2,400,000 Shares
REALTY INCOME CORPORATION
9 M% Class B Cumulative Redeemable Preferred Stock
(Par Value $1.00 Per Share)
(Liquidation Preference $25.00 Per Share)
PURCHASE AGREEMENT
May 20, 1999
Table of Contents
Page
----
SECTION 1. Representations and Warranties.. . . . . . . . . . . . . . . 3
(a) REPRESENTATIONS AND WARRANTIES BY THE COMPANY.. . . . . . . . 3
(i) Compliance with Registration Requirements.. . . . . 3
(ii) Incorporated Documents. . . . . . . . . . . . . . . 4
(iii) Independent Accountants.. . . . . . . . . . . . . . 4
(iv) Financial Statements. . . . . . . . . . . . . . . . 4
(v) No Material Adverse Change in Business. . . . . . . 5
(vi) Good Standing of the Company. . . . . . . . . . . . 5
(vii) Good Standing of Subsidiaries . . . . . . . . . . . 5
(viii) Capitalization. . . . . . . . . . . . . . . . . . . 6
(ix) Authorization of Agreement. . . . . . . . . . . . . 6
(x) Authorization of Common Stock.. . . . . . . . . . . 6
(xi) Absence of Defaults and Conflicts.. . . . . . . . . 6
(xii) Absence of Labor Dispute. . . . . . . . . . . . . . 7
(xiii) Absence of Proceedings. . . . . . . . . . . . . . . 7
(xiv) Accuracy of Exhibits. . . . . . . . . . . . . . . . 7
(xv) Possession of Intellectual Property.. . . . . . . . 8
(xvi) Absence of Further Requirements.. . . . . . . . . . 8
(xvii) Possession of Licenses and Permits. . . . . . . . . 8
(xviii) Investment Company Act. . . . . . . . . . . . . . . 8
(xix) Partnership Agreements. . . . . . . . . . . . . . . 9
(xx) Properties. . . . . . . . . . . . . . . . . . . . . 9
(xxi) Insurance.. . . . . . . . . . . . . . . . . . . . . 10
(xxii) Environmental Matters.. . . . . . . . . . . . . . . 10
(xxiii) Qualification as a Real Estate Investment Trust . . 12
(xxiv) Registration Rights.. . . . . . . . . . . . . . . . 12
(xxv) Tax Treatment of Certain Entities.. . . . . . . . . 12
(xxvi) Securities. . . . . . . . . . . . . . . . . . . . . 12
(xxvii) Ranking of Securities.. . . . . . . . . . . . . . . 13
(xxviii) Articles Supplementary. . . . . . . . . . . . . . . 13
(b) OFFICER'S CERTIFICATES. . . . . . . . . . . . . . . . . . . . 13
SECTION 2. Sale and Delivery to Underwriters; Closing. . . . . . . . . . . . 13
(a) INITIAL SECURITIES. . . . . . . . . . . . . . . . . . . . . . 13
(b) OPTION SECURITIES.. . . . . . . . . . . . . . . . . . . . . . 13
(c) PAYMENT.. . . . . . . . . . . . . . . . . . . . . . . . . . . 14
(d) DENOMINATIONS; REGISTRATION.. . . . . . . . . . . . . . . . . 14
SECTION 3. Covenants of the Company. . . . . . . . . . . . . . . . . . . . . 14
(a) COMPLIANCE WITH SECURITIES REGULATIONS AND
COMMISSION REQUESTS . . . . . . . . . . . . . . . . . . . . . 14
(b) FILING OF AMENDMENTS. . . . . . . . . . . . . . . . . . . . . 15
(c) RULE 434. . . . . . . . . . . . . . . . . . . . . . . . . . . 15
(d) DELIVERY OF REGISTRATION STATEMENTS.. . . . . . . . . . . . . 15
i
Page
----
(e) DELIVERY OF PROSPECTUSES. . . . . . . . . . . . . . . . . . . 15
(f) CONTINUED COMPLIANCE WITH SECURITIES LAWS.. . . . . . . . . . 16
(g) BLUE SKY QUALIFICATIONS.. . . . . . . . . . . . . . . . . . . 16
(h) RULE 158. . . . . . . . . . . . . . . . . . . . . . . . . . . 16
(i) USE OF PROCEEDS.. . . . . . . . . . . . . . . . . . . . . . . 16
(j) LISTING.. . . . . . . . . . . . . . . . . . . . . . . . . . . 16
(k) REPORTING REQUIREMENTS. . . . . . . . . . . . . . . . . . . . 16
(l) RESTRICTION ON SALE OF SECURITIES.. . . . . . . . . . . . . . 17
SECTION 4. Payment of Expenses . . . . . . . . . . . . . . . . . . . . . . . 17
(a) EXPENSES. . . . . . . . . . . . . . . . . . . . . . . . . . . 17
(b) TERMINATION OF AGREEMENT. . . . . . . . . . . . . . . . . . . 18
SECTION 5. Conditions of Underwriters' Obligations.. . . . . . . . . . . . . 18
(a) EFFECTIVENESS OF REGISTRATION STATEMENT.. . . . . . . . . . . 18
(b) OPINIONS OF COUNSEL FOR COMPANY.. . . . . . . . . . . . . . . 18
(c) OPINION OF COUNSEL FOR UNDERWRITERS.. . . . . . . . . . . . . 18
(d) OFFICERS' CERTIFICATE.. . . . . . . . . . . . . . . . . . . . 19
(e) ACCOUNTANT'S COMFORT LETTER.. . . . . . . . . . . . . . . . . 19
(f) BRING-DOWN COMFORT LETTER.. . . . . . . . . . . . . . . . . . 19
(g) APPROVAL OF LISTING.. . . . . . . . . . . . . . . . . . . . . 19
(h) RATING REQUIREMENT. . . . . . . . . . . . . . . . . . . . . . 19
(i) ARTICLES SUPPLEMENTARY. . . . . . . . . . . . . . . . . . . . 19
(j) CONDITIONS TO PURCHASE OF OPTION SECURITIES.. . . . . . . . . 19
(k) ADDITIONAL DOCUMENTS. . . . . . . . . . . . . . . . . . . . . 20
(l) TERMINATION OF AGREEMENT. . . . . . . . . . . . . . . . . . . 21
SECTION 6. Indemnification.. . . . . . . . . . . . . . . . . . . . . . . . . 21
(a) INDEMNIFICATION OF UNDERWRITERS.. . . . . . . . . . . . . . . 21
(b) INDEMNIFICATION OF COMPANY, DIRECTORS AND OFFICERS. . . . . . 22
(c) ACTIONS AGAINST PARTIES; NOTIFICATION.. . . . . . . . . . . . 22
(d) SETTLEMENT WITHOUT CONSENT IF FAILURE TO REIMBURSE. . . . . . 23
SECTION 7. Contribution. . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 8. Representations, Warranties and Agreements to Survive Delivery. . 24
SECTION 9. Termination of Agreement. . . . . . . . . . . . . . . . . . . . . 24
(a) TERMINATION; GENERAL. . . . . . . . . . . . . . . . . . . . . 24
(b) LIABILITIES.. . . . . . . . . . . . . . . . . . . . . . . . . 25
ii
Page
----
SECTION 10. Default by One or More of the Underwriters.. . . . . . . . . . . 25
SECTION 11. Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 12. Parties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 13. GOVERNING LAW AND TIME.. . . . . . . . . . . . . . . . . . . . . 26
SECTION 14. Effect of Headings and Table of Contents.. . . . . . . . . . . . 26
iii
2,400,000 Shares
REALTY INCOME CORPORATION
(a Maryland corporation)
9 M% Class B Cumulative Redeemable Preferred Stock
(Par Value $1.00 Per Share)
(Liquidation Preference $25.00 Per Share)
PURCHASE AGREEMENT
------------------
May 20, 1999
Xxxxxxx Xxxxx & Co.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated
Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities Corporation
X.X. Xxxxxxx & Sons, Inc.
EVEREN Securities, Inc.
First Union Capital Markets Corp.
PaineWebber Incorporated
Sutro & Co. Incorporated
as Representatives of the several Underwriters
c/x Xxxxxxx Xxxxx & Co.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated
North Tower
World Financial Center
New York, New York 10281
Ladies and Gentlemen:
Realty Income Corporation, a Maryland corporation (the "Company"), confirms
its agreement with the Underwriters named in Schedule A hereto (the
"Underwriters" which term shall also include any underwriter substituted as
hereinafter provided in Section 10 hereof), for whom Xxxxxxx Xxxxx & Co.,
Xxxxxxx Lynch, Xxxxxx, Xxxxxx & Xxxxx Incorporated ("Xxxxxxx Xxxxx"), Xxxxxxxxx,
Xxxxxx & Xxxxxxxx Securities Corporation, X.X. Xxxxxxx & Sons, Inc., EVEREN
Securities, Inc., First Union Capital Markets Corp., PaineWebber Incorporated
and Sutro & Co. Incorporated are acting as representatives (the
"Representatives"), with respect to the sale by the Company and the purchase by
the Underwriters, acting severally and not jointly, of the respective numbers of
shares of the Company's Class B Cumulative Redeemable Preferred Stock, par value
$1.00 per share (the "Class B Preferred Stock") set forth in said Schedule A,
and with respect to the grant by the Company to the Underwriters, acting
severally and not jointly, of the option described in Section 2(b) hereof to
purchase all or any part of 360,000 additional
shares of Preferred Stock to cover over-allotments, if any. The aforesaid
2,400,000 shares of Preferred Stock (the "Initial Securities") to be
purchased by the Underwriters and all or any part of the 360,000 shares of
Preferred Stock subject to the option described in Section 2(b) hereof (the
"Option Securities") are hereinafter called, collectively, the "Securities."
The terms of the Securities will be set forth in articles supplementary (the
"Articles Supplementary") to be filed by the Company with the Maryland State
Department of Assessments and Taxation (the "SDAT").
The Company understands that the Underwriters propose to make a public
offering of the Securities as soon as the Representatives 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-3 (No. 333-34311) and Amendment
No. 1 thereto covering the registration of, among other things, the Securities
under the Securities Act of 1933, as amended (the "1933 Act"), in each case
including the related preliminary prospectus or prospectuses. Promptly after
execution and delivery of this Agreement, the Company will either (i) prepare
and file a prospectus supplement and, if required by Rule 424(b) (as defined
below), a prospectus in accordance with the provisions of Rule 415 ("Rule 415")
of the rules and regulations of the Commission under the 1933 Act (the "1933 Act
Regulations") and paragraph (b) of Rule 424 ("Rule 424(b)") of the 1933 Act
Regulations or (ii) if the Company has elected to rely upon Rule 434 ("Rule
434") of the 1933 Act Regulations, prepare and file a term sheet (a "Term
Sheet") in accordance with the provisions of Rule 434 and Rule 424(b). The
information included in such Term Sheet that was omitted from such registration
statement at the time it became effective but that is deemed to be part of such
registration statement at the time the Term Sheet is filed with the Commission
pursuant to paragraph (d) of Rule 434 is referred to as "Rule 434 Information."
Each prospectus, together with any related prospectus supplement, relating to
the Securities used before such registration statement became effective, and
each prospectus, together with the related prospectus supplement, relating to
the Securities that omitted the Rule 434 Information or that was captioned
"Subject to Completion" that was used after such effectiveness and prior to the
execution and delivery of this Agreement, is herein called, together with the
documents incorporated by reference therein pursuant to Item 12 of Form S-3
under the 1933 Act, a "preliminary prospectus." Such registration statement, as
amended and including the exhibits thereto, schedules, if any, and the documents
incorporated by reference therein pursuant to Item 12 of Form S-3 under the 1933
Act, at the time it became effective and including, if applicable, the Rule 434
Information, is herein called the "Registration Statement." Any registration
statement filed pursuant to Rule 462(b) of the 1933 Act Regulations is herein
referred to as the "Rule 462(b) Registration Statement," and after such filing
the term "Registration Statement" shall include the Rule 462(b) Registration
Statement. The prospectus dated October 1, 1997 and the final prospectus
supplement relating to the offering of the Securities, including the documents
incorporated by reference therein pursuant to Item 12 of Form S-3 under the 1933
Act, in the form first furnished to the Underwriter for use in connection with
the offering of the Securities are herein called, collectively, the
"Prospectus." If Rule 434 is relied on, the term "Prospectus" shall refer to
the prospectus dated October 1, 1997, the preliminary prospectus supplement
dated March 13, 1999 and the Term Sheet and all documents incorporated by
reference therein pursuant to Item 12 of Form S-3, and all references in this
Agreement to the date of the Prospectus shall mean the date of the Term Sheet.
