Exhibit 1.1
Execution Copy
UNDERWRITING AGREEMENT
Mid-Atlantic Realty Trust
2,000,000 Common Shares
($0.01 par value)
March 6, 2002
First Union Securities, Inc.
Xxxx Xxxxx Xxxx Xxxxxx, Incorporated
Xxxxxx, Xxxxx Xxxxx, Incorporated
c/o First Union Securities, Inc.
0 Xx. Xxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Ladies and Gentlemen:
Mid-Atlantic Realty Trust, a self-administered Maryland real estate
investment trust (the "Company"), proposes to issue and sell to you and the
several Underwriters named in Schedule I hereto (collectively, the
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"Underwriters") 2,000,000 common shares (the "Firm Shares") of beneficial
interest of the Company, $0.01 par value per share (the "Common Shares"), and
also proposes to issue and sell to the Underwriters, at the option of the
Underwriters, up to 300,000 additional shares (the "Optional Shares") of its
Common Shares as set forth below. The Firm Shares and the Optional Shares are
herein collectively called the "Offered Shares".
The Company and MART Limited Partnership (the "Partnership"), for which
the Company serves as sole general partner, hereby agree with the Underwriters
as follows:
1. Representations and Warranties with Respect to Registration Under the
Act. The Company and the Partnership, jointly and severally, represent and
warrant to, and agree with, the several Underwriters that:
(a) A registration statement on Form S-3 (File No. 333-20813) with
respect to the Offered Shares, including a base prospectus dated January 30,
1997 (the "Base Prospectus"), was prepared by the Company in conformity with the
requirements of the Securities Act of 1933, as amended (the "Act"), and the
rules and regulations (the "1933 Act Rules and Regulations") of the Securities
and Exchange Commission (the "Commission") thereunder, was filed with the
Commission and was declared effective on February 3, 1997. No stop order
suspending the effectiveness of such registration statement has been issued, and
no proceeding for that purpose has been instituted or, to the knowledge of the
Company, threatened by the Commission. A final prospectus supplement (the
"Prospectus Supplement") setting forth the final terms of the offering, sale and
plan of distribution of the Offered Shares and additional information concerning
the Company and its business has been or will be so prepared and will be filed
pursuant to Rule 424(b) of the 1933 Act Rules and Regulations on or before the
second business day after the date hereof (or such earlier time as may be
required by the 1933 Act Rules and
Regulations). Copies of such registration statement and the Prospectus
Supplement, including all documents incorporated by reference therein that were
filed with the Commission on or prior to the date of this Agreement (including
one fully executed copy of the registration statement and of each amendment
thereto for each Representative and its counsel) have been delivered or made
available to First Union Securities, Inc. ("FUSI") and its counsel. The
registration statement, including the Base Prospectus, as amended at the time it
became effective, including the information (if any) deemed to be part of the
registration statement at the time of effectiveness pursuant to Rule 430A under
the Act and as it may have been subsequently amended, is referred to herein as
the "Registration Statement." The term "Prospectus" as used herein means the
Base Prospectus together with the Prospectus Supplement. Any reference herein to
the Registration Statement or the Prospectus or any amendment or supplement
thereto shall be deemed to refer to and include the Incorporated Documents, and
any reference herein to the terms "amend," "amendment" or "supplement" with
respect to the Registration Statement or the Prospectus shall be deemed to refer
to and include the filing after the execution hereof of any Incorporated
Documents. As used herein, the term "Incorporated Documents" means the documents
which at the time are incorporated by reference in the Registration Statement,
the Prospectus or any amendment or supplement thereto filed prior to the date
hereof or during the period the Prospectus is required to be delivered in
connection with the sale of the Offered Shares by the Underwriters or any dealer
as required by paragraph (b) of Item 12 of Form S-3. For purposes of this
Agreement, all references to the Registration Statement, the Prospectus, or any
amendment or supplement thereto shall be deemed to include any copy filed with
the Commission pursuant to its Electronic Data Gathering Analysis and Retrieval
System (XXXXX), and such copy shall be identical in content to any Prospectus
delivered to the Underwriter for use in connection with the offering of the
Offered Shares.
(b) The Company and the transactions contemplated by this Agreement meet
the requirements and the conditions for use of a registration statement on Form
S-3 under the Act and the 1933 Act Rules and Regulations.
(c) The Registration Statement, when it became effective and on the
Closing Date (as defined in Section 3) or the Option Closing Date (as defined in
Section 3) (i) contained or will contain all information required to be set
forth therein in accordance with, and complied or will comply in all material
respects with the requirements of, the Act and the 1933 Act Rules and
Regulations and (ii) did not or will not include any untrue statement of a
material fact or omit to state any material fact necessary to make the
statements therein not misleading. On the date of filing with the Commission
pursuant to Rule 424(b) and on the Closing Date or the Option Closing Date, the
Prospectus, as amended or supplemented at any such time (i) contained or will
contain all information required to be set forth therein in accordance with, and
complied or will comply in all material respects with the requirements of, the
Act and the 1933 Act Rules and Regulations and (ii) did not or will not include
any untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; except that the representations and
warranties set forth in this Section 1(c) do not apply to statements in the
Prospectus based upon written information concerning the Underwriters that was
furnished to the Company by any Underwriter through the Representative
specifically for use in the preparation thereof, it being understood and agreed
that the only such information is that described as such in Section 7(b) hereof.
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(d) The Incorporated Documents when they became or become effective
under the Act or were or are filed with the Commission under the Act or the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), as the case
may be, conformed or will conform in all material respects with the requirements
of the Act, the 1933 Act Rules and Regulations, the Exchange Act and/or the
rules and regulations of the Commission under the Exchange Act (the "Exchange
Act Rules and Regulations"), as applicable and did not or will not include an
untrue statement of a material fact or omit to state a material fact necessary
to make the statements therein, in light of the circumstances in which they were
made, not misleading.
(e) The consolidated financial statements, including the related
schedules and notes thereto, set forth or included or incorporated by reference
in the Registration Statement and Prospectus fairly present the financial
condition of the Company and its consolidated subsidiaries as of the dates
indicated and the results of operations, changes in financial position,
stockholders' equity and cash flows for the periods therein specified, in
conformity with generally accepted accounting principles consistently applied
throughout the periods involved. The summary and selected financial and
statistical data included or incorporated by reference in the Registration
Statement and the Prospectus present fairly the information shown therein and,
to the extent based upon or derived from the financial statements, have been
compiled on a basis consistent with the financial statements presented therein.
In addition, all financial statements required by Rule 3-14 of Regulation S-X
("Rule 3-14") have been included or incorporated by reference in the
Registration Statement and the Prospectus and any such financial statements are
in conformity with the requirements of Rule 3-14. No other financial statements
are required to be set forth or to be incorporated by reference in the
Registration Statement or the Prospectus under the Act or the 1933 Act Rules and
Regulations.
(f) The descriptions in the Registration Statement and the Prospectus of
the contracts, leases and other legal documents therein described present fairly
the information required to be shown, and there are no contracts, leases, or
other documents of a character required to be described in the Registration
Statement or the Prospectus or to be filed as exhibits to the Registration
Statement which are not described or filed as required; Exhibit 21 to the
Company's Annual Report on Form 10-K for the year ended December 31, 2000
contains a true, correct and complete list of all of the subsidiaries of the
Company controlled directly or indirectly by the Company (each, a "Subsidiary"
and collectively, the "Subsidiaries"); there are no legal or governmental
proceedings pending or threatened to which the Company, the Partnership or any
Subsidiary is subject that are required to be described in the Registration
Statement or the Prospectus and are not so described; there are no statutes or
regulations applicable to the Company, the Partnership or any Subsidiary or
certificates, permits or other authorizations from governmental regulatory
officials or bodies required to be obtained or maintained by the Company, the
Partnership or any Subsidiary of a character required to be disclosed and
properly described therein; all agreements between the Company, the Partnership
or any Subsidiary and third parties expressly referenced in the Prospectus are
legal, valid and binding obligations of the Company, the Partnership or the
Subsidiary, enforceable in accordance with their respective terms, except to the
extent enforceability may be limited by bankruptcy, insolvency, reorganization
or other laws of general applicability relating to or affecting creditors'
rights and by general equity principles.
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(g) KPMG LLP, whose reports are incorporated by reference in the
Registration Statement and Prospectus, are and, during the periods covered by
their reports, were independent public accountants within the meaning of the Act
and the applicable rules and regulations thereunder adopted by the Commission
and as required by the applicable rules and regulations of the New York Stock
Exchange, Inc.
