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EXHIBIT 1
XXXXXXXXXX REALTY INVESTORS
Common Shares and Preferred Shares
Underwriting Agreement
February 19, 1998
Xxxxxxx Xxxxx & Co.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated
Xxxxxxx, Sachs & Co.
Xxxxxx Xxxxxxx & Co. Incorporated
Xxxxx Xxxxxx Inc.
c/o Merrill Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated
World Financial Center
Xxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Ladies and Gentlemen:
From time to time Xxxxxxxxxx Realty Investors, a Texas real estate
investment trust (the "Company"), proposes to enter into one or more Pricing
Agreements (each a "Pricing Agreement") in the form of Annex I hereto, with
such additions and deletions as the parties thereto may determine, and, subject
to the terms and conditions stated herein and therein, to issue and sell to the
firms named in Schedule I to the applicable Pricing Agreement (such firms
constituting the "Underwriters" with respect to such Pricing Agreement and the
securities specified therein) certain of its shares of beneficial interest (the
"Shares") specified in Schedule II to such Pricing Agreement (with respect to
such Pricing Agreement, the "Designated Shares"). The Shares may include the
Company's common shares of beneficial interest, par value $.03 per share (the
"Common Shares"), or preferred shares of beneficial interest, par value $.03
per share (the "Preferred Shares").
The terms and rights of any particular issuance of Designated Shares
shall be as specified in the Pricing Agreement relating thereto and in or
pursuant to the resolutions of the board of trust managers of the Company
identified in such Pricing Agreement.
Particular sales of Designated Shares may be made from time to time
to the Underwriters of such Shares, for whom the firms designated as
representatives of the Underwriters of such Shares in the Pricing Agreement
relating thereto will act as representatives (the "Representatives"). The term
"Representatives" also refers to a single
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firm acting as sole representative of the Underwriters and to an Underwriter or
Underwriters who act without any firm being designated as its or their
representatives. This Underwriting Agreement shall not be construed as an
obligation of the Company to sell any of the Shares or as an obligation of any
of the Underwriters to purchase the Shares. The obligation of the Company to
issue and sell any of the Shares and the obligation of any of the Underwriters
to purchase any of the Shares shall be evidenced by the Pricing Agreement with
respect to the Designated Shares specified therein. Each Pricing Agreement
shall specify the aggregate number of such Designated Shares, the initial
public offering price of such Designated Shares, the purchase price to the
Underwriters of such Designated Shares, the names of the Underwriters of such
Designated Shares, the names of the Representatives of such Underwriters and
the number of such Designated Shares to be purchased by each Underwriter and
shall set forth the date, time and manner of delivery of such Designated Shares
and payment therefor. The Pricing Agreement shall also specify (to the extent
not set forth in the registration statement and prospectus with respect
thereto) the terms of such Designated Shares. A Pricing Agreement shall be in
the form of an executed writing (which may be in counterparts), and may be
evidenced by an exchange of telegraphic communications or any other rapid
transmission device designed to produce a written record of communications
transmitted. The obligations of the Underwriters under this Agreement and each
Pricing Agreement shall be several and not joint.
The Company represents and warrants to, and agrees with, each of the
Underwriters that:
A registration statement on Form S-3 (File No. 333-12179)
in respect of the Securities has been filed with the Securities and
Exchange Commission (the "Commission"); such registration statement
and any post-effective amendment thereto, each in the form heretofore
delivered or to be delivered to the Representatives and, excluding
exhibits to such registration statement, but including all documents
incorporated by reference in the prospectus contained therein, to
the Representatives for each of the other Underwriters have been
declared effective by the Commission in such form; other than a
registration statement, if any, increasing the size of the offering
(a "Rule 462(b) Registration Statement") filed pursuant to Rule
462(b) under the Securities Act of 1933, as amended (the "Act"),
which became effective upon filing, no other document with respect
to such registration statement or document incorporated by reference
therein has heretofore been filed or transmitted for filing with the
Commission (other than prospectuses filed pursuant to Rule 424(b) of
the rules and regulations of the Commission under the Act each in
the form heretofore delivered to the Representatives); and no stop
order suspending the effectiveness of such registration statement,
any post-effective amendment thereto or the Rule 462(b) Registration
Statement, if any, has been issued and no proceeding for that
purpose has been initiated or threatened by the Commission (any
preliminary prospectus included in such registration statement or
filed with the Commission pursuant to Rule 424(a) under the Act, is
hereinafter called a "Preliminary Prospectus"; the various parts of
such registration statement and
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Rule 462(b) Registration Statement, if any, including all exhibits
thereto and the documents incorporated by reference in the
prospectus contained in the registration statement at the time such
part of the registration statement became effective, each as amended
at the time such part of the registration statement became effective
or such part of the Rule 462(b) Registration Statement, if any,
became or hereafter becomes effective, are hereinafter collectively
called the "Registration Statement"; the prospectus relating to the
Shares, in the form in which it has most recently been filed, or
transmitted for filing, with the Commission on or prior to the date
of this Agreement, is hereinafter called the "Prospectus"; any
reference herein to any Preliminary Prospectus or the Prospectus
shall be deemed to refer to and include the documents incorporated
by reference therein pursuant to Item 12 of Form S-3 under the Act,
as of the date of such Preliminary Prospectus or Prospectus, as the
case may be; any reference to any amendment or supplement to any
Preliminary Prospectus or the Prospectus shall be deemed to refer to
and include any documents filed after the date of such Preliminary
Prospectus or Prospectus, as the case may be, under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and
incorporated by reference in such Preliminary Prospectus or
Prospectus, as the case may be; any reference to any amendment to
the Registration Statement shall be deemed to refer to and include
any annual report of the Company filed pursuant to Sections 13(a) or
15(d) of the Exchange Act after the effective date of the
Registration Statement that is incorporated by reference in the
Registration Statement; and any reference to the Prospectus as
amended or supplemented shall be deemed to refer to the Prospectus
as amended or supplemented in relation to the applicable Designated
Shares in the form in which it is filed with the Commission pursuant
to Rule 424(b) under the Act in accordance with Section 5(a) hereof,
including any documents incorporated by reference therein as of the
date of such filing and if the Company elects to rely on Rule 434
under the Act, any reference to the Prospectus shall be deemed to
include, without limitation, the form of prospectus and the
abbreviated term sheet, taken together, provided to the Underwriters
by the Company in reliance on Rule 434 under the Act (the "Rule 434
Prospectus));
The documents incorporated by reference in the Prospectus,
when they became effective or were filed with the Commission, as the
case may be, conformed in all material respects to the requirements
of the Act or the Exchange Act, as applicable, and the rules and
regulations of the Commission thereunder, and none of such documents
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 in light of the circumstances
under which they were made; and any further documents so filed and
incorporated by reference in the Prospectus or any further amendment
or supplement thereto, when such documents become effective or are
filed with the Commission, as the case may be, will conform in all
material respects to the requirements of the Act or the Exchange
Act, as applicable, and the rules and regulations of the Commission
thereunder and will not contain an untrue statement of a material
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fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein not misleading;
provided, however, that this representation and warranty shall not
apply to any statements or omissions made in reliance upon and in
conformity with information furnished in writing to the Company by
an Underwriter of Designated Shares through the Representatives
expressly for use in the Prospectus as amended or supplemented
relating to such Shares;
The Registration Statement and the Prospectus conform, and any
further amendments or supplements to the Registration Statement or
the Prospectus will conform, in all material respects to the
requirements of the Act and the rules and regulations of the
Commission thereunder and do not and will not, as of the applicable
effective date and Time of Delivery (as defined in Section 4 hereof)
as to the Registration Statement and any amendment thereto and as of
its date of issuance and Time of Delivery (as defined in Section 4
hereof) as to the Prospectus and any amendment or supplement
thereto, 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; provided, however, that
this representation and warranty shall not apply to any statements
or omissions made in reliance upon and in conformity with
information furnished in writing to the Company by an Underwriter of
Designated Shares through the Representatives expressly for use in
the Prospectus as amended or supplemented relating to such Shares;
The Company is a real estate investment trust duly formed and
validly existing under the laws of the State of Texas, with full
power and authority to own, lease and operate its properties and to
conduct its business as described in the Prospectus; and the Company
is duly qualified to transact business and is in good standing in
each other jurisdiction in which it owns or leases properties, or
conducts any business, so as to require such qualification, or is
subject to no material liability or disability by reason of the
failure to be so qualified in any such jurisdiction, and holds all
authorizations, approvals, orders, licenses, certificates and
permits from all governmental authorities which are material to the
conduct of its business;
Each subsidiary of the Company has been duly incorporated and
is validly existing as a corporation in good standing under the laws
of the jurisdiction of its incorporation, has full power and
authority to own, lease and operate its properties and to conduct
its business as described in the Prospectus and 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 to so qualify would
not have a material adverse effect or a prospective material adverse
effect, on the condition, financial or otherwise, or the earnings or
business affairs of the Company and its subsidiaries considered as
one enterprise; all of the issued and outstanding capital stock of
each such subsidiary has been duly authorized and
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validly issued, is fully paid and non-assessable and is owned by the
Company, directly or through subsidiaries (except for Xxxxxxxxxx
Properties Trust, of which the Company owns approximately 77% of the