For purposes of
2
this Agreement, all references to the Registration Statement, any preliminary
prospectus, the Prospectus or any Term Sheet or any amendment or supplement
to any of the foregoing shall be deemed to include any copy filed with the
Commission pursuant to its Electronic Data Gathering, Analysis and Retrieval
system ("XXXXX").
All references in this Agreement to financial statements and schedules and
other information which is "described," "disclosed," "contained," "included" or
"stated" in the Registration Statement, any preliminary prospectus or the
Prospectus (or other references of like import) shall be deemed to mean and
include all such financial statements and schedules and other information which
is incorporated or deemed to be incorporated by reference in the Registration
Statement, any preliminary prospectus or the Prospectus, as the case may be; and
all references in this Agreement to amendments or supplements to the
Registration Statement, any preliminary prospectus or the Prospectus shall be
deemed to mean and include the filing of any document under the Securities
Exchange Act of 1934, as amended (the "1934 Act"), which is incorporated or
deemed to be incorporated by reference in the Registration Statement, such
preliminary prospectus or the Prospectus, as the case may be.
All references in this Agreement to properties or improvements "owned by"
or "of" the Company or any of its subsidiaries shall be deemed to mean and
include all properties and improvements which are leased by the Company or any
of its subsidiaries, as lessee.
As used in this Agreement, the term "Consolidation" means the merger of 25
limited partnerships and RIC Properties Ltd., a California limited partnership,
into the Company on August 15, 1994; and "Merger" means the merger of R.I.C.
Advisor, Inc., a California corporation (the "Advisor"), into the Company on
August 17, 1995.
SECTION 1. REPRESENTATIONS AND WARRANTIES.
(a) REPRESENTATIONS AND WARRANTIES BY THE COMPANY. The Company represents
and warrants to each Underwriter as of the date hereof, as of the Closing Time
referred to in Section 2(c) hereof, and as of each Date of Delivery (if any)
referred to in Section 2(b) hereof, and agrees with each Underwriter, as
follows:
(i) COMPLIANCE WITH REGISTRATION REQUIREMENTS. The Company meets the
requirements for use of Form S-3 under the 1933 Act. Each of the
Registration Statement and any Rule 462(b) Registration Statement has
become effective under the 1933 Act and no stop order suspending the
effectiveness of the Registration Statement or any Rule 462(b) Registration
Statement has been issued under the 1933 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 any request on the part of
the Commission for additional information has been complied with.
At the respective times the Registration Statement, any Rule 462(b)
Registration Statement and any post-effective amendments thereto became
effective, at the date hereof and at the Closing Time (and, if any Option
Securities are purchased, at each Date of Delivery), the Registration
Statement, any Rule 462(b) Registration Statement and any amendments and
supplements thereto complied and will comply in all material respects
3
with the applicable requirements of the 1933 Act and the 1933 Act
Regulations and the Trust Indenture Act of 1939, as amended (the "1939
Act"), and the rules and regulations of the Commission under the 1939
Act (the "1939 Act Regulations"), and did not and will not contain an
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading, and, at the date hereof and at the Closing Time
(and, if any Option Securities are purchased, at each Date of Delivery),
neither the Prospectus nor any amendments or supplements thereto
contained or will contain any untrue statement of a material fact or
omitted or will omit to state a material fact necessary in order to make
the statements therein, in the light of the circumstances under which
they were made, not misleading; PROVIDED, HOWEVER, that the
representations and warranties in this paragraph shall not apply to
statements in or omissions from the Registration Statement or Prospectus
made in reliance upon and in conformity with information furnished to
the Company in writing by any Underwriter through Xxxxxxx Xxxxx
expressly for use in the Registration Statement or Prospectus.
Each preliminary prospectus and Prospectus filed as part of the
Registration Statement as originally filed or as part of any amendment
thereto, or filed pursuant to Rule 424 under the 1933 Act, complied when so
filed in all material respects with the 1933 Act and the 1933 Act
Regulations and, if applicable, each preliminary prospectus and the
Prospectus delivered to the Underwriter for use in connection with this
offering was identical to the electronically transmitted copies thereof
filed with the Commission pursuant to XXXXX except to the extent permitted
by Regulation S-T.
(ii) INCORPORATED DOCUMENTS. The documents incorporated or deemed to
be incorporated by reference in the Registration Statement and the
Prospectus, at the time they were or hereafter are filed with the
Commission, complied and will comply in all material respects with the
requirements of the 1934 Act and the rules and regulations of the
Commission thereunder (the "1934 Act Regulations"), and, when read together
with the other information in the Prospectus, at the date hereof and at the
Closing Time (and, if any Option Securities are purchased, at each Date of
Delivery), did not and will not contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(iii) INDEPENDENT ACCOUNTANTS. The accountants who certified the
financial statements and supporting schedules included in the Registration
Statement are independent public accountants as required by the 1933 Act
and the 1933 Act Regulations.
(iv) FINANCIAL STATEMENTS. The consolidated financial statements of
the Company included in the Registration Statement and the Prospectus,
together with the related schedule and notes, present fairly the financial
position of the Company and its subsidiaries at the dates indicated and the
consolidated statements of income, stockholders' equity and cash flows of
the Company and its subsidiaries for the periods specified; said
consolidated financial statements have been prepared in conformity with
generally accepted accounting principles ("GAAP") applied on a consistent
basis throughout the periods involved. The supporting schedules included
in the Registration
4
Statement present fairly in accordance with GAAP the information
required to be stated therein. The selected financial data, if any, and
summary financial information, if any, included in the Prospectus
present fairly the information shown therein and have been compiled on a
basis consistent with that of the audited financial statements included
in the Registration Statement. The Company's ratios of earnings to
fixed charges and, if applicable, ratios of earnings to combined fixed
charges and preferred stock dividends (actual and, if any, pro forma)
included in the Prospectus have been calculated in compliance with Item
503(d) of Regulation S-K of the Commission.
(v) NO MATERIAL ADVERSE CHANGE IN BUSINESS. Since the respective
dates as of which information is given in the Registration Statement and
the Prospectus, except as otherwise stated therein, (A) there has been no
material adverse change in the condition, financial or otherwise, or in the
earnings, business affairs or business prospects of the Company and its
subsidiaries considered as one enterprise (a "Material Adverse Effect"),
whether or not arising in the ordinary course of business, (B) there have
been no transactions entered into by the Company or any of its
subsidiaries, other than those in the ordinary course of business, which
are material with respect to the Company and its subsidiaries considered as
one enterprise, and (C) except for regular monthly distributions on the
Common Stock, par value $1.00 per share, of the Company (the "Common
Stock") in amounts per share that are consistent with past practice, there
has been no dividend or distribution of any kind declared, paid or made by
the Company on any class of its stock.
(vi) GOOD STANDING OF THE COMPANY. The Company is a corporation duly
organized and validly existing under the laws of the State of Maryland and
is in good standing with the State Department of Assessments and Taxation
of Maryland and has corporate power and authority to own, lease and operate
its properties and to conduct its business as described in the Prospectus
and to enter into and perform its obligations under this Agreement; and the
Company is duly qualified as a foreign corporation to transact business and
is in good standing in each other jurisdiction in which such qualification
is required, whether by reason of the ownership or leasing of property or
the conduct of business, except where the failure so to qualify or to be in
good standing would not result in a Material Adverse Effect.
(vii) GOOD STANDING OF SUBSIDIARIES. The only subsidiaries of the
Company are Realty Income Texas Properties, L.P., a Delaware limited
partnership, and Realty Income Texas Properties, Inc., a Delaware
corporation, and the Company does not hold any equity interest in any
corporation, limited liability company, partnership, joint venture or
entity other than such subsidiaries. Each subsidiary of the Company has
been duly organized and is validly existing as a partnership or
corporation, as the case may be, in good standing under the laws of the
state of its organization and has power and authority as a partnership or
corporation, as the case may be, to own, lease and operate its properties
and to conduct its business as described in the Prospectus; each such
subsidiary is duly qualified as a foreign partnership or corporation, as
the case may be, to transact business and is in good standing in each other
jurisdiction in which such qualification is required, whether by reason of
the ownership or leasing of property or the conduct of business, except
where the failure so to qualify or to be in good standing would not result
in a Material Adverse Effect; except as otherwise disclosed in the
5
Registration Statement, all of the issued and outstanding partnership
interests and shares of capital stock, as the case may be, of each such
subsidiary have been duly authorized (if applicable) and validly issued and
are fully paid and are non-assessable (except to the extent that the
general partners of subsidiaries which are partnerships may be liable for
the obligations of such partnerships) and are owned by the Company,
directly or through subsidiaries, free and clear of any security interest,
mortgage, pledge, lien, encumbrance, claim or equity; none of the
outstanding partnership interests or shares of capital stock, as the case
may be, of such subsidiaries were issued in violation of preemptive or
other similar rights arising by operation of law, under the partnership
agreement or charter or bylaws, as the case may be, of any such subsidiary
or under any agreement or instrument to which the Company or any such
subsidiary is a party.
(viii) CAPITALIZATION. The authorized stock of the Company and the
issued and outstanding stock of the Company are as set forth in the line
items "Preferred Stock" and "Common Stock" under the caption
"Capitalization " in the Prospectus (except for subsequent issuances, if
any, pursuant to this Agreement, pursuant to employee benefit plans
referred to in the Prospectus or pursuant to the exercise of options
referred to in the Prospectus).
(ix) AUTHORIZATION OF AGREEMENT. This Agreement has been duly
authorized, executed and delivered by the Company.
(x) AUTHORIZATION OF COMMON STOCK. The shares of issued and
outstanding Common Stock have been duly authorized and validly issued and
are fully paid and non-assessable; none of the outstanding shares of Common
Stock was issued in violation of preemptive or other similar rights arising
by operation of law, under the charter or bylaws of the Company, under any
agreement or instrument to which the Company or any of its subsidiaries is
a party or otherwise. The Common Stock, the Company's authorized but
unissued Class A Junior Participating Preferred Stock, par value $1.00 per
share (the "Class A Preferred Stock"), and the Rights Agreement dated as of
June 25, 1998 (the "Rights Agreement") between the Company and The Bank of
New York conform to all statements relating thereto contained or
incorporated by reference in the Prospectus and such statements conform to
the rights set forth in the instruments defining the same.
(xi) ABSENCE OF DEFAULTS AND CONFLICTS. Neither the Company nor any
of its subsidiaries is in violation of its charter or bylaws or its
partnership agreement, as the case may be, or in default in the performance
or observance of any obligation, agreement, covenant or condition contained
in any contract, indenture, mortgage, deed of trust, loan or credit
agreement, note, lease or other agreement or instrument to which the
Company or any of its subsidiaries is a party or by which any of them may
be bound, or to which any of the respective properties or assets of the
Company or any subsidiary is subject (collectively, "Agreements and
Instruments"), except for such defaults that would not have a Material
Adverse Effect; and the execution, delivery and performance of this
Agreement and the Articles Supplementary and the consummation of the
transactions contemplated herein and therein (including the use of the
proceeds from the sale of the Securities to repay borrowings under the
Amended and Restated Revolving Credit
6
Agreement dated as of December 30, 1997 among the Company, the banks
named therein and The Bank of New York, as agent and swing line bank and
BNY Capital Markets, Inc., as arranger, as amended by that certain
letter agreement dated as of November 13, 1998 extending the termination
date and increasing the commitments for certain lenders therein (as so
amended, the "Acquisition Credit Agreement"), as described in the
Prospectus under the caption "Use of Proceeds" but excluding any use of
proceeds for other general corporate purposes for which specific
corporate authorization may be required) and compliance by the Company
with its obligations hereunder and thereunder have been duly authorized
by all necessary corporate action and do not and will not, whether with
or without the giving of notice or passage of time or both, conflict
with or constitute a breach of, or default or Repayment Event (as
defined below) under, or result in the creation or imposition of any
lien, charge or encumbrance upon any property or assets of the Company
or any subsidiary pursuant to, any Agreement or Instrument, except for
such conflicts, breaches or defaults or liens, charges or encumbrances
that, individually or in the aggregate, would not have a Material
Adverse Effect, nor will such action result in any violation of the
provisions of the charter or bylaws of the Company or any applicable
law, rule, regulation, or governmental or court judgment, order, writ or
decree. As used herein, a "Repayment Event" means any event or
condition which gives the holder of any note, debenture or other
evidence of indebtedness (or any person acting on such holder's behalf)
the right to require the repurchase, redemption or repayment of all or a
portion of such indebtedness by the Company or any subsidiary of the
Company or any of its subsidiaries.
