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EXHIBIT 1
FORM OF UNDERWRITING AGREEMENT
CAPSTONE CAPITAL CORPORATION
Shares
Preferred Stock
UNDERWRITING AGREEMENT
[Date]
▇▇▇▇▇ ▇▇▇▇▇▇ INC.
[Co-Managers]
c/o ▇▇▇▇▇ ▇▇▇▇▇▇ INC.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Dear Sirs:
Capstone Capital Corporation, a Maryland corporation (the "Company")
qualified for federal income tax purposes as a real estate investment trust
pursuant to Sections 856 through 860 of the Internal Revenue Code of 1986, as
amended (the "Code"), proposes to issue and sell an aggregate of
shares of its Preferred Stock, liquidation preference per share (the
"Firm Shares") to you (collectively the "Underwriters"). The Company also
proposes to sell to you, upon the terms and conditions set forth in Section 2
hereof, up to an additional shares of Preferred Stock (the "Additional
Shares") to cover over-allotments, if any. The Firm Shares and the Additional
Shares are hereinafter collectively referred to as the "Shares."
The Company wishes to confirm as follows its agreements with you in
connection with the several purchases of the Shares by the Underwriters.
1. REGISTRATION STATEMENT AND PROSPECTUS. The Company has
prepared and filed with the Securities and Exchange Commission (the
"Commission") in accordance with the provisions of the Securities Act of 1933,
as amended, and the rules and regulations of the Commission thereunder
(collectively, the "Act"), a registration statement (file number 333-31639) on
Form S-3 under the Act (the "registration statement"), including a prospectus
subject to completion relating to the Shares, and such amendments to such
registration statement as may have been required prior to the date hereof have
been similarly prepared and have been filed with the Commission. Such
registration statement, as so amended, and any post-effective amendments
thereto, have been declared by the Commission to be effective under the Act.
Such registration statement, as amended at the date of this Agreement meets the
requirements set forth in Rule 415(a)(1)(x) under the Act and complies in all
other material respects with said Rule. The
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Company will next file with the Commission pursuant to Rule 424(b) under the Act
a final prospectus supplement to the basic prospectus included in such
registration statement, as so amended, describing the Shares and the offering
thereof, in such form as has been provided to or discussed with, and approved by
the Underwriters.
The term "Registration Statement" as used in this Agreement means the
registration statement, as amended at the time it became effective, as
supplemented or amended prior to the execution of this Agreement, including (i)
all financial schedules and exhibits thereto and (ii) all documents incorporated
by reference or deemed to be incorporated by reference therein. If it is
contemplated, at the time this Agreement is executed, that a post-effective
amendment to the registration statement will be filed and must be declared
effective before the offering of the Shares may commence, the term "Registration
Statement" as used in this Agreement means the registration statement as amended
by said post-effective amendment. The term "Basic Prospectus" as used in this
Agreement means the prospectus included in the Registration Statement. The term
"Prepricing Prospectus" as used in this Agreement means any preliminary form of
the prospectus (as defined herein) subject to completion, specifically relating
to the Shares, in the form filed with, or transmitted for filing to, the
Commission pursuant to the Rules and Regulations. The term "Prospectus
Supplement" as used in this Agreement means any prospectus supplement
specifically relating to the Shares, in the form first filed with, or
transmitted for filing to, the Commission pursuant to Rule 424 under the Act
after the execution of this agreement. The term "Prospectus" as used in this
Agreement means the Basic Prospectus together with the Prospectus Supplement
except that if such Basic Prospectus is amended or supplemented on or prior to
the date on which the Prospectus Supplement was first filed pursuant to Rule 424
after the execution of this agreement, the term "Prospectus" shall refer to the
Basic Prospectus as so amended or supplemented and as supplemented by the
Prospectus Supplement. Any reference in this Agreement to the registration
statement, the Registration Statement, the Basic Prospectus, any Prepricing
Prospectus, any Prospectus Supplement 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 the registration statement, the
Registration Statement, the Basic Prospectus, such Prepricing Prospectus, such
Prospectus Supplement or the Prospectus, as the case may be, and any reference
to any amendment or supplement to the registration statement, the Registration
Statement, the Basic Prospectus, any Prepricing Prospectus, any Prospectus
Supplement or the Prospectus shall be deemed to refer to and include any
documents filed after such date under the Securities Exchange Act of 1934, as
amended (the "Exchange Act") which, upon filing, are incorporated by reference
therein, as required by paragraph (b) of Item 12 of Form S-3. As used herein,
the term "Incorporated Documents" means the documents which at the time are
incorporated by reference in the registration statement, the Registration
Statement, the Basic Prospectus, any Prepricing Prospectus, any Prospectus
Supplement, the Prospectus, or any amendment or supplement thereto.
2. AGREEMENTS TO SELL AND PURCHASE. Subject to such adjustments
as you may determine to avoid fractional shares, the Company hereby agrees,
subject to all the terms and conditions set forth herein, to issue and sell to
the Underwriters and, upon the basis of the representations, warranties and
agreements of the Company herein contained and subject to all the terms and
conditions set forth herein, each Underwriter agrees, severally and not jointly,
to purchase from the Company, at a purchase price of $ per share (the "purchase
price per share"), the number of Firm Shares set forth opposite the name of such
Underwriter in Schedule I hereto.
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The Company also agrees, subject to all the terms and conditions set
forth herein, to sell to the Underwriters, and, upon the basis of the
representations, warranties and agreements of the Company herein contained and
subject to all the terms and conditions set forth herein, the Underwriters shall
have the right to purchase from the Company, at the purchase price per share,
pursuant to an option (the "over-allotment option") which may be exercised at
any time prior to 9:00 P.M., New York City time, on the 30th day after the date
of the Prospectus (or, if such 30th day shall be a Saturday or Sunday or a
holiday, on the next business day thereafter when the New York Stock Exchange is
open for trading) up to an aggregate of Additional Shares. Additional Shares may
be purchased only for the purpose of covering overallotments made in connection
with the offering of the Firm Shares.
3. TERMS OF PUBLIC OFFERING. The Company has been advised by you
that the Underwriters propose to make a public offering of their respective
portions of the Shares as soon after the Registration Statement has become
effective and this Agreement has been entered into, as in your judgment is
advisable and initially to offer the Shares upon the terms set forth in the
Prospectus.
4. DELIVERY OF THE SHARES AND PAYMENT THEREFOR. Delivery to the
Underwriters of and payment for the Firm Shares shall be made at the office of
▇▇▇▇▇ ▇▇▇▇▇▇ Inc., ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, at 10:00
A.M., New York City time, on (the "Closing Date"). The place of closing for the
Firm Shares and the Closing Date may be varied by agreement between you and the
Company.
Delivery to the Underwriters of and payment for any Additional Shares
to be purchased by the Underwriters shall be made at the aforementioned office
of ▇▇▇▇▇ ▇▇▇▇▇▇ Inc. at such time on such date (the "Option Closing Date"),
which may be the same as the Closing Date but shall in no event be earlier than
the Closing Date nor earlier than two nor later than ten business days after the
giving of the notice hereinafter referred to, as shall be specified in a written
notice from you on behalf of the Underwriters to the Company of the
Underwriters' determination to purchase a number, specified in such notice, of
Additional Shares. The place of closing for any Additional Shares and the Option
Closing Date for such Shares may be varied by agreement between you and the
Company.
Certificates for the Firm Shares and for any Additional Shares to be
purchased hereunder shall be registered in such names and in such denominations
as you shall request prior to 9:30 A.M., New York City time, on the second
business day preceding the Closing Date or any Option Closing Date, as the case
may be. Such certificates shall be made available to you in New York City for
inspection and packaging not later than 9:30 A.M., New York City time, on the
business day next preceding the Closing Date or the Option Closing Date, as the
case may be. The certificates evidencing the Firm Shares and any Additional
Shares to be purchased hereunder shall be delivered to you on the Closing Date
or the Option Closing Date, as the case may be, against payment of the purchase
price therefor in immediately available funds.