outstanding capital shares), free and clear of any security
interest, mortgage, pledge, lien, encumbrance, claim or equity;
Neither the Company nor any of its subsidiaries has sustained
since the date of the latest audited financial statements included
or incorporated by reference in the Prospectus any material loss or
interference with its business from fire, explosion, flood or other
calamity, whether or not covered by insurance, or from any labor
dispute or court or governmental action, order or decree, otherwise
than as set forth or contemplated in the Prospectus; and, since the
respective dates as of which information is given in the
Registration Statement and the Prospectus, there has not been any
change in the consolidated capital stock of the Company (except for
issuances of Common Shares pursuant to the Company's employee
benefit and stock option plans and the Company's Dividend
Reinvestment and Share Purchase Plan) or any change in the
consolidated debt of the Company or any of its subsidiaries or any
decrease in consolidated net current assets or net assets or any
material adverse change, or any development involving a prospective
material adverse change, in or affecting the general affairs,
management, financial position, shareholders' equity or results of
operations of the Company and its subsidiaries, otherwise than as
set forth or contemplated in the Prospectus, and 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, whether
or not arising in the ordinary course of business;
The Company has an authorized capitalization as set forth in the
Prospectus, and all of the issued shares of capital stock of the
Company have been duly and validly authorized and issued and are
fully paid and non-assessable;
The Shares have been duly and validly authorized, and, when
Designated Shares are issued and delivered pursuant to this
Agreement and the Pricing Agreement with respect to such Designated
Shares, such Designated Shares will be duly and validly issued and
fully paid and non-assessable; and the Shares conform to the
description thereof contained in the Registration Statement, and the
Designated Shares will conform to the description thereof contained
in the Prospectus as amended or supplemented with respect to such
Designated Shares;
The issue and sale of the Shares and the compliance by the
Company with all of the provisions of this Agreement and any Pricing
Agreement, and the consummation of the transactions herein and
therein contemplated will not conflict with or result in a breach or
violation of any of the terms or provisions of, or constitute a
default under, any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which the Company or
any of its subsidiaries is a party or by which the Company or any of
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its subsidiaries is bound or to which any of the property or assets
of the Company or any of its subsidiaries is subject, nor will such
action result in any violation of the provisions of the Declaration
of Trust or By-laws of the Company or any statute or any order, rule
or regulation of any court or governmental agency or body having
jurisdiction over the Company or any of its subsidiaries or any of
their respective properties; and no consent, approval,
authorization, order, registration or qualification of or with any
such court or governmental agency or body is required for the issue
and sale of the Shares or the consummation by the Company of the
transactions contemplated by this Agreement or any Pricing
Agreement, except such as have been, or will have been prior to the
Time of Delivery (as defined in Section 4 hereof), obtained under
the Act and except for the listing of the Designated Shares on the
New York Stock Exchange, Inc. or other stock exchange and such
consents, approvals, authorizations, registrations or qualifications
as may be required under state securities or Blue Sky laws in
connection with the purchase and distribution of the Shares by the
Underwriters;
The statements set forth in the Prospectus under the captions
"Description of Common Shares," "Description of Preferred Shares,"
"Description of Securities Warrants," "Plan of Distribution" and
"Underwriting," insofar as they purport to constitute a summary of
the terms of the Shares, or to describe the provisions of the laws
and documents referred to therein, are accurate, complete and fair;
Neither the Company nor any of its subsidiaries is in violation
of its charter or By-laws or in default in the performance or
observance of any material obligation, agreement, covenant or
condition contained in any indenture, mortgage, deed of trust, loan
agreement, lease or other agreement or instrument to which it is a
party or by which it or its properties may be bound;
Other than as set forth in the Prospectus, there are no legal or
governmental proceedings pending to which the Company or any of its
subsidiaries is a party or of which any property of the Company or
any of its subsidiaries is the subject which, if determined
adversely to the Company or any of its subsidiaries, would
individually or in the aggregate have a material adverse effect on
the current or future consolidated financial position, shareholders'
equity or results of operations of the Company and its subsidiaries;
and, to the best of the Company's knowledge, no such proceedings are
threatened or contemplated by governmental authorities or threatened
by others;
The consolidated financial statements together with related
notes and schedules as set forth or incorporated by reference in the
Registration Statement, present fairly the financial position and
the results of operations of the Company and its subsidiaries at the
indicated dates and for the indicated periods. Except as otherwise
stated in the Registration Statement, such financial statements have
been prepared in accordance with generally accepted accounting
principles, applied on a consistent basis; and the supporting
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schedules included in the Registration Statement present fairly the
information required to be stated therein;
The Company and its subsidiaries have good and marketable
title to all real property and interests in real property owned by
them and good and marketable title to all personal property owned by
them, in each case free and clear of all pledges, liens,
encumbrances, claims, security interests and defects, except as are
described in the Prospectus and except for property owned in the
joint ventures set forth in Annex III hereto or such as do not
materially affect the value of such property and interests in the
aggregate and do not interfere with the use made and proposed to be
made of such property and interests by the Company and its
subsidiaries taken as a whole; in the case of real property and
interests in real property, the Company and its subsidiaries have
obtained satisfactory confirmation (consisting of policies of title
insurance or binders therefor or opinions of counsel based upon the
examination of abstracts) confirming, except as is otherwise
described in the Prospectus, (a) that the Company and its
subsidiaries have the foregoing title to such real property and
interests in real property; provided, however, that in those cases
in which such information is not current, the Company and its
subsidiaries do not have notice of any material claim of any sort
which has been asserted by anyone adverse to the Company's or its
subsidiaries foregoing title to such real property and interests in
real property, and (b) that the instruments securing the
indebtedness of third parties to the Company or its subsidiaries
create valid liens upon the real properties described in such
instruments enjoying the priorities intended, subject only to
exceptions to title which have no materially adverse effect on the
value of such real properties and interests; and any real property
and buildings held under lease by the Company or its subsidiaries or
leased by the Company or its subsidiaries to a third party are held
or leased by them under valid, binding and enforceable leases
conforming to the description thereof set forth in the Prospectus,
with such exceptions as are not material and do not interfere with
the use made and proposed to be made of such property and buildings
by the Company or its subsidiaries or such third party;
The Company and its subsidiaries have filed all federal, state,
local and foreign income tax returns which have been required to be
filed on or before the due date (taking into account all extensions
of time to file) and have paid or provided for all taxes indicated
by said returns and all assessments received by it to the extent
that taxes have become due;
With respect to all tax periods regarding which the Internal
Revenue Service is or will be entitled to assert any claim, the
Company has met the requirements for qualification as a real estate
investment trust under Sections 856 through 860 of the Internal
Revenue Code of 1986, as amended (the "Code), and the Company's
present and contemplated operations, assets and income continue to
meet such requirements;
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The Company is not and, after giving effect to the offering
and sale of the Shares, will not be an "investment company" or an
entity "controlled" by an "investment company", as such terms are
defined in the Investment Company Act of 1940, as amended (the
"Investment Company Act");
Deloitte & Touche LLP, who have audited certain financial
statements of the Company and its subsidiaries filed with the
Commission as part of, or incorporated by reference in, the
Registration Statement and Prospectus are independent public
accountants as required by the Act and the rules and regulations of
the Commission promulgated thereunder; and
Although the Company is aware of the presence of hazardous
substances, hazardous materials, toxic substances or waste materials
("Hazardous Materials") on certain of its properties, nothing has
come to the attention of the Company which, at this time, would lead
the Company to believe that the presence of such Hazardous
Materials, when considered in the aggregate, would materially
adversely affect the financial condition of the Company. In
connection with the construction on or operation and use of the
properties owned or leased by the Company or any of its
subsidiaries, the Company represents that, as of the date of this
Agreement, it has no knowledge of any material failure by the
Company or any of its subsidiaries to comply with all applicable
local, state and federal environmental laws, regulations, ordinances
and administrative and judicial orders relating to the generation,
recycling, reuse, sale, storage, handling, transport and disposal of
any Hazardous Materials.
Upon the execution of the Pricing Agreement applicable to any
Designated Shares and authorization by the Representatives of the release of
such Designated Shares, the several Underwriters propose to offer such
Designated Shares for sale upon the terms and conditions set forth in the
Prospectus as amended or supplemented.
Certificates for the Designated Shares to be purchased by each
Underwriter pursuant to the Pricing Agreement relating thereto, in definitive
form, and in such authorized denominations and registered in such names as the
Representatives may request upon at least twenty-four hours' prior notice to
the Company, shall be delivered by or on behalf of the Company to the
Representatives for the account of such Underwriter, against payment by such
Underwriter or on its behalf of the purchase price therefor by certified or
official bank check or checks, payable to the order of the Company in the funds
specified in such Pricing Agreement, all at the place and time and date
specified in such Pricing Agreement or at such other place and time and date as
the Representatives and the Company may agree upon in writing, such time and
date being herein called the "Time of Delivery" for such Shares.