(xii) ABSENCE OF LABOR DISPUTE. No labor dispute with the
employees of the Company or any subsidiary of the Company exists or, to the
best knowledge of the Company, is imminent; and the Company is not aware of
any existing or imminent labor disturbance by the employees of any of its
or any subsidiary's tenants, which, in either case, could reasonably be
expected, individually or in the aggregate, to result in a Material Adverse
Effect.
(xiii) ABSENCE OF PROCEEDINGS. The Company has not received any
notice of any action, suit, proceeding, inquiry or investigation before or
by any court or governmental agency or body, domestic or foreign, and, to
the best knowledge of the Company, there is no such proceeding now pending
or threatened, against or affecting the Company or any of its subsidiaries,
which is required to be disclosed in the Registration Statement (other than
as disclosed therein), or which could reasonably be expected to result in a
Material Adverse Effect, or which could reasonably be expected to
materially and adversely affect the consummation of this Agreement or the
performance by the Company of its obligations under this Agreement or the
Articles Supplementary; the aggregate of all pending legal or governmental
proceedings to which the Company or any subsidiary is a party or of which
any of their respective property or assets is the subject which are not
described in the Registration Statement, including ordinary routine
litigation incidental to the business, could not reasonably be expected to
result in a Material Adverse Effect.
(xiv) ACCURACY OF EXHIBITS. There are no contracts or documents
which are required to be described in the Registration Statement, the
Prospectus or the documents
7
incorporated by reference therein or to be filed as exhibits thereto which
have not been so described and filed as required.
(xv) POSSESSION OF INTELLECTUAL PROPERTY. The Company and its
subsidiaries own or possess, or can acquire on reasonable terms, adequate
patents, patent rights, licenses, inventions, copyrights, know-how
(including trade secrets and other unpatented and/or unpatentable
proprietary or confidential information, systems or procedures),
trademarks, service marks, trade names or other intellectual property
(collectively, "Intellectual Property") necessary to carry on the business
now operated by them, and neither the Company nor any of its subsidiaries
has received any notice or is otherwise aware of any infringement of or
conflict with asserted rights of others with respect to any Intellectual
Property or of any facts or circumstances which would render any
Intellectual Property invalid or inadequate to protect the interest of the
Company or any of its subsidiaries therein, and which infringement or
conflict (if the subject of any unfavorable decision, ruling or finding) or
invalidity or inadequacy, singly or in the aggregate, would result in a
Material Adverse Effect.
(xvi) ABSENCE OF FURTHER REQUIREMENTS. No filing with, or
authorization, approval, consent, license, order, registration,
qualification or decree of, any court or governmental authority or agency
is necessary or required for the performance by the Company of its
obligations under this Agreement or the Articles Supplementary, in
connection with the offering, issuance or sale of the Securities hereunder
or the consummation of the other transactions contemplated by this
Agreement or the Articles Supplementary, except such as have been already
made or obtained under the 1933 Act or the 1933 Act Regulations or as may
be required under state securities laws and except for the filing of the
Articles Supplementary with SDAT.
(xvii) POSSESSION OF LICENSES AND PERMITS. The Company and its
subsidiaries possess such permits, licenses, approvals, consents and other
authorizations (collectively, "Governmental Licenses") issued by the
appropriate federal, state, local or foreign regulatory agencies or bodies
necessary to conduct the business now operated by them and the Company and
its subsidiaries are in compliance with the terms and conditions of all
such Governmental Licenses, except where the failure so to possess or
comply would not, singly or in the aggregate, have a Material Adverse
Effect; all of the Governmental Licenses are valid and in full force and
effect, except where the invalidity of such Governmental Licenses or the
failure of such Governmental Licenses to be in full force and effect would
not, singly or in the aggregate, have a Material Adverse Effect; and
neither the Company nor any of its subsidiaries has received any notice of
proceedings relating to the revocation or modification of any such
Governmental Licenses which, singly or in the aggregate, if the subject of
an unfavorable decision, ruling or finding, would result in a Material
Adverse Effect.
(xviii) INVESTMENT COMPANY ACT. The Company is not, and upon the
issuance and sale of the Securities as herein contemplated and the
application of the net proceeds therefrom as described in the Prospectus
will not be, an "investment company" as such term is defined in the
Investment Company Act of 1940, as amended (the "1940 Act").
8
(xix) PARTNERSHIP AGREEMENTS. Each of the partnership and, if
applicable, joint venture agreements to which the Company or any of its
subsidiaries is a party has been duly authorized, executed and delivered by
the Company or the relevant subsidiary, as the case may be, and constitutes
the valid and binding agreement of the Company or such subsidiary, as the
case may be, enforceable in accordance with its terms, except as the
enforcement thereof may be limited by (A) the effect of bankruptcy,
insolvency or other similar laws now or hereafter in effect relating to or
affecting creditors' rights generally or (B) the effect of general
principles of equity, and the execution, delivery and performance of such
agreements did not, at the time of execution and delivery, and does not
constitute a breach of or default under the charter or bylaws or
partnership agreement, as the case may be, of the Company or any of its
subsidiaries or any of the Agreements and Instruments or any law,
administrative regulation or administrative or court order or decree.
(xx) PROPERTIES. Except as otherwise disclosed in the Prospectus:
(i) the Company and its subsidiaries have good and marketable title (either
in fee simple or pursuant to a valid leasehold interest) to all properties
and assets described in the Prospectus as being owned or leased, as the
case may be, by them and to all properties reflected in the Company's most
recent consolidated financial statements included in the Prospectus, and
neither the Company nor any of its subsidiaries has received notice of any
claim that has been or may be asserted by anyone adverse to the rights of
the Company or any subsidiary with respect to any such properties or assets
(or any such lease) or affecting or questioning the rights of the Company
or any such subsidiary to the continued ownership, lease, possession or
occupancy of such property or assets, except for such claims that would
not, singly or in the aggregate, have a Material Adverse Effect; (ii) all
liens, charges, encumbrances, claims or restrictions on or affecting the
properties and assets of the Company or any of its subsidiaries which are
required to be disclosed in the Registration Statement or the Prospectus
are disclosed therein, and all such liens, charges, encumbrances, claims or
restrictions which are not disclosed in the Prospectus could not reasonably
be expected, singly or in the aggregate, to have a Material Adverse Effect;
(iii) no person or entity, including, without limitation, any tenant under
any of the leases pursuant to which the Company or any of its subsidiaries
leases (as lessor) any of its properties (whether directly or indirectly
through other partnerships, joint ventures or otherwise) has an option or
right of first refusal or any other right to purchase any of such
properties, except for such options, rights of first refusal or other
rights to purchase which, individually or in the aggregate, are not
material with respect to the Company and its subsidiaries considered as one
enterprise; (iv) to the Company's best knowledge, each of the properties of
the Company or any of its subsidiaries has access to public rights of way,
either directly or through insured easements, except where the failure to
have such access would not, singly or in the aggregate, have a Material
Adverse Effect; (v) to the Company's best knowledge, each of the properties
of the Company or any of its subsidiaries is served by all public utilities
necessary for the current operations on such property in sufficient
quantities for such operations, except where the failure to have such
public utilities would not, singly or in the aggregate, have a Material
Adverse Effect; (vi) to the best knowledge of the Company, each of the
properties of the Company or any of its subsidiaries complies with all
applicable codes and zoning and subdivision laws and regulations, except
for such failures to comply
9
which would not, either individually or in the aggregate, have a
Material Adverse Effect; (vii) all of the leases under which the Company
or any of its subsidiaries holds or uses any real property or
improvements or any equipment relating to such real property or
improvements are in full force and effect, except where the failure to
be in full force and effect would not, singly or in the aggregate, have
a Material Adverse Effect, and neither the Company nor any of its
subsidiaries is in default in the payment of any amounts due under any
such leases or in any other default thereunder and the Company knows of
no event which, with the passage of time or the giving of notice or
both, would constitute a default under any such lease, except such
defaults that would not, individually or in the aggregate, have a
Material Adverse Effect; (viii) to the best knowledge of the Company,
there is no pending or threatened condemnation, zoning change, or other
proceeding or action that could in any manner affect the size of, use
of, improvements on, construction on or access to the properties of the
Company or any of its subsidiaries, except such proceedings or actions
that, either singly or in the aggregate, would not have a Material
Adverse Effect; and (ix) neither the Company nor any of its subsidiaries
nor any lessee of any of the real property or improvements of the
Company or any of its subsidiaries is in default in the payment of any
amounts due or in any other default under any of the leases pursuant to
which the Company or any of its subsidiaries leases (as lessor) any of
its real property or improvements (whether directly or indirectly
through partnerships, joint ventures or otherwise), and the Company
knows of no event which, with the passage of time or the giving of
notice or both, would constitute such a default under any of such
leases, except such defaults as would not, individually or in the
aggregate, have a Material Adverse Effect.
(xxi) INSURANCE. With such exceptions as would not, individually
or in the aggregate, have a Material Adverse Effect, the Company and its
subsidiaries have title insurance on all real property and improvements
described in the Prospectus as being owned or leased under a ground lease,
as the case may be, by them and to all real property and improvements
reflected in the Company's most recent consolidated financial statements
included in the Prospectus in an amount at least equal to the original cost
of acquisition and the Company and its subsidiaries are entitled to all
benefits of the insured thereunder, and each such property is insured by
extended coverage hazard and casualty insurance in amounts and on such
terms as are customarily carried by lessors of properties similar to those
owned by the Company and its subsidiaries (in the markets in which the
Company's and subsidiaries' respective properties are located), and the
Company and its subsidiaries carry comprehensive general liability
insurance and such other insurance as is customarily carried by lessors of
properties similar to those owned by the Company and its subsidiaries in
amounts and on such terms as are customarily carried by lessors of
properties similar to those owned by the Company and its subsidiaries (in
the markets in which the Company's and its subsidiaries' respective
properties are located) and the Company or one of its subsidiaries is named
as an additional insured on all policies required under the leases for such
properties.
(xxii) ENVIRONMENTAL MATTERS. Except as otherwise disclosed in the
Prospectus: (i) all real property and improvements owned or leased by the
Company or any of its subsidiaries, including, without limitation, the
Environment (as defined below) associated with such real property and
improvements, is free of any Contaminant (as defined
10
below), except such Contaminants which, individually or in the
aggregate, would not have a Material Adverse Effect; (ii) neither the
Company, nor any of its subsidiaries nor any Partnership has caused or
suffered to exist or occur any Release (as defined below) of any
Contaminant into the Environment or any other condition that,
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect or could result in any violation of any
Environmental Laws (as defined below) or constitute a health, safety or
environmental hazard to any person or property except for such
violations or hazards that could not reasonably be expected to have a
Material Adverse Effect; (iii) neither the Company nor any of its
subsidiaries is aware of any notice from any governmental body claiming
any violation of any Environmental Laws or requiring or calling
attention to the need for any work, repairs, construction, alterations,
removal or remedial action or installation on or in connection with such
real property or improvements, whether in connection with the presence
of asbestos-containing materials in such properties or otherwise, except
for such violations, work, repairs, construction, alterations, removal
or remedial actions or installations as would not, individually or in
the aggregate, have a Material Adverse Effect; (iv) any such work,
repairs, construction, alterations, removal or remedial action or
installation, if required, would not result in the incurrence of
liabilities, which, individually or in the aggregate, would have a
Material Adverse Effect; (v) neither the Company nor any of its
subsidiaries has caused or suffered to exist or occur any condition on
any of the properties or improvements of the Company or any of its
subsidiaries that could give rise to the imposition of any Lien (as
defined below) under any Environmental Laws, except such Liens which,
individually or in the aggregate, would not have a Material Adverse
Effect; and (vi) to the Company's best knowledge, no real property or
improvements owned or leased by the Company or any of its subsidiaries
is being used or has been used for manufacturing or for any other
operations that involve or involved the use, handling, transportation,
storage, treatment or disposal of any Contaminant, where such operations
require or required permits or are or were otherwise regulated pursuant
to the Environmental Laws and where such permits have not been or were
not obtained or such regulations are not being or were not complied
with, except in all instances where any failure to obtain a permit or
comply with any regulation could not reasonably be expected, singly or
in the aggregate, to have a Material Adverse Effect. "Contaminant"
means any pollutant, hazardous substance, toxic substance, hazardous
waste, special waste, petroleum or petroleum-derived substance or waste,
asbestos or asbestos-containing materials, PCBs, lead, pesticides or
radioactive materials or any constituent of any such substance or waste,
including any such substance identified or regulated under any
Environmental Law. "Environmental Laws" means the Comprehensive
Environmental Response, Compensation and Liability Act, 42 U.S.C. 9601
ET SEQ., the Resource Conservation and Recovery Act, 42 U.S.C. 6901, ET
SEQ., the Clean Air Act, 42 U.S.C. 7401, ET SEQ., the Clean Water Act,
33 U.S.C. 1251, ET SEQ., the Toxic Substances Control Act, 15 U.S.C.
2601, ET SEQ., the Occupational Safety and Health Act, 29 U.S.C. 651, ET
SEQ., and all other federal, state and local laws, ordinances,
regulations, rules, orders, decisions, permits, and the like, which are
directed at the protection of human health or the Environment. "Lien"
means, with respect to any asset, any mortgage, deed of trust, lien,
pledge, encumbrance, charge or security interest in or on such asset.