2. Representations and Warranties of the Company and the Partnership. The
Company and the Partnership, jointly and severally, represent and warrant to,
and agree with, the several Underwriters that:
(a) (1) The Company has been duly organized and is an existing
statutory real estate investment trust in good standing under the laws of the
State of Maryland, with power and authority (corporate and other) to own its
properties and conduct its business as described in the Prospectus; and (2) the
Company is duly qualified to do business as a foreign entity in good standing in
all other jurisdictions in which its ownership or lease of property or the
conduct of its business requires such qualification, except where the failure to
so qualify would not, individually or in the aggregate, have a material adverse
effect on the condition (financial or otherwise), business, prospects,
properties or results of operations of the Company, the Partnership and the
Subsidiaries, taken as a whole (a "Material Adverse Effect").
(b) (1) The Partnership and each Subsidiary has been duly incorporated
or formed, as the case may be, and each is existing and in good standing under
the laws of the respective jurisdiction of incorporation or formation, with
power and authority (corporate and other) to own its properties and conduct its
business as described in the Prospectus; (2) the Partnership and each Subsidiary
is duly qualified to do business as a foreign entity in good standing in all
other jurisdictions in which its ownership or lease of property or the conduct
of its business requires such qualification, except where the failure to so
qualify will not have a Material Adverse Effect; all of the issued and
outstanding equity interests of the Partnership and each Subsidiary have been
duly authorized and validly issued and are fully paid and nonassessable; and the
equity interests of each Subsidiary owned by the Company or Partnership,
directly or through subsidiaries, are owned free from security interests, liens,
claims, encumbrances and defects. Immediately prior to the consummation of the
transaction contemplated hereby and the applications of the net proceeds from
the sale of the Offered Shares, the Company owns the sole general partnership
interest and a majority of the limited partnership interests in the Partnership.
(c) The Company has an authorized, issued and outstanding
capitalization as set forth in the Prospectus under the caption
"Capitalization." As of February 28, 2002, 15,224,232 Common Shares were issued
and outstanding and, as of the date hereof and as of the Closing Date, no
preferred shares of beneficial interest are or will be issued and outstanding.
This Agreement and the issuance and sale of the Offered Shares hereunder has
been duly authorized by all appropriate action of the Company, all outstanding
shares of beneficial interest of the Company are, and, when the Offered Shares
have been delivered and paid for in accordance with this Agreement on the
Closing Date and the Option Closing Date (as defined below), such Offered Shares
will be, validly issued, fully paid and nonassessable and will conform to the
description thereof contained in the Prospectus; the issued and outstanding
units of partnership interest in the Partnership (the "Partnership Units") have
been duly authorized by the Partnership; all of the issued and outstanding
shares of beneficial interest of the Company and
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outstanding Partnership Units have been offered, sold and issued by the
Company or the Partnership in compliance with all applicable laws, including
without limitation, federal and state securities laws; except as described in
the Prospectus, there is no outstanding option, warrant or other right requiring
the issuance of, and no commitment, plan or arrangement to issue, any shares of
beneficial interest of the Company or equity interests in the Partnership or any
security convertible into or exchangeable for shares of beneficial interest of
the Company or equity interests in the Partnership, and the shareholders of the
Company have no preemptive or similar rights with respect to any shares of
beneficial interest of the Company.
(d) Except as described in the Prospectus, there are no contracts,
agreements or understandings between the Company or the Partnership and any
person that would give rise to a valid claim against the Company or any
Underwriter for a brokerage commission, finder's fee or other like payment in
connection with the offering, issuance and sale of the Offered Shares.
(e) Except as described in the Prospectus, there are no contracts,
agreements or understandings between the Company or the Partnership and any
person granting such person the right to require the Company to include any
securities of the Company owned or to be owned by such person in the securities
registered pursuant to the Registration Statement.
(f) The Offered Shares have been approved for listing on the New York
Stock Exchange, subject to final notice of issuance.
(g) No consent, approval, license, authorization, certificate, permit or
order of, or filing with, any governmental agency or body or any court is
required for the consummation of the transactions contemplated by this Agreement
including the valid authorization, issuance, sale and delivery of the Offered
Shares, except such as may be required under state securities laws.
(h) The execution, delivery and performance of this Agreement and the
issuance and sale of the Offered Shares will not result in a breach or violation
of any of the terms and provisions of, or constitute a default under, any
statute, rule, regulation or order of any governmental agency or body or any
court, domestic or foreign, having jurisdiction over the Company, the
Partnership or the Subsidiaries or any of their properties, or any agreement or
instrument to which the Company, the Partnership or Subsidiary is a party or by
which the Company, the Partnership or any Subsidiary is bound or to which any of
the Properties of the Company, the Partnership or any Subsidiary is subject, or
the charter, by-laws, partnership agreement, certificate of limited partnership,
operating agreement or other organizational documents of the Company, the
Partnership or any Subsidiary, and the Company, has full power and authority to
authorize, issue, sell and deliver the Offered Shares as contemplated by this
Agreement.
(i) This Agreement has been duly authorized, executed and delivered by
the Company and the Partnership and constitutes the legal, valid and binding
obligation of the Company and the Partnership enforceable against the Company
and the Partnership in accordance with its terms, except as may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors' rights generally or by general principles of equity.
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(j) Except as described in the Prospectus, the Company, the Partnership or
their Subsidiaries have good and marketable title to all real properties and all
other properties and assets owned by them (each, a "Property" and collectively,
the "Properties"), in each case free from liens, encumbrances and defects that
would materially affect the value thereof or materially interfere with the use
made or to be made thereof by them; the Company, the Partnership or the
Subsidiary has obtained an owner's title insurance policy in an amount at least
equal to the cost of acquisition from a title insurance company with respect to
each of its real estate properties; except as disclosed in the Prospectus, the
Company, the Partnership and the Subsidiaries hold any leased real or personal
property under valid and enforceable leases, with no exceptions that would
materially interfere with the value thereof or materially interfere with the use
made or to be made thereof by them; neither the Company, the Partnership nor any
Subsidiary has knowledge of any pending or threatened condemnation proceeding,
zoning change, or other proceeding or action that will in any manner affect the
size of, use of, improvements on, construction on or access to any of the
Properties.
(k) The Company, the Partnership and the Subsidiaries possess adequate
permits, licenses, franchises, certificates, authorities, consents, orders or
approvals issued by appropriate governmental agencies or bodies necessary to
conduct the business now conducted by them or contemplated by the Prospectus and
have not received any notice of proceedings relating to the revocation or
modification of any such permits, licenses, franchises, certificates,
authorities, consents, orders or approvals that, if determined adversely to the
Company, the Partnership or any Subsidiary, would have a Material Adverse
Effect.
(l) No labor dispute with the employees of the Company, the Partnership or
any subsidiary exists or, to the knowledge of the Company, is imminent that
might have a Material Adverse Effect.
(m) The Company, the Partnership and the Subsidiaries own, possess or can
acquire on reasonable terms, adequate trademarks, trade names and other rights
to inventions, know-how, patents, copyrights, confidential information and other
intellectual property (collectively, "intellectual property rights") necessary
to conduct the business now operated by them, or presently employed by them, and
have not received any notice of infringement of or conflict with asserted rights
of others with respect to any intellectual property rights that, if determined
adversely to the Company, the Partnership or any of the Subsidiaries, would
individually or in the aggregate have a Material Adverse Effect.