The Company agrees with each of the Underwriters of any Designated
Shares:
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If the Company does not elect to rely on Rule 434 under the Act,
immediately following execution and delivery of the applicable Pricing
Agreement, to prepare the Prospectus as amended and supplemented in relation to
the applicable Designated Shares in a form approved by the Representatives and
to file such Prospectus pursuant to Rule 424(b) under the Act not later than
the Commission's close of business on the business day following the execution
and delivery of the Pricing Agreement relating to the applicable Designated
Shares or, if applicable, such earlier time as may be required by Rule 424(b),
or if the Company elects to rely on Rule 434 under the Act, immediately
following execution and delivery of the applicable Pricing Agreement, to
prepare an abbreviated term sheet relating to the Designated Shares in a form
approved by the Representatives that complies with the requirements of Rule 434
under the Act and to file such form of Rule 434 Prospectus complying with Rule
434(c)(2) of the Act pursuant to Rule 424(b) under the Act not later than the
Commission's close of business on the business day following the execution and
delivery of the Pricing Agreement relating to the applicable Designated Shares
or, if applicable, such earlier time as may be required by Rule 424(b); to make
no further amendment or any supplement to the Registration Statement or
Prospectus as amended or supplemented after the date of the Pricing Agreement
relating to such Shares and prior to the Time of Delivery for such Shares which
shall be disapproved by the Representatives for such Shares promptly after
reasonable notice thereof; to advise the Representatives promptly of any such
amendment or supplement after such Time of Delivery and furnish the
Representatives with copies thereof; to file promptly all reports and any
definitive proxy or information statements required to be filed by the Company
with the Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the
Exchange Act for so long as the delivery of a prospectus is required in
connection with the offering or sale of such Shares, and during such same
period to advise the Representatives, promptly after it receives notice
thereof, of the time when any amendment to the Registration Statement has been
filed or becomes effective or any supplement to the Prospectus or any amended
Prospectus has been filed with the Commission, of the issuance by the
Commission of any stop order or of any order preventing or suspending the use
of any prospectus relating to the Shares, of the suspension of the
qualification of such Shares for offering or sale in any jurisdiction, of the
initiation or threatening of any proceeding for any such purpose, or of any
request by the Commission for the amending or supplementing of the Registration
Statement or Prospectus or for additional information; and, in the event of the
issuance of any such stop order or of any such order preventing or suspending
the use of any prospectus relating to the Shares or suspending any such
qualification, to promptly use every reasonable effort to obtain the withdrawal
of such order;
Promptly from time to time to take such action as the
Representatives may reasonably request to qualify such Shares for offering and
sale under the securities laws of such jurisdictions as the Representatives may
request and to comply with such laws so as to permit the continuance of sales
and dealings therein in such
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jurisdictions for as long as may be necessary to complete the distribution of
such Shares, provided that in connection therewith the Company shall not be
required to qualify as a foreign corporation or to file a general consent to
service of process in any jurisdiction;
Prior to 10:00 a.m. New York City time, on the New York business day
next succeeding the date of the applicable Pricing Agreement and from time to
time to furnish the Underwriters with copies of the Prospectus in New York City
as amended or supplemented in such quantities as the Representatives may
reasonably request, and, if the delivery of a prospectus is required at any
time in connection with the offering or sale of the Shares and if at such time
any event shall have occurred as a result of which the Prospectus as then
amended or supplemented would include an untrue statement of a material fact or
omit to state any material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made when such
Prospectus is delivered, not misleading, or, if for any other reason it shall
be necessary during such same period to amend or supplement the Prospectus or
to file under the Exchange Act any document incorporated by reference in the
Prospectus in order to comply with the Act or the Exchange Act, to notify the
Representatives and upon their request to file such document and to prepare and
furnish without charge to each Underwriter and to any dealer in securities as
many copies as the Representatives may from time to time reasonably request of
an amended Prospectus or a supplement to the Prospectus which will correct such
statement or omission or effect such compliance;
To make generally available to its securityholders as soon as
practicable, but in any event not later than eighteen months after the
effective date of the Registration Statement (as defined in Rule 158(c) under
the Act), an earnings statement of the Company and its subsidiaries (which need
not be audited) complying with Section 11(a) of the Act and the rules and
regulations of the Commission thereunder (including, at the option of the
Company, Rule 158);
During the period beginning from the date of the Pricing Agreement
for such Designated Shares and continuing to and including the later of (i) the
termination of trading restrictions for such Designated Shares, as notified to
the Company by the Representatives and (ii) the Time of Delivery for such
Designated Shares, not to offer, sell, contract to sell or otherwise issue any
shares of beneficial interest of the Company which are substantially similar to
such Designated Shares, without the prior written consent of the
Representatives or enter into any swap or any other agreement or any
transaction that transfers, in whole or in part, directly or indirectly, the
economic consequence of ownership of shares of beneficial interest of the
Company which are substantially similar to such Designated Shares, whether any
such swap or transaction described above is to be settled by delivery of shares
of beneficial
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interest of the Company which are substantially similar to such
Designated Shares, in cash or otherwise;
To use the net proceeds received by it from the sale of the
Shares in the manner specified in the Prospectus under the caption
"Use of Proceeds"; and
To elect to qualify as a "real estate investment trust" under
the Code, and to use its best efforts to continue to meet the
requirements to qualify as a "real estate investment trust".
The Company covenants and agrees with the several Underwriters
that the Company will pay or cause to be paid the following: (i) the fees,
disbursements and expenses of the Company's counsel and accountants in
connection with the registration of the Shares under the Act and all other
expenses in connection with the preparation, printing and filing of the
Registration Statement, any Preliminary Prospectus and the Prospectus and
amendments and supplements thereto (including each abbreviated term sheet
delivered by the Company pursuant to Rule 434 under the Act) and the mailing
and delivering of copies thereof to the Underwriters and dealers; (ii) the cost
of printing or producing any Agreement among Underwriters, this Agreement, any
Pricing Agreement, any blue sky and legal investment surveys and any other
documents in connection with the offering, purchase, sale and delivery of the
Shares; (iii) all expenses in connection with the qualification of the Shares
for offering and sale under state securities laws as provided in Section 5(b)
hereof, including the fees and disbursements of counsel for the Underwriters in
connection with such qualification and in connection with the blue sky and
legal investment surveys; (iv) any fees charged by securities rating services
for rating the Shares; (v) any filing fees incident to any required review by
the National Association of Securities Dealers, Inc. of the terms of the sale
of the Shares; (vi) the cost of preparing certificates for the Shares (vii) the
fees and expenses of any transfer agent or registrar or dividend disbursing
agent; and (viii) all other costs and expenses incident to the performance of
its obligations hereunder which are not otherwise specifically provided for in
this Section. It is understood, however, that, except as provided in this
Section and Sections 8 and 11 hereof, the Underwriters will pay all of their
own costs and expenses, including the fees of their counsel, transfer taxes on
resale of any of the Shares by them, and any advertising expenses connected
with any offers they may make.
The obligations of the Underwriters of any Designated Shares under
the Pricing Agreement relating to such Designated Shares shall be subject, in
the discretion of the Representatives, to the condition that all
representations and warranties and other statements of the Company in or
incorporated by reference in the Pricing Agreement relating to such Designated
Shares are, at and as of the Time of Delivery for such Designated Shares, true
and correct, to the condition that the Company shall have performed all of its
obligations hereunder theretofore to be performed, and the following additional
conditions:
The Prospectus as amended or supplemented in relation to the
applicable Designated Shares shall have been filed with the
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Commission pursuant to Rule 424(b) within the applicable time period prescribed
for such filing by the rules and regulations under the Act and in accordance
with Section 5(a) hereof; no stop order suspending the effectiveness of the
Registration Statement or any part thereof shall have been issued and no
proceeding for that purpose shall have been initiated or threatened by the
Commission; and all requests for additional information on the part of the
Commission shall have been complied with to the Representatives' reasonable
satisfaction;
Xxxxx & Xxxx LLP, counsel for the Underwriters, shall have
furnished to the Representatives such opinion or opinions, dated the Time of
Delivery for such Designated Shares, with respect to the matters covered in
paragraphs (i), (ii), (v) (as to the Designated Shares only), (vii), (viii),
(xi) and (xv) of subsection (c) below as well as such other related matters as
the Representatives may reasonably request, and such counsel shall have
received such papers and information as they may reasonably request to enable
them to pass upon such matters;
Liddell, Sapp, Zivley, Hill & XxXxxx, L.L.P., counsel for the
Company, shall have furnished to the Representatives their written opinion,
dated the Time of Delivery for such Designated Shares, in form and substance
satisfactory to the Representatives, to the effect that:
The Company is a real estate investment trust duly formed and
validly existing under the laws of the State of Texas and is
entitled to the benefits of the Texas Real Estate Investment Trust
Act.
The Company has the power and authority (corporate and other) to
own its properties and to conduct its business as described in the
Prospectus as amended or supplemented.
The Company is duly qualified to transact business and is in
good standing in each jurisdiction in which it owns or leases
properties, or conducts any business, so as to require such
qualification or is subject to no material liability, or disability
by reason of the failure to be so qualified in any such
jurisdiction.
Each subsidiary of the Company has been duly incorporated (or,
with respect to Xxxxxxxxxx Properties Trust, has been formed as a
real estate investment trust) and is validly existing as a
corporation in good standing under the laws of the jurisdiction of
its incorporation, has power and authority (corporate and other) to
own, lease and operate its properties and to conduct its business as
described in the Prospectus and, to the best of their knowledge and
information, is duly qualified as a foreign corporation or trust 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
13
conduct of business, except where the failure to so qualify would
not have a material adverse effect or a prospective material adverse
effect on the condition, financial or otherwise, or the earnings or
business affairs of the Company and its subsidiaries considered as
one enterprise; all of the issued and outstanding capital stock of
each such subsidiary has been duly authorized and validly issued, is
fully paid and non-assessable and is owned by the Company, directly
or through subsidiaries (except for Xxxxxxxxxx Properties Trust, of
which the Company owns approximately 77% of the outstanding capital
shares), free and clear of any security interest, mortgage, pledge,
lien, encumbrance, claim or equity.
The Company has an authorized capitalization as set forth in the
Prospectus as amended or supplemented and all of the issued shares
of capital stock of the Company (including the Designated Shares
being delivered at such Time of Delivery) have been duly and validly
authorized and issued and are fully paid and non-assessable.
To the best of such counsel's knowledge and other than as set
forth in the Prospectus, there are no legal or governmental
proceedings pending to which the Company or any of its subsidiaries
is a party or of which any property of the Company or any its
subsidiaries is the subject other than as set forth in the
Prospectus, which, if determined adversely to the Company or any of
its subsidiaries, would individually or in the aggregate have a
material adverse effect on the current or future consolidated
financial position, shareholders' equity or results of operations of
the Company and its subsidiaries; and, to the best of such counsel's
knowledge, no such proceedings are threatened or contemplated by
governmental authorities or threatened by others.
This Agreement and the Pricing Agreement with respect to the
Designated Shares have been duly authorized, executed and delivered
by the Company.
The Designated Shares conform to the description thereof in
the Prospectus as amended or supplemented.