5. AGREEMENTS OF THE COMPANY. The Company agrees with the
Underwriters as follows:
(a) If, at the time this Agreement is executed and
delivered, it is necessary for the Registration Statement or a post-effective
amendment thereto to be declared effective before the offering of the Shares may
commence, the Company will endeavor to cause the
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Registration Statement or such post-effective amendment to become effective as
soon as possible and will advise you promptly and, if requested by you, will
confirm such advice in writing, when the Registration Statement or such
post-effective amendment has become effective.
(b) The Company will advise you promptly and, if
requested by you, will confirm such advice in writing: (i) of any request by the
Commission for amendment of or a supplement to the Registration Statement, any
Prepricing Prospectus, any Prospectus Supplement or the Prospectus or for
additional information; (ii) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or of the suspension
of qualification of the Shares for offering or sale in any jurisdiction or the
initiation of any proceeding for such purpose; and (iii) within the period of
time referred to in paragraph (f) below, of any change in the Company's
condition (financial or other), business, prospects, properties, net worth or
results of operations, or of the happening of any event, which makes any
statement of a material fact made in the Registration Statement or the
Prospectus (as then amended or supplemented) untrue or which requires the making
of any additions to or changes in the Registration Statement or the Prospectus
(as then amended or supplemented) in order to state a material fact required by
the Act or the regulations thereunder to be stated therein or necessary in order
to make the statements therein not misleading, or of the necessity to amend or
supplement the Prospectus (as then amended or supplemented) to comply with the
Act or any other law. If at any time the Commission shall issue any stop order
suspending the effectiveness of the Registration Statement, the Company will
make every reasonable effort to obtain the withdrawal of such order at the
earliest possible time.
(c) The Company will furnish to you, without charge (i)
two signed copies of the registration statement as originally filed with the
Commission and of each amendment thereto, including financial statements and all
exhibits to the registration statement, (ii) such number of conformed copies of
the registration statement as originally filed and of each amendment thereto,
but without exhibits, as you may request, (iii) such number of copies of the
Incorporated Documents, without exhibits, as you may request, and (iv) two
copies of the exhibits to the Incorporated Documents.
(d) The Company will not file any amendment to the
Registration Statement or make any amendment or supplement to the Prospectus or,
prior to the end of the period of time referred to in the first sentence in
subsection (f) below, file any document which, upon filing becomes an
Incorporated Document, of which you shall not previously have been advised or to
which, after you shall have received a copy of the document proposed to be
filed, you shall object.
(e) Prior to the execution and delivery of this
Agreement, the Company has delivered to you, without charge, in such quantities
as you have requested, copies of each form of the Prepricing Prospectus and of
each form of the Prospectus Supplement. The Company consents to the use, in
accordance with the provisions of the Act and with the securities or Blue Sky
laws of the jurisdictions in which the Shares are offered by the Underwriters
and by dealers, prior to the date of the Prospectus, of each Prepricing
Prospectus and each Prospectus Supplement so furnished by the Company.
(f) As soon after the execution and delivery of this
Agreement as possible and thereafter from time to time for such period as in the
opinion of counsel for the Underwriter a prospectus is required by the Act to be
delivered in connection with sales by the Underwriter or
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any dealer, the Company will expeditiously deliver to each Underwriter and each
dealer, without charge, as many copies of the Prospectus (and of any amendment
or supplement thereto) as you may request. The Company consents to the use of
the Prospectus (and of any amendment or supplement thereto) in accordance with
the provisions of the Act and with the securities or Blue Sky laws of the
jurisdictions in which the Shares are offered by the several Underwriters and by
all dealers to whom Shares may be sold, both in connection with the offering and
sale of the Shares and for such period of time thereafter as the Prospectus is
required by the Act to be delivered in connection with sales by any Underwriter
or dealer. If during such period of time any event shall occur that in the
judgment of the Company or in the opinion of counsel for the Underwriters is
required to be set forth in the Prospectus (as then amended or supplemented) or
should be set forth therein in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading, or if it
is necessary to supplement or amend the Prospectus (or to file under the
Exchange Act any document which, upon filing, becomes an Incorporated Document)
in order to comply with the Act or any other law, the Company will forthwith
prepare and, subject to the provisions of paragraph (d) above, file with the
Commission an appropriate supplement or amendment thereto, and will
expeditiously furnish to the Underwriters and dealers a reasonable number of
copies thereof. In the event that the Company and you agree that the Prospectus
should be amended or supplemented, the Company, if requested by you, will
promptly issue a press release announcing or disclosing the matters to be
covered by the proposed amendment or supplement.
(g) The Company will cooperate with you and, if
applicable, with counsel for the Underwriters in connection with the
registration or qualification of the Shares for offering and sale by the
Underwriters and by dealers under the securities or Blue Sky laws of such
jurisdictions as you may designate and will file such consents to service of
process or other documents necessary or appropriate in order to effect such
registration or qualification; provided that in no event shall the Company be
obligated to qualify to do business in any jurisdiction where it is not now
otherwise required to be so qualified or to take any action which would subject
it to service of process in suits, other than those arising out of the offering
or sale of the Shares, in any jurisdiction where it is not now so subject.
(h) The Company will make generally available to its
securityholders a consolidated earnings statement, which need not be audited,
covering a twelve-month period commencing after the effective date of the
Registration Statement and ending not later than 15 months thereafter, as soon
as practicable after the end of such period, which consolidated earnings
statement shall satisfy the provisions of Section 11(a) of the Act.
(i) During the period of five years hereafter, the
Company will furnish to you (i) as soon as available, a copy of each report of
the Company mailed to stockholders or filed with the Commission, and (ii) from
time to time such other information concerning the Company as you may request.
(j) If this Agreement shall terminate or shall be
terminated after execution pursuant to any provisions hereof (otherwise than
pursuant to the second paragraph of Section 10 hereof or by notice given by you
terminating this Agreement pursuant to Section 10 or Section 11 hereof) or if
this Agreement shall be terminated by the Underwriters because of any failure or
refusal on the part of the Company to comply with the terms or fulfill any of
the conditions of this Agreement, the Company agrees to reimburse the
Underwriters for all out-of-pocket
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expenses (including fees and expenses of counsel for the Underwriters) incurred
by you in connection herewith.
(k) The Company will apply the net proceeds from the sale
of the Shares to be sold by it hereunder substantially in accordance with the
description thereof set forth in the Prospectus Supplement.
(l) The Company will timely file the Prospectus pursuant
to Rule 424(b) under the Act and will advise you of the time and manner of such
filing.
(m) Except as provided in this Agreement, the Company
will not offer, sell, contract to sell or otherwise dispose of any common stock
or any securities convertible into or exercisable or exchangeable for common
stock or grant any options or warrants to purchase common stock (except pursuant
to the grant or exercise of options under the Company's Stock Incentive or
option plan(s) and shares of Common Stock issuable upon conversion of the
Company's 10 1/2% Convertible Subordinated Debentures due 2002 or the 6.55%
Convertible Subordinated Debentures due 2002) for the period of 90 days after
the date of the Prospectus, without the prior written consent of ▇▇▇▇▇ ▇▇▇▇▇▇
Inc.
(n) The Company has furnished or will furnish to you
"lock-up" letters, in form and substance satisfactory to you, signed by all of
its current officers, certain of its current directors and each of its
stockholders designated by you.
(o) Except as stated in this Agreement and in any
Prepricing Prospectus, Prospectus Supplement and Prospectus, the Company has not
taken, nor will it take, directly or indirectly, any action designed to or that
might reasonably be expected to cause or result in stabilization or manipulation
of the price of any security of the Company to facilitate the sale or resale of
the Shares.