(n) Except as otherwise described in the Prospectus, neither the Company,
the Partnership nor any Subsidiary has authorized or conducted or has knowledge
of the generation, transportation, storage, presence, use, treatment, disposal,
release, or other handling of any hazardous substance, hazardous waste,
hazardous material, hazardous constituent, toxic substance, pollutant,
contaminant, asbestos, radon, polychlorinated biphenyls ("PCBs"), petroleum
product or waste (including crude oil or any fraction hereof, natural gas,
liquefied gas, synthetic gas or other material defined, regulated, controlled or
potentially subject to any remediation requirement under any environmental law
(collectively, "Hazardous Materials"), on, in, under or affecting any Property,
except in material compliance with applicable laws; except as disclosed in the
Prospectus, to the knowledge of the trustees and officers of the Company, the
Properties are in material compliance with all federal, state and local laws,
ordinances, rules,
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regulations and other governmental requirements relating to pollution,
control of chemicals, management of waste, (collectively, "Environmental Laws"),
and the Company, the Partnership and the Subsidiaries are in compliance with all
licenses, permits, registrations and government authorizations necessary to
operate under all applicable Environmental Laws in all material respects; except
as otherwise described in the Prospectus, neither the Company, the Partnership
or any Subsidiary has received any written or oral notice from any governmental
entity or any other person and there is no pending, or, to the knowledge of the
trustees and officers of the Company, threatened claim, litigation or any
administrative agency proceeding that: alleges a violation of any Environmental
Laws by the Company, the Partnership or any Subsidiary; or that the Company, the
Partnership or any Subsidiary is a liable party or a potentially responsible
party under the Comprehensive Environmental Response, Compensation and Liability
Act, 42 U.S.C. (S) 9601, et. seq., or any state superfund law; has resulted in
or could result in the attachment of an environmental lien on any of the
properties; or alleges that the Company, the Partnership or any Subsidiary is
liable for any contamination of the environment, contamination of the Property,
damage to natural resources, property damage, or personal injury based on their
activities or the activities of their predecessors or third parties (whether at
the properties or elsewhere) involving Hazardous Materials, whether arising
under the Environmental Laws, common law principles, or other legal standards.
In the ordinary course of its business, the Company, the Partnership and the
Subsidiaries conduct Phase I environmental assessments on each of the Properties
at the time such Property is acquired and periodic reviews of the effect of
Environmental Laws on the business, operations and properties of the Company,
the Partnership and the Subsidiaries. Notwithstanding the foregoing, the Company
and the Partnership have disclosed that Chevron USA has agreed with the Maryland
Department of the Environment ("MDE") to remediate, and has undertaken a
corrective plan of action for remediation of, the former Chevron service station
site and adjacent shopping center property at 0000 Xxxxxxx Xxx., Xxxxxxxx,
Xxxxxxxx (the "Rosedale Plaza Shopping Center"), with respect to certain ground
soil contamination caused during the past operation of such service station. The
Company and the Partnership believe that such corrective plan of action, once
completed to the satisfaction of MDE, will be sufficient to remediate any such
contamination in a manner that will be satisfactory under applicable law.
Accordingly, the existence of such condition at the Rosedale Plaza Shopping
Center is not deemed material to the Company and the Partnership.
(o) Except as described in the Prospectus, there are no pending actions,
suits or proceedings against or, to the Company's knowledge, affecting the
Company, the Partnership or any Subsidiary or any of their respective Properties
that, if determined adversely to the Company, the Partnership or such
Subsidiary, would individually or in the aggregate have a Material Adverse
Effect, or would materially and adversely affect the ability of the Company or
the Partnership to perform their obligations under this Agreement, or which are
otherwise material in the context of the offering, issuance, sale and delivery
of the Offered Shares; and no such actions, suits or proceedings are threatened
or, to the Company's or the Partnership's knowledge, contemplated.
(p) Except as described in the Prospectus, since the date of the latest
audited financial statements included or incorporated by reference in the
Prospectus there has been no change material adverse change, nor any development
or event involving a prospective material adverse change in the condition
(financial or other), business, properties or results of operations of the
Company, the Partnership and the Subsidiaries, taken as a whole, that would
constitute a
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Material Adverse Effect, and, except as disclosed in or the Prospectus,
there has been no dividend or distribution of any kind declared, paid or made by
the Company on any class of its shares of beneficial interest.
(q) The system of internal accounting controls of the Company, the
Partnership and the Subsidiaries, taken as a whole, is sufficient to meet the
broad objectives of internal accounting controls insofar as those that would be
material in relation to the Company's financial statements; and, to the
Company's and the Partnership's knowledge, neither the Company, the Partnership
nor any Subsidiary, nor any employee or agent thereof, has made any payment of
funds of the Company, the Partnership or any of the Subsidiaries, as the case
may be, or received or retained any funds, and no funds of the Company, the
Partnership or any of the Subsidiaries, as the case may be, have been set aside
to be used for any payment, in each case in violation of any law, rule or
regulation.
(r) Neither the Company, the Partnership or any Subsidiary is and, after
giving effect to the offering and sale of the Offered Shares and the application
of the proceeds thereof as described in the Prospectus, will not be an
"investment company" or a company "controlled" by an "investment company" within
the meaning of the Investment Company Act of 1940, as amended, (the "1940 Act").
(s) The Agreement of Limited Partnership of the Partnership, including any
amendments thereto (the "Partnership Agreement"), has been duly and validly
authorized, executed and delivered by all partners of the Partnership and
constitutes a valid and binding agreement, enforceable in accordance with its
terms, except as may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting creditors' rights generally or by general
principles of equity.
(t) Neither the Company, the Partnership nor any Subsidiary is in breach
of, or in default under (nor has any event occurred which with notice, lapse of
time, or both would constitute a breach of, or default under), its respective
declaration of trust, by-laws, certificate of limited partnership, partnership
agreement or operating agreement, as the case may be, or in the performance or
observance of any obligation, agreement, covenant or condition contained in any
license, indenture, mortgage, deed of trust, loan or credit agreement or other
agreement or instrument to which the Company, the Partnership or such Subsidiary
is a party or by which any of them or their respective properties is bound.
(u) Each of the Company, the Partnership or the Subsidiaries has filed on a
timely basis all necessary federal, state, local and foreign income and
franchise tax returns, if any such returns were required to be filed, through
the date hereof and have paid all taxes shown as due thereon; and no tax
deficiency has been asserted against the Company, the Partnership or any
Subsidiary, nor, does the Company or the Partnership know of any tax deficiency
which is likely to be asserted against the Company or the Partnership; all tax
liabilities, if any, are adequately provided for on the respective books of the
entities in all material respects.
(v) The Company is organized in conformity with the requirements for
qualification as a real estate investment trust under the Internal Revenue Code
of 1986, as amended (the "Code"), and the Company's current and proposed method
of operation will enable it to meet the
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requirements for taxation as a real estate investment trust under the Code;
the Partnership will be treated as a partnership for federal income tax purposes
and not as a corporation or association taxable as a corporation.
(w) Each of the Company, the Partnership and the Subsidiaries maintains
insurance (issued by insurers of recognized financial responsibility) of the
types and in the amounts generally deemed adequate, if any, for their respective
businesses and consistent with insurance coverage maintained by similar
companies in similar businesses, including, but not limited to, insurance
covering real and personal property owned or leased by the Company, the
Partnership and the Subsidiaries against theft, damage, destruction, acts of
vandalism and all other risks customarily insured against, all of which
insurance is in full force and effect.
(x) Except as otherwise described in the Prospectus, there are no material
outstanding loans or advances or materials guarantees of indebtedness by the
Company, the Partnership or any Subsidiary to or for the benefit of any of the
officers or trustees of the Company or any of their family members.
(y) In connection with the offering of the Offered Shares, the Company has
not offered and will not offer its Common Shares or any other securities
convertible into or exchangeable or exercisable for Common Shares in a manner in
violation of the Act or the 1933 Act Rules and Regulations; the Company has not
distributed and will not distribute any Prospectus or other offering material in
connection with the offer and sale of the Offered Shares, except as contemplated
herein.
(z) None of the entities which prepared appraisals of the Properties or
Phase I environmental assessment reports with respect to such Properties was
employed for such purpose on a contingent basis or has any substantial interest
in the Company, the Partnership or any Subsidiary, and none of their directors,
officers or employees is connected with the Company, the Partnership or any
Subsidiary as a promoter, selling agent, voting trustee, officer or employee.
3. Purchase, Sale and Delivery of Offered Shares. On the basis of the
representations, warranties and agreements herein contained, but subject to the
terms and conditions herein set forth, the Company agrees to sell to the
Underwriters, and the Underwriters agree, severally and not jointly, to purchase
from the Company, at a purchase price of $14.327 per share, the respective
numbers of shares of Firm Shares set forth opposite the names of the
Underwriters in Schedule I hereto.
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The Company will deliver the Firm Shares to FUSI for the accounts of the
Underwriters against payment of the purchase price in Federal (same day) funds
by wire transfer to an account at a bank acceptable to the Company drawn to the
order of the Company, at the office of Hunton & Xxxxxxxx, at 10:00 A.M., New
York time, on March 12, 2002, or at such other time not later than seven full
business days thereafter as FUSI and the Company determine, such time being
herein referred to as the "First Closing Date". The certificates for the Firm
Shares so to be delivered will be in definitive form, in such denominations and
registered in such names as the Underwriters request and will be made available
for checking and packaging at the above office of FUSI at least 24 hours prior
to the First Closing Date.