"Environment" means any surface water, drinking water, ground water,
land surface, subsurface strata, river sediment, buildings, structures,
and ambient,
11
workplace and indoor air. "Release" means any spilling, leaking,
pumping, pouring, emitting, emptying, discharging, injecting, escaping,
leaching, dumping, emanating or disposing of any Contaminant into the
Environment, including, without limitation, the abandonment or discard
of barrels, containers, tanks or other receptacles containing or
previously containing any Contaminant or any release, emission or
discharge as those terms are defined or used in any Environmental Law.
(xxiii) QUALIFICATION AS A REAL ESTATE INVESTMENT TRUST. The
Company was and is organized in conformity with the requirements for
qualification and taxation as a "real estate investment trust" under the
Internal Revenue Code of 1986, as amended (the "Code"); the Company at all
times has met and continues to meet all the requirements of the Code for
qualification and taxation as a "real estate investment trust"; the
Company's method of operation will enable it to meet the requirements for
qualification and taxation as a "real estate investment trust" under the
Code; and the Company is qualified as a "real estate investment trust"
under the Code and will be so qualified for the taxable year in which sales
of the Securities occur.
(xxiv) REGISTRATION RIGHTS. There are no persons with registration
or other similar rights to have any securities registered pursuant to the
Registration Statement or otherwise registered by the Company under the
1933 Act, or included in the offering contemplated hereby.
(xxv) TAX TREATMENT OF CERTAIN ENTITIES. Each of R.I.C. Trade
Center, Ltd., Empire Business Center, Ltd., and Silverton Business Center,
Ltd., each a California limited partnership (the "Sub-Limited
Partnerships"), was, from the time of the Consolidation through and
including the time of its merger into the Company, treated as a partnership
(rather than as an association taxable as a corporation) for federal income
tax purposes. The Company's ownership interests in three properties held
through tenancies in common with unrelated third parties (which are the
only properties which, since the Consolidation, have been held in tenancies
in common with unrelated third parties) have not been, since the
Consolidation, and will not be treated as ownership interests in
associations taxable as corporations for federal income tax purposes.
Realty Income Texas Properties, L.P., a Delaware limited partnership, is
not and has never been treated as an association taxable as a corporation
for federal income tax purposes. Realty Income Texas Properties, Inc., a
Delaware corporation, is and has been at all times treated as a "qualified
REIT subsidiary" within the meaning of Section 856(i) of the Code.
(xxvi) SECURITIES. The Securities have been duly authorized for
issuance and sale to the Underwriters pursuant to this Agreement and, when
issued and delivered by the Company pursuant to this Agreement against
payment of the consideration therefor set forth in this Agreement, will be
validly issued, fully paid and non-assessable; the Securities will conform
to the statements relating thereto contained in the Prospectus and such
statements will conform to the rights set forth in the instruments defining
the same; and the issuance of the Securities is not subject to preemptive
or other similar rights arising by operation of law, under the charter or
bylaws of the Company, under any
12
agreement or instrument to which the Company or any of its subsidiaries is
a party or otherwise.
(xxvii) RANKING OF SECURITIES. The Securities will rank, with
respect to the payment of dividends and the distribution of assets upon
liquidation, dissolution, and winding up of the Company, senior to the
Common Stock and senior to the Class A Preferred Stock.
(xxviii) ARTICLES SUPPLEMENTARY. The Articles Supplementary will
have been duly filed with SDAT prior to the Closing Time.
(b) OFFICER'S CERTIFICATES. Any certificate signed by any officer of the
Company and delivered to the Representatives or to counsel for the Underwriters
shall be deemed a representation and warranty by the Company to each Underwriter
as to the matters covered thereby.
SECTION 2. SALE AND DELIVERY TO UNDERWRITERS; CLOSING.
(a) INITIAL SECURITIES. On the basis of the representations and
warranties herein contained and subject to the terms and conditions herein set
forth, the Company agrees to sell to each Underwriter, severally and not
jointly, and each Underwriter, severally and not jointly, agrees to purchase
from the Company, at the price set forth in Schedule B, the aggregate number of
Initial Securities set forth in Schedule A opposite the name of such
Underwriter, plus any additional number of Initial Securities which such
Underwriter may become obligated to purchase pursuant to the provisions of
Section 10 hereof.
(b) OPTION SECURITIES. In addition, on the basis of the representations
and warranties herein contained and subject to the terms and conditions herein
set forth, the Company hereby grants an option to the Underwriters, severally
and not jointly, to purchase up to an additional 360,000 shares of Class B
Preferred Stock at the price set forth in Schedule B, less an amount per share
equal to any dividends or distributions declared by the Company and paid or
payable on the Initial Securities but not payable on the Option Securities. The
option hereby granted may be exercised through and including the 30th day 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 Securities upon notice by the
Representatives to the Company setting forth the number of Option Securities as
to which the several Underwriters are then exercising the option and the time
and date of payment and delivery for such Option Securities. Any such time and
date of delivery (a "Date of Delivery") shall be determined by the
Representatives, but shall not be later than seven full business days after the
exercise of said option, nor in any event prior to the Closing Time. If the
option is exercised as to all or any portion of the Option Securities, each of
the Underwriters, acting severally and not jointly, will purchase that
proportion of the total number of Option Securities then being purchased which
the aggregate number of Initial Securities set forth in Schedule A opposite the
name of such Underwriter bears to the aggregate number of all of the Initial
Securities, subject in each case to such adjustments as the Representatives in
their discretion shall make to eliminate any sales or purchases of fractional
shares.
13
(c) PAYMENT. Payment of the purchase price for, and delivery of
certificates for, the Initial Securities shall be made at the office of Xxxxxx &
Xxxxxxx, 000 Xxxx Xxxxxx Xxxxx, 00xx Xxxxx, Xxxxx Xxxx, Xxxxxxxxxx 00000-1925,
or at such other place as shall be agreed upon by the Representatives and the
Company, at 6:00 A.M. (California time) on the third (fourth, if the pricing
occurs after 4:30 P.M. New York City time, on any given day) business day after
the date hereof (unless postponed in accordance with the provisions of
Section 10), or such other time not later than ten business days after such date
as shall be agreed upon by the Representatives and the Company (such time and
date of payment and delivery being herein called "Closing Time").
In addition, in the event that any or all of the Option Securities are
purchased by the Underwriters, payment of the purchase price for, and delivery
of certificates for, such Option Securities shall be made at the above-mentioned
offices, or at such other place as shall be agreed upon by the Representatives
and the Company, on each Date of Delivery as specified in the notice from the
Representatives to the Company.
Payment shall be made to the Company by wire transfer of immediately
available funds to an account at a bank designated by the Company, against
delivery to the Representatives for the respective accounts of the Underwriters
of certificates for the Securities to be purchased by them. It is understood
that each Underwriter has authorized the Representatives, for its account, to
accept delivery of, receipt for, and make payment of the purchase price for, the
Initial Securities and the Option Securities, if any, which it has agreed to
purchase. Xxxxxxx Xxxxx, individually and not as representative of the
Underwriters, may (but shall not be obligated to) make payment of the purchase
price for the Initial Securities and the Option Securities, if any, to be
purchased by any Underwriter whose payment therefor has not been received by the
Closing Time or the relevant Date of Delivery, as the case may be, but such
payment shall not relieve such Underwriter from its obligations hereunder.
(d) DENOMINATIONS; REGISTRATION. Certificates for the Initial Securities
and the Option Securities, if any, shall be in such denominations and registered
in such names as the Representatives may request in writing at least one full
business day before the Closing Time or the relevant Date of Delivery, as the
case may be. The certificates for the Initial Securities and the Option
Securities, if any, will be made available for examination and packaging by the
Representatives in The City of New York not later than 2:00 P.M. (New York City
time) on the business day prior to the Closing Time or the relevant Date of
Delivery, as the case may be.
SECTION 3. COVENANTS OF THE COMPANY. The Company covenants with each
Underwriter as follows:
(a) COMPLIANCE WITH SECURITIES REGULATIONS AND COMMISSION REQUESTS.
The Company, subject to Section 3(b), will notify the Representatives
immediately, and confirm the notice in writing, (i) when any post-effective
amendment to the Registration Statement or any Rule 462(b) Registration
Statement shall become effective or any supplement to the Prospectus, any
Term Sheet or any amended Prospectus shall have been filed, (ii) of the
receipt of any comments from the Commission, (iii) of any request by the
Commission for any amendment to the Registration Statement or any Rule
462(b) Registration Statement or any amendment or supplement to the
Prospectus or for additional information, and (iv) of the issuance by the
Commission of any stop order
14
suspending the effectiveness of the Registration Statement or any Rule
462(b) Registration Statement or of any order preventing or suspending
the use of any preliminary prospectus, or of the suspension of the
qualification of the Securities for offering or sale in any
jurisdiction, or of the initiation or threatening of any proceedings for
any of such purposes. The Company will promptly effect the filings
necessary pursuant to Rule 424(b) and, if applicable, will take such
steps as it deems necessary to ascertain promptly whether the form of
prospectus supplement, prospectus or term sheet transmitted for filing
under Rule 424(b) was received for filing by the Commission and, in the
event that it was not, it will promptly file such prospectus supplement,
prospectus or term sheet, as the case may be. The Company will make
every reasonable effort to prevent the issuance of any stop order and,
if any stop order is issued, to obtain the lifting thereof at the
earliest possible moment.
(b) FILING OF AMENDMENTS. The Company will give the Representatives
notice of its intention to file or prepare any amendment to the
Registration Statement (including any filing under Rule 462(b)), any Term
Sheet or any amendment, supplement or revision to either the prospectus
included in the Registration Statement at the time it became effective or
to the Prospectus, whether pursuant to the 1933 Act, the 1934 Act or
otherwise, will furnish the Representatives with copies of any such
documents a reasonable amount of time prior to such proposed filing or use,
as the case may be, and will not file or use any such document to which the
Representatives or counsel for the Underwriters shall object.
(c) RULE 434. If the Company uses Rule 434, it will comply with the
requirements of such Rule.
(d) DELIVERY OF REGISTRATION STATEMENTS. The Company has furnished
or will deliver to the Representatives and counsel for the Underwriters,
without charge, as many signed and conformed copies of the Registration
Statement as originally filed and of each amendment thereto (including
exhibits filed therewith or incorporated by reference therein and documents
incorporated or deemed to be incorporated by reference therein) as the
Representatives and counsel for the Underwriters may reasonably request.
The copies of the Registration Statement and each amendment thereto
furnished to the Underwriters will be identical to the electronically
transmitted copies thereof filed with the Commission pursuant to XXXXX, if
any, except to the extent permitted by Regulation S-T.
(e) DELIVERY OF PROSPECTUSES. The Company has delivered to each
Underwriter, without charge, as many copies of each preliminary prospectus
as such Underwriter reasonably requested, and the Company hereby consents
to the use of such copies for purposes permitted by the 1933 Act. The
Company will furnish to each Underwriter, without charge, during the period
when the Prospectus is required to be delivered under the 1933 Act or the
1934 Act, such number of copies of the Prospectus (as amended or
supplemented) as such Underwriter may reasonably request. The Prospectus
and any amendments or supplements thereto furnished to the Underwriters
will be identical to the electronically transmitted copies thereof filed
with the Commission pursuant to XXXXX, if any, except to the extent
permitted by Regulation S-T.
15
(f) CONTINUED COMPLIANCE WITH SECURITIES LAWS. The Company will
comply with the 1933 Act and the 1933 Act Regulations and the 1934 Act and
the 1934 Act Regulations so as to permit the completion of the distribution
of the Securities as contemplated in this Agreement and in the Prospectus.