The issue and sale of the Shares and the compliance by the
Company with all of the provisions of this Agreement and any Pricing
Agreement, and the consummation of the transactions herein and
therein contemplated will not conflict with or result in a breach or
violation of any of the terms or provisions of, or constitute a
default under, any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which the Company or
any of its subsidiaries is a party or by which the Company or any of
its subsidiaries is bound or to which any of the property or assets
of the Company or any of its subsidiaries is subject, nor will such
action result in any violation of the provisions of the Declaration
of Trust or By-laws of the Company or any statute or any
14
order, rule or regulation of any court or governmental agency or
body having jurisdiction over the Company or any of its subsidiaries
or any of their respective properties.
No consent, approval, authorization, order, registration or
qualification of or with any such court or governmental agency or
body is required for the issue and sale of the Designated Shares or
the consummation by the Company of the transactions contemplated by
this Agreement or the Pricing Agreement, except such as have been,
or will have been prior to the Time of Delivery, obtained under the
Act and such consents, approvals, authorizations, orders,
registrations or qualifications as may be required under state
securities or Blue Sky laws in connection with the purchase and
distribution of the Designated Shares by the Underwriters.
The information set forth in the Prospectus, under the
captions "Description of Common Shares," "Description of Preferred
Shares," "Plan of Distribution" and "Underwriting," to the extent
such information constitutes matters of law, summaries of legal
matters, documents or proceedings, or legal conclusions, has been
reviewed by them and is correct.
Based upon review of such documents, certificates and
records as counsel has deemed necessary to express its opinion, upon
its discussions with management of the Company, independent
accountants for the Company and with certain shareholders of the
Company and based upon the facts set forth in the Registration
Statement, certain assumptions and certain representations made to
it by the Company's management and by certain of its shareholders,
counsel is of the view that, as of the date of its opinion the
Company's form of organization and its share ownership is such as to
enable the Company to meet the requirements of the Code for
qualifications as a real estate investment trust thereunder and that
its income, assets and method of operations have allowed it to
qualify as a real estate investment trust for its taxable year ended
December 31, 1985 and all years thereafter, and its currently
contemplated future assets, income and method of operations should
put it in a position to qualify to be treated as a real estate
investment trust for the calendar year 1998.
The Company is not and, after giving effect to the offering
and sale of the Designated Shares, will not be an "investment
company" or an entity "controlled" by an "investment company", as
such terms are defined in the Investment Company Act;
The documents incorporated by reference in the Prospectus
as amended or supplemented (other than the financial statements and
related schedules therein, as to which such counsel need express no
opinion), when they became effective or were filed with the
Commission, as the case may be, complied as to form in all material
respects with the
15
requirements of the Act or the Exchange Act, as applicable, and the
rules and regulations of the Commission thereunder; and they have no
reason to believe that any of such documents, when they became
effective or were so filed, as the case may be, contained, in the
case of a registration statement which became effective under the
Act, 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, and, in the case of other
documents which were filed under the Act or the Exchange Act with
the Commission, an 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 when such documents were so filed, not misleading.
The Registration Statement and the Prospectus as amended or
supplemented and any further amendments and supplements thereto
made by the Company prior to the Time of Delivery for the Designated
Shares (other than the financial statements and related schedules
therein, as to which such counsel need express no opinion) comply as
to form in all material respects with the requirements of the Act
and the rules and regulations thereunder; although they do not
assume any responsibility for the accuracy, completeness or fairness
of the statements contained in the Registration Statement or the
Prospectus, except for those referred to in the opinion in
subsection (xi) of this Section 7(c), they have no reason to believe
that, as of its effective date, the Registration Statement or any
further amendment thereto (other than the financial statements and
related schedules therein, as to which such counsel need express no
opinion) 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
as amended or supplemented (other than the financial statements and
related schedules therein, as to which such counsel need express no
opinion), at the time the Prospectus was issued, at the time any
such amended or supplemented prospectus was issued or at the Time of
Delivery, contained or contains an untrue statement of a material
fact or omitted or omits to state a material fact necessary to make
the statements therein, in the light of the circumstances under
which they were made, not misleading.
On the date of the Pricing Agreement for such Designated Shares and
at the Time of Delivery for such Designated Shares, the independent public
accountants of the Company who have certified the financial statements of the
Company and its subsidiaries included or incorporated by reference in the
Registration Statement shall have furnished to the Representatives a letter,
dated the effective date of the Registration Statement or the date of the most
recent report filed with the Commission containing financial statements and
incorporated by reference in the Registration Statement, if the date of such
report is later than such effective date, and a letter dated
16
such Time of Delivery, respectively, to the effect set forth in Annex II
hereto, and with respect to such letter dated such Time of Delivery, as to such
other matters as the Representatives may reasonably request and in form and
substance satisfactory to the Representatives;
(i) Neither the Company nor any of its subsidiaries shall have
sustained since the date of the latest audited financial statements included or
incorporated by reference in the Prospectus as amended prior to the date of the
Pricing Agreement relating to the Designated Shares any loss or interference
with its business from fire, explosion, flood or other calamity, or from any
labor dispute or court or governmental action, order or decree, or 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, otherwise than as set forth or contemplated in the Prospectus as
amended prior to the date of the Pricing Agreement relating to the Designated
Shares, and (ii) since the respective dates as of which information is given in
the Prospectus as amended prior to the date of the Pricing Agreement relating
to the Designated Shares there shall not have been any change in the capital
stock of the Company or any change in the consolidated long-term debt of the
Company and its subsidiaries or any decrease in consolidated net current assets
or net assets or any change, or any development involving a prospective change,
in or affecting the general affairs, management, financial position,
shareholders' equity or results of operations of the Company and its
subsidiaries, otherwise than as set forth or contemplated in the Prospectus as
amended prior to the date of the Pricing Agreement relating to the Designated
Shares, the effect of which, in any such case described in Clause (i) or (ii),
is in the judgment of the Representatives so material and adverse as to make it
impracticable or inadvisable to proceed with the public offering or the
delivery of the Designated Shares on the terms and in the manner contemplated
in the Prospectus as first amended or supplemented relating to the Designated
Shares;
On or after the date of the Pricing Agreement relating to the
Designated Shares (i) no downgrading shall have occurred in the rating accorded
the Company's debt securities or preferred shares by any "nationally recognized
statistical rating organization", as that term is defined by the Commission for
purposes of Rule 436(g)(2) under the Act and (ii) no such organization shall
have publicly announced that it has under surveillance or review, with possible
negative implications, its rating of any of the Company's debt securities or
preferred shares;
On or after the date of the Pricing Agreement relating to the
Designated Shares there shall not have occurred any of the following: (i) a
suspension or material limitation in trading in securities generally on the New
York Stock Exchange; (ii) a suspension or material limitation in trading in the
Company's securities on the New York Stock Exchange; (iii) a general
17
moratorium on commercial banking activities in New York or Texas declared by
either Federal, Texas or New York authorities; or (iv) the outbreak or
escalation of hostilities involving the United States or the declaration by the
United States of a national emergency or war, if the effect of any such event
specified in this Clause (iv) in the judgment of the Representatives makes it
impracticable or inadvisable to proceed with the public offering or the
delivery of the Designated Shares on the terms and in the manner contemplated
in the Prospectus as first amended or supplemented relating to the Designated
Shares; and
The Company shall have furnished or caused to be furnished to the
Representatives at the Time of Delivery for the Designated Shares a certificate
or certificates of officers of the Company satisfactory to the Representatives
as to the accuracy of the representations and warranties of the Company herein
at and as of such Time of Delivery, as to the performance by the Company of all
of its obligations hereunder to be performed at or prior to such Time of
Delivery, as to the matters set forth in subsections (a) and (e) of this
Section and as to such other matters as the Representatives may reasonably
request.
The Company will indemnify and hold harmless each Underwriter against
any losses, claims, damages or liabilities, joint or several, to which such
Underwriter may become subject, under the Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise
out of or are based upon an untrue statement or alleged untrue statement of a
material fact contained in any Preliminary Prospectus, any preliminary
prospectus supplement, the Registration Statement, the Prospectus as amended or
supplemented and any other prospectus relating to the Shares, or any amendment
or supplement thereto (including the information deemed to be a part of the
Registration Statement pursuant to Rule 434 under the Act, if applicable), or
arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, 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 any such settlement is effected with the
written consent of the Company, and will reimburse each Underwriter for any
legal or other expenses reasonably incurred by such Underwriter in connection
with investigating or defending any such action or claim as such expenses are
incurred; provided, however, that the Company shall not be liable in any such
case to the extent that any such loss, claim, damage or liability arises out of
or is based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in any Preliminary Prospectus, any preliminary prospectus
supplement, the Registration Statement, the Prospectus as amended or
supplemented and any other prospectus relating to the
18
Shares, or any such amendment or supplement in reliance upon and in conformity
with written information furnished to the Company by any Underwriter of
Designated Shares through the Representatives expressly for use in the
Prospectus as amended or supplemented relating to such Shares.
Each Underwriter will indemnify and hold harmless the Company
against any losses, claims, damages or liabilities to which the Company may
become subject, under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are
based upon an untrue statement or alleged untrue statement of a material fact
contained in any Preliminary Prospectus, any preliminary prospectus supplement,
the Registration Statement, the Prospectus as amended or supplemented and any
other prospectus relating to the Shares, or any amendment or supplement thereto
(including the information deemed to be a part of the Registration Statement
pursuant to Rule 434 under the Act, if applicable), or arise out of or are
based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, in each case to the extent, but only to the extent, that such
untrue statement or alleged untrue statement or omission or alleged omission
was made in any Preliminary Prospectus, any preliminary prospectus supplement,
the Registration Statement, the Prospectus as amended or supplemented and any
other prospectus relating to the Shares, or any such amendment or supplement in
reliance upon and in conformity with written information furnished to the
Company by such Underwriter through the Representatives expressly for use
therein; and will reimburse the Company for any legal or other expenses
reasonably incurred by the Company in connection with investigating or
defending any such action or claim as such expenses are incurred.
