any amendments or supplements thereto) was
not sent or given by or on behalf of such Underwriter to such person, if
required by law so to have been delivered, at or prior to the written
confirmation of the sale of the Shares to such person, and if the Prospectus (as
so amended or supplemented) would have cured the defect giving rise to such
loss, expense, liability, damage or claim. The indemnity agreement set forth in
this Section 9(a) shall be in addition to any liabilities that the Company may
otherwise have.
If any action is brought against an Underwriter or controlling person
in respect of which indemnity may be sought against the Company pursuant to the
foregoing paragraph, such Underwriter shall promptly notify the Company in
writing of the institution of such action, and the Company shall assume the
defense of such action, including the employment of counsel and payment of
expenses; provided, however, that any failure or delay to so notify the Company
will not relieve the Company of any obligation hereunder, except to the extent
that their ability to defend is actually impaired by such failure or delay. Such
Underwriter or controlling person shall have the right to employ its or their
own counsel in any such case, but the fees and expenses of such counsel shall be
at the expense of such Underwriter or such controlling person unless the
employment of such counsel shall have been authorized in writing by the Company
in connection with the defense of such action, or the Company shall not have
employed counsel to have charge of the defense of such action within a
reasonable time or such indemnified party or
34
parties shall have reasonably concluded (based on the advice of counsel) that
there may be defenses available to it or them which are different from or
additional to those available to the Company (in which case the Company shall
not have the right to direct the defense of such action on behalf of the
indemnified party or parties), in any of which events such reasonable fees and
expenses shall be borne by the Company and paid as incurred (it being
understood, however, that the Company shall not be liable for the expenses of
more than one separate firm of attorneys for the Underwriters or controlling
persons in any one action or series of related actions in the same jurisdiction
(other than local counsel in any such jurisdiction) representing the indemnified
parties who are parties to such action).
(b) Each Underwriter agrees, severally and not jointly, to
indemnify, defend and hold harmless the Company, the Company's directors, the
Company's officers that signed the Registration Statement, and any person who
controls the Company within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act, from and against any loss, expense, liability,
damage or claim (including the reasonable cost of investigation) that, jointly
or severally, the Company or any such person may incur under the Securities Act,
the Exchange Act or otherwise, but only insofar as such loss, expense,
liability, damage or claim arises out of or is based upon (A) any untrue
statement or alleged untrue statement of a material fact contained in and in
conformity with information furnished in writing by such Underwriter through the
Representatives to the Company expressly for use in the Registration Statement
(or in the Registration Statement as amended by any post-effective amendment
thereof by the Company) or the Prospectus, or (B) any omission or alleged
omission to state a material fact in connection with such information required
to be stated either in such Registration Statement or Prospectus or necessary to
make such information, in the light of the circumstances under which made, not
misleading; provided, however, that the following statements set forth under the
caption "Underwriting" in the Prospectus (to the extent such statements relate
to the Underwriters) constitute the only information furnished by or on behalf
of any Underwriter through the Representatives to the Company for purposes of
Section 3(l) and this Section 9: (1) the table in the first paragraph, (2) the
first sentence of the third paragraph, (3) the tenth paragraph, (4) the first
and last sentence of fifteenth paragraph and (5) the sixteenth paragraph. The
indemnity agreement set forth in this Section 9(b) shall be in addition to any
liabilities that such Underwriter may otherwise have.