(p) The Company will use its best efforts to have the
Shares listed, subject to notice of issuance, on the New York Stock Exchange
("NYSE") on or before the Closing Date and to maintain the listing of the Shares
on the NYSE for a period of three years after the Closing Date.
(q) The Company will use its best efforts to continue to
qualify as a real estate investment trust ("REIT") under Sections 856 through
860 of the Code.
(r) The Company will not file any registration statement
with the Commission for the registration of any securities of the Company for a
period of 30 days after the date of the Prospectus Supplement without the prior
written consent of ▇▇▇▇▇ ▇▇▇▇▇▇ Inc.
6. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to the Underwriters that:
(a) No order preventing or suspending the use of any
Prepricing Prospectus has been issued and no proceeding for that purpose has
been instituted or threatened by the Commission or the securities authority of
any state or other jurisdiction. No stop order suspending the effectiveness of
the Registration Statement or any part thereof has been issued and
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no proceeding for that purpose has been instituted or threatened by the
Commission or the securities authority of any state or other jurisdiction.
(b) The execution and delivery of, and the performance by
the Company of its obligations under, this Agreement, have been duly authorized
by all necessary corporate action of the Company, and, at the Closing Date or
the related Option Closing Date (as the case may be), this Agreement will have
been duly executed and delivered by the Company, and this Agreement will
constitute a valid and binding instrument of the Company enforceable against the
Company in accordance with its respective terms, subject to the effect of
bankruptcy, insolvency, moratorium, fraudulent conveyance, reorganization and
similar laws relating to creditors' rights generally and to the application of
equitable principles in any proceeding, whether at law or in equity, except as
rights to indemnity and contribution hereunder may be limited by federal or
state securities laws.
(c) Each Prepricing Prospectus included as part of the
registration statement as originally filed or as part of any amendment or
supplement thereto, or filed pursuant to Rule 424 under the Act, complied when
so filed in all material respects with the provisions of the Act. The Commission
has not issued any order preventing or suspending the use of any Prepricing
Prospectus.
(d) The Company and the transactions contemplated by this
Agreement meet the requirements for using Form S-3 under the Act. The
registration statement in the form in which it became or becomes effective and
also in such form as it may be when any post-effective amendment thereto shall
become effective and the Prospectus and any supplement or amendment thereto,
including the Prospectus Supplement, when filed with the Commission under Rule
424(b) under the Act, complied or will comply in all material respects with the
provisions of the Act and did not or will not at any such times 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,
except that this representation and warranty does not apply to statements in or
omissions from the registration statement or the Prospectus or any supplement or
amendment thereto made in reliance upon and in conformity with information
relating to the Underwriter furnished to the Company in writing by or on behalf
of the Underwriter through you expressly for use therein.
(e) The Incorporated Documents heretofore filed, when
they were filed (or, if any amendment with respect to any such document was
filed, when such amendment was filed), conformed in all material respects with
the requirements of the Act, the Exchange Act and the respective rules and
regulations thereunder; any further Incorporated Documents so filed will, when
they are filed, conform in all material respects with the requirements of the
Act, the Exchange Act and the respective rules and regulations thereunder; no
such document when it was filed (or, if an amendment with respect to any such
document was filed, when such amendment was filed), contained an untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein not
misleading; and no such further document, when it is filed, will contain an
untrue statement of a material fact or will omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein not misleading.
(f) The Company has not distributed and, prior to the
later to occur of (i) the Closing Date and (ii) completion of the distribution
of the Shares, will not distribute any offering
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material in connection with the offering and sale of the Shares other than the
Registration Statement, the Prepricing Prospectus, the Prospectus Supplement,
the Prospectus or other materials, if any, permitted by the Act.
(g) All outstanding capital stock of the Company has been
duly authorized and validly issued, is fully paid and nonassessable and is free
of any preemptive or similar rights; the Shares to be issued and sold by the
Company have been duly authorized and, when issued and delivered to the
Underwriters against payment therefor in accordance with the terms hereof, will
be validly issued, fully paid and nonassessable and free of any preemptive or
similar rights; and the capital stock of the Company conforms to the description
thereof in the Registration Statement and the Prospectus. Application has been
made to list the Shares on the NYSE. The form of certificate for the Shares will
comply with all applicable legal and NYSE requirements.
(h) Except as disclosed in the Prospectus, there are no
outstanding options, warrants or other rights calling for the issuance of, nor
any commitment, plan or arrangement to issue, any shares of capital stock of the
Company or any security convertible into or exchangeable or exercisable for
capital stock of the Company.
(i) No holder of any security of the Company or any other
person has the right, contractual or otherwise, which right has not been waived
by the holder thereof, (A) to cause the Company to sell or otherwise issue to
them, or to permit them to underwrite the sale of, the Shares, or (B) as a
result of the filing of the registration statement or the consummation of the
transactions contemplated by this Agreement, to require registration under the
Act of any shares of Common Stock or other securities of the Company.
(j) The Company is a corporation duly organized and
validly existing in good standing under the laws of the State of Maryland with
full corporate power and authority to own, lease and operate its properties and
to conduct its business as presently conducted and as disclosed in the
Registration Statement and the Prospectus, and is duly registered and qualified
to conduct its business and is in good standing in each jurisdiction or place
where the nature of its properties or the conduct of its business requires such
registration or qualification, except where the failure so to register or
qualify does not and will not have a material adverse effect on the condition
(financial or other), business, prospects, properties, net worth or results of
operations of the Company and the Subsidiaries (as hereinafter defined) taken as
a whole (a "Material Adverse Effect"). The term "Subsidiary" or "Subsidiaries"
means (A) a corporation, a majority of the voting or capital stock of which is,
at the time, directly or indirectly owned by the Company and (B) any other
partnership, joint venture, association, joint stock company, trust,
unincorporated organization or other entity (other than a corporation)
(collectively, a "Person") in which the Company, directly or indirectly, (i)
owns a majority of the equity interest thereof and (ii) has the power to elect
or direct the election of a majority of the members of the governing body of
such Person or otherwise has control over such Person (e.g., as the general or
managing partner of a partnership).
(k) The Company is organized and operates in a manner so
as to qualify as a REIT under the Code; the Company elected to be taxed as a
REIT commencing with the Company's taxable year ended December 31, 1994 and will
continue to so elect.
(l) Each Subsidiary is duly organized, validly existing
and in good standing in the jurisdiction of its incorporation, if a corporation,
and is legally formed and validly existing
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under the laws of the jurisdiction of its organization, if a partnership,
association or business organization, with full corporate or organizational
power and authority to own, lease and operate its properties and to conduct its
business as presently conducted. Each Subsidiary is duly registered and
qualified to conduct its business (and, if a corporation, is in good standing)
in each jurisdiction or place where the nature of its properties or the conduct
of its business requires such registration or qualification, except where the
failure so to register or qualify does not and will not have a Material Adverse
Effect; all the outstanding shares of capital stock of each Subsidiary that is a
corporation have been duly authorized and validly issued, are fully paid and
nonassessable, and all ownership interests in each Subsidiary that is not a
corporation have been validly created pursuant to the partnership or other
agreements or organizational documents of each such Subsidiary, and the shares
or other interests owned by the Company are owned by the Company directly, or
indirectly through one of the other Subsidiaries, free and clear of any lien,
adverse claim, security interest, equity or other encumbrance.
(m) There are no legal or governmental proceedings
pending or, to the knowledge of the Company, threatened, against the Company or
any of the Subsidiaries, or to which the Company or any of the Subsidiaries, or
to which any of their respective properties is subject, that are required to be
disclosed in the Registration Statement or the Prospectus but are not disclosed
as required, and there are no agreements, indentures, leases or other
instruments that are required to be disclosed in the Registration Statement or
the Prospectus or to be filed as an exhibit to the Registration Statement or any
Incorporated Document that are not disclosed or filed as required by the Act or
the Exchange Act.