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In addition, upon written notice from FUSI given to the Company from time
to time not more than 30 days subsequent to the date of the Prospectus (the
"Option Period"), the Underwriters may purchase all or less than all of the
Optional Shares at the purchase price per Optional Share to be paid for the Firm
Shares less an amount per share equal to any dividends or distributions per
common share payable on the Firm Shares during the Option Period (to the extent
such dividends and distributions were not payable on the Optional Shares). The
Company agrees to sell to the Underwriters the number of shares of Optional
Shares specified in such notice, and the Underwriters agree, severally and not
jointly, to purchase such Optional Shares. Such Optional Shares shall be
purchased for the account of each Underwriter in the same proportion as the
number of shares of Firm Shares set forth opposite such Underwriter's name in
Schedule I hereto bears to the total number of shares of Firm Shares (subject to
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adjustment by the Underwriters to eliminate fractions) and may be purchased by
the Underwriters only for the purpose of covering over-allotments made in
connection with the sale of the Firm Shares. No Optional Shares shall be sold or
delivered unless the Firm Shares previously have been, or simultaneously are,
sold and delivered. The right to purchase the Optional Shares or any portion
thereof may be exercised from time to time and to the extent not previously
exercised may be surrendered and terminated at any time upon notice by FUSI to
the Company.
Each time for the delivery of and payment for the Optional Shares, being
herein referred to as an "Option Closing Date", which may be the First Closing
Date (the First Closing Date and each Option Closing Date, if any, being
sometimes referred to as a "Closing Date"), shall be determined by FUSI but
shall be not later than five full business days after written notice of election
to purchase Optional Shares is given. The Company will deliver the Optional
Shares being purchased on each Option Closing Date to FUSI for the accounts of
the several Underwriters against payment of the purchase price therefor in
Federal (same day) funds by wire transfer to an account at a bank acceptable to
the Company drawn to the order of the Company, at the offices of Hunton &
Xxxxxxxx. The certificates for the Optional Shares being purchased on each
Option Closing Date will be in definitive form, in such denominations and
registered in such names as FUSI requests upon reasonable notice prior to such
Option Closing Date and will be made available for checking and packaging at the
above office of FUSI at a reasonable time in advance of such Option Closing
Date.
4. Offering by Underwriters. It is understood that the several Underwriters
propose to offer the Offered Shares for sale to the public as set forth in the
Prospectus.
5. Conditions of the Underwriters' Obligations. The obligations of the
Underwriters to purchase the Firm Shares and the Optional Shares, as the case
may be, shall be subject to the accuracy of the representations and warranties
on the part of the Company and the Partnership contained herein as of the time
of execution hereof, the Closing Date and any Option Closing Date, to the
accuracy of the statements of the Company and the Partnership made in any
certificates pursuant to the provisions hereof, to the performance by the
Company and the Partnership of their obligations hereunder and to the following
additional conditions:
(a) If, at the time this Agreement is executed and delivered, it is
necessary for a post-effective amendment to the Registration Statement to be
declared effective before the offering of the Offered Shares may commence, such
post-effective amendment shall have become effective not later than 5:30 PM New
York City time on the date hereof.
10
(b) No stop order suspending the effectiveness of the Registration
Statement shall have been issued and no proceedings for that purpose shall have
been instituted or threatened.
(c) No order preventing or suspending the use of the Prospectus shall
have been or shall be in effect, and any requests for additional information on
the part of the Commission (to be included in the Registration Statement or the
Prospectus or otherwise) shall have been complied with to the satisfaction of
the Commission and the Underwriters.
(d) The Company shall have furnished to the Underwriters on the Closing
Date, a certificate, dated such Closing Date, signed by the President and the
chief financial officer or chief accounting officer of the Company to the effect
that the signers of such certificate have carefully examined the Registration
Statement, the Prospectus and this Agreement and that (i) the representations
and warranties of the Company and the Partnership in this Agreement are true and
correct on and as of such Closing Date or settlement date with the same effect
as if made on such Closing Date, and the Company has performed all covenants and
agreements and satisfied all conditions to be performed or satisfied by it at or
prior to such Closing Date; (ii) no stop order suspending the effectiveness of
the Registration Statement has been issued and, to the best of their knowledge,
no proceedings for that purpose have been instituted or are pending under the
Act; and (iii) since the date of the most recent financial statements included
or incorporated by reference in the Prospectus (exclusive of any supplement
thereto), there has been no event, occurrence, circumstance, action, claim,
condition or development that could reasonably be expected to have a Material
Adverse Effect.
(e) The Company shall have requested and caused KPMG LLP to have
furnished to the Underwriters, on the date hereof and at the Closing Date and
the Option Closing Date, if any, letters, dated respectively as of the date
hereof, as of the Closing Date and as of the Option Closing Date, if any, in
form and substance satisfactory to FUSI, confirming that they are independent
accountants within the meaning of the Act and the applicable rules and
regulations adopted by the Commission thereunder, and stating in effect that:
(i) In their opinion the audited financial statements included or
incorporated by reference in the Registration Statement and the Prospectus
and reported on by them comply as to form in all material respects with the
applicable accounting requirements of the Act and the Exchange Act and the
related rules and regulations adopted by the Commission;
(ii) They have performed certain other specified procedures as a
result of which they determined that certain information of an accounting,
financial or statistical nature (which is limited to accounting, financial or
statistical information derived from the general accounting records of the
Company and its Subsidiaries) set forth in the Registration Statement and the
Prospectus, the information included or incorporated by reference in Items 1, 2,
6, 7 and 11 of, and in Exhibit 12 to, the Company's Annual Report on Form 10-K,
incorporated by reference in the Registration Statement and the Prospectus, the
information included in the "Management's Discussion and Analysis of Financial
Condition and Results of Operations" included or incorporated by reference in
the Company's Quarterly Reports on Form 10-Q, incorporated by reference in the
Registration Statement and the Prospectus, and the information included in the
Company's Current Reports on Form 8-K incorporated by reference in the
Registration Statement and the Prospectus agrees with the accounting records of
the Company
11
and its Subsidiaries, excluding any questions of legal interpretation, except as
described in such letter; and
(iii) Nothing came to their attention which caused them to
believe that the unaudited pro forma financial statements do not comply as to
form in all material respects with the applicable accounting requirements of
Rule 11-02 of Regulation S-X or that the pro forma adjustments have not been
properly applied to the historical amounts in the compilation of such
statements.
References to the Registration Statement and the Prospectus in this
paragraph (f) are to such documents as amended and supplemented at the date of
the letter.
(f) The Underwriters shall have received on the Closing Date from
Xxxxxx, Feinblatt, Rothman, Hoffberger & Xxxxxxxxx, LLP, counsel for the
Company, an opinion, addressed to the Underwriters and dated such Closing Date
and stating in effect that:
(i) Each of the Company, the Partnership and the Subsidiaries
has been duly incorporated, organized or formed and is validly existing as a
corporation, trust, partnership or limited liability company, as the case may
be, in good standing under the laws of the jurisdiction in which it is
incorporated, organized or formed and is duly qualified and in good standing as
a foreign entity in each jurisdiction where, to the knowledge of such counsel,
ownership, lease or operation of property or the conduct of its business
requires such qualification;
(ii) Each of the Company, the Partnership and the Subsidiaries
has all requisite corporate, trust, partnership or limited liability company, as
the case may be, power and authority to own, lease and operate its assets and
properties and conduct its business as now being conducted as described in the
Prospectus and, to enter into, deliver and perform this Agreement and, with
respect to the Company, to issue and sell the Offered Shares.