If at any time when a prospectus is required by the 1933 Act to be
delivered in connection with sales of the Securities, any event shall occur
or condition shall exist as a result of which it is necessary, in the
opinion of counsel for the Underwriters or for the Company, to amend the
Registration Statement or amend or supplement the Prospectus in order that
the Prospectus will not include any untrue statements of a material fact or
omit to state a material fact necessary in order to make the statements
therein not misleading in the light of the circumstances existing at the
time it is delivered to a purchaser, or if it shall be necessary, in the
opinion of any such counsel, at any such time to amend the Registration
Statement or amend or supplement the Prospectus in order to comply with the
requirements of the 1933 Act or the 1933 Act Regulations, the Company will
promptly prepare and file with the Commission, subject to Section 3(b),
such amendment or supplement as may be necessary to correct such statement
or omission or to make the Registration Statement or the Prospectus comply
with such requirements, and the Company will furnish to the Underwriters
such number of copies of such amendment or supplement as the Underwriters
may reasonably request.
(g) BLUE SKY QUALIFICATIONS. The Company will use its best efforts,
in cooperation with the Underwriters, to qualify the Securities for
offering and sale under the applicable securities laws of such states and
other jurisdictions of the United States as the Representatives may
designate and to maintain such qualifications in effect for a period of not
less than one year from the date hereof; PROVIDED, HOWEVER, that the
Company shall not be obligated to file any general consent to service of
process or to qualify as a foreign corporation or as a dealer in securities
in any jurisdiction in which it is not so qualified or to subject itself to
taxation in respect of doing business in any jurisdiction in which it is
not otherwise so subject. In each jurisdiction in which the Securities
have been so qualified, the Company will file such statements and reports
as may be required by the laws of such jurisdiction to continue such
qualification in effect for a period of not less than one year from the
date hereof.
(h) RULE 158. The Company will timely file such reports pursuant to
the 1934 Act as are necessary in order to make generally available to its
security holders as soon as practicable an earning statement for the
purposes of, and to provide the benefits contemplated by, the last
paragraph of Section 11(a) of the 1933 Act.
(i) USE OF PROCEEDS. The Company will use the net proceeds received
by it from the sale of the Securities in the manner specified in the
Prospectus under "Use of Proceeds."
(j) LISTING. The Company will use its best efforts to effect the
listing of the Securities in the New York Stock Exchange.
(k) REPORTING REQUIREMENTS. The Company, during the period when the
Prospectus is required to be delivered under the 1933 Act or the 1934 Act,
will file all
16
documents required to be filed with the Commission pursuant to the 1934
Act within the time periods required by the 1934 Act and the 1934 Act
Regulations.
(l) RESTRICTION ON SALE OF SECURITIES. During the period from the
date of this Agreement through and including the Closing Time, the Company
will not, without the prior written consent of Xxxxxxx Xxxxx, directly or
indirectly, (i) offer, pledge, sell, 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 Securities, any other shares of the Company's
preferred stock, par value $1.00 per share ("Preferred Stock"), any
securities of the Company substantially similar to the Securities or any
depositary shares or depositary receipts representing or evidencing any of
the foregoing or any securities convertible into, or exercisable or
exchangeable for, any of the foregoing, or file any registration statement
under the 1933 Act with respect to any of the foregoing, or (ii) enter into
any swap or any other agreement or transaction that transfers, in whole or
in part, directly or indirectly, the economic consequence of ownership of
any Securities, Preferred Stock, other securities, depositary shares or
depositary receipts referred to clause (i) above, whether any such swap,
agreement or transaction described in clause (i) or (ii) above is to be
settled by delivery of Securities, other securities, in cash or otherwise,
other than the Securities sold to the Underwriters pursuant to this
Agreement.
SECTION 4. PAYMENT OF EXPENSES
(a) EXPENSES. The Company will pay all expenses incident to the
performance of its obligations under this Agreement, including (i) the word
processing, printing and filing of the Registration Statement (including
financial statements and exhibits) as originally filed and of each amendment
thereto, (ii) the printing and delivery to the Underwriters of this Agreement
and such other documents as may be required in connection with the offering,
purchase, sale, issuance or delivery of the Securities, (iii) the preparation,
issuance and delivery of the certificates for the Securities to the
Underwriters, including any transfer taxes or other duties payable upon the sale
of the Securities to the Underwriters, (iv) the fees and disbursements of the
Company's counsel, accountants and other advisors, (v) the qualification of the
Securities under securities laws in accordance with the provisions of
Section 3(g) hereof, including filing fees and the reasonable fees and
disbursements of counsel for the Underwriters in connection therewith and in
connection with the preparation of the Blue Sky Survey and any supplement
thereto, (vi) the printing and delivery to the Underwriters of copies of each
preliminary prospectus, any Term Sheet and the Prospectus and any amendments or
supplements thereto, (vii) the preparation, printing and delivery to the
Underwriters of copies of the Blue Sky Survey and any supplement thereto,
(viii) the fees and expenses of any transfer agent or registrar for the
Securities, (ix) if required, the filing fees incident to, and the reasonable
fees and disbursements of counsel to the Underwriters (such fees and
disbursements not to exceed $10,000) in connection with, the review, if any, by
the National Association of Securities Dealers, Inc. (the "NASD") of the terms
of the sale of the Securities, and (x) any fees payable in connection with the
rating of the Securities and the fees payable in connection with the listing of
the Securities on the New York Stock Exchange (the "NYSE").
17
(b) TERMINATION OF AGREEMENT. If this Agreement is terminated by the
Representatives in accordance with the provisions of Section 5 or
Section 9(a)(i) or 9(a)(v) hereof, the Company shall reimburse the Underwriters
for all of their out-of-pocket expenses, including the reasonable fees and
disbursements of counsel for the Underwriters.
SECTION 5. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The obligations of
the several Underwriters hereunder are subject to the accuracy of the
representations and warranties of the Company contained in Section 1 hereof or
in certificates of any officer of the Company or any subsidiary of the Company
delivered pursuant to the provisions hereof, to the performance by the Company
of its covenants and other obligations hereunder, and to the following further
conditions:
(a) EFFECTIVENESS OF REGISTRATION STATEMENT. The Registration
Statement, including any Rule 462(b) Registration Statement, has become
effective not later than 5:30 P.M. on the date hereof and at Closing Time
(and, if any Option Securities are purchased, at the relevant Date of
Delivery) no stop order suspending the effectiveness of the Registration
Statement or any Rule 462(b) Registration Statement shall have been issued
under the 1933 Act or proceedings therefor initiated or threatened by the
Commission, and any request on the part of the Commission for additional
information shall have been complied with to the reasonable satisfaction of
counsel to the Underwriters. If required by the 1933 Act or the 1933 Act
Regulations, the Prospectus shall have been filed with the Commission in
accordance with Rule 424(b) and, if the Company has elected to rely upon
Rule 434, a Term Sheet shall have been filed with the Commission in
accordance with Rule 434 and Rule 424(b).
(b) OPINIONS OF COUNSEL FOR COMPANY. At Closing Time, the
Representatives shall have received the favorable opinions, dated as of
Closing Time, of Xxxxxx & Xxxxxxx, counsel for the Company, Xxxxxxx X.
Xxxxxxxx, Senior Vice President, General Counsel and Secretary of the
Company, and Xxxxxxx Xxxxx Xxxxxxx & Xxxxxxxxx, LLP, special Maryland
counsel to the Company, each in form and substance satisfactory to counsel
for the Underwriters, to the effect set forth in Exhibits A, B and C
hereto, respectively, and to such further effect as counsel to the
Underwriters may reasonably request pursuant to Section 5(k).
(c) OPINION OF COUNSEL FOR UNDERWRITERS. At Closing Time, the
Representatives shall have received the favorable opinion, dated as of
Closing Time, of Brown & Wood LLP, counsel for the Underwriters, with
respect to the matters set forth in clauses (v) and (vi) and the
antepenultimate paragraph of Exhibit A and the first sentence of clause (i)
and clauses (iii)(A), (iv), (v) and (vii) (solely as to the statements
under the captions "Description of Class B Preferred Stock" and
"Description of Preferred Stock") of Exhibit C. In giving such opinion
such counsel may rely, as to all matters arising under or governed by the
laws of the State of Maryland, upon the opinion of Xxxxxxx Xxxxx Xxxxxxx &
Xxxxxxxxx, LLP delivered pursuant to Section 5(b) and, as to all matters
governed by the laws of other jurisdictions (other than the law of the
State of New York and the federal law of the United States) upon the
opinions of counsel satisfactory to the Representatives.
18
(d) OFFICERS' CERTIFICATE. At Closing Time, there shall not have
been, since the date hereof or since the respective dates as of which
information is given in the Prospectus, any material adverse change in the
condition, financial or otherwise, or in the earnings, business affairs or
business prospects of the Company and its subsidiaries considered as one
enterprise, whether or not arising in the ordinary course of business, and
the Representatives shall have received a certificate of the Chairman or
the President of the Company and of the chief financial or chief accounting
officer of the Company, dated as of Closing Time, to the effect that
(i) there has been no such material adverse change, (ii) the
representations and warranties in Section 1 hereof are true and correct
with the same force and effect as though expressly made at and as of
Closing Time, (iii) the Company has complied with all agreements and
satisfied all conditions on its part to be performed or satisfied at or
prior to Closing Time, and (iv) no stop order suspending the effectiveness
of the Registration Statement or any Rule 462(b) Registration Statement has
been issued and no proceedings for that purpose have been initiated or, to
the best of their knowledge, threatened by the Commission.
(e) ACCOUNTANT'S COMFORT LETTER. At the time of the execution of
this Agreement, the Representatives shall have received from KPMG LLP a
letter dated such date, in form and substance satisfactory to the
Representatives, together with signed or reproduced copies of such letter
for each of the Underwriters, containing statements and information of the
type ordinarily included in accountants' "comfort letters" to underwriters
with respect to the financial statements and certain financial information
contained in the Registration Statement and the Prospectus.
(f) BRING-DOWN COMFORT LETTER. At Closing Time, the Representatives
shall have received from KPMG LLP a letter, dated as of the Closing Time,
to the effect that they reaffirm the statements made in the letter
furnished pursuant to subsection (e) of this Section, except that the
specified date referred to shall be a date not more than three business
days prior to the Closing Time.
(g) APPROVAL OF LISTING. At the Closing Time, the Securities shall
have been approved for listing on the NYSE, subject only to official notice
of issuance.
(h) RATING REQUIREMENT. At the date of this Agreement and at the
Closing Time, the Securities shall be rated at least "ba1" by Xxxxx'x
Investor's Service Inc. ("Xxxxx'x"), "BB+" by Standard & Poor's Corporation
("S&P") and "BBB-" by Xxxx & Xxxxxx ("D&P"), and the Company shall have
delivered to the Representative a letter, dated the Closing Time, from each
such rating agency, or other evidence satisfactory to the Representative,
confirming that the Securities have such ratings.
(i) ARTICLES SUPPLEMENTARY. At the Closing Time, the
Representatives shall have received evidence, in form and substance
satisfactory to them, that the Articles Supplementary shall have been duly
filed with, and accepted for record by, SDAT.
(j) CONDITIONS TO PURCHASE OF OPTION SECURITIES. In the event that
the Underwriters exercise their option provided in Section 2(b) hereof to
purchase all or any portion of the Option Securities, the representations
and warranties of the Company
19
contained herein and the statements in any certificates furnished by the
Company hereunder shall be true and correct as of each Date of Delivery
and, at the relevant Date of Delivery, the Representatives shall have
received:
(i) OFFICERS' CERTIFICATE. A certificate, dated such Date of
Delivery, of the Chairman or President of the Company and of the chief
financial or chief accounting officer of the Company confirming that
the certificate delivered at the Closing Time pursuant to Section 5(d)
hereof remains true and correct as of such Date of Delivery.
(ii) OPINIONS OF COUNSEL FOR COMPANY. The favorable opinions of
Xxxxxx & Xxxxxxx, counsel for the Company, Xxxxxxx X. Xxxxxxxx, Senior
Vice President, General Counsel and Secretary of the Company, and
Xxxxxxx Xxxxx Xxxxxxx & Xxxxxxxxx, LLP, special Maryland counsel to
the Company, each in form and substance satisfactory to counsel for
the Underwriters, dated such Date of Delivery, relating to the Option
Securities to be purchased on such Date of Delivery and otherwise to
the same effect as the respective opinions required by Section 5(b)
hereof.