If any action is brought against the Company or any such person in
respect of which indemnity may be sought against any Underwriter pursuant to the
foregoing paragraph, the Company or such person shall promptly notify the
Representatives in writing of the institution of such action and the
Representatives, on behalf of the Underwriters, shall assume the defense of such
action, including the employment of counsel and payment of expenses. The Company
or such person shall have the right to employ its own counsel in any such case,
but the fees and expenses of such counsel shall be at the expense of the Company
or such person unless the employment of such counsel shall have been authorized
in writing by the Representatives in connection with the defense of such action
or the Representatives shall not have employed counsel to have charge of the
defense of such action within a reasonable time or such indemnified party or
parties shall have reasonably concluded (based on the advice of counsel) that
there may be defenses available to it or them that are different from or
additional to those available to the Underwriters (in which case the
Representatives shall not have the right to direct the defense of such action on
behalf of the indemnified party or parties), in any of which events
35
such fees and expenses shall be borne by such Underwriter and paid as incurred
(it being understood, however, that the Underwriters shall not be liable for the
expenses of more than one separate firm of attorneys in any one action or series
of related actions in the same jurisdiction (other than local counsel in any
such jurisdiction) representing the indemnified parties who are parties to such
action).
(c) The indemnifying party under this Section 9 shall not be
liable for any settlement of any proceeding effected without its written
consent, but if settled with such consent or if there be a final judgment for
the plaintiff, the indemnifying party agrees to indemnify (to the extent
provided in this Section 9) the indemnified party against any loss, claim,
damage, liability or expense by reason of such settlement or judgment. No
indemnifying party shall, without the prior written consent of the indemnified
party, effect any settlement, compromise or consent to the entry of judgment in
any pending or threatened action, suit or proceeding in respect of which any
indemnified party is or could have been a party and indemnity was or could have
been sought hereunder by such indemnified party, unless such settlement,
compromise or consent includes an unconditional release of such indemnified
party from all liability on claims that are the subject matter of such action,
suit or proceeding.
(d) If the indemnification provided for in this Section 9 is
unavailable or insufficient to hold harmless an indemnified party under
subsections (a), (b) or (c) of this Section 9 in respect of any losses,
expenses, liabilities, damages or claims referred to therein, then each
applicable indemnifying party, in lieu of indemnifying such indemnified party,
shall contribute to the amount paid or payable by such indemnified party as a
result of such losses, expenses, liabilities, damages or claims (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company and by the Underwriters from the offering of the Shares or (ii) if (but
only if) the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above, but also the relative fault
of the Company and of the Underwriters in connection with the statements or
omissions that resulted in such losses, expenses, liabilities, damages or
claims, as well as any other relevant equitable considerations. The relative
benefits received by the Company and by the Underwriters shall be deemed to be
in the same proportion as the total proceeds from the offering (net of
underwriting discounts and commissions but before deducting expenses) received
by the Company bear to the underwriting discounts and commissions received by
the Underwriters. The relative fault of the Company and of the Underwriters
shall be determined by reference to, among other things, whether the untrue
statement or alleged untrue statement of a material fact or omission or alleged
omission relates to information supplied by the Company or by the Underwriters
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The amount paid or
payable by a party as a result of the losses, claims, damages and liabilities
referred to above shall be deemed to include any legal or other fees or expenses
reasonably incurred by such party in connection with investigating or defending
any claim or action.
(e) The Company and the Underwriters agree that it would not be
just and equitable if contribution pursuant to this Section 9 were determined by
pro rata allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation that does not take account of
the equitable considerations referred to in clause (i) and, if applicable clause
(ii), of subsection (d) above. Notwithstanding the provisions of this Section
36
9, no Underwriter shall be required to contribute any amount in excess of the
underwriting discounts and commissions applicable to the Shares purchased by
such Underwriter. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations to contribute pursuant to this
Section 9 are several in proportion to their respective underwriting commitments
and not joint. For purposes of this Section 9, each officer and employee of an
Underwriter and each person, if any, who controls an Underwriter within the
meaning of the Section 15 of the Securities Act and Section 20 of the Exchange
Act shall have the same rights to contribution as such Underwriter, and each
director of the Company, each officer of the Company who signed the Registration
Statement, and each person, if any, who controls the Company within the meaning
of Section 15 of the Securities Act and Section 20 of the Exchange Act shall
have the same rights to contribution as the Company.