(iii) The Company's authorized equity capitalization is as set
forth in the Prospectus; the capital stock of the Company conforms in all
material respects to the description thereof contained in the Prospectus and
meets the requirements of Item 9 of Form S-3 under the Act; the outstanding
Common Shares have been duly and validly authorized and issued and are fully
paid and nonassessable; the issuance and sale of the Offered Shares have been
duly and validly authorized by the Company, and, when issued and delivered to
and paid for by the Underwriters pursuant to this Agreement, will be fully paid
and nonassessable; the Offered Shares are duly authorized for trading, subject
to official notice of issuance, on the New York Stock Exchange; the certificates
for the Offered Shares are in valid form; the holders of outstanding shares of
capital stock of the Company are not entitled to any statutory or, to the best
knowledge of counsel, contractual, preemptive or other rights to subscribe for
the Offered Shares; except as set forth in the Prospectus, no options, warrants
or other rights to purchase, or other obligations to issue, or rights to convert
any obligations into or exchange any securities for, shares of capital stock of
or ownership interests in the Company are outstanding; and, to the knowledge of
such counsel, no person or entity has a right to participate in the registration
under the Act of the Offered Shares pursuant to the Registration Statement;
12
(iv) All of the outstanding equity interests of each Subsidiary
have been duly and validly authorized and issued and are fully paid and
nonassessable, were not issued and are not owned or held in violation of any
statutory preemptive rights or preemptive rights set forth in the charter or
other organizational documents of any such Subsidiary, and, except as otherwise
set forth in the Prospectus, to such counsel's knowledge, all outstanding equity
interests of the Subsidiaries are owned by the Company either directly or
through Subsidiaries free and clear of any perfected security interest and, to
the knowledge of such counsel, after due inquiry, any other security interest,
claim, lien or encumbrance. The units of limited partnership interest in the
Partnership have been issued, offered and sold in compliance with all applicable
laws, including, without limitation, federal and state securities laws;
(v) This Agreement has been duly and validly authorized,
executed and delivered by the Company and the Partnership and constitutes the
legal, valid and binding obligation of the Company and the Partnership
enforceable against the Company and the Partnership in accordance with its
terms, except as may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting creditors' rights generally or by general
principles of equity;
(vi) Neither the issuance, sale and delivery of the Offered
Shares, nor the execution, delivery, and performance of this Agreement nor the
consummation of any other of the transactions herein contemplated nor the
fulfillment of the terms hereof by the Company or the Partnership will conflict
with or, result in a breach or violation of (A) the charter, by-laws,
declaration of trust, partnership agreement, operating agreement or certificate
of limited partnership of the Company, the Partnership or any Subsidiary; (B) to
the knowledge of such counsel, the terms of any indenture, contract, lease,
mortgage, deed of trust, note agreement, loan agreement or other agreement,
obligation, condition, covenant or instrument to which the Company or its
Subsidiaries is a party or bound or to which its or their property is subject;
or (C) to the knowledge of such counsel, any statute, law, rule, regulation,
judgment, order or decree applicable to the Company or its Subsidiaries of any
court, regulatory body, administrative agency, governmental body, arbitrator or
other authority having jurisdiction over the Company or its Subsidiaries or any
of its or their properties or, result in the creation or imposition of any lien,
charge, claim or encumbrance upon any property or asset of the Company or any
Subsidiary;
(vii) No consent, approval, authorization, order, license,
certificate, permit, registration, designation or filing is required for the
execution, delivery and performance of this Agreement by the Company and the
Partnership or the consummation of the transactions contemplated hereby, except
such as have been obtained under the Act and such as may be required under state
or foreign blue sky laws in connection with the purchase and distribution of the
Offered Shares by the several Underwriters in the manner contemplated in this
Agreement and in the Prospectus;
(viii) To the knowledge of such counsel, there is no pending or
threatened action, suit or proceeding by or before any court or governmental
agency, authority or body or any arbitrator involving the Company or any of its
Subsidiaries or its or their property which, individually or in the aggregate,
might have a Material Adverse Effect, or affect the consummation of this
Agreement or which are required to be disclosed in the Registration
13
Statement or the Prospectus that are not so disclosed, and, to the knowledge of
such counsel, there is no contract, lease or other document, or statute, rule or
regulation, of a character required to be described in the Registration
Statement or Prospectus, or to be filed as an exhibit thereto, which is not
described or filed as required; and the statements included or incorporated by
reference in the Prospectus under the headings "Federal Income Tax
Considerations", "Description of the Debt Securities", "Description of Capital
Stock", "Certain Provisions of Maryland Law and of the Company's Declaration of
Trust and Bylaws" and "Risk Factors" insofar as such statements constitute
summaries of the legal matters, documents or proceedings referred to therein has
been reviewed by such counsel, is correct in all material respects and the
discussion thereunder does not omit any material provisions with respect to the
matters covered and fairly presents the information called for with respect to
such legal matters, documents and proceedings and fairly summarizes the matters
therein described;
(ix) The statements (A) incorporated by reference into the
Prospectus and (B) in the Registration Statement, in each case insofar as such
statements constitute summaries of documents referred to therein or matters of
law, fairly present the information required with respect to such documents and
matters of law and fairly summarize the matters required to be disclosed
therein;
(x) The Registration Statement has become effective under the
Act; any required filing of the Prospectus, and any supplements thereto,
pursuant to Rule 424(b) has been made in the manner and within the time period
required by Rule 424(b); to the knowledge of such counsel, no stop order
suspending the effectiveness of the Registration Statement has been issued, no
proceedings for that purpose have been instituted or threatened and the
Registration Statement and the Prospectus (other than the financial statements
and supporting schedules and other financial information contained therein, as
to which such counsel need express no opinion) comply as to form in all material
respects with the applicable requirements of the Act and the Exchange Act and
the respective rules thereunder; and the Incorporated Documents (other than the
financial statements and other financial information contained therein, as to
which such counsel need express no opinion) at the time they became effective or
were filed complied as to form in all material respects with the Exchange Act
and the Exchange Act Rules and Regulations;
(xi) The Offered Shares have been authorized for trading on the
New York Stock Exchange;
(xii) The Company is not, and after giving effect to the
offering and sale of the Offered Shares and the application of the proceeds
thereof as described in the Prospectus, will not be an "investment company" or a
company "controlled" by an "investment company" within the meaning of the
Investment Company Act of 1940;
(xiii) Commencing with its taxable year ended December 31, 1993,
the Company has been organized and has operated in conformity with the
requirements for qualification as a real estate investment trust pursuant to
Sections 856 through 860 of the Code, and the Company's organization and current
and proposed method of operation will enable it to continue to meet the
requirements for qualification and taxation as a real estate investment trust
under the Code; and
14
(xiv) Since its formation in 1997, the Partnership has been
treated as a partnership for federal income tax purposes and not as a
corporation or association taxable as a corporation or as a publicly traded
partnership.
To the extent deemed advisable by such counsel, they may rely as to
matters of fact on records of the Company, certificates of responsible officers
of the Company and public officials and on the opinions of other counsel
satisfactory to the Underwriters as to matters which are governed by laws other
than the laws of Maryland, Delaware or the Federal laws of the United States;
provided that such other counsel shall state in their opinion that the
Underwriters and they are justified in relying on such other opinions. Copies of
such certificates and other opinions shall be furnished to the Underwriters and
counsel for the Underwriters. Such other opinions shall also permit counsel for
the Underwriters to rely thereon.
In addition, such counsel shall state that such counsel has participated
in conferences with officers and other representatives of the Company,
representatives of the Underwriters and representatives of the independent
certified public accountants of the Company, at which conferences the contents
of the Registration Statement and the Prospectus and related matters were
discussed and, although such counsel is not passing upon and does not assume any
responsibility for the accuracy, completeness or fairness of the statements
contained in the Registration Statement and the Prospectus (except as specified
in the foregoing opinion), on the basis of the foregoing, no facts have come to
the attention of such counsel which lead such counsel to believe that the
Registration Statement at the time it became effective and on the Closing Date
(except with respect to the financial statements and notes and schedules thereto
and other financial data, as to which such counsel need express no belief and
after giving effect to any changes incorporated pursuant to Section 430A under
the Act) contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading, or that the Prospectus as amended or supplemented
(except with respect to the financial statements, notes and schedules thereto
and other financial data, as to which such counsel need make no statement) on
the date thereof and on the Closing Date contained any untrue statement of a
material fact or omitted to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
(g) All proceedings taken in connection with the sale of the Offered
Shares as herein contemplated shall be reasonably satisfactory in form and
substance to the Underwriters, and their counsel and the Underwriters shall have
received on the Closing Date from Hunton & Xxxxxxxx a favorable opinion,
addressed to the Underwriters, with respect to the Offered Shares, the
Registration Statement and the Prospectus, and such other related matters, as
the Underwriters may reasonably request, and the Company shall have furnished to
Hunton & Xxxxxxxx such documents as they may reasonably request for the purpose
of enabling them to pass upon such matters.
(h) At the time of execution of this Agreement, the Company shall have
furnished to the Underwriters a letter substantially in the form of Exhibit A
---------
hereto executed by each executive officer and trustee of the Company addressed
to the Underwriters.
15
(i) The Offered Shares shall have been approved for listing, and admitted
and authorized for trading, on the New York Stock Exchange, subject to notice of
issuance.