(iii) OPINION OF COUNSEL FOR UNDERWRITERS. The favorable
opinion of Xxxxx & Wood LLP, counsel for the Underwriters, dated such
Date of Delivery, relating to the Option Securities to be purchased on
such Date of Delivery and otherwise to the same effect as the opinion
required by Section 5(c) hereof.
(iv) BRING-DOWN COMFORT LETTER. A letter from KPMG LLP, in form
and substance satisfactory to the Representatives and dated such Date
of Delivery, substantially in the same form and substance as the
letter furnished to the Representatives pursuant to Section 5(f)
hereof, except that the specified date referred to shall be a date not
more than three business days prior to such Date of Delivery.
(v) APPROVAL OF LISTING. At such Date of Delivery, the Option
Securities shall have been approved for listing on the NYSE.
(vi) RATING REQUIREMENT. At such Date of Delivery, the
Securities shall have been rated at least "ba1" by Xxxxx'x, at least
"BB+" by S&P and at least "BBB-" by D&P.
(k) ADDITIONAL DOCUMENTS. At the Closing Time and at each Date of
Delivery, counsel for the Underwriters shall have been furnished with such
documents and opinions as they may reasonably require for the purpose of
enabling them to pass upon the issuance and sale of the Securities as
herein contemplated, or in order to evidence the accuracy of any of the
representations or warranties, or the fulfillment of any of the conditions,
herein contained; and all proceedings taken by the Company in connection
with the issuance and sale of the Securities as herein contemplated shall
be satisfactory in form and substance to the Representatives and counsel
for the Underwriters.
20
(l) TERMINATION OF AGREEMENT. If any condition specified in this
Section shall not have been fulfilled when and as required to be fulfilled,
this Agreement, or, in the case of any condition to the purchase of Option
Securities on a Date of Delivery which occurs after the Closing Time, the
obligations of the several Underwriters to purchase the relevant Option
Securities, may be terminated by the Representatives by notice to the
Company at any time at or prior to Closing Time or such Date of Delivery,
as the case may be, and such termination shall be without liability of any
party to any other party except as provided in Section 4 and except that
Sections 6 and 7 shall survive any such termination and remain in full
force and effect.
SECTION 6. INDEMNIFICATION.
(a) INDEMNIFICATION OF UNDERWRITERS. The Company agrees to indemnify and
hold harmless each Underwriter and each person, if any, who controls any
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act as follows:
(i) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement
(or any amendment thereto), including the Rule 434 Information, if
applicable, or the omission or alleged omission therefrom of a material
fact required to be stated therein or necessary to make the statements
therein not misleading or arising out of any untrue statement or alleged
untrue statement of a material fact included in any preliminary prospectus
or the Prospectus (or any amendment or supplement thereto), or the omission
or alleged omission therefrom of a material fact necessary in order to make
the statements therein, in the light of the circumstances under which they
were made, not misleading;
(ii) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission, provided that (subject to Section
6(d) below) any such settlement is effected with the written consent of the
Company; and
(iii) against any and all expense whatsoever, as incurred
(including the fees and disbursements of counsel chosen by Xxxxxxx Xxxxx),
reasonably incurred in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any governmental agency
or body, commenced or threatened, or any claim whatsoever based upon any
such untrue statement or omission, or any such alleged untrue statement or
omission, to the extent that any such expense is not paid under (i) or (ii)
above;
PROVIDED, HOWEVER, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company by any
Underwriter through Xxxxxxx Xxxxx expressly for use in the Registration
Statement (or any amendment thereto) or any preliminary prospectus or the
21
Prospectus (or any amendment or supplement thereto); and PROVIDED FURTHER that
this indemnity agreement with respect to any preliminary prospectus shall not
inure to the benefit of any Underwriter, or any person controlling such
Underwriter, if a copy of the Prospectus (as then amended or supplemented if the
Company shall have furnished any such amendments or supplements thereto, but
excluding documents incorporated or deemed to be incorporated by reference
therein) was not sent or given by or on behalf of such Underwriter to such
person, if such is required by law, at or prior to the written confirmation of
the sale of such Securities to such person and if the Prospectus (as so amended
or supplemented, if applicable) would have corrected the defect giving rise to
such loss, liability, claim, damage or expense, except that this proviso shall
not be applicable if such defect shall have been corrected in a document which
is incorporated or deemed to be incorporated by reference in the Prospectus.
(b) INDEMNIFICATION OF COMPANY, DIRECTORS AND OFFICERS. Each
Underwriter severally agrees to indemnify and hold harmless the Company, its
directors, each of its officers who signed the Registration Statement, and each
person, if any, who controls the Company within the meaning of Section 15 of the
1933 Act or Section 20 of the 1934 Act against any and all loss, liability,
claim, damage and expense described in the indemnity contained in subsection (a)
of this Section, as incurred, but only with respect to untrue statements or
omissions, or alleged untrue statements or omissions, made in the Registration
Statement (or any amendment thereto), including the Rule 434 Information, if
applicable, or any preliminary prospectus or the Prospectus (or any amendment or
supplement thereto) in reliance upon and in conformity with written information
furnished to the Company by such Underwriter through Xxxxxxx Xxxxx expressly for
use in the Registration Statement (or any amendment thereto) or such preliminary
prospectus or the Prospectus (or any amendment or supplement thereto).
(c) ACTIONS AGAINST PARTIES; NOTIFICATION. Each indemnified party shall
give notice as promptly as reasonably practicable to each indemnifying party of
any action commenced against it in respect of which indemnity may be sought
hereunder, but failure to so notify an indemnifying party shall not relieve such
indemnifying party from any liability hereunder to the extent it is not
materially prejudiced as a result thereof and in any event shall not relieve it
from any liability which it may have otherwise than on account of this indemnity
agreement. In the case of parties indemnified pursuant to Section 6(a) above,
counsel to the indemnified parties shall be selected by Xxxxxxx Xxxxx, and, in
the case of parties indemnified pursuant to Section 6(b) above, counsel to the
indemnified parties shall be selected by the Company. An indemnifying party may
participate at its own expense in the defense of any such action; PROVIDED,
HOWEVER, that counsel to the indemnifying party shall not (except with the
consent of the indemnified party) also be counsel to the indemnified party. In
no event shall the indemnifying parties be liable for fees and expenses of more
than one counsel (in addition to any local counsel) separate from their own
counsel for all indemnified parties in connection with any one action or
separate but similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances. No indemnifying party shall,
without the prior written consent of the indemnified parties, settle or
compromise or consent to the entry of any judgment with respect to any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever in respect of which
indemnification or contribution could be sought under this Section 6 or Section
7 hereof (whether or not the indemnified parties are actual or potential parties
thereto), unless such settlement, compromise or consent (i) includes an
unconditional release of each indemnified party from all liability arising out
of such litigation,
22
investigation, proceeding or claim and (ii) does not include a statement as to
or an admission of fault, culpability or a failure to act by or on behalf of
any indemnified party.
(d) SETTLEMENT WITHOUT CONSENT IF FAILURE TO REIMBURSE. If at any time an
indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel, such indemnifying party
agrees that it shall be liable for any settlement of the nature contemplated by
Section 6(a)(ii) effected without its written consent if (i) such settlement is
entered into more than 60 days after receipt by such indemnifying party of the
aforesaid request, (ii) such indemnifying party shall have received notice of
the terms of such settlement at least 45 days prior to such settlement being
entered into and (iii) such indemnifying party shall not have reimbursed such
indemnified party in accordance with such request prior to the date of such
settlement.
SECTION 7. CONTRIBUTION. If the indemnification provided for in
Section 6 hereof is for any reason unavailable to or insufficient to hold
harmless an indemnified party in respect of any losses, liabilities, claims,
damages or expenses referred to therein, then each indemnifying party shall
contribute to the aggregate amount of such losses, liabilities, claims, damages
and expenses incurred by such indemnified party, as incurred, (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company on the one hand and the Underwriters on the other hand from the offering
of the Securities pursuant to this Agreement or (ii) if the allocation provided
by clause (i) is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Company on the one hand and of the
Underwriters on the other hand in connection with the statements or omissions
which resulted in such losses, liabilities, claims, damages or expenses, as well
as any other relevant equitable considerations.
The relative benefits received by the Company on the one hand and the
Underwriters on the other hand in connection with the offering of the Securities
pursuant to this Agreement shall be deemed to be in the same respective
proportions as the total net proceeds from the offering of the Securities
pursuant to this Agreement (before deducting expenses) received by the Company
and the total underwriting discount received by the Underwriters, in each case
as set forth on the cover of the Prospectus (or, if Rule 434 is used, the
corresponding location on the Term Sheet) bear to the aggregate initial public
offering price of the Securities as set forth on such cover (or corresponding
location on the Term Sheet, as the case may be).
The relative fault of the Company on the one hand and the Underwriters on
the other hand shall be determined by reference to, among other things, whether
any such untrue or alleged untrue statement of a material fact or omission or
alleged omission to state a material fact 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 Company and the Underwriters agree that it would not be just and
equitable if contribution pursuant to this Section 7 were determined by pro rata
allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to above in this Section 7. The aggregate
amount of losses, liabilities, claims, damages and expenses incurred by an
23
indemnified party and referred to above in this Section 7 shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue or alleged untrue
statement or omission or alleged omission.
Notwithstanding the provisions of this Section 7, no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the Securities underwritten by it and distributed to the public
were offered to the public exceeds the amount of any damages which such
Underwriter has otherwise been required to pay by reason of any such untrue or
alleged untrue statement or omission or alleged omission.
No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the 1933 Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 7, each person, if any, who controls an
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 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 1933 Act or Section 20 of the 1934 Act shall
have the same rights to contribution as the Company. The Underwriters'
respective obligations to contribute pursuant to this Section 7 are several in
proportion to the number of Initial Securities set forth opposite their
respective names in Schedule A hereto and not joint.
SECTION 8. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE
DELIVERY. All representations, warranties and agreements contained in this
Agreement or in certificates of officers of the Company submitted pursuant
hereto shall remain operative and in full force and effect, regardless of any
investigation made by or on behalf of any Underwriter or controlling person, or
by or on behalf of the Company, and shall survive delivery of the Securities to
the Underwriters.
SECTION 9. TERMINATION OF AGREEMENT.
(a) TERMINATION; GENERAL. The Representatives may terminate this
Agreement, by notice to the Company, at any time at or prior to Closing Time
(and, if any Option Securities are purchased, at any time at or prior to the
relevant Date of Delivery, with respect to the obligation of the Underwriters to
purchase such Option Securities) (i) if there has been, since the time of
execution of this Agreement or since the respective dates as of which
information is given in the Prospectus, any material adverse change in the
condition, financial or otherwise, or in the earnings, business affairs or
business prospects of the Company and its subsidiaries considered as one
enterprise, whether or not arising in the ordinary course of business, or
(ii) if there has occurred any material adverse change in the financial markets
in the United States or the international financial markets, any outbreak of
hostilities or escalation thereof or other calamity or crisis or any change or
development involving a prospective change in national or international
political, financial or economic conditions, in each case the effect of which is
such as to make it, in the judgment of the Representatives, impracticable to
market the Securities or to
24
enforce contracts for the sale of the Securities, or (iii) if trading in any
securities of the Company has been suspended or limited by the Commission,
the New York Stock Exchange or the Nasdaq National Market, or if trading
generally on the American Stock Exchange or the New York Stock Exchange or in
the Nasdaq National Market has been suspended or limited, or minimum or
maximum prices for trading have been fixed, or maximum ranges for prices have
been required, by any of said exchanges or by such system or by order of the
Commission, the National Association of Securities Dealers, Inc. or any other
governmental authority, or (iv) if a banking moratorium has been declared by
either Federal, California or New York authorities, or (v) if since the date
of this Agreement, there has occurred a downgrading in the rating assigned to
the Securities or any of the Company's debt securities by any nationally
recognized securities rating agency, or any such securities rating agency has
publicly announced that it has under surveillance or review, with possible
negative implications or without indicating the direction of the possible
change, its rating of the Securities or any of the Company's debt securities.
(b) LIABILITIES. If this Agreement is terminated pursuant to this
Section, such termination shall be without liability of any party to any other
party except as provided in Section 4 hereof, and provided further that Sections
6 and 7 shall survive such termination and remain in full force and effect.