10. SURVIVAL.
The indemnity and contribution agreements contained in Section 9 and
the covenants, warranties and representations of the Company contained in
Sections 3, 4 and 5 of this Agreement shall remain in full force and effect
regardless of any investigation made by or on behalf of any Underwriter, or any
person who controls any Underwriter within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, or by or on behalf of the
Company, its directors and officers or any person who controls the Company
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act, and shall survive any termination of this Agreement or the sale
and delivery of the Shares. That certain letter agreement dated July 16, 2003,
as amended on October 7, 2003 and further amended on January 21, 2004, between
Friedman, Billings, Xxxxxx & Co. and Gen-Net Lease Income Trust, as it may be
subsequently amended, shall survive the execution, delivery, performance and
termination of this Agreement (except as otherwise provided therein), and the
Company agrees to the appointment of Friedman, Billings, Xxxxxx & Co., Inc.
contained in Section 2 thereof. The Company and each Underwriter agree promptly
to notify the others of the commencement of any litigation or proceeding against
it and, in the case of the Company, against any of the Company's officers and
directors, in connection with the sale and delivery of the Shares, or in
connection with the Registration Statement or Prospectus.
11. NOTICES.
Except as otherwise herein provided, all statements, requests, notices
and agreements shall be in writing or by telegram and, if to the Underwriters,
shall be sufficient in all respects if delivered to Friedman, Billings, Xxxxxx &
Co., Inc., 0000 00xx Xxxxxx Xxxxx, Xxxxxxxxx, Xxxxxxxx 00000, Attention:
Syndicate Department; or if to the Company shall be sufficient in all respects
if delivered to the Company at the offices of the Company at 00000 Xxxxxxx
Xxxxxx, Xxxxx 000, Xxxxx, Xxxxxxxx 00000.
12. GOVERNING LAW; CONSENT TO JURISDICTION; HEADINGS.
THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NEW YORK, WITHOUT
37
REGARD TO CONFLICTS OF LAWS PRINCIPLES. The parties hereto agree to be subject
to, and hereby irrevocably submit to, the nonexclusive jurisdiction of any
United States federal or New York state court sitting in New York, New York, in
respect of any suit, action or proceeding arising out of or relating to this
Agreement or the transactions contemplated herein, and irrevocably agree that
all claims in respect of any such suit, action or proceeding may be heard and
determined in any such court. Each of the parties hereto irrevocably waives, to
the fullest extent permitted by applicable law, any objection to the laying of
the venue of any such suit, action or proceeding brought in any such court and
any claim that any such suit, action or proceeding has been brought in an
inconvenient forum. The section headings in this Agreement have been inserted as
a matter of convenience of reference and are not a part of this Agreement.
13. PARTIES AT INTEREST.
This Agreement herein set forth has been and is made solely for the
benefit of the Underwriters, the Company and the controlling persons, directors
and officers referred to in Sections 9 and 10 hereof, and their respective
successors, assigns, executors and administrators. No other person, partnership,
association or corporation (including a purchaser, as such purchaser, from any
of the Underwriters) shall acquire or have any right under or by virtue of this
Agreement.
14. COUNTERPARTS AND FACSIMILE SIGNATURES.
This Agreement may be signed by the parties in counterparts which
together shall constitute one and the same agreement among the parties. A
facsimile signature shall constitute an original signature for all purposes.
[Signature Page to Follow]
38
If the foregoing correctly sets forth the understanding among the
Company and the Underwriters, please so indicate in the space provided below for
the purpose, whereupon this Agreement shall constitute a binding agreement among
the Company and the Underwriters.
Very truly yours,
GOVERNMENT PROPERTIES TRUST, INC.
By:
---------------------------------------
Name:
Title:
Accepted and agreed to as
of the date first above written:
FRIEDMAN, BILLINGS, XXXXXX & CO., INC.
BB&T CAPITAL MARKETS, A DIVISION OF XXXXX
& XXXXXXXXXXXX, INC.
FLAGSTONE SECURITIES
By: FRIEDMAN, BILLINGS, XXXXXX & CO., INC.