Promptly after receipt by an indemnified party under subsection (a)
or (b) above of notice of the commencement of any action, such indemnified
party shall, if a claim in respect thereof is to be made against the
indemnifying party under such subsection, notify the indemnifying party in
writing of the commencement thereof; but the omission so to notify the
indemnifying party shall not relieve it from any liability which it may have to
any indemnified party otherwise than under such subsection. In case any such
action 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 therein and, to the extent that it shall wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel satisfactory to such indemnified party (who shall not,
except with the consent of the indemnified party, be counsel to the
indemnifying party), and, after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party shall not be liable to such indemnified party under such
subsection for any legal expenses of other counsel (unless separate counsel is
required due to conflict of interest) or any other expenses, in each case
subsequently
19
incurred by such indemnified party, in connection with the defense thereof
other than reasonable costs of investigation.
If the indemnification provided for in this Section 8 is unavailable
to or insufficient to hold harmless an indemnified party under subsection (a)
or (b) above in respect of any losses, claims, damages or liabilities (or
actions in respect thereof) referred to therein, then each indemnifying party
shall contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages or liabilities (or actions in respect
thereof) in such proportion as is appropriate to reflect the relative benefits
received by the Company on the one hand and the Underwriters of the Designated
Shares on the other from the offering of the Designated Shares to which such
loss, claim, damage or liability (or action in respect thereof) relates. If,
however, the allocation provided by the immediately preceding sentence is not
permitted by applicable law or if the indemnified party failed to give the
notice required under subsection (c) above, then each indemnifying party shall
contribute to such amount paid or payable by such indemnified party in such
proportion as is appropriate to reflect not only such relative benefits but
also the relative fault of the Company on the one hand and the Underwriters of
the Designated Shares on the other in connection with the statements or
omissions which resulted in such losses, claims, damages or liabilities (or
actions in respect thereof), as well as any other relevant equitable
considerations. The relative benefits received by the Company on the one hand
and such Underwriters on the other shall be deemed to be in the same proportion
as the total net proceeds from such offering (before deducting expenses)
received by the Company bear to the total underwriting discounts and
commissions received by such Underwriters. The relative fault shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to
state a material fact relates to information supplied by the Company on the one
hand or such Underwriters on the other 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 subsection (d) 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
subsection (d). The amount paid or payable by an indemnified party as a result
of the losses, claims, damages or liabilities (or actions in respect thereof)
referred to above in this subsection (d) shall be deemed to include any legal
or other expenses reasonably incurred by such indemnified party in connection
with investigating or defending any such action or claim. Notwithstanding the
provisions of this subsection (d), no Underwriter shall be required to
contribute any amount in excess of the amount by which the total price at which
the applicable Designated Shares 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
20
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 Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The obligations of the
Underwriters of Designated Shares in this subsection (d) to contribute are
several in proportion to their respective underwriting obligations with respect
to such Shares and not joint.
The obligations of the Company under this Section 8 shall be in
addition to any liability which the Company may otherwise have and shall
extend, upon the same terms and conditions, to each person, if any, who
controls any Underwriter within the meaning of the Act; and the obligations of
the Underwriters under this Section 8 shall be in addition to any liability
which the respective Underwriters may otherwise have and shall extend, upon the
same terms and conditions, to each officer and trust manager of the Company and
to each person, if any, who controls the Company within the meaning of the Act.
If any Underwriter shall default in its obligation to purchase the
Designated Shares which it has agreed to purchase under the Pricing Agreement
relating to such Designated Shares, the Representatives may in their discretion
arrange for themselves or another party or other parties to purchase such
Designated Shares on the terms contained herein. If within thirty-six hours
after such default by any Underwriter the Representatives do not arrange for
the purchase of such Designated Shares, then the Company shall be entitled to a
further period of thirty-six hours within which to procure another party or
other parties satisfactory to the Representatives to purchase such Designated
Shares on such terms. In the event that, within the respective prescribed
period, the Representatives notify the Company that they have so arranged for
the purchase of such Designated Shares, or the Company notifies the
Representatives that it has so arranged for the purchase of such Designated
Shares, the Representatives or the Company shall have the right to postpone the
Time of Delivery for such Designated Shares for a period of not more than seven
days, in order to effect whatever changes may thereby be made necessary in the
Registration Statement or the Prospectus as amended or supplemented, or in any
other documents or arrangements, and the Company agrees to file promptly any
amendments or supplements to the Registration Statement or the Prospectus which
in the opinion of the Representatives may thereby be made necessary. The term
"Underwriter" as used in this Agreement shall include any person substituted
under this Section with like effect as if such person had originally been a
party to the Pricing Agreement with respect to such Designated Shares.
If, after giving effect to any arrangements for the purchase of the
Designated Shares of a defaulting Underwriter or Underwriters by the
Representatives and the Company as provided in subsection (a) above, the
aggregate number of such Designated Shares which remains unpurchased does not
exceed one-tenth of the aggregate number of the Designated Shares, then the
Company shall have the right to require
21
each non-defaulting Underwriter to purchase the number of Designated
Shares which such Underwriter agreed to purchase under the Pricing
Agreement relating to such Designated Shares and, in addition, to
require each non-defaulting Underwriter to purchase its pro rata
share (based on the number of Designated Shares which such
Underwriter agreed to purchase under such Pricing Agreement) of the
Designated Shares of such defaulting Underwriter or Underwriters for
which such arrangements have not been made; but nothing herein shall
relieve a defaulting Underwriter from liability for its default.
If, after giving effect to any arrangements for the purchase
of the Designated Shares of a defaulting Underwriter or Underwriters
by the Representatives and the Company as provided in subsection (a)
above, the aggregate number of Designated Shares which remains
unpurchased exceeds one-tenth of the aggregate number of the
Designated Shares, as referred to in subsection (b) above, or if the
Company shall not exercise the right described in subsection (b)
above to require non-defaulting Underwriters to purchase Designated
Shares of a defaulting Underwriter or Underwriters, then the Pricing
Agreement relating to such Designated Shares shall thereupon
terminate, without liability on the part of any non-defaulting
Underwriter or the Company, except for the expenses to be borne by
the Company and the Underwriters as provided in Section 6 hereof and
the indemnity and contribution agreements in Section 8 hereof; but
nothing herein shall relieve a defaulting Underwriter from liability
for its default.
The respective indemnities, agreements, representations, warranties
and other statements of the Company and the several Underwriters, as set forth
in this Agreement or made by or on behalf of them, respectively, pursuant to
this Agreement, shall remain in full force and effect, regardless of any
investigation (or any statement as to the results thereof) made by or on behalf
of any Underwriter or any controlling person of any Underwriter, or the
Company, or any officer or trust manager or controlling person of the Company,
and shall survive delivery of and payment for the Shares.
If any Pricing Agreement shall be terminated pursuant to Section 9
hereof, the Company shall not then be under any liability to any Underwriter
with respect to the Designated Shares covered by such Pricing Agreement except
as provided in Section 6 and Section 8 hereof. If this Agreement shall be
terminated as a result of any of the conditions set forth in Section 7 hereof
(other than Section 7(g)(i), (iii) or (iv)) not being satisfied, the Company
will reimburse the Underwriters through the Representatives for all
out-of-pocket expenses approved in writing by the Representatives, including
fees and disbursements of counsel, reasonably incurred by the Underwriters in
making preparations for the purchase, sale and delivery of such Designated
Shares, but the Company shall then be under no further liability to any
Underwriter with respect to such Designated Shares except as provided in
Sections 6 and 8 hereof.
In all dealings hereunder, the Representatives of the Underwriters
of Designated Shares shall act on behalf of each of such Underwriters, and the
parties hereto shall be entitled to act and rely upon any statement,
22
request, notice or agreement on behalf of any Underwriter made or given by such
Representatives jointly or by such of the Representatives, if any, as may be
designated for such purpose in the Pricing Agreement.
All statements, requests, notices and agreements hereunder shall be in
writing, and if to the Underwriters shall be delivered or sent by mail, telex
or facsimile transmission to the address of the Representatives as set forth in
the Pricing Agreement; and if to the Company shall be delivered or sent by
mail, telex or facsimile transmission to the address of the Company set forth
in the Registration Statement: Attention: Secretary; provided, however, that
any notice to an Underwriter pursuant to Section 8(c) hereof shall be delivered
or sent by mail, telex or facsimile transmission to such Underwriter at its
address set forth in its Underwriters' Questionnaire, or telex constituting
such Questionnaire, which address will be supplied to the Company by the
Representatives upon request. Any such statements, requests, notices or
agreements shall take effect upon receipt thereof.
This Agreement and each Pricing Agreement shall be binding upon, and
inure solely to the benefit of, the Underwriters, the Company and, to the
extent provided in Sections 8 and 10 hereof, the officers and trust managers of
the Company and each person who controls the Company or any Underwriter, and
their respective heirs, executors, administrators, successors and assigns, and
no other person shall acquire or have any right under or by virtue of this
Agreement or any such Pricing, Agreement. No purchaser of any of the Shares
from any Underwriter shall be deemed a successor or assign by reason merely of
such purchase.
Time shall be of the essence of each Pricing Agreement. As used
herein, "business day" shall mean any day when the Commission's office in
Washington, D.C. is open for business.
THIS AGREEMENT AND EACH PRICING AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
This Agreement and each Pricing Agreement may be executed by any one
or more of the parties hereto and thereto in any number of counterparts, each
of which shall be deemed to be an original, but all such respective
counterparts shall together constitute one and the same instrument.
If the foregoing is in accordance with your understanding, please sign
and return to us four counterparts hereof.