(n) Neither the Company nor any of the Subsidiaries is
(i) in violation of its certificate or articles of incorporation, by-laws,
partnership agreements, or other organizational documents, or (ii) in violation
of any law, ordinance, administrative or governmental rule or regulation
applicable to the Company or any of the Subsidiaries, including any lending or
banking law, governmental rule or regulation, or of any decree of any court or
governmental agency or body having jurisdiction over the Company or any of the
Subsidiaries, or (iii) in default in any material respect in the performance of
any obligation, agreement or condition contained in any bond, debenture, note or
any other evidence of indebtedness or in any material agreement, indenture,
lease, mortgage or other instrument to which the Company or any of the
Subsidiaries is a party or by which any of them or any of their respective
properties may be bound.
(o) Neither the issuance and sale of the Shares, the
execution, delivery or performance of this Agreement by the Company nor the
consummation by the Company of the transactions contemplated hereby (i) requires
any consent, approval, authorization or other order of or registration or filing
with, any court, regulatory body, administrative agency or other governmental
body, agency or official (except such as may be required for the registration of
the Shares under the Act and the Exchange Act and compliance with the securities
or Blue Sky laws of various jurisdictions, all of which have been or will be
effected in accordance with this Agreement) or conflicts or will conflict with
or constitutes or will constitute a breach of, or a default under, the
certificate or articles of incorporation, bylaws, partnership agreements, or
other organizational documents, of the Company or any of the Subsidiaries or
(ii) conflicts or will conflict with or constitutes or will constitute a breach
of, or a default under, any agreement, indenture, lease, mortgage or other
instrument to which the Company or any of the Subsidiaries is a party or by
which any of them or any of their respective properties may be bound, or
violates or will violate any statute, law, regulation or filing or judgment,
injunction, order or decree
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applicable to the Company or any of the Subsidiaries or any of their respective
properties, or will result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Company or any of the
Subsidiaries pursuant to the terms of any agreement or instrument to which any
of them is a party or by which any of them may be bound or to which any of the
property or assets of any of them is subject.
(p) The accountants, KPMG Peat Marwick LLP, who have
certified or shall certify the financial statements included or incorporated by
reference in the Registration Statement and the Prospectus (or any amendment or
supplement thereto) are independent public accountants as required by the Act,
the Exchange Act and the respective rules and regulations thereunder.
(q) The financial statements, together with related
schedules and notes, included or incorporated by reference in the Registration
Statement and the Prospectus (and any amendment or supplement thereto), present
fairly the consolidated financial position, results of operations and changes in
financial position of the Company and the Subsidiaries on the basis stated in
the Registration Statement at the respective dates or for the respective periods
to which they apply; such statements and related schedules and notes have been
prepared in accordance with generally accepted accounting principles
consistently applied throughout the periods involved, except as disclosed
therein; and the other financial and statistical information and data included
or incorporated by reference in the Registration Statement and the Prospectus
(and any amendment or supplement thereto) are accurately presented and prepared
on a basis consistent with such financial statements and the books and records
of the Company and the Subsidiaries. The other financial and statistical
information and data included in the Registration Statement and the Prospectus
(and any amendment or supplement thereto) are accurately presented and prepared
on a basis consistent with such financial statements and the books and records
of the Company and the Subsidiaries.
(r) Except as disclosed in the Registration Statement and
the Prospectus (or any amendment or supplement thereto), subsequent to the
respective dates as of which such information is given in the Registration
Statement and the Prospectus (or any amendment or supplement thereto), neither
the Company nor any of the Subsidiaries has incurred any liability or
obligation, direct or contingent, or entered into any transaction, not in the
ordinary course of business, that is material to the Company and the
Subsidiaries taken as a whole, and there has not been any change in the capital
stock, or material increase in the short-term debt or long-term debt, of the
Company or any of the Subsidiaries, or any material adverse change, or any
development involving or which may reasonably be expected to involve, a
prospective material adverse change in the condition (financial or other),
business, prospects, properties, net worth or results of operation of the
Company and the Subsidiaries taken as a whole.
(s) The Company or the Subsidiaries has good and
marketable title to all of the property (real and personal) disclosed in the
Prospectus as being owned by them, free and clear of all liens, claims, security
interests or other encumbrances except such as are disclosed in the Registration
Statement and the Prospectus or in any other document previously made available
to the Underwriter or to their counsel or such as do not materially affect the
value of such property and do not materially interfere with the use made and
proposed to be made of such property by the Company or the Subsidiaries, and all
the property disclosed in the Prospectus as being held under lease by the
Company and each of the Subsidiaries is held by it under valid,
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subsisting and enforceable leases, free and clear of all liens, claims, security
interests and other encumbrances.
(t) The Company and the Subsidiaries have title insurance
on all real properties described in the Prospectus as owned or leased by them
(collectively, the "Properties"), in an amount at least equal to the aggregate
acquisition price paid by the Company or the Subsidiaries for such Properties
and the cost of construction of the improvements located on such properties.
(u) The Company and the Subsidiaries have title insurance
on each Mortgage Loan (as defined in the Prospectus) in an amount at least equal
to the aggregate principal amount of each such Mortgage Loan.
(v) The mortgages and deeds of trust encumbering the
Properties are not cross-defaulted or cross-collateralized to any property not
owned directly or indirectly by the Company.
(w) The Company and each of the Subsidiaries has such
permits, licenses, franchises and authorizations of governmental or regulatory
authorities ("permits") as are necessary to own its respective properties and to
conduct its business as presently conducted and in the manner disclosed in the
Prospectus, including the necessary lending or banking law permits, subject to
such qualifications as may be set forth in the Prospectus; the Company and each
of the Subsidiaries has fulfilled and performed all its material obligations
with respect to such permits and no event has occurred which allows, or after
notice or lapse of time would allow, revocation or termination thereof or
results in any other material impairment of the rights of the holder of any such
permit, subject in each case to such qualification as may be set forth in the
Prospectus; and, except as disclosed in the Prospectus, none of such permits
contains any restriction that is materially burdensome to the Company or any of
the Subsidiaries.
(x) Except as disclosed in the Prospectus, the Company
and the Subsidiaries own or possess all patents, trademarks, trademark
registrations, service marks, service ▇▇▇▇ registrations, trade names,
copyrights, licenses, inventions, trade secrets and rights disclosed in the
Prospectus as being owned by them or any of them or necessary for the conduct of
their respective businesses, and the Company is not aware of any claim to the
contrary or any challenge by any other person to the rights of the Company and
the Subsidiaries with respect to the foregoing.
(y) Insurance, including property and casualty insurance,
in favor of the Company or the Subsidiaries, as the case may be, is in effect
and will be maintained with respect to the Properties, with insurers of
recognized financial responsibility, against such losses and risks in an amount
and on such terms as is reasonable and customary for business of the type
conducted by the Company, the Subsidiaries or lessees, sub-lessees or mortgagors
of the Properties, as the case may be; all policies of insurance insuring the
Company, the Subsidiaries, and lessees, sub-lessees or mortgagors of the
Properties, as the case may be, or their respective businesses, assets
(including the property and casualty insurance on the Properties), employees,
officers and directors are in full force and effect; the Company, each of the
Subsidiaries, and, to the best knowledge of the Company, each lessee, sub-lessee
and mortgagor of the Properties is in compliance with the terms of such policies
and instruments in all material respects; neither the Company nor any of the
Subsidiaries, or, to the best knowledge of the Company, no lessee, sub-
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lessee or mortgagor of the Properties has received from any insurance company
written notice of any material defects or deficiencies affecting the
insurability of any of the Properties; and there are no claims by the Company,
any of the Subsidiaries or, to the best knowledge of the Company, any lessee,
sub-lessee or mortgagor under any such policy or instrument as to which any
insurance company is denying liability or defending under a reservation of
rights clause.