SECTION 10. DEFAULT BY ONE OR MORE OF THE UNDERWRITERS. If one or more
of the Underwriters shall fail at the Closing Time or a Date of Delivery to
purchase the Securities which it or they are obligated to purchase under this
Agreement on such date (the "Defaulted Securities"), the Representatives shall
have the right, within 24 hours thereafter, 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 Defaulted Securities in such amounts as may be
agreed upon and upon the terms herein set forth; if, however, the
Representatives shall not have completed such arrangements within such 24-hour
period, then:
(a) if the number of Defaulted Securities does not exceed 10% of the
total number of Securities to be purchased on such date, each of the
non-defaulting Underwriters shall be obligated, severally and not jointly,
to purchase the full amount thereof in the proportions that their
respective underwriting obligations hereunder bear to the underwriting
obligations of all non-defaulting Underwriters, or
(b) if the number of Defaulted Securities exceeds 10% of the total
number of Securities to be purchased on such date, this Agreement or, with
respect to any Date of Delivery which occurs after the Closing Time, the
obligations of the Underwriters to purchase and of the and of the Company
to sell the Option Securities to be purchased and sold on such Date of
Delivery shall terminate without liability on the part of any
non-defaulting Underwriter.
No action taken pursuant to this Section shall relieve any defaulting
Underwriter from liability in respect of its default.
In the event of any such default which does not result in a termination of
this Agreement or, in the case of a Date of Delivery which is after the Closing
Time, which does not result in a termination of the obligations of the
Underwriters to purchase and the Company to sell the
25
relevant Option Securities, as the case may be, either the Representatives or
the Company shall have the right to postpone the Closing Time or the relevant
Date of Delivery, as the case may be, for a period not exceeding seven days
in order to effect any required changes in the Registration Statement or
Prospectus or in any other documents or arrangements. As used herein, the
term "Underwriter" includes any person substituted for an Underwriter under
this Section 10.
SECTION 11. NOTICES. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the
Underwriters shall be directed to the Representatives at 00000 Xxxxxxxx
Xxxxxxxxx, Xxxxx 0000, Xxx Xxxxxxx, Xxxxxxxxxx 00000, Attention of Xxxx X.
Xxxxxx; and notices to the Company shall be directed to it at Realty Income
Corporation, 000 Xxxx Xxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxxxx 00000-0000, attention
of Legal Department.
SECTION 12. PARTIES. This Agreement shall inure to the benefit of and
be binding upon the Underwriters and the Company and their respective
successors. Nothing expressed or mentioned in this Agreement is intended or
shall be construed to give any person, firm or corporation, other than the
Underwriters and the Company and their respective successors and the controlling
persons and officers and directors referred to in Sections 6 and 7 and their
heirs and legal representatives, any legal or equitable right, remedy or claim
under or in respect of this Agreement or any provision herein contained. This
Agreement and all conditions and provisions hereof are intended to be for the
sole and exclusive benefit of the Underwriters and the Company and their
respective successors, and said controlling persons and officers and directors
and their heirs and legal representatives, and for the benefit of no other
person, firm or corporation. No purchaser of Securities from any Underwriter
shall be deemed to be a successor by reason merely of such purchase.
SECTION 13. GOVERNING LAW AND TIME. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
AGREEMENTS MADE AND TO BE PERFORMED IN SAID STATE. EXCEPT AS OTHERWISE SET
FORTH HEREIN, SPECIFIED TIMES OF DAY REFER TO NEW YORK CITY TIME.
SECTION 14. EFFECT OF HEADINGS AND TABLE OF CONTENTS. The Article and
Section headings herein and the Table of Contents are for convenience only and
shall not affect the construction hereof.
26
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to the Company a counterpart hereof, whereupon this
instrument, along with all counterparts, will become a binding agreement between
the Underwriters and the Company in accordance with its terms.
Very truly yours,
REALTY INCOME CORPORATION
By:
---------------------------------
Xxxxxxx X. Xxxxxxxx
Senior Vice President,
General Counsel and Secretary
CONFIRMED AND ACCEPTED,
as of the date first above written:
XXXXXXX LYNCH, XXXXXX, XXXXXX & XXXXX
INCORPORATED
XXXXXXXXX, XXXXXX & XXXXXXXX SECURITIES CORPORATION
X.X. XXXXXXX & SONS, INC.
EVEREN SECURITIES, INC.
FIRST UNION CAPITAL MARKETS CORP.
PAINEWEBBER INCORPORATED
SUTRO & CO. INCORPORATED
By: XXXXXXX XXXXX, XXXXXX, XXXXXX & XXXXX
INCORPORATED
By:
----------------------------------
Authorized Signatory
For themselves and as Representatives of the other
Underwriters named in Schedule A hereto.
27
SCHEDULE A
NUMBER OF
INITIAL
NAME OF UNDERWRITER SECURITIES
--------------------- --------------
Xxxxxxx Xxxxx, Xxxxxx, Xxxxxx & Xxxxx
Incorporated . . . . . . . . . . . . . . . . . . . . 320,000
Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities Corporation. . . . . . 305,000
X.X. Xxxxxxx & Sons, Inc.. . . . . . . . . . . . . . . . . . . 305,000
EVEREN Securities, Inc.. . . . . . . . . . . . . . . . . . . . 305,000
First Union Capital Markets Corp.. . . . . . . . . . . . . . . 305,000
PaineWebber Incorporated . . . . . . . . . . . . . . . . . . . 305,000
Sutro & Co. Incorporated . . . . . . . . . . . . . . . . . . . 305,000
Xxxxxx X. Xxxxx & Co. Incorporated . . . . . . . . . . . . . . 25,000
CIBC World Markets Corp. . . . . . . . . . . . . . . . . . . . 25,000
Xxxx Xxxxxxxx Incorporated . . . . . . . . . . . . . . . . . . 25,000
Xxxxxxxxxx & Co. Inc.. . . . . . . . . . . . . . . . . . . . . 25,000
Xxxx Xxxxx Xxxx Xxxxxx, Incorporated . . . . . . . . . . . . . 25,000
Xxxxxxx Xxxxx & Associates, Inc. . . . . . . . . . . . . . . . 25,000
The Xxxxxxxx-Xxxxxxxx Company, LLC . . . . . . . . . . . . . . 25,000
XX Xxxxx Securities Corporation. . . . . . . . . . . . . . . . 25,000
Xxxxxx Xxxxxxx Incorporated. . . . . . . . . . . . . . . . . . 25,000
U.S. Bancorp Xxxxx Xxxxxxx Inc.. . . . . . . . . . . . . . . . 25,000
--------------
Total: . . . . . . . . . . . . . . . . . . . . . . . 2,400,000
--------------
--------------
Sch A-1
SCHEDULE B
PRICE SCHEDULE
1. The initial public offering price per share for the Securities shall
be $25.00 (the "Public Offering Price"), plus accrued dividends from May 25,
1999.
2. The purchase price per share for the Securities to be paid by the
several Underwriters shall be $24.2125, being an amount equal to the Public
Offering Price set forth above less $0.7875 per share; provided that the
purchase price per share for any Option Security purchased upon exercise of the
over-allotment option described in Section 2(b) shall be reduced by an amount
per share equal to any dividends or distributions declared by the Company and
payable or paid on the Initial Securities but not payable on the Option
Securities.
Sch B-1
Exhibit A
FORM OF OPINION OF XXXXXX & XXXXXXX
TO BE DELIVERED PURSUANT TO SECTION 5(b)
(i) Based solely on certificates from public officials, the Company
is duly qualified as a foreign corporation to transact business and is in good
standing in the State of California.
(ii) Each of Realty Income Texas Properties, L.P. and Realty Income
Texas Properties, Inc. has been duly organized and is validly existing as a
partnership or corporation, as the case may be, based solely on certificates
from public officials, in good standing under the laws of the State of Delaware,
has power and authority as a partnership or corporation, as the case may be, to
own, lease and operate its properties and to conduct its business as described
in the Registration Statement and based solely on certificates from public
officials, each such subsidiary is duly qualified as a foreign partnership or
corporation, as the case may be, to transact business and is in good standing in
each other jurisdiction in which such qualification is required, whether by
reason of the ownership or leasing of property or the conduct of business,
except where failure to so qualify or to be in good standing would not result in
a Material Adverse Effect; and all of the issued and outstanding partnership
interests and shares of capital stock, as the case may be, of each of Realty
Income Texas Properties, L.P. and Realty Income Texas Properties, Inc. have been
duly authorized (if applicable) and validly issued, are fully paid and
non-assessable (except to the extent that the general partners of Realty Income
Texas Properties, L.P. may be liable for the obligations of such partnership)
and, to our knowledge and information, are owned by the Company, directly or
through subsidiaries, free and clear of any security interest, mortgage, pledge,
lien, encumbrance, claim or equity.
(iii) None of the outstanding shares of Common Stock of the Company was
issued, to the best of our knowledge and information, in violation of preemptive
rights or other similar rights arising under any agreement or instrument to
which the Company or any of its subsidiaries is a party.
(iv) The issuance of the Securities is not subject, to the best of our
knowledge and information, to preemptive or other similar rights arising under
any agreement or instrument to which the Company or any of its subsidiaries is a
party.
(v) Each of the Registration Statement and any Rule 462(b)
Registration Statement has been declared effective under the 1933 Act; to the
best of our knowledge and information, the Prospectus has been filed pursuant to
Rule 424(b) under the 1933 Act in the manner and within the time period required
by Rule 424(b); and, to the best of our knowledge and information, no stop order
suspending the effectiveness of either the Registration Statement or any Rule
462(b) Registration Statement has been issued under the 1933 Act or proceedings
therefor initiated or threatened by the Commission.
(vi) Each of the Registration Statement, any Rule 462(b) Registration
Statement and the Prospectus (in each case excluding the documents incorporated
or deemed to be incorporated by reference therein and the financial statements,
supporting schedules and other financial data
A-1
included or incorporated by reference therein and excluding any Statement of
Eligibility on Form T-1 (a "Form T-1"), as to which no opinion need be
rendered), as of their respective effective or issue dates, complied as to
form in all material respects with the applicable requirements of the 1933
Act and the 1933 Act Regulations.
(vii) The documents incorporated or deemed to be incorporated by
reference in the Prospectus (other than the financial statements, supporting
schedules and other financial data therein, as to which no opinion need be
rendered), when they were filed with the Commission, complied as to form in all
material respects with the applicable requirements of the 1934 Act and the 1934
Act Regulations.
(viii) The information in the Prospectus under "Risk Factors--Adverse
Impact of Failure to Qualify as a REIT," "Risk Factors--Effect of Distribution
Requirements," "Material Federal Income Tax Considerations to Holders of Class B
Preferred Stock" and "Certain Federal Income Tax Considerations" and the
information in the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1998 under "Business--Other Items--Taxation of the Company"
and "Business--Other Items--Effect of Distribution Requirements," in each case
to the extent that it constitutes matters of law, summaries of legal matters or
legal conclusions, has been reviewed by us and is correct in all material
respects.
(ix) No authorization, approval, consent or order of any federal or
California state governmental authority or agency (other than under the 1933
Act, the 1933 Act Regulations, the 1939 Act and the 1939 Act Regulations, which
have been obtained, or as may be required under the securities or blue sky laws
of the various states, as to which we express no opinion) is required in
connection with the due authorization, execution or delivery of the Purchase
Agreement or for the offering, issuance or sale of the Securities;
(x) The execution, delivery and performance on or prior to the date
hereof of the Purchase Agreement and the Articles Supplementary by the Company
(including the issuance and sale of the Securities to the Underwriters and the
use of the proceeds from the sale of the Securities as described in the
Prospectus under the caption "Use of Proceeds") will not, whether with or
without the giving of notice or lapse of time or both, constitute a breach or
violation of, or default or Repayment Event under, or result in the creation or
imposition of any lien, charge or encumbrance upon any property or assets of the
Company or any of its subsidiaries pursuant to, the Acquisition Credit
Agreement, the indenture dated as of May 6, 1997 between the Company and the
Bank of New York ("BONY"), as trustee (the "1997 Indenture"), the indenture
dated October 28, 1998 between the Company and BONY, as trustee (the "1998
Indenture") or any securities outstanding under the 1997 Indenture or the 1998
Indenture, nor to the best of our knowledge and information, any applicable
provision of any federal or State of California law, statute, administrative
regulation or administrative or court decree applicable to the Company.
(xi) The Company is not an "investment company" as such term is
defined in the 1940 Act.
(xii) Commencing with the Company's taxable year ended December 31,
1994, the Company has been organized in conformity with the requirements for
qualification and taxation as a real estate investment trust under the Code and
its proposed method of operation will enable
A-2
the Company to meet the requirements for qualification and taxation as a real
estate investment trust under the Code.