Very truly yours,
XXXXXXXXXX REALTY INVESTORS
By:______________________________
Name:
Title:
23
Accepted as of the date hereof:
XXXXXXX LYNCH, PIERCE, XXXXXX & XXXXX
INCORPORATED
XXXXXXX, SACHS & CO.
XXXXXX XXXXXXX & CO. INCORPORATED
XXXXX XXXXXX INC.
BY: XXXXXXX LYNCH, PIERCE, XXXXXX & XXXXX
INCORPORATED
By: ________________________
Authorized Signatory
ANNEX I
Pricing Agreement
-----------------
[Name(s) of Representative(s)]
As Representatives of the several
Underwriters named in Schedule I hereto,
[Name and address of Representative]
_________________, 199_
Dear Sirs:
Xxxxxxxxxx Realty Investors, a Texas real estate investment trust (the
"Company"), proposes, subject to the terms and conditions stated herein and in
the Underwriting Agreement, dated _______________ __, 199_ (the "Underwriting
Agreement"), between the Company on the one hand and [names of Representatives
named therein] on the other hand, to issue and sell to the Underwriters named
in Schedule I hereto (the "Underwriters") the Shares specified in Schedule II
hereto (the "Designated Shares"). Each of the provisions of the Underwriting
Agreement is incorporated herein by reference in its entirety, and shall be
deemed to be a part of
24
this Agreement to the same extent as if such provisions had been set forth in
full herein; and each of the representations and warranties set forth therein
shall be deemed to have been made at and as of the date of this Pricing
Agreement, except that each representation and warranty which refers to the
Prospectus in Section 2 of the Underwriting Agreement shall be deemed to be a
representation or warranty as of the date of the Underwriting Agreement in
relation to the Prospectus (as therein defined), and also a representation and
warranty as of the date of this Pricing Agreement in relation to the Prospectus
as amended or supplemented relating to the Designated Shares which are the
subject of this Pricing Agreement. Each reference to the Representatives
herein and in the provisions of the Underwriting Agreement so incorporated by
reference shall be deemed to refer to you. Unless otherwise defined herein,
terms defined in the Underwriting Agreement are used herein as therein defined.
The Representatives designated to act on behalf of the Representatives and on
behalf of each of the Underwriters of the Designated Shares pursuant to Section
12 of the Underwriting Agreement and the address of the Representatives
referred to in such Section 12 are set forth at the end of Schedule II hereto.
An amendment to the Registration Statement, or a supplement to the
Prospectus, as the case may be, relating to the Designated Shares, in the form
heretofore delivered to you is now proposed to be filed with the Commission.
Subject to the terms and conditions set forth herein and in the
Underwriting Agreement incorporated herein by reference, the Company agrees to
issue and sell to each of the Underwriters, and each of the Underwriters
agrees, severally and not jointly, to purchase from the Company, at the time
and place and at the purchase price to the Underwriters set forth in Schedule
II hereto, the number of Designated Shares set forth opposite the name of such
Underwriter in Schedule I hereto.
If the foregoing is in accordance with your understanding, please sign
and return to us ____ counterparts hereof, and upon acceptance hereof by you,
on behalf of each of the Underwriters, this letter and such acceptance hereof,
including the provisions of the Underwriting Agreement incorporated herein by
reference, shall constitute a binding agreement between each of the
Underwriters and the Company. It is understood that your acceptance of this
letter on behalf of each of the Underwriters is or will be pursuant to the
authority set forth in a form of Agreement among Underwriters, the form of
which shall be submitted to the Company for examination upon request, but
without warranty on the part of the Representatives as to the authority of the
signers thereof.
Very truly yours,
XXXXXXXXXX REALTY INVESTORS
By:______________________________
Name:
Title:
25
Accepted as of the date hereof:
[Name of Representatives]
By_______________________
On behalf of each of the Underwriters
26
SCHEDULE I
Number of
Designated Shares
Underwriter to be Purchased
----------- -----------------
Xxxxxxx Xxxxx, Xxxxxx Xxxxxx & Xxxxx Incorporated $ 750,000
Xxxxxxx, Sachs & Co. 750,000
Xxxxxx Xxxxxxx & Co. Incorporate 750,000
Xxxxx Xxxxxx Inc. 750,000
----------
Total $3,000,000
----------
Total -----------
===========
SCHEDULE II
TITLE OF DESIGNATED SHARES:
[DATE OF BOARD RESOLUTION ESTABLISHING DESIGNATED SHARES:]
NUMBER OF DESIGNATED SHARES:
INITIAL OFFERING PRICE TO PUBLIC:
[$ ___ per share] [Formula]
27
PURCHASE PRICE BY UNDERWRITERS:
[$ ___ per share] [Formula]
[COMMISSION PAYABLE TO UNDERWRITERS:
$ ___ per share]
SPECIFIED FUNDS FOR PAYMENT OF PURCHASE PRICE:
[New York] Clearing House funds
DIVIDEND RATE:
[ % per annum]
DIVIDEND PAYMENT DATES:
[months and dates]
DIVIDEND RIGHTS:
[Non-] cumulative, [deferred]
VOTING RIGHTS:
LIQUIDATION RIGHTS:
PREEMPTIVE AND CONVERSION RIGHTS:
REDEMPTION PROVISIONS:
[No provisions for redemption]
[The Designated Shares may be redeemed, [otherwise than through the
sinking fund,] in whole or in part at the option of the Company, [on or
after......., at the following redemption prices:
Redemption
Year
Price
------------
and thereafter at $.... per share, together in each case with accrued
dividends to the redemption date.]
[on any dividend payment date falling in or after , ,
at the election of the Company, at a redemption price equal to the
stated amount thereof, plus accrued dividends to the date of
redemption.]
[Other possible redemption provisions, such as mandatory redemption upon
occurrence of certain events or redemption for changes in tax law]
28
SINKING FUND PROVISIONS:
[None]
[The Designated Shares are entitled to the benefit of a sinking
fund to retire Designated Shares on in each of
the years through at 100% of their stated amount
plus accrued dividends] [, together with [cumulative]
[noncumulative] redemptions at the option of the Company to
retire an additional Designated Shares in the years
through at 100% of their stated amount plus accrued dividends].
TIME OF DELIVERY:
CLOSING LOCATION FOR DELIVERY OF SHARES:
NAMES AND ADDRESSES OF REPRESENTATIVES:
Designated Representatives:
Address for Notices, etc.:
[OTHER TERMS]*:
___________
*A description of particular tax, accounting or other unusual features (such as
the addition of event risk provisions) of the Designated Shares should be set
forth, or referenced to an attached and accompanying description, if necessary
to ensure agreement as to the terms of the Shares to be purchased and sold.
Such a description might appropriately be in the form in which such features
will be described in the Prospectus Supplement for the offering.
ANNEX II
Pursuant to Section 7(d) of the Underwriting Agreement, the accountants
shall furnish letters to the Underwriters to the effect that:
(i) They are independent certified public accountants with respect
to the Company and its subsidiaries within the meaning of the Act and the
applicable published rules and regulations thereunder;
(ii) In their opinion, the financial statements and any
supplementary financial information and schedules audited (and, if
applicable, financial forecasts and/or pro forma financial information)
examined by them and included or incorporated by reference in the
Registration Statement or the Prospectus comply as to form in all material
respects with the applicable accounting requirements of the Act or the
Exchange Act, as applicable, and the related published rules and
regulations thereunder; and, if
29
applicable, they have made a review in accordance with standards
established by the American Institute of Certified Public Accountants of
the consolidated interim financial statements, selected financial data,
pro forma financial information, financial forecasts and/or condensed
financial statements derived from audited financial statements of the
Company for the periods specified in such letter, as indicated in their
reports thereon, copies of which have been [separately] furnished to the
representative or representatives of the Underwriters (the
Representatives ) such term to include an Underwriter or Underwriters who
act without any firm being designated as its or their representatives [and
are attached hereto];
(iii) They have made a review in accordance with standards
established by the American Institute of Certified Public Accountants of
the unaudited condensed consolidated statements of income, consolidated
balance sheets and consolidated statements of cash flows included in the
Prospectus and/or included in the Company's quarterly report on Form 10-Q
incorporated by reference into the Prospectus as indicated in their
reports thereon copies of which [have been separately furnished to the
Representatives][are attached hereto]; and on the basis of specified
procedures including inquiries of officials of the Company who have
responsibility for financial and accounting matters regarding whether the
unaudited condensed consolidated financial statements referred to in
paragraph (vi)(A)(i) below comply as to form in all material respects with
the applicable accounting requirements of the [Act and the Exchange] Act
and the related published rules and regulations, nothing came to their
attention that caused them to believe that the unaudited condensed
consolidated financial statements do not comply as to form in all material
respects with the applicable accounting requirements of the [Act and the
Exchange] Act and the related published rules and regulations;
(iv) The unaudited selected financial information with respect to
the consolidated results of operations and financial position of the
Company for the five most recent fiscal years included in the Prospectus
and included or incorporated by reference in Item 6 of the Company's
Annual Report on Form 10-K for the most recent fiscal year agrees with the
corresponding amounts (after restatement where applicable) in the audited
consolidated financial statements for five such fiscal years which were
included or incorporated by reference in the Company's Annual Reports on
Form 10-K for such fiscal years;
(v) They have compared the information in the Prospectus under
selected captions with the disclosure requirements of Regulation S-K and
on the basis of limited procedures specified in such letter nothing came
to their attention as a result of the foregoing procedures that caused
them to believe that this information does not conform in all material
respects with the disclosure requirements of Items 301, 302, 402 and
503(d) respectively, of Regulation S-K;
30
(vi) On the basis of limited procedures, not constituting an
examination in accordance with generally accepted auditing standards,
consisting of a reading of the unaudited financial statements and other
information referred to below, a reading of the latest available interim
financial statements of the Company and its subsidiaries, inspection of
the minute books of the Company and its subsidiaries since the date of the
latest audited financial statements included or incorporated by reference