(z) The Company and the Subsidiaries maintain a system of
internal accounting controls sufficient to provide reasonable assurances that
(i) transactions are executed in accordance with management's general or
specific authorization; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain accountability for assets; (iii) access to
assets is permitted only in accordance with management's general or specific
authorization; and (iv) the recorded accountability for assets is compared with
existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(aa) Neither the Company nor any of its Subsidiaries nor
any employee or agent of the Company or any Subsidiary has made any payment of
funds of the Company or any Subsidiary or received or retained any funds in
violation of any law, rule or regulation.
(bb) The Company and each of the Subsidiaries have filed
all tax returns required to be filed, which returns are complete and correct,
and neither the Company nor any Subsidiary is in default in the payment of any
taxes which were payable pursuant to said returns or any assessments with
respect thereto.
(cc) No holder of any security of the Company has any
right to require registration of shares of Common Stock or any other security of
the Company because of the consummation of the transactions contemplated by this
Agreement.
(dd) The Company is not now, and, after sale of the Shares
to be sold by the Company hereunder and application of the net proceeds from
such sale as described in the Prospectus under the caption "Use of Proceeds,"
will not be, an "investment company" within the meaning of the Investment
Company Act of 1940, as amended.
(ee) The Company and the Subsidiaries and, to the
Company's knowledge, the owner and operator of any property on which the Company
or the Subsidiaries holds a mortgage and the operator of any property owned by
the Company or the Subsidiaries (i) are in compliance with any and all
applicable foreign, federal, state and local laws and regulations relating to
the protection of human health and safety, the environment, or hazardous or
toxic substances or wastes, pollutants or contaminants (as regulated by such
laws and regulations) ("Environmental Laws"), (ii) have received all permits,
licenses or other approvals under applicable Environmental Laws required in
connection with their businesses, properties or assets as conducted or
contemplated to be conducted as described in the Registration Statement, and
(iii) are in compliance with all terms and conditions of any such permit,
license or approval, except where such noncompliance with Environmental Laws,
failure to receive required permits, licenses or other approvals or failure to
comply with the terms and conditions of such permits, licenses or approvals
would not, singly or in the aggregate, have a Material Adverse Effect.
(ff) There has been no storage, disposal, generation,
manufacture, refinement, transportation, handling, treatment, spill, discharge,
leak, emission, injection,
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dumping, or release of hazardous or toxic substances or wastes, pollutants or
contaminants by the Company or the Subsidiaries or, to the knowledge of the
Company, by any other person, at, to, or from any property (including the
Properties) now or previously owned or operated by the Company or the
Subsidiaries or now or previously subject to a mortgage held by the Company or
the Subsidiaries, except for any such storage, disposal, generation,
manufacture, refinement, transportation, handling, treatment, spill, discharge,
leak, emission, injection, dumping, or release which would not have, or could
not be reasonably likely to have singularly or in the aggregate, a Material
Adverse Effect; and, to the knowledge of the Company, there has been no spill,
discharge, leak, emission, injection, escape, dumping, or release at any other
location of any hazardous or toxic substances or wastes, pollutants or
contaminants generated at any property (including the Properties) now or
previously owned or operated by the Company or the Subsidiaries or now or
previously subject to a mortgage held by the Company or the Subsidiaries, except
for any such spill, discharge, leak, emission, injection, dumping, or release
which would not have, or could not be reasonably likely to have, singularly or
in the aggregate, a Material Adverse Effect.
(gg) The Company has filed all reports and other documents
required to be filed by it under the Exchange Act.
(hh) Each of the Subsidiaries constitutes either a
partnership for federal income tax purposes or a "qualified REIT subsidiary"
within the meaning of Section 856(i) of the Code.
(ii) None of the assets of the Company or the Subsidiaries
constitute, nor will such assets, as of the Closing Date, constitute "plan
assets," as such term is defined in the Employee Retirement Income Security Act
of 1974, as amended ("ERISA").
(jj) Subject to the provisions of applicable law, none of
the Subsidiaries is currently prohibited, directly or indirectly, from paying
any dividends to the Company, from making any other distributions on such
Subsidiary's capital stock or from repaying to the Company any loans or advances
to such Subsidiary's property or assets to the Company.
(kk) The information and disclosures regarding the
Company's directors and officers, contained in the Company's Proxy Statement for
the Annual Meeting of Stockholders held in May 1997, (i) are accurate and
consistent with the information provided to the Company by each director and
officer for that purpose and (ii) did not omit to disclose any fact that should
have been so disclosed under the rules and regulations of the Exchange Act
governing Proxy Statement disclosure obligations.
7. INDEMNIFICATION AND CONTRIBUTION. (a) The Company agrees to
indemnify and hold harmless each of you and each other Underwriter and each
person, if any, who controls any Underwriter within the meaning of Section 15 of
the Act or Section 20(a) of the Exchange Act from and against any and all
losses, claims, damages, liabilities and expenses (including reasonable costs of
investigation) arising out of or based upon any untrue statement or alleged
untrue statement of a material fact contained in any Prepricing Prospectus or in
any Prospectus Supplement or in the Registration Statement or the Prospectus or
in any amendment or supplement thereto, or arising out of or based upon any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading,
except insofar as such losses, claims, damages, liabilities or expenses arise
out of
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or are based upon any untrue statement or omission or alleged untrue statement
or omission which has been made therein or omitted therefrom in reliance upon
and in conformity with the information relating to such Underwriter furnished in
writing to the Company by or on behalf of any Underwriter through you expressly
for use in connection therewith; provided, however, that the indemnification
contained in this paragraph (a) with respect to any Prepricing Prospectus shall
not inure to the benefit of the Underwriter (or to the benefit of any person
controlling the Underwriter) on account of any such loss, claim, damage,
liability or expense arising from the sale of the Shares by such Underwriter to
any person if a copy of the Prospectus shall not have been delivered or sent to
such person within the time required by the Act and the regulations thereunder,
and the untrue statement or alleged untrue statement or omission or alleged
omission of a material fact contained in such Prepricing Prospectus was
corrected in the Prospectus, provided that the Company has delivered the
Prospectus to the several Underwriters in requisite quantity on a timely basis
to permit such delivery or sending. The foregoing indemnity agreement shall be
in addition to any liability which the Company may otherwise have.
(b) If any action, suit or proceeding shall be brought
against any Underwriter or any person controlling any Underwriter in respect of
which indemnity may be sought against the Company, such Underwriter or such
controlling person shall promptly notify the Company, and the Company shall
assume the defense thereof, including the employment of counsel and payment of
all fees and expenses. Such Underwriter or any such controlling person shall
have the right to employ separate counsel in any such action, suit or proceeding
and to participate in the defense thereof, but the fees and expenses of such
counsel shall be at the expense of such Underwriter or such controlling person
unless (i) the Company has agreed in writing to pay such fees and expenses, (ii)
the Company has failed to assume the defense and employ counsel, or (iii) the
named parties to any such action, suit or proceeding (including any impleaded
parties) include both such Underwriter or such controlling person and the
Company and such Underwriter or such controlling person shall have been advised
by its counsel that representation of such indemnified party and the Company by
the same counsel would be inappropriate under applicable standards of
professional conduct (whether or not such representation by the same counsel has
been proposed) due to actual or potential differing interests between them (in
which case the Company shall not have the right to assume the defense of such
action, suit or proceeding on behalf of such Underwriter or such controlling
person). It is understood, however, that the Company shall, in connection with
any one such action, suit or proceeding or separate but substantially similar or
related actions, suits or proceedings in the same jurisdiction arising out of
the same general allegations or circumstances, be liable for the reasonable fees
and expenses of only one separate firm of attorneys (in addition to any local
counsel) at any time for all such Underwriters and controlling persons not
having actual or potential differing interests with you or among themselves,
which firm shall be designated in writing by ▇▇▇▇▇ ▇▇▇▇▇▇ Inc., and that all
such fees and expenses shall be reimbursed as they are incurred. The Company
shall not be liable for any settlement of any such action, suit or proceeding
effected without its written consent, but if settled with such written consent,
or if there be a final judgment for the plaintiff in any such action, suit or
proceeding, the Company agrees to indemnify and hold harmless any Underwriter,
to the extent provided in the preceding paragraph, and any such controlling
person from and against any loss, claim, damage, liability or expense by reason
of such settlement or judgment.