(j) The Company shall have furnished or caused to be furnished to the
Underwriters such further certificates or documents as the Underwriters shall
reasonably request.
6. Certain Agreements of the Company.
(a) The Company agrees with the several Underwriters that:
(i) If, at the time this Agreement is executed and delivered, it is
necessary for a post-effective amendment to the Registration Statement to be
declared effective before the offering of the Offered Shares may commence, the
Company will endeavor to cause such post-effective amendment to become effective
as soon as possible and will advise you promptly and, if requested by you, will
confirm such advice in writing, when such post-effective amendment has become
effective. Prior to the termination of the offering of the Shares, the Company
will not file any amendment of the Registration Statement or supplement to the
Prospectus or any Rule 462(b) Registration Statement unless the Company has
furnished you a copy for your review prior to filing and will not file any such
proposed amendment or supplement to which you reasonably object. Subject to the
foregoing sentence, the Company will cause the Prospectus, properly completed,
and any supplement thereto to be filed with the Commission pursuant to the
applicable paragraph of Rule 424(b) within the time period prescribed and will
provide evidence satisfactory to the Underwriters of such timely filing;
(ii) The Company will promptly advise the Underwriters (1) when the
Final Prospectus shall have been filed (if required) with the Commission
pursuant to Rule 424(b), (2) when, prior to termination of the offering of the
Shares, any amendment to the Registration Statement shall have been filed or
become effective, (3) of any request by the Commission or its staff for any
amendment of the Registration Statement or for any supplement to the Prospectus
or for any additional information, (4) of the issuance by the Commission of any
stop order suspending the effectiveness of the Registration Statement or the
institution or threatening of any proceeding for that purpose and (5) of the
receipt by the Company of any notification with respect to the suspension of the
qualification of the Offered Shares for sale in any jurisdiction or the
institution or threatening of any proceeding for such purpose. The Company will
use its best efforts to prevent the issuance of any such stop order or the
suspension of any such qualification and, if issued, to obtain as soon as
possible the withdrawal thereof;
(iii) If, at any time when a prospectus relating to the Offered
Shares is required to be delivered under the Act, any event occurs as a result
of which the Prospectus as then amended or supplemented would include any untrue
statement of a material fact or omit to state any material fact necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading, or if it shall be necessary to amend or supplement
the Prospectus to comply with the Act, the Exchange Act or the respective rules
thereunder, the Company promptly shall (A) notify the Underwriters of such
event, (B) prepare and file with the Commission, subject to the second sentence
of paragraph (i) of this Section 6(a), an amendment or supplement which shall
correct such statement or omission or an amendment which shall
16
effect such compliance and (C) supply any supplemented Prospectus to you in such
quantities as you may reasonably request;
(iv) As soon as practicable, the Company will make generally
available to its security holders and to the Underwriters (to the extent
unavailable on open-access public filing retrieval systems) an earnings
statement or statements of the Company and its Subsidiaries which will satisfy
the provisions of Section 11(a) of the Act and Rule 158 under the Act;
(v) Upon your request, the Company shall furnish to the
Underwriters and counsel for the Underwriters, without charge, signed copies of
the Registration Statement (including all exhibits thereto and amendments
thereof) and to each other Underwriter a copy of the Registration Statement
(without exhibits thereto) and all amendments thereof and, so long as delivery
of a prospectus by an Underwriter or dealer may be required by the Act, as many
copies of the Prospectus, and any amendments thereof and supplements thereto, as
the Underwriters may reasonably request. The Company shall pay the expenses of
printing or other production of all documents relating to the offering of the
Offered Shares;
(vi) The Company will arrange, if necessary, for the qualification
of the Offered Shares for sale under the laws of such jurisdictions as the
Underwriters may designate, will maintain such qualifications in effect so long
as required for the distribution of the Offered Shares and will pay any fee of
the National Association of Securities Dealers, Inc., in connection with its
review of the offering; provided that in no event shall the Company be obligated
--------
to qualify to do business in any jurisdiction where it is not now so qualified
or to take any action that would subject it to service of process in suits,
other than those arising out of the offering or sale of the Offered Shares, in
any jurisdiction where it is not now so subject;
(vii) Without the prior written consent of FUSI, until the Lock-Up
Period (as defined in Section 6(b) below) has expired, the Company and each of
its individual trustees and executive officers shall not issue, sell or register
with the Commission (other than on Form S-8 or on any successor form), or
otherwise dispose of, directly or indirectly, any equity securities of the
Company (or any securities convertible into, exercisable for or exchangeable for
equity securities of the Company), except for the issuance of the Offered Shares
pursuant to the Registration Statement, the grant of options and issuance of
Common Shares pursuant to the Company's existing Omnibus Share Plan and the 1995
Non-Qualified Stock Option Plan, the disposition of Common Shares pursuant to
the exercise of options granted pursuant to the Company's Omnibus Share Plan and
the 1995 Non-Qualified Stock Option Plan, and the issuance of Common Shares to
holders of Partnership Units where the Company may issue such Partnership Units
pursuant to conversion rights of such holders of Partnership Units existing
prior to the date of this Agreement, in each case as described, or incorporated
by reference, in the Registration Statement and the Prospectus. In the event
that prior to the expiration of the Lock-Up Period, (A) any Common Shares are
issued pursuant to the Company's existing stock option plan or bonus plan that
are exercisable prior to the expiration of the Lock-Up Period or (B) any
registration is effected on Form S-8 or on any successor form relating to Common
Shares that are exercisable prior to the expiration of the Lock-Up Period, the
Company shall obtain the written agreement of such grantee or purchaser or
holder of such registered securities who is a trustee or officer that, until the
expiration of the Lock-Up Period, such person will not, without your prior
written consent, offer for sale, sell, distribute, grant any option for the sale
of, or otherwise
17
dispose of, directly or indirectly, or exercise any registration rights with
respect to, any Common Shares (or any securities convertible into, exercisable
for or exchangeable for any Common Shares) owned by such person;
(viii) On or before completion of this offering, the Company shall
make all filings required under applicable securities laws and by the New York
Stock Exchange (including any required registration under the Exchange Act); and
(ix) The Company and the Partnership will apply the net proceeds
from the offering of the Offered Shares in the manner set forth under "Use of
Proceeds" in the Prospectus.
(b) For a period of 90 days after the date of the Prospectus Supplement
(the "Lock-Up Period"), the Company will not, directly or indirectly, (1) offer,
pledge, sell, or contract to sell any Common Shares, (2) sell any option or
contract to sell any Common Shares, (3) purchase any option or contract to sell
any Common Shares, (4) grant any option, right or warrant to purchase any Common
Shares, (5) enter into any swap or other agreement that transfers, in whole or
in part, the economic consequence of ownership of any Common Shares whether any
such swap or transaction is to be settled by delivery of shares or other
securities, in cash or otherwise, (6) take any of the foregoing actions with
respect to any securities convertible into or exchangeable or exercisable for or
repayable with Common Shares, (7) file with the Commission a registration
statement under the Act relating to any additional Common Shares or securities
convertible into or exchangeable or exercisable for its Common Shares, or (8)
publicly disclose the intention to take any of the foregoing actions, without
the prior written consent of FUSI, except issuances of Common Shares (A) in
connection with any acquisitions, joint ventures or similar arrangements, so
long as the recipients of those shares agree not to sell or transfer those
shares in a public market transaction during the Lock-Up Period; (B) upon the
exercise of outstanding employee stock options, (C) and options pursuant to
employee benefit plans, (D) pursuant to non-employee director or trustee stock
plans, (E) pursuant to the Company's dividend reinvestment plan, or (F) upon
conversion of any currently outstanding convertible securities.
(c) The Company will not take, directly or indirectly, any action designed
to or which has constituted or which might reasonably be expected to cause or
result, under the Exchange Act or otherwise, in stabilization or manipulation of
the price of any security of the Company to facilitate the sale or resale of the
Offered Shares.
(d) If the sale of the Offered Shares provided for herein is not
consummated because any condition to the obligations of the Underwriters set
forth in Section 6 hereof is not satisfied, because of any termination pursuant
to Section 10 hereof or because of any refusal, inability or failure on the part
of the Company to perform any agreement herein, satisfy any condition herein or
comply with any provision hereof other than by reason of a default by any of the
Underwriters, the Company will reimburse the Underwriters severally through FUSI
on demand for all out-of-pocket expenses (including reasonable fees and
disbursements of counsel) that shall have been incurred by them in connection
with the proposed purchase and sale of the Offered Shares.