in the Prospectus, inquiries of officials of the Company and its
subsidiaries responsible for financial and accounting matters and such
other inquiries and procedures as may be specified in such letter, nothing
came to their attention that caused them to believe that:
(A) (i) the unaudited condensed consolidated statements of
income, consolidated balance sheets and consolidated statements of
cash flows included in the Prospectus and/or included or incorporated
by reference in the Company's Quarterly Reports on Form 10-Q
incorporated by reference in the Prospectus do not comply as to form
in all material respects with the applicable accounting requirements
of the Exchange Act and the related published rules and regulations,
or (ii) any material modifications should be made to the unaudited
condensed consolidated statements of income, consolidated balance
sheets and consolidated statements of cash flows included in the
Prospectus or included in the Company's Quarterly Reports on Form
10-Q incorporated by reference in the Prospectus for them to be in
conformity with generally accepted accounting principles;
(B) any other unaudited income statement data and balance
sheet items included in the Prospectus do not agree with the
corresponding items in the unaudited consolidated financial
statements from which such data and items were derived, and any such
unaudited data and items were not determined on a basis substantially
consistent with the basis for the corresponding amounts in the
audited consolidated financial statements included or incorporated by
reference in the Company's Annual Report on Form 10-K for the most
recent fiscal year;
(C) the unaudited financial statements which were not included
in the Prospectus but from which were derived the unaudited condensed
financial statements referred to in clause (A) and any unaudited
income statement data and balance sheet items included in the
Prospectus and referred to in Clause (B) were not determined on a
basis substantially consistent with the basis for the audited
financial statements included or incorporated by reference in the
Company's Annual Report on Form 10-K for the most recent fiscal year;
(D) any unaudited pro forma consolidated condensed financial
statements included or incorporated by reference in the Prospectus do
not comply as to form in all material respects with the applicable
accounting requirements of the
31
Act and the published rules and regulations thereunder or the pro
forma adjustments have not been properly applied to the historical
amounts in the compilation of those statements;
(E) as of a specified date not more than five days prior to
the date of such letter, there have been any changes in the
consolidated capital stock (other than issuances of capital stock
upon exercise of options and stock appreciation rights, upon
earn-outs of performance shares and upon conversions of convertible
securities, in each case which were outstanding on the date of the
latest balance sheet included or incorporated by reference in the
Prospectus) or any increase in the consolidated long-term debt of the
Company and its subsidiaries, or any decreases in consolidated net
current assets or net assets or shareholders' equity or other items
specified by the Representatives, or any increases in any items
specified by the Representatives, in each case as compared with
amounts shown in the latest balance sheet included or incorporated by
reference in the Prospectus, except in each case for changes,
increases or decreases which the Prospectus discloses have occurred
or may occur or which are described in such letter; and
(F) for the period from the date of the latest financial
statements included or incorporated by reference in the Prospectus to
the specified date referred to in Clause (E) there were any decreases
in total revenues or net income or net income per share or other
items specified by the Representatives, or any increases in any items
specified by the Representatives, in each case as compared with the
comparable period of the preceding year and with any other period of
corresponding length specified by the Representatives, except in each
case for increases or decreases which the Prospectus discloses have
occurred or may occur or which are described in such letter; and
(vii) In addition to the audit referred to in their report(s)
included or incorporated by reference in the Prospectus and the limited
procedures, inspection of minute books, inquiries and other procedures
referred to in paragraphs (iii) and (vi) above, they have carried out
certain specified procedures, not constituting an audit in accordance with
generally accepted auditing standards, with respect to certain amounts,
percentages and financial information specified by the Representatives
which are derived from the general accounting records of the Company and
its subsidiaries, which appear in the Prospectus (excluding documents
incorporated by reference), or in Part II of, or in exhibits and schedules
to, the Registration Statement specified by the Representatives or in
documents incorporated by reference in the Prospectus specified by the
Representatives, and have compared certain of such amounts, percentages
and financial information with the accounting records of the Company and
its subsidiaries and have found them to be in agreement.
32
All references in this Annex II to the Prospectus shall be deemed to refer
to the Prospectus (including the documents incorporated by reference therein)
as defined in the Underwriting Agreement as of the date of the letter delivered
on the date of the Pricing Agreement for purposes of such letter and to the
Prospectus as amended or supplemented (including the documents incorporated by
reference therein) in relation to the applicable Designated Shares for purposes
of the letter delivered at the Time of Delivery for such Designated Shares.
ANNEX III
Alabama-Shepherd Shopping Center
XxXxxxxx Center Joint Venture
Eastdale Center, Ltd.
Eastex Venture
East Town, Lake Xxxxxxx Co.
Jacinto City, Ltd.
Maine J.V. (Lisbon Street Shopping Trust)
Main/OST, Ltd.
Mansfield Road Associates
Mesquite Center, Ltd.
Northwest Hollister Venture
Xxxxxx Boulevard Venture
Xxxxxxx'x Center/Lake Houston Parkway
Xxxxxxxxx, Ltd.
Xxxxxxx Center, Ltd.
South-Loop-Long-Wayside Company
Southridge Plaza Venture
Steeplechase Mall Joint Venture
WRI/Palans Venture
Yale/20 Venture
York Townhouse Apartment
33
Pricing Agreement
Xxxxxxx Xxxxx & Co.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated
Xxxxxxx, Sachs & Co.
Xxxxxx Xxxxxxx & Co. Incorporated
Xxxxx Xxxxxx Inc.
x/x Xxxxxxx Xxxxx & Xx.
Xxxxx Financial Center
Xxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
February 19, 1998
Ladies and Gentlemen:
Xxxxxxxxxx Realty Investors, a Texas real estate investment trust (the
"Company"), proposes, subject to the terms and conditions stated herein and in
the Underwriting Agreement, dated February 19, 1998 (the "Underwriting
Agreement"), between the Company on the one hand and Xxxxxxx Lynch, Pierce,
Xxxxxx & Xxxxx Incorporated, Xxxxxxx, Sachs & Co., Xxxxxx Xxxxxxx & Co.
Incorporated and Xxxxx Xxxxxx Inc., on the other hand, to issue and sell to the
Underwriters named in Schedule I hereto (the "Underwriters") the Shares
specified in Schedule II hereto (the "Designated Shares"). Each of the
provisions of the Underwriting Agreement is incorporated herein by reference in
its entirety, and shall be deemed to be a part of this Agreement to the same
extent as if such provisions had been set forth in full herein; and each of the
representations and warranties set forth therein shall be deemed to have been
made at and as of the date of this Pricing Agreement, except that each
representation and warranty which refers to the Prospectus in Section 2 of the
Underwriting Agreement shall be deemed to be a representation or warranty as of
the date of the Underwriting Agreement in relation to the Prospectus (as
therein defined), and also a representation and warranty as of the date of this
Pricing Agreement in relation to the Prospectus as amended or supplemented
relating to the Designated Shares which are the subject of this Pricing
Agreement. Each reference to the Representatives herein and in the provisions
of the Underwriting Agreement so incorporated by reference shall be deemed to
refer to you. Unless otherwise defined herein, terms defined in the
Underwriting Agreement are used herein as therein defined. The Representatives
designated to act on behalf of the Representatives and on behalf of each of the
Underwriters of the Designated Shares pursuant to Section 12 of the
Underwriting Agreement and the address of the Representatives referred to in
such Section 12 are set forth at the end of Schedule II hereto.
An amendment to the Registration Statement, or a supplement to the
Prospectus, as the case may be, relating to the Designated Shares, in the form
heretofore delivered to you is now proposed to be filed with the Commission.
Subject to the terms and conditions set forth herein and in the
Underwriting Agreement incorporated herein by reference, the Company agrees to
issue and sell to each of the Underwriters, and each of the Underwriters
agrees, severally and not jointly, to purchase from the Company, at the time
and place and at the purchase price to the Underwriters set forth in Schedule
II hereto, the number of Designated Shares set forth opposite the name of such
Underwriter in Schedule I hereto.
If the foregoing is in accordance with your understanding, please sign and
return to us four counterparts hereof, and upon acceptance hereof by you, on
behalf of each of the Underwriters, this letter and such acceptance hereof,
including the provisions of the Underwriting Agreement incorporated herein by
reference, shall constitute a binding agreement between each of the
Underwriters and the Company. It is understood that your acceptance of this
letter on
34
35
behalf of each of the Underwriters is or will be pursuant to the authority set
forth in a form of Agreement among Underwriters, the form of which shall be
submitted to the Company for examination upon request, but without warranty on
the part of the Representatives as to the authority of the signers thereof.
Very truly yours,
XXXXXXXXXX REALTY INVESTORS
By:______________________________
Name:
Title:
Accepted as of the date hereof:
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated
Xxxxxxx, Sachs & Co.
Xxxxxx Xxxxxxx & Co. Incorporated
Xxxxx Xxxxxx Inc.
By: Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated
By: _________________________________
Authorized Signatory
On behalf of each of the Underwriters
SCHEDULE I
Number of
Underwriter Designated Shares
----------- to be Purchased
-----------------
Xxxxxxx Xxxxx, Xxxxxx Xxxxxx & Xxxxx $ 750,000
Incorporated
Xxxxxxx, Sachs & Co. 750,000
Xxxxxx Xxxxxxx & Co. Incorporated 750,000
Xxxxx Xxxxxx Inc. 750,000
----------
Total $3,000,000
==========
36
SCHEDULE II
TITLE OF DESIGNATED SHARES:
7.44% Series A Cumulative Redeemable Preferred Shares (par value
$0.03 per share)
NUMBER OF DESIGNATED SHARES:
3,000,000
OVER-ALLOTMENT OPTION:
450,000 Option Shares; exercisable for 30 days from the date hereof.