(c) Each Underwriter agrees, severally and not jointly,
to indemnify and hold harmless the Company, its directors, its officers who sign
the Registration Statement, and any person who controls the Company within the
meaning of Section 15 of the Act or Section
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20(a) of the Exchange Act, to the same extent as the foregoing indemnity from
the Company to each Underwriter, but only with respect to information relating
to such Underwriter furnished in writing by or on behalf of such Underwriter
through you expressly for use in the Registration Statement, the Prospectus, any
Prepricing Prospectus, any Prospectus Supplement, or any amendment or supplement
thereto. If any action, suit or proceeding shall be brought against the Company,
any of its directors, any such officer, or any such controlling person based on
the Registration Statement, the Prospectus or any Prepricing Prospectus, any
Prospectus Supplement, or any amendment or supplement thereto, and in respect of
which indemnity may be sought against any Underwriter pursuant to this paragraph
(c), such Underwriter shall have the rights and duties given to the Company by
paragraph (b) above (except that if the Company shall have assumed the defense
thereof such Underwriter shall not be required to do so, but may employ separate
counsel therein and participate in the defense thereof, but the fees and
expenses of such counsel shall be at such Underwriters' expense), and the
Company, its directors, any such officer, and any such controlling person shall
have the rights and duties given to the Underwriters by paragraph (b) above. The
foregoing indemnity agreement shall be in addition to any liability which any
Underwriter may otherwise have.
(d) If the indemnification provided for in this Section 7
is unavailable to an indemnified party under paragraphs (a) or (c) hereof in
respect of any losses, claims, damages, liabilities or expenses referred to
therein, then an indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by such indemnified party
as a result of such losses, claims, damages, liabilities or expenses (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company on the one hand and the Underwriters on the other hand from the offering
of the Shares, or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) above but also the relative
fault of the Company on the one hand and the Underwriters on the other in
connection with the statements or omissions that resulted in such losses,
claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations. The relative benefits received by the Company on the
one hand and the Underwriters on the other shall be deemed to be in the same
proportion as the total net proceeds from the offering (before deducting
expenses) received by the Company bear to the total underwriting discounts and
commissions received by the Underwriters, in each case as set forth in the table
on the cover page of the Prospectus. The relative fault of the Company on the
one hand and the Underwriters on the other hand shall be determined by reference
to, among other things, whether 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 by the
Underwriters on the other hand and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission.
(e) The Company and the Underwriters agree that it would
not be just and equitable if contribution pursuant to this Section 7 were
determined by a pro rata allocation or by any other method of allocation that
does not take account of the equitable considerations referred to in paragraph
(d) above. The amount paid or payable by an indemnified party as a result of the
losses, claims, damages, liabilities and expenses referred to in paragraph (d)
above shall be deemed to include, subject to the limitations set forth above,
any legal or other expenses reasonably incurred by such indemnified party in
connection with investigating any claim or defending any such action, suit or
proceeding. Notwithstanding the provisions of this Section 7, no Underwriter
shall be required to contribute any amount in excess of the amount by which the
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total price of the Shares underwritten by it and distributed to the public
exceeds the amount of any damages which such Underwriter has otherwise been
required to pay by reason of 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.
(f) No indemnifying party shall, without the prior
written consent of the indemnified party, effect any settlement of any pending
or threatened action, suit or proceeding in respect of which any indemnified
party is or could have been a party and indemnity could have been sought
hereunder by such indemnified party, unless such settlement includes an
unconditional release of such indemnified party from all liability on claims
that are the subject matter of such action, suit or proceeding.
(g) Any losses, claims, damages, liabilities or expenses
for which an indemnified party is entitled to indemnification or contribution
under this Section 7 shall be paid by the indemnifying party to the indemnified
party as such losses, claims, damages, liabilities or expenses are incurred. The
indemnity and contribution agreements contained in this Section 7 and the
representations and warranties of the Company set forth in this Agreement shall
remain operative and in full force and effect, regardless of (i) any
investigation made by or on behalf of any Underwriter or any person controlling
any Underwriter, the Company, its directors or officers or any person
controlling the Company, (ii) acceptance of any Shares and payment therefor
hereunder, and (iii) any termination of this Agreement. A successor to any
Underwriter or any person controlling any Underwriter, or to the Company, its
directors or officers, or any person controlling the Company, shall be entitled
to the benefits of the indemnity, contribution and reimbursement agreements
contained in this Section 7.
8. CONDITIONS OF UNDERWRITER'S OBLIGATIONS. The several
obligations of the Underwriters to purchase the Firm Shares hereunder are
subject to the following conditions:
(a) If, at the time this Agreement is executed and
delivered, it is necessary for the registration statement or a post-effective
amendment thereto to be declared effective before the offering of the Shares may
commence, the registration statement or such post-effective amendment shall have
become effective not later than 5:30 P.M., New York City time, on the date
hereof, or at such later date and time as shall be consented to in writing by
you, and all filings, if any, required by Rules 424 and 430A under the Act shall
have been timely made; no stop order suspending the effectiveness of the
registration statement shall have been issued and no proceeding for that purpose
shall have been instituted or, to the knowledge of the Company or the
Underwriter, threatened by the Commission, and any request of the Commission for
additional information (to be included in the registration statement or the
prospectus or otherwise) shall have been complied with to your satisfaction.
(b) Subsequent to the effective date of this Agreement,
there shall not have occurred (i) any change, or any development involving a
prospective change, in or affecting the condition (financial or other),
business, prospects, properties, net worth or results of operations of the
Company or the Subsidiaries not contemplated by the Prospectus, which in your
opinion, would materially adversely affect the market for the Shares, or (ii)
any event or development relating to or involving the Company or any officer or
director of the Company which makes any statement made in the Prospectus untrue
or which, in the opinion of the Company and its counsel or the Underwriter and
its counsel, requires the making of any addition to or change in the
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Prospectus in order to state a material fact required by the Act or any other
law to be stated therein or necessary in order to make the statements therein
not misleading, if amending or supplementing the Prospectus to reflect such
event or development would, in your opinion, materially adversely affect the
market for the Shares.
(c) You shall have received on the Closing Date, an
opinion of Sirote & Permutt, P.C., special counsel for the Company, dated the
Closing Date and addressed to you, to the effect that:
(i) The Company is a corporation duly
incorporated and validly existing in good standing under the laws of the State
of Maryland with full corporate power to own, lease and operate its properties
and to conduct its business as presently conducted and as disclosed in the
Registration Statement and the Prospectus (and any amendment or supplement
thereto), and is duly registered and qualified to conduct its business and is in
good standing in each jurisdiction or place where the nature of its properties
or the conduct of its business requires such registration or qualification,
except where the failure so to register or qualify does not have a Material
Adverse Effect;
(ii) To the best knowledge of such counsel, after
reasonable inquiry, the Company has no subsidiaries other than the Subsidiaries.