18
7. Indemnification.
(a) The Company and the Partnership, jointly and severally, agree to
indemnify and hold harmless each Underwriter, the directors, officers, employees
and agents of each Underwriter and each person, if any, who controls any
Underwriter within the meaning of either the Act or the Exchange Act against any
and all losses, claims, damages or liabilities, joint or several (including,
without limitation to, any reasonable investigation, legal and other expenses
incurred in connection with, and any amount paid in settlement of, any action,
suit or proceeding or any claim asserted), to which they, or any of them, may
become subject under the Act, the Exchange Act or other Federal or state law or
regulation, at common law or otherwise, insofar as such losses, claims, damages
or liabilities (or actions in respect thereof) arise out of or are based (i)
upon any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement or the Prospectus, or any amendment
thereof or supplement thereto, or in any blue sky application or other
information or other documents executed by the Company filed in any state or
other jurisdiction to qualify any or all of the Offered Shares under the
securities laws thereof or arise out of or are based upon any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading; (ii) in whole or in
part upon any breach of the representations and warranties set forth in Sections
1 and 2 hereof; or (iii) in whole or in part upon any failure of the Company to
perform any of its obligations hereunder or under law, and agrees to reimburse
each such indemnified party, as incurred, for any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
such loss, claim, damage, liability or action. This indemnity agreement will be
in addition to any liability which the Company may otherwise have.
(b) Each Underwriter agrees, severally and not jointly, to indemnify and
hold harmless the Company and the Partnership and each person, if any, who
controls the Company and the Partnership within the meaning of either the Act or
the Exchange Act, each director of the Company, and each officer of the Company
who signs the Registration Statement, to the same extent as the foregoing
indemnity from the Company to each Underwriter, but only insofar as such losses,
claims, damages or liabilities arise out of or are based upon written
information relating to such Underwriter furnished to the Company by or on
behalf of such Underwriter specifically for inclusion in the Prospectus;
provided, however, that the obligation of each Underwriter to indemnify the
-------- -------
Company (including any controlling person, director or officer thereof) shall be
limited to the net proceeds received by the Company from such Underwriter. The
Company acknowledges that, under the heading "Underwriting" in the Prospectus,
(i) the list of Underwriters and their respective participation in the sale of
the Offering Shares, (ii) the sentences related to concessions and reallowances
and (iii) the section entitled "Price Stabilization and Short Positions"
constitute the only information furnished in writing by or on behalf of the
several Underwriters for inclusion in the Final Prospectus. This indemnity
agreement will be in addition to any liability that the Underwriters may
otherwise have.
(c) Any party that proposes to assert the right to be indemnified under
this Section (or contribution under Section 8, as further provided in the last
sentence to this Section 7(c)) will, promptly after receipt of notice of
commencement of any action, suit or proceeding against such party in respect of
which a claim is to be made against an indemnifying party or parties under this
Section, notify each such indemnifying party of the commencement of such action,
suit or proceeding, enclosing a copy of all papers served. The failure so to
notify the indemnifying
19
party will not relieve it from liability under paragraph (a) or (b) above unless
and to the extent it did not otherwise learn of such action and such failure
results in the forfeiture by the indemnifying party of substantial rights and
defenses and will not, in any event, relieve the indemnifying party from any
obligations to any indemnified party other than the indemnification obligation
provided in paragraph (a) or (b) above. In case any such action, suit or
proceeding shall be brought against any indemnified party and it shall notify
the indemnifying party of the commencement thereof, the indemnifying party shall
be entitled to participate in, and, to the extent that it shall wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel reasonably satisfactory to such indemnified party, and
after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof and the approval by the indemnified
party of such counsel, the indemnifying party shall not be liable to such
indemnified party for any legal or other expenses, except as provided below and
except for the reasonable costs of investigation subsequently incurred by such
indemnified party in connection with the defense thereof. Notwithstanding the
indemnifying party's election to appoint counsel to represent the indemnified
party in an action, suit or proceeding, the indemnified party shall have the
right to employ separate counsel (including local counsel) in any such action,
and the fees and expenses of such counsel shall be at the expense of the
indemnifying party if (i) the use of counsel chosen by the indemnifying party to
represent the indemnified party would present such counsel with a conflict of
interest; (ii) the actual or potential defendants in, or targets of, any such
action include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be legal
defenses available to it and/or other indemnified parties which are different
from or additional to and in conflict with those available to the indemnifying
party; (iii) the indemnifying party shall not have employed counsel satisfactory
to the indemnified party to represent the indemnified party within a reasonable
time after notice of the institution of such action; or (iv) the indemnifying
party shall authorize the indemnified party to employ separate counsel at the
expense of the indemnifying party. No indemnifying party shall, without the
prior written consent of the indemnified parties, effect any settlement or
compromise of, or consent to the entry of any judgment with respect to, any
pending or threatened action, claim or proceeding in respect of which any
indemnified party is or could have been a party and indemnity or contribution
may have been sought hereunder by such indemnified party, unless such
settlement, compromise or consent includes an unconditional release of such
indemnified party from all liability on claims arising out of such action, claim
or proceeding and 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. If an
indemnifying party has agreed to assume the defense of any claim against an
indemnified party, the indemnified party shall provide the indemnifying party
with prior written notice of any proposed settlement and shall not complete any
settlement without the prior written consent of the indemnifying party. An
indemnifying party shall not be liable for any settlement of any action, suit,
proceeding or claim effected without its written consent, which consent shall
not be unreasonably withheld or delayed. Proceedings with respect to
contribution obligations under Section 9 shall be subject to the same conditions
as provided in this Section 7(c).
8. Contribution. In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in Section 7(a) or 7(b)
is due in accordance with its terms but for any reason is held to be unavailable
to or insufficient to hold harmless an indemnified party under Section 7(a) or
7(b), the Company and the Partnership, jointly and severally, and the
20
Underwriters, severally, agree to contribute to the aggregate losses, claims,
damages and liabilities (including legal or other expenses reasonably incurred
in connection with investigating or defending same) (collectively "Losses") to
which the Company and the Partnership and one or more of the Underwriters may be
subject in such proportion as is appropriate to reflect the relative benefits
received by the Company and the Partnership on the one hand and the Underwriters
on the other from the offering of the Offered Shares or, if such allocation is
unavailable for any reason, in such proportion as is appropriate to reflect not
only the relative benefits referred to above but also the relative fault of the
Company on the one hand and the Underwriters on the other in connection with the
statements or omissions which resulted in such Losses, as well as any other
relevant equitable considerations. Benefits received by the Company shall be
deemed to be equal to the total net proceeds from the offering (before deducting
expenses) received by the Company, and benefits received by the Underwriters
shall be deemed to be equal to the total underwriting discounts received by the
Underwriters, in each case as set forth on the cover page of the Prospectus. The
relative fault of the Company and the Partnership or the Underwriters shall be
determined by reference to, among other things, whether any untrue or any
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact related to information supplied by the Company or the
Underwriters and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such untrue statement or omission. The
Company and the Partnership and the Underwriters agree that it would not be just
and equitable if contribution pursuant to this Section 8 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. Notwithstanding the provisions of
this Section 8 (i) in no case shall any Underwriter (except as may be provided
in an Agreement Among Underwriters) be liable or responsible for any amount in
excess of the underwriting discount applicable to the Offered Shares purchased
by such Underwriter hereunder; and (ii) the Company shall be liable and
responsible for any amount in excess of such underwriting discount; provided,
--------
however, that no person guilty of fraudulent misrepresentation (within the
-------
meaning of Section 11(f) of the Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation. For purposes of
this Section 8, each person, if any, who controls an Underwriter within the
meaning of the Act or the Exchange Act and each director, officer, employee and
agent of an Underwriter shall have the same rights to contribution as such
Underwriter, and each person, if any, who controls the Company and the
Partnership within the meaning of either the Act or the Exchange Act, each
officer of the Company who shall have signed the Registration Statement and each
director of the Company shall have the same rights to contribution as the
Company and the Partnership, subject in each case to clauses (i) and (ii) in the
immediately preceding sentence of this Section 8.