(xiii) Realty Income Texas Properties, L.P., a Delaware limited
partnership, is not and has never been treated as an association taxable as a
corporation for federal income tax purposes. Realty Income Texas Properties,
Inc., a Delaware corporation, is and has, at all times during its existence,
been treated as a "qualified REIT subsidiary" within the meaning of Section
856(i) of the Code.
Although we are not passing upon, and do not assume any responsibility for,
the accuracy, completeness or fairness of the statements contained in the
Registration Statement or the Prospectus and have not made any independent
judgment, check or verification thereof (except with respect to the opinion set
forth in paragraphs (viii), (xii) and (xiii) hereof), we have, however,
participated in conferences with certain officers and other representatives of
the Company, representatives of KPMG LLP and your representatives at which the
Registration Statement, any Rule 462(b) Registration Statement and the
Prospectus (including, in each case, the documents incorporated or deemed to be
incorporated by reference therein) and any amendments or supplements to any of
the foregoing and related matters were discussed, and in the course of such
conferences (relying in connection with questions of materiality on
representations of factual matters of officers and other representatives of the
Company), nothing has come to our attention which has led us to believe that the
Registration Statement, any Rule 462(b) Registration Statement or any amendment
thereto (except for the financial statements, supporting schedules and other
financial data included therein and any Form T-1, as to which we express no
belief), as of the time the Registration Statement, any such Rule 462(b)
Registration Statement or any such post-effective or other amendment thereto
became effective, contained an untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading, or that the Prospectus or any amendment or
supplement thereto (except for the financial statements, supporting schedules
and other financial data included therein, as to which we express no belief), as
of May 20, 1999 or as of the date of this opinion, contained or contains an
untrue statement of a material fact or omitted or omits to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
In rendering such opinion, such counsel may rely insofar as such opinion
involves factual matters, to the extent they deem proper, on certificates of
responsible officers of the Company and public officials. Such opinion shall
not state that it is to be governed or qualified by, or that it is otherwise
subject to, any treatise, written policy or other document relating to legal
opinions, including, without limitation, the Legal Opinion Accord of the ABA
Section of Business Law (1991).
The matters set forth in (viii) (with respect to the information under the
captions "Risk Factors--Adverse Impact of Failure to Qualify as a REIT," "Risk
Factors--Effect of Distribution Requirements," "Material Federal Income Tax
Considerations to Holders of Class B Preferred Stock" and "Certain Federal
Income Tax Considerations"), (xii) and (xiii) above may be covered in one or
more separate legal opinions, which may be subject to such assumptions,
limitations and qualifications as shall be satisfactory to counsel for the
Underwriters. In particular, the opinions set forth in paragraphs (viii) (with
respect to the information under the
A-3
captions referred to above), (xii) and (xiii) above (the "Tax Opinions") may
be conditioned upon certain representations made by the Company as to factual
matters through a certificate of an officer of the Company (the "Officer's
Certificate"). In addition, the Tax Opinions may be based upon the factual
representations of the Company concerning its business and properties as set
forth in the Registration Statement and Prospectus. The Tax Opinions may
state that they relate only to the federal income tax laws of the United
States and such counsel need not express any opinion with respect to the
applicability thereto, or the effect thereon, of other federal laws, the laws
of any state or other jurisdiction or as to any matters of municipal law or
the laws of any other local agencies within any state. The Tax Opinions may
state that they are based on various statutory provisions, regulations
promulgated thereunder and interpretations thereof by the Internal Revenue
Service and the courts having jurisdiction over such matters, all of which
are subject to change either prospectively or retroactively, that any such
change may affect the conclusions stated therein, and that any variation or
difference in the facts from those set forth in the Registration Statement,
the Prospectus or the Officer's Certificate may affect the conclusions stated
therein. Moreover, the Tax Opinions may state that the Company's
qualification and taxation as a real estate investment trust depends upon the
Company's ability to meet (through actual annual operating results,
distribution levels and diversity of stock ownership) the various
qualification tests imposed under the Code, the results of which have not
been and will not be reviewed by such counsel, and, accordingly, no assurance
can be given that the actual results of the Company's operation for any one
taxable year will satisfy such requirements.
A-4
Exhibit B
FORM OF OPINION OF XXXXXXX X. XXXXXXXX
TO BE DELIVERED PURSUANT TO SECTION 5(b)
(i) The Company is duly qualified as a foreign corporation to
transact business and is in good standing in each jurisdiction in which such
qualification is required, whether by reason of the ownership or leasing of
property or the conduct of business, except where the failure so to qualify or
to be in good standing would not have a Material Adverse Effect.
(ii) The information in the Prospectus under "Risk
Factors--Environmental Liabilities," "Risk Factors--Uninsured Loss" and "Risk
Factors--Compliance With Americans with Disabilities Act and Fire and Safety
Regulations" and in the Company's annual report on Form 10-K for the fiscal year
ended December 31, 1998 under "Business--Other Items--Environmental
Liabilities," to the extent that it constitutes matters of law, summaries of
legal matters, instruments or agreements or legal proceedings, or legal
conclusions, has been reviewed by me and is correct in all material respects.
(iii) To the best of my knowledge and information, there is not pending
or threatened any action, suit, proceeding, inquiry or investigation to which
the Company or any subsidiary is a party, or to which the property of the
Company or any subsidiary is subject, before or brought by any court or
governmental agency or authority, which could reasonably be expected to result
in a Material Adverse Effect, or which could reasonably be expected to
materially and adversely affect the properties or assets thereof or the
consummation of the Purchase Agreement or the performance by the Company of its
obligations under the Purchase Agreement or the Articles Supplementary.
(iv) All descriptions in the Prospectus of leases, contracts and other
documents to which the Company or any subsidiary is a party are accurate in all
material respects.
(v) To the best of my knowledge and information, there are no
franchises, contracts, indentures, mortgages, loan agreements, notes, leases or
other instruments required to be described in the Registration Statement or to
be filed as exhibits thereto other than those described therein or filed or
incorporated by reference as exhibits thereto, and the descriptions thereof or
references thereto are correct in all material respects.
(vi) To the best of my knowledge and information, neither the Company
nor any of its subsidiaries is in violation of its charter or bylaws or its
partnership agreement, as applicable, and no default by the Company or any of
its subsidiaries exists in the due performance or observance of any material
obligation, agreement, covenant or condition contained in any contract,
indenture, mortgage, loan agreement, note, lease or other agreement or
instrument that is described or referred to in the Registration Statement or the
Prospectus or filed or incorporated by reference as an exhibit to the
Registration Statement.
(vii) The execution, delivery and performance of the Purchase Agreement
and the Articles Supplementary by the Company (including the issuance and sale
of the Securities to the
B-1
Underwriters and the use of the proceeds from the sale of the Securities as
described in the Prospectus under the caption "Use of Proceeds") and
compliance by the Company with its obligations under the Purchase Agreement
and the Articles Supplementary will not, whether with or without the giving
of notice or lapse of time or both, constitute a breach or violation of, or
default or Repayment Event under, or result in the creation or imposition of
any lien, charge or encumbrance upon any property or assets of the Company or
any of its subsidiaries pursuant to, any contract, indenture, mortgage, deed
of trust, loan or credit agreement, note, lease or any other agreement or
instrument, known to me, to which the Company or any of its subsidiaries is a
party or by which it or any of them may be bound or to which any of the
property or assets of the Company or any of its subsidiaries is subject,
except for such breaches, violations or defaults or liens, charges or
encumbrances that, individually or in the aggregate, would not have a
Material Adverse Effect, nor will such action result in any violation of the
provisions of the charter or bylaws of the Company or the partnership
agreement or charter or bylaws, as the case may be, of any of its
subsidiaries, or, to the best of my knowledge and information, any applicable
provision of any law, statute or administrative regulation of the State of
California, or, to the best of my knowledge and information, any judgment,
order, writ or decree of any government instrumentality or court, domestic or
foreign, applicable to the Company or any of its subsidiaries or any of their
respective properties, assets or operations.
In rendering such opinion, such counsel may rely as to matters of fact (but
not as to legal conclusions), to the extent he deems proper, on certificates of
responsible officers of the Company and public officials. Such opinion shall
not state that it is to be governed or qualified by, or that it is otherwise
subject to, any treatise, written policy or other document relating to legal
opinions, including, without limitation, the Legal Opinion Accord of the ABA
Section of Business Law (1991). Such opinion shall state that, insofar as it
concerns the Articles Supplementary, such counsel has assumed that the Articles
Supplementary are governed by the laws of the State of California.
B-1
Exhibit C
FORM OF OPINION OF XXXXXXX XXXXX XXXXXXX & XXXXXXXXX, LLP
TO BE DELIVERED PURSUANT TO SECTION 5(b)
(i) The Company has been duly incorporated and is validly existing
under the laws of the State of Maryland and is in good standing with the State
Department of Assessments and Taxation of Maryland (the "SDAT"). The Company
has the corporate power to own, lease and operate its current properties and to
conduct its business as described in the Prospectus under the heading "Business
and Properties" and to enter into and perform its obligations under the Purchase
Agreement.
(ii) The authorized, issued and outstanding stock of the Company is as
set forth in the line items "Preferred Stock" and "Common Stock" under the
caption "Capitalization" in the Prospectus (except for subsequent issuances
pursuant to the Purchase Agreement or pursuant to employee benefit plans or the
exercise of options referred to in the Prospectus). The shares of issued and
outstanding Common Stock (the "Outstanding Shares") have been duly authorized
and validly issued and are fully paid and non-assessable and none of the
Outstanding Shares was issued in violation of preemptive rights arising under
the Maryland General Corporation Law (the "MGCL") or the charter or bylaws of
the Company.
(iii) (A) The Securities have been duly authorized by all necessary
corporate action on the part of the Company for issuance and sale to the
Underwriters pursuant to the Purchase Agreement and, when issued and delivered
by the Company pursuant to the Purchase Agreement against payment of the
consideration set forth therein, will be validly issued, fully paid and
non-assessable; and (B) the preferences, rights, voting powers, restrictions,
limitations as to dividends, qualifications and terms and conditions of
redemption of the Securities are as set forth in the Articles Supplementary and
such provisions are not prohibited by the laws of the State of Maryland and do
not conflict with the Company's charter or bylaws.
(iv) The issuance of the Securities is not subject to preemptive
rights arising by operation of the laws of the State of Maryland or under the
charter or bylaws of the Company.
(v) The Purchase Agreement has been duly authorized by the Company,
and has been duly executed and, so far as is known to us, delivered by the
Company.
(vi) The form of certificate used to represent shares of Preferred
Stock complies in all material respects with the applicable requirements of the
laws of the State of Maryland and the charter and bylaws of the Company.
(vii) We have reviewed the information in the Prospectus under
"Description of Class B Preferred Stock," "Description of Common Stock,"
"Description of Preferred Stock" and "Restrictions on Ownership and Transfers of
Capital Stock", and in each case to the extent that such information constitutes
matters of Maryland law, summaries of Maryland legal matters, summaries of
certain provisions of the Company's charter or bylaws, the Articles
Supplementary, the Securities or other instruments or agreements governed by
Maryland law, or legal conclusions with respect to matters of Maryland law, such
information is correct in all material respects.
C-1
(viii) No authorization, approval, consent or order of any Maryland
state government authority or agency (other than as may be required under
Maryland securities or blue sky laws) is required in connection with the due
authorization, execution or delivery of the Purchase Agreement or the Articles
Supplementary or for the offering, issuance or sale of the Securities, except
for the filing of the Articles Supplementary with the SDAT (which filing has
been made in accordance with the MGCL).
(ix) The execution, delivery and performance of the Purchase Agreement
and the Articles Supplementary by the Company (including the issuance and sale
of the Securities to the Underwriters and the use of the proceeds from the sale
of the Securities as described in the Prospectus under the caption "Use of
Proceeds") do not result in any violation of the provisions of the charter or
bylaws of the Company or, so far as is known to us, any applicable provision of
any Maryland law, statute, administrative regulation or administrative or court
decree applicable to the Company.
In rendering such opinion, such counsel shall state that each of Xxxxxx &
Xxxxxxx and Brown & Wood LLP, in rendering their opinions pursuant to the
Purchase Agreement, may rely upon such opinion of special Maryland counsel as to
all matters arising under or governed by the laws of the State of Maryland. In
addition, in rendering such opinion, such counsel may rely insofar as such
opinion involves factual matters, to the extent they deem proper, on
certificates of responsible officers of the Company and public officials. Such
opinion shall not state that it is to be governed or qualified by, or that it is
otherwise subject to, any treatise, written policy or other document relating to
legal opinions, including, without limitation, the Legal Opinion Accord of the
ABA Section of Business Law (1991).
C-1