Each of the Subsidiaries is duly organized, validly existing and in good
standing in the jurisdiction of its incorporation, if a corporation, and is
legally formed and validly existing under the laws of the jurisdiction of its
organization, if a partnership, association or business organization, with full
corporate or organizational power and authority to own, lease and operate its
properties and to conduct its business as presently conducted and as disclosed
in the Registration Statement and the Prospectus (and any amendment or
supplement thereto) and is duly registered and qualified to conduct its business
and is in good standing in each jurisdiction or place where the nature of its
properties or the conduct of its business requires such registration or
qualification, except where the failure so to register or qualify does not have
a Material Adverse Effect; all the outstanding shares of capital stock of each
Subsidiary that is a corporation have been duly authorized and validly issued
and are fully paid and nonassessable, and all ownership interests in each
Subsidiary that is not a corporation have been validly created pursuant to the
partnership or other agreements or organizational documents of each such
Subsidiary. Except as described in the Registration Statement and the Prospectus
(and any amendment or supplement thereto), all of such shares and interests in
the Subsidiaries owned by the Company are owned by the Company directly, or
indirectly through one of the other Subsidiaries, free and clear of any
perfected security interest, or, to the best knowledge of such counsel after
reasonable inquiry, any other security interest, lien, adverse claim, equity or
other encumbrance;
(iii) The authorized and outstanding stock of the
Company is as set forth under the caption "Capitalization" in the Prospectus;
and the authorized stock of the Company conforms in all material respects as to
legal matters to the description thereof contained in the Prospectus under the
captions "Description of Series A Preferred Stock" and "Description of Capital
Stock";
(iv) All the shares of stock of the Company
outstanding prior to the issuance of the Shares to be issued and sold by the
Company hereunder, have been duly authorized and validly issued, are fully paid
and nonassessable and are free of any preemptive or similar rights;
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(v) The Shares to be issued and sold to the
Underwriters by the Company hereunder (i) have been duly authorized and, when
issued and delivered to the Underwriters against payment therefor in accordance
with the terms hereof, will be validly issued, fully paid and nonassessable and
free of any preemptive, or to the best knowledge of such counsel, similar rights
that entitle or will entitle any person to acquire any Shares upon the issuance
thereof by the Company and (ii) conform in all material respects to the
descriptions thereof in the Prospectus and (iii) have been duly authorized for
listing by the New York Stock Exchange upon official notice of issuance;
(vi) The form of certificates for the Shares
conforms to the requirements of the Maryland General Corporation Law;
(vii) Except as disclosed in the Prospectus, there
are no outstanding options, warrants or other rights calling for the issuance
of, and such counsel does not know of, any commitment, plan or arrangement to
issue, any shares of stock of the Company or any security convertible into or
exchangeable or exercisable for stock of the Company;
(viii) No holder of any security of the Company or
any other person has the right, contractual or otherwise, which right has not
been waived by the holder thereof, (A) to cause the Company to sell or otherwise
issue to them, or to permit them to underwrite the sale of, the Shares or (B) as
a result of the filing of the Registration Statement or consummation of
transactions contemplated by this Agreement, to require registration under the
Act of any shares of Common Stock or other securities of the Company;
(ix) The Registration Statement and all
post-effective amendments, if any, have become effective under the Act and, to
the best knowledge of such counsel, no stop order suspending the effectiveness
of the Registration Statement has been issued and no proceedings for that
purpose are pending before or contemplated by the Commission; and any required
filing of the Prospectus pursuant to Rule 424(b) has been made in accordance
with Rule 424(b);
(x) The Company has full corporate power to
enter into this Agreement and to issue, sell and deliver the Shares to be sold
by it to the Underwriters as provided herein, and this Agreement has been duly
authorized, executed and delivered by the Company and is a valid, legal and
binding agreement of the Company, enforceable against the Company in accordance
with its respective terms, subject to the qualification that the enforceability
of the Company's obligations hereunder and thereunder may be limited by
bankruptcy, insolvency, reorganization, moratorium, and other laws relating to
or affecting creditors' rights generally and by general equitable principles and
except as enforcement of rights to indemnity and contribution hereunder may be
limited by federal or state securities laws or principles of public policy;
(xi) Neither the Company nor any of the
Subsidiaries is (i) in violation of its respective certificate or articles of
incorporation, bylaws, partnership agreements, or other organizational
documents; or (ii) to the best knowledge of such counsel after reasonable
inquiry, is (A) in default in the performance of any material obligation,
agreement or condition contained in any bond, debenture, note or other evidence
of indebtedness or in any material agreement, indenture, lease, or other
instrument known to such counsel to which such person is a party or by which any
of them or their respective properties may be bound, or (B) in violation of
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any law, ordinance, administrative or governmental rule or regulation, including
any lending or banking law, governmental rule or regulation, applicable to the
Company or any Subsidiary or of any decree of any court or governmental agency
or body having jurisdiction over the Company or any of the Subsidiaries;
(xii) Neither the issuance, offer, sale or
delivery of the Shares, the execution, delivery or performance of this
Agreement, compliance by the Company with the provisions hereof nor consummation
by the Company of the transactions contemplated hereby conflicts or will
conflict with or constitutes or will constitute a breach of, or a default under,
the certificate or articles of incorporation, bylaws, partnership agreements or
other organizational documents, of the Company or any of the Subsidiaries or any
agreement, indenture, lease, mortgage or other instrument to which the Company
or any of the Subsidiaries is a party or by which any of them or any of their
respective properties is bound that is an exhibit to the Registration Statement
or to any Incorporated Document, or is known to such counsel after reasonable
inquiry, or will result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Company or any of the
Subsidiaries, nor will any such action result in any violation of any existing
law, regulation, ruling (assuming compliance with all applicable state
securities and Blue Sky laws), judgment, injunction, order or decree known to
such counsel after reasonable inquiry, applicable to the Company, the
Subsidiaries or any of their respective properties;
(xiii) Except as disclosed in the Prospectus (or
any supplement thereto), to the best knowledge of such counsel after due
inquiry, there are no legal or governmental proceedings pending or threatened
against the Company or any of the Subsidiaries, or to which the Company or any
of the Subsidiaries, or any of their property, is subject, which are required to
be disclosed in the Registration Statement or Prospectus (or any amendment or
supplement thereto);
(xiv) No consent, approval, authorization or other
order of, or registration or filing with, any court, regulatory body,
administrative agency or other governmental body, agency, or official is
required on the part of the Company (except as have been obtained under the Act,
the Exchange Act and under state securities or Blue Sky laws governing the
purchase and distribution of the Shares) for the valid issuance and sale of the
Shares to the Underwriter as contemplated by this Agreement;
(xv) Such counsel does not know of any
agreements, indentures, leases or other instruments required to be disclosed in
the Registration Statement or the Prospectus (or any amendment or supplement
thereto) or to be filed as an exhibit to the Registration Statement or any
Incorporated Document that are not disclosed or filed as required, and such
agreements, indentures, lease or other instruments as are summarized in the
Registration Statement or the Prospectus are fairly summarized in all respects;
(xvi) The Registration Statement and the
Prospectus and any supplements or amendments thereto (except for the financial
statements and the notes thereto and the schedules and other financial and
statistical data included therein, as to which such counsel need not express any
opinion) comply as to form in all material respects with the requirements of the
Act; and each of the Incorporated Documents (except for the financial statements
and the notes thereto and the schedules and other financial and statistical data
included therein, as to
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which counsel need not express any opinion) when filed complied as to form in
all material respects with the Exchange Act and the rules and regulations of the
Commission thereunder;
(xvii) The Company and each of the Subsidiaries are
duly licensed or authorized in each jurisdiction where they are required to be
so licensed or authorized to conduct their respective businesses; the Company
and each of the Subsidiaries have all other necessary orders, consents,
approvals, permits, licenses, franchises and authorizations of and from all
regulatory authorities to conduct their respective businesses as presently
conducted, including the necessary lending or banking law permits, and, to the
best of such counsel's knowledge after due inquiry, neither the Company nor any
of the Subsidiaries has received any notification from any regulatory authority
to the effect that any additional approval is required to be obtained by the
Company or any of the Subsidiaries;
(xviii) The statements in the Registration Statement
and Prospectus under the captions "Risk Factors," "Management's Discussion and
Analysis of Financial Condition and Results of Operations," "Business,"
"Management," "Description of Debt Securities", "Description of Series A
Preferred Stock" and "Description of Capital Stock," insofar as such statements
constitute summaries of the legal matters, documents or proceedings referred to
therein, fairly present the information called for with respect to such legal
matters, documents and proceedings and fairly summarize the matters referred to
therein;
(xix) The Company is not, and after the sale of
the Shares and the application of the net proceeds therefrom as disclosed in the
Prospectus under the caption "Use of Proceeds" will not be, an "investment
company" within the meaning of the 1940 Act;
(xx) The Company has filed all reports and other
documents required to be filed by it under the Exchange Act;
(xxi) None of the assets of the Company or the
Subsidiaries constitute "plan assets," as such term is defined in ERISA;
(xxii) The Company was and is organized in
conformity with the requirements for qualification as a REIT and its proposed
method of operation, as described in the Prospectus, permits it to meet the
requirements for qualification under the Code;
(xxiii) The discussion in the Prospectus under the
caption "Federal Income Tax Considerations" is accurate in all material respects
and fairly summarizes the federal income tax considerations that are likely to
be material to holders of the Common Stock who are not subject to special
treatment under the tax laws; and
(xxiv) Each of the Subsidiaries constitutes either
a partnership for federal income tax purposes or a "qualified REIT subsidiary"
within the meaning of Section 856(i) of the Code.