By:
---------------------------------------
Title:
For themselves and as Representatives of the other
Underwriters named on Schedule I hereto.
Schedule I
Number of Initial
Underwriter Shares to be Purchased
Friedman, Billings, Xxxxxx & Co., Inc. [ ]
BB&T Capital Markets, a Division of Xxxxx & Xxxxxxxxxxxx, Inc.
Flagstone Securities
Total.................................................................. 14,000,000
EXHIBIT A
FORM OF LOCK-UP LETTER
_____________, 2004
Friedman, Billings, Xxxxxx & Company, Inc.
0000 00xx Xxxxxx Xxxxx
00xx Xxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Dear Sirs:
The undersigned understands that Friedman, Billings, Xxxxxx & Company,
Inc. ("FBR"), BB&T Capital Markets, a Division of Xxxxx & Xxxxxxxxxxxx, Inc. and
Flagstone Securities propose to enter into an
Underwriting Agreement (the
"
Underwriting Agreement"), as representatives of several underwriters (the
"Underwriters"), with Government Properties Trust, Inc. a Maryland corporation
(the "Company"), providing for the public offering (the "Public Offering") by
(inter alia) the Underwriters of shares (the "Shares") of Common Stock of the
Company (the "Common Stock").
To induce the Underwriters to continue its efforts in connection with
the Public Offering, the undersigned hereby agrees that, without the prior
written consent of FBR, the undersigned will not directly or indirectly, during
the period commencing on the date hereof and ending on the 180-day anniversary
of the date of the final prospectus relating to the Public Offering (such
period, the "Lock-Up Period" and such prospectus, the "Prospectus"), (1) offer,
pledge, sell, loan, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or warrant to
purchase, or otherwise transfer or dispose of, directly or indirectly, any of
the following (whether now owned by the undersigned or hereafter acquired): (i)
Common Stock, (ii) any securities convertible into or exercisable or
exchangeable for any shares of Common Stock, or (iii) any rights to purchase or
otherwise acquire Common Stock held by the undersigned or acquired by the
undersigned after the date hereof, or that may be deemed to be beneficially
owned by the Undersigned; or (2) enter into any swap or other arrangement that
transfers to another, in whole or in part, any of the economic consequences of
ownership of the Common Stock or such units, whether any such transaction
described in clause (1) or (2) above is to be settled by delivery of Common
Stock or such other securities, in cash or otherwise. The undersigned further
agrees that the undersigned will not publicly disclose the intention to make any
such offer, sale, pledge, redemption or disposition or to enter into any
transaction described in the preceding sentence during the Lock-Up Period
without, in each case, the prior written consent of FBR. In addition, the
undersigned agrees that, without prior written consent of FBR, the undersigned
will not, during the Lock-Up Period, make any demand for or exercise any right
with respect to, the registration under the Securities Act of 1933, as amended
(the "Securities Act"), of any shares of Common Stock or any security
convertible into or exercisable or exchangeable for Common Stock.
Notwithstanding the foregoing, the undersigned shall not be restricted
from distributing any of the Company's securities to the undersigned's equity
holders provided that prior to and as
a condition to the effectiveness of any such distribution such equity holders
execute a lock-up agreement substantially in the form hereof in favor of the
addressees hereof.
In furtherance of the foregoing, the Company and its transfer agent and
registrar are hereby authorized to decline to make any transfer that would
constitute a violation or breach of this letter. This letter shall be binding on
the undersigned and the respective successors, heirs, personal representatives
and assigns of the undersigned.
Whether or not the Public Offering actually occurs depends on a number
of factors, including market conditions. Any Public Offering will only be made
pursuant to the
Underwriting Agreement, the terms of which are subject to
agreement between the Company and the representatives of the Underwriters. The
terms of this Lock-Up letter shall expire in the event the Public Offering is
not consummated on or before __________________.
Very truly yours,
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(Printed or Typed Name)
By:
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(SEAL)
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Title:
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