9. Default by an Underwriter. If any one or more Underwriters shall fail to
purchase and pay for any of the Offered Shares agreed to be purchased by such
Underwriter or Underwriters hereunder and such failure to purchase shall
constitute a default in the performance of its or their obligations under this
Agreement, the remaining Underwriters shall be obligated severally to take up
and pay for (in the respective proportions which the amount of Offered Shares
set forth opposite their names in Schedule I hereto bears to the aggregate
amount of Offered Shares set forth opposite the names of all the remaining
Underwriters) the Offered Shares which the defaulting Underwriter or
Underwriters agreed but failed to purchase; provided, however, that in the event
-------- -------
that the aggregate amount of Offered Shares which the defaulting Underwriter or
21
Underwriters agreed but failed to purchase shall exceed 10% of the aggregate
amount of Offered Shares set forth in Schedule I hereto, the remaining
Underwriters shall have the right to purchase all, but shall not be under any
obligation to purchase any, of the Offered Shares, and if such nondefaulting
Underwriters do not purchase all the Offered Shares, this Agreement will
terminate without liability to any nondefaulting Underwriter or the Company. In
the event of a default by any Underwriter as set forth in this Section 9, the
Closing Date shall be postponed for such period, not exceeding five Business
Days, as the Underwriters shall determine in order that the required changes in
the Registration Statement and the Prospectus or in any other documents or
arrangements may be effected. Nothing contained in this Agreement shall relieve
any defaulting Underwriter of its liability, if any, to the Company and any
nondefaulting Underwriter for damages occasioned by its default hereunder.
10. Termination. This Agreement shall be subject to termination in the absolute
discretion of the Underwriters, by notice given to the Company prior to delivery
of and payment for the Offered Shares, if at any time prior to such time (i)
trading in the Company's Common Shares shall have been suspended by the
Commission or the New York Stock Exchange or trading in securities generally on
the New York Stock Exchange shall have been suspended or limited or minimum
prices shall have been established on such Exchange; (ii) a banking moratorium
shall have been declared either by Federal or New York State authorities; or
(iii) there shall have occurred any outbreak or escalation of hostilities,
declaration by the United States of a national emergency or war, or other
calamity or crisis the effect of which on financial markets is such as to make
it, in the sole judgment of the Underwriters, impractical or inadvisable to
proceed with the offering or delivery of the Offered Shares as contemplated by
the Prospectus (exclusive of any supplement thereto).
If this Agreement is terminated pursuant to any of its provisions, the
Company shall not be under any liability to any Underwriter, and no Underwriter
shall be under any liability to the Company, except that, pursuant to Section 9,
no Underwriter who shall have failed or refused to purchase the Offered Shares
agreed to be purchased by it under this Agreement, without some reason
sufficient hereunder to justify cancellation or termination of its obligations
under this Agreement, shall be relieved of liability to the Company or to the
other Underwriters for damages occasioned by its failure or refusal.
11. Miscellaneous.
(a) The respective agreements, representations, warranties, indemnities
and other statements of the Company and the Partnership or their officers and of
the Underwriters set forth in or made pursuant to this Agreement shall remain in
full force and effect, regardless of any investigation made by or on behalf of
any Underwriter or the Company or any of the officers, directors or controlling
persons referred to in Sections 7 and 8 hereof, and shall survive delivery of
and payment for the Shares. The provisions of Sections 7, 8 and 9 shall survive
the termination or cancellation of this Agreement.
(b) This Agreement will inure to the benefit of and be binding upon the
parties hereto and their respective successors and the officers, directors,
employees, agents and controlling persons referred to in Section 8 hereof, and
no other person will have right or obligation hereunder.
22
(c) All notices and communications hereunder shall be in writing and
mailed or delivered or by telephone or telegraph if subsequently confirmed in
writing,
(i) if to the Underwriters:
c/o First Union Securities, Inc.,
0 Xx. Xxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx Xxxxxx, Director
with a copy to:
Hunton & Xxxxxxxx
Riverfront Plaza, East Tower
000 Xxxx Xxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxx X. Xxxxxx, Esq.
(ii) if to the Company:
Mid-Atlantic Realty Trust
000 Xxxx Xxxxxxx Xxxx, Xxxxx 000
Xxxxxxxxxxx, Xxxxxxxx 00000
Attention: F. Xxxxxxx Xxxxxx, President and Chief Executive
Officer
with a copy to:
Xxxxxx, Feinblatt, Rothman, Hoffberger & Xxxxxxxxx, LLP
000 Xxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attention: Abba Xxxxx Xxxxxxxxx, Esq.
(d) This Agreement shall be governed by and construed in accordance with
the laws of the State of New York applicable to contracts made and to be
performed within the State of New York.
(e) This Agreement may be signed in any number of counterparts, each of
which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument.
(f) The section headings used herein are for convenience only and shall
not affect the construction hereof.
23
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to us the enclosed duplicate hereof, whereupon this
letter and your acceptance shall represent a binding agreement among the Company
and the several Underwriters.
Very truly yours,
Mid-Atlantic Realty Trust
By: /s/ F. Xxxxxxx Xxxxxx
--------------------------------------------
Name: F. Xxxxxxx Xxxxxx
Title: President and Chief Executive Officer
MART Limited Partnership
By: Mid-Atlantic Realty Trust, general partner
By: /s/ F. Xxxxxxx Xxxxxx
---------------------------------------------
Name: F. Xxxxxxx Xxxxxx
Title: President and Chief Executive Officer
The foregoing Agreement is hereby
confirmed and accepted as of the
date specified in Schedule I hereto.
First Union Securities, Inc.
By: /s/ J. Xxxx Xxxxxxxx
------------------------------------
Name: J. Xxxx Xxxxxxxx
Title: Managing Director
For itself and the other
several Underwriters named in
Schedule I to the foregoing
Agreement
SCHEDULE I
March 6, 2002
Number of
Underwriters Offered Shares to be Purchased
------------ ------------------------------
First Union Securities, Inc. 1,000,000
Xxxx Xxxxx Xxxx Xxxxxx, Incorporated 900,000
Xxxxxx, Xxxxx Xxxxx, Incorporated 100,000
----------
Total 2,000,000
EXHIBIT A
---------
Form of Lock-Up Agreement
Public Offering of Common Shares
of Mid-Atlantic Realty Trust
March __, 2002
First Union Securities, Inc.
Xxxx Xxxxx Xxxx Xxxxxx, Incorporated
Xxxxxx Xxxxx Xxxxx Incorporated
c/o First Union Securities, Inc.
0 Xx. Xxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Ladies and Gentlemen:
This letter is being delivered to you in connection with the proposed
Underwriting Agreement (the "Underwriting Agreement"), among Mid-Atlantic Realty
Trust, a statutory Maryland real estate investment trust (the "Company") and
MART Limited Partnership, a Maryland limited partnership, and each of you as
representatives of a group of Underwriters named therein, relating to a public
offering of Common Shares, $0.01 par value, of the Company.
In order to induce you and the other Underwriters to enter into the
Underwriting Agreement, the undersigned will not, without the prior written
consent of First Union Securities, Inc., directly or indirectly, for a period of
90 days after the date of this agreement (the "Lock-Up Period"),
(1) offer, sell, contract to sell, pledge or otherwise dispose of (or enter
into any transaction which is designed to, or might reasonably be expected to,
result in the disposition (whether by actual disposition or effective economic
disposition due to cash settlement or otherwise) by the Company or any affiliate
of the Company or any person in privity with the Company or any affiliate of the
Company), including the filing (or participation in the filing) of a
registration statement with the Securities and Exchange Commission in respect
of, or
(2) establish or increase a put equivalent position or establish, liquidate
or decrease a call equivalent position within the meaning of Section 16 of the
Securities Exchange Act of 1934, as amended, and the rules and regulations of
the Securities and Exchange Commission promulgated thereunder with respect to,
any shares of capital stock of the Company or any securities convertible
into or exercisable or exchangeable for such capital stock, nor will the
undersigned publicly announce an intention to effect any of the foregoing.
If for any reason the Underwriting Agreement shall be terminated prior to
the Closing Date (as defined in the Underwriting Agreement), the agreement set
forth above shall likewise be terminated. The foregoing restrictions shall not
apply to securities disposed of privately through bona fide gifts to family
members, or common shares issued pursuant to, or disposed of in connection with,
the exercise of options previously awarded in the ordinary course of business
under the Company's 1993 Omnibus Share Plan or the Company's 1995 Share Option
Plan, common shares issued under the Company's dividend reinvestment plan or
otherwise approved by First Union Securities, Inc., so long as the recipients
agree to be bound by the same restrictions set forth herein during the Lock-Up
Period.
Yours very truly,
_____________________________________________
Name:________________________________________
Address:_____________________________________