In addition, such counsel shall state that they have participated in
the preparation of the Registration Statement and the Prospectus, including
review and discussion of the contents thereof (including review and discussion
of the contents of all Incorporated Documents), and nothing has come to the
attention of such counsel that has caused them to believe that the Registration
Statement (including the Incorporated Documents), at the time the Registration
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Statement became effective, contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements therein not misleading or that the Prospectus, as of its
date and as of the Closing Date or the Option Closing Date, as the case may be,
or that any amendment or supplement to the Prospectus, as of its respective
date, and as of the Closing Date or the Option Closing Date, as the case may be,
contained or contains any untrue statement of a material fact or omitted or
omits to state a material fact necessary in order to make the statements herein,
in the light of the circumstances under which they were or are made, not
misleading (it being understood that such counsel need express no opinion with
respect to the financial statements and the notes thereto and the schedules and
other financial and statistical data included in the Registration Statement or
the Prospectus or any Incorporated Document).
Such counsel shall also reaffirm as of the Closing Date their opinion
filed as Exhibit 8 to the Registration Statement.
In rendering their opinion as aforesaid, counsel may rely upon an
opinion, dated the Closing Date, of ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ with
respect to Maryland law and may rely upon other opinions, each dated the Closing
Date, of other counsel retained by them or the Company as to laws of any
jurisdiction other than the United States or the State of Alabama, provided that
(1) each such local counsel is acceptable to the Underwriters, (2) such reliance
is expressly authorized by each opinion so relied upon and a copy of each such
opinion is delivered to the Underwriters and is in form and substance
satisfactory to it and its counsel, and (3) counsel shall state in their opinion
that they believe that they and the Underwriters are justified in relying
thereon.
(d) You shall have received on the Closing Date an
opinion of ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, counsel for the Underwriters, dated the Closing
Date and addressed to you, with respect to the matters referred to in clauses
(v)(other than subclause (ii) and (iii) thereof), (ix), (x) and (xvi) of the
foregoing paragraph (c) and the third to last paragraph of the foregoing
paragraph (c), and such other related matters as you may request. In rendering
their opinion as aforesaid, such counsel may rely on the opinion, dated the
Closing Date and any Option Closing Date, of ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇
with respect to Maryland law.
(e) You shall have received letters addressed to you and
dated the date hereof and the Closing Date from KPMG Peat Marwick LLP,
independent certified public accountants, substantially in the forms heretofore
approved by you.
(f) (i) No stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for that
purpose shall have been taken or, to the knowledge of the Company, shall be
contemplated by the Commission at or prior to the Closing Date; (ii) there shall
not have been any change in the capital stock of the Company nor any material
increase in the short-term or long-term debt of the Company (other than in the
ordinary course of business) from that set forth or contemplated in the
Registration Statement or the Prospectus (or any amendment or supplement
thereto); (iii) there shall not have been, since the respective dates as of
which information is given in the Registration Statement and the Prospectus (or
any amendment or supplement thereto), except as may otherwise be stated in the
Registration Statement and Prospectus (or any amendment or supplement thereto),
any material adverse change in the condition (financial or other), business,
prospects, properties, net worth or results of operations of the Company and the
Subsidiaries taken as a whole; (iv) the Company
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and the Subsidiaries shall not have any liabilities or obligations, direct or
contingent (whether or not in the ordinary course of business), that are
material to the Company and the Subsidiaries, taken as a whole, other than those
reflected in the Registration Statement or the Prospectus (or any amendment or
supplement thereto); and (v) all the representations and warranties of the
Company contained in this Agreement shall be true and correct on and as of the
date hereof and on and as of the Closing Date as if made on and as of the
Closing Date, and you shall have received a certificate, dated the Closing Date
and signed by the chief executive officer and the chief financial officer of the
Company (or such other officers as are acceptable to you), to the effect set
forth in this Section 8(f) and in Section 8(g) hereof.
(g) The Company shall not have failed at or prior to the
Closing Date to have performed or complied with any of its agreements herein
contained and required to be performed or complied with by it hereunder at or
prior to the Closing Date.
(h) Prior to the Closing Date, the Shares which the
Company agrees to sell pursuant to this Agreement shall have been listed,
subject to notice of issuance, on the New York Stock Exchange.
(i) The Company shall have furnished or caused to be
furnished to you such further certificates and documents as you shall have
requested.
All such opinions, certificates, letters and other documents will be in
compliance with the provisions hereof only if they are satisfactory in form and
substance to you and your counsel.
Any certificate or document signed by any officer of the Company and
delivered to you, or to counsel for the Underwriters, shall be deemed a
representation and warranty by the Company to each Underwriter as to the
statements made therein.
The several obligations of the Underwriters to purchase Additional
Shares hereunder are subject to the satisfaction on and as of any Option Closing
Date of the conditions set forth in this Section 8, except that, if any Option
Closing Date is other than the Closing Date, the certificates, opinions and
letters referred to in paragraphs (c) through (g) shall be dated the Option
Closing Date in question and the opinions called for by paragraphs (c) and (d)
shall be revised to reflect the sale of Additional Shares.
9. EXPENSES. The Company agrees to pay the following costs and
expenses and all other costs and expenses incident to the performance by it of
its obligations hereunder: (i) the preparation, printing or reproduction, and
filing with the Commission of the registration statement (including financial
statements and exhibits thereto), each Prepricing Prospectus, each Prospectus
Supplement, the Prospectus, and each amendment or supplement to any of them;
(ii) the printing (or reproduction) and delivery (including postage, air freight
charges and charges for counting and packaging) of such copies of the
registration statement, each Prepricing Prospectus, each Prospectus Supplement,
the Prospectus, the Incorporated Documents, and all amendments or supplements to
any of them, as may be reasonably requested for use in connection with the
offering and sale of the Shares; (iii) the preparation, printing,
authentication, issuance and delivery