INITIAL OFFERING PRICE TO PUBLIC:
$25.00 per share, plus accrued dividends, if any, from the date of
original issue.
PURCHASE PRICE BY UNDERWRITERS:
$ 24.2125 per share
COMMISSION PAYABLE TO UNDERWRITERS:
$ 0.7875 per share
PURCHASE PRICE FOR OPTION SHARES:
$25.00 per share, plus accrued dividends, if any, from the date of
original issue.
SPECIFIED FUNDS FOR PAYMENT OF PURCHASE PRICE:
Same-day funds.
DIVIDEND RATE:
7.44% of the liquidation preference per annum
DIVIDEND PAYMENT DATES:
Payable quarterly on or about the last day of each March, June,
September and December or, if not a business day, the succeeding
business day, commencing March 31, 1998.
DIVIDEND RIGHTS:
Cumulative
VOTING RIGHTS:
None, except as provided in the Prospectus Supplement
37
LIQUIDATION RIGHTS:
Liquidation preference of $25.00 per share, plus an amount equal to any
accrued and unpaid dividends
PREEMPTIVE AND CONVERSION RIGHTS:
None
REDEMPTION PROVISIONS:
On or after March 31, 2003, the Designated Shares may be redeemed, in
whole or in part at the option of the Company, at a redemption price of
$25.00 per share, plus an amount equal to any accrued and unpaid dividends
SINKING FUND PROVISIONS:
None
TIME OF DELIVERY:
9:00 a.m., New York City time, on February 24, 1998
CLOSING LOCATION FOR DELIVERY OF SHARES:
Xxxxx & Xxxx LLP
Xxx Xxxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
NAMES AND ADDRESSES OF REPRESENTATIVES:
Designated Representatives:Xxxxxxx Xxxxx & Co.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated
Xxxxxxx, Sachs & Co.
Xxxxxx Xxxxxxx & Co. Incorporated
Xxxxx Xxxxxx Inc.
Address for Notices, etc.: x/x Xxxxxxx Xxxxx & Xx.
Xxxxx Financial Center
Xxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
OTHER TERMS:
The Representatives waive receipt of the letter from the independent
public accountants of the Company, to be dated the date of this Pricing
Agreement, referenced in Section 7(d) of the Underwriting Agreement.
ANNEX II
Pursuant to Section 7(d) of the Underwriting Agreement, the accountants
shall furnish letters to the Underwriters to the effect that:
(i) They are independent certified public accountants with respect
to the Company and its subsidiaries within the meaning of the Act and the
applicable published rules and regulations thereunder;
38
(ii) In their opinion, the financial statements and any supplementary
financial information and schedules audited (and, if applicable, financial
forecasts and/or pro forma financial information) examined by them and
included or incorporated by reference in the Registration Statement or the
Prospectus comply as to form in all material respects with the applicable
accounting requirements of the Act or the Exchange Act, as applicable, and
the related published rules and regulations thereunder; and, if applicable,
they have made a review in accordance with standards established by the
American Institute of Certified Public Accountants of the consolidated
interim financial statements, selected financial data, pro forma financial
information, financial forecasts and/or condensed financial statements
derived from audited financial statements of the Company for the periods
specified in such letter, as indicated in their reports thereon, copies of
which have been [separately] furnished to the representative or
representatives of the Underwriters (the Representatives ) such term to
include an Underwriter or Underwriters who act without any firm being
designated as its or their representatives [and are attached hereto];
(iii) They have made a review in accordance with standards
established by the American Institute of Certified Public Accountants of
the unaudited condensed consolidated statements of income, consolidated
balance sheets and consolidated statements of cash flows included in the
Prospectus and/or included in the Company's quarterly report on Form 10-Q
incorporated by reference into the Prospectus as indicated in their
reports thereon copies of which [have been separately furnished to the
Representatives][are attached hereto]; and on the basis of specified
procedures including inquiries of officials of the Company who have
responsibility for financial and accounting matters regarding whether the
unaudited condensed consolidated financial statements referred to in
paragraph (vi)(A)(i) below comply as to form in all material respects with
the applicable accounting requirements of the [Act and the Exchange] Act
and the related published rules and regulations, nothing came to their
attention that caused them to believe that the unaudited condensed
consolidated financial statements do not comply as to form in all material
respects with the applicable accounting requirements of the [Act and the
Exchange] Act and the related published rules and regulations;
(iv) The unaudited selected financial information with respect to
the consolidated results of operations and financial position of the
Company for the five most recent fiscal years included in the Prospectus
and included or incorporated by reference in Item 6 of the Company's
Annual Report on Form 10-K for the most recent fiscal year agrees with the
corresponding amounts (after restatement where applicable) in the audited
consolidated financial statements for five such fiscal years which were
included or incorporated by reference in the Company's Annual Reports on
Form 10-K for such fiscal years;
(v) They have compared the information in the Prospectus under
selected captions with the disclosure requirements of Regulation S-K and
on the basis of limited procedures specified in such letter nothing came
to their attention as a result of the foregoing procedures that caused
them to believe that this information does not conform in all material
respects with the disclosure requirements of Items 301, 302, 402 and
503(d) respectively, of Regulation S-K;
(vi) On the basis of limited procedures, not constituting an
examination in accordance with generally accepted auditing standards,
consisting of a reading of the unaudited financial statements and other
information referred to below, a reading of the latest available interim
financial statements of the Company and its subsidiaries, inspection of
the minute books of the Company and its subsidiaries since the date of the
latest audited financial statements included or incorporated by reference
in the Prospectus, inquiries of officials of the Company and its
subsidiaries responsible for financial and accounting matters and such
other inquiries and procedures as may be specified in such letter, nothing
came to their attention that caused them to believe that:
(A) (i) the unaudited condensed consolidated statements of income,
consolidated balance sheets and consolidated statements of cash flows
included in the Prospectus and/or included or incorporated by
reference in the Company's Quarterly Reports on Form 10-Q incorporated
by reference in the Prospectus do not comply as to form in all
material respects with the
39
applicable accounting requirements of the Exchange Act and the
related published rules and regulations, or (ii) any material
modifications should be made to the unaudited condensed consolidated
statements of income, consolidated balance sheets and consolidated
statements of cash flows included in the Prospectus or included in
the Company's Quarterly Reports on Form 10-Q incorporated by
reference in the Prospectus for them to be in conformity with
generally accepted accounting principles;
(B) any other unaudited income statement data and balance sheet
items included in the Prospectus do not agree with the corresponding
items in the unaudited consolidated financial statements from which
such data and items were derived, and any such unaudited data and
items were not determined on a basis substantially consistent with the
basis for the corresponding amounts in the audited consolidated
financial statements included or incorporated by reference in the
Company's Annual Report on Form 10-K for the most recent fiscal year;
(C) the unaudited financial statements which were not included in
the Prospectus but from which were derived the unaudited condensed
financial statements referred to in clause (A) and any unaudited
income statement data and balance sheet items included in the
Prospectus and referred to in Clause (B) were not determined on a
basis substantially consistent with the basis for the audited
financial statements included or incorporated by reference in the
Company's Annual Report on Form 10-K for the most recent fiscal year;
(D) any unaudited pro forma consolidated condensed financial
statements included or incorporated by reference in the Prospectus do
not comply as to form in all material respects with the applicable
accounting requirements of the Act and the published rules and
regulations thereunder or the pro forma adjustments have not been
properly applied to the historical amounts in the compilation of those
statements;
(E) as of a specified date not more than five days prior to the
date of such letter, there have been any changes in the consolidated
capital stock (other than issuances of capital stock upon exercise of
options and stock appreciation rights, upon earn-outs of performance
shares and upon conversions of convertible securities, in each case
which were outstanding on the date of the latest balance sheet
included or incorporated by reference in the Prospectus) or any
increase in the consolidated long-term debt of the Company and its
subsidiaries, or any decreases in consolidated net current assets or
net assets or shareholders' equity or other items specified by the
Representatives, or any increases in any items specified by the
Representatives, in each case as compared with amounts shown in the
latest balance sheet included or incorporated by reference in the
Prospectus, except in each case for changes, increases or decreases
which the Prospectus discloses have occurred or may occur or which are
described in such letter; and
(F) for the period from the date of the latest financial
statements included or incorporated by reference in the Prospectus to
the specified date referred to in Clause (E) there were any decreases
in total revenues or net income or net income per share or other items
specified by the Representatives, or any increases in any items
specified by the Representatives, in each case as compared with the
comparable period of the preceding year and with any other period of
corresponding length specified by the Representatives, except in each
case for increases or decreases which the Prospectus discloses have
occurred or may occur or which are described in such letter; and
(vii) In addition to the audit referred to in their report(s) included or
incorporated by reference in the Prospectus and the limited procedures,
inspection of minute books, inquiries and other procedures referred to in
paragraphs (iii) and (vi) above, they have carried out certain specified
procedures, not constituting an audit in accordance with generally accepted
auditing standards, with respect to certain amounts, percentages and financial
information specified by the Representatives which are derived
40
from the general accounting records of the Company and its subsidiaries,
which appear in the Prospectus (excluding documents incorporated by
reference), or in Part II of, or in exhibits and schedules to, the
Registration Statement specified by the Representatives or in documents
incorporated by reference in the Prospectus specified by the
Representatives, and have compared certain of such amounts, percentages
and financial information with the accounting records of the Company and
its subsidiaries and have found them to be in agreement.
All references in this Annex II to the Prospectus shall be deemed to refer
to the Prospectus (including the documents incorporated by reference therein)
as defined in the Underwriting Agreement as of the date of the letter delivered
on the date of the Pricing Agreement for purposes of such letter and to the
Prospectus as amended or supplemented (including the documents incorporated by
reference therein) in relation to the applicable Designated Shares for purposes
of the letter delivered at the Time of Delivery for such Designated Shares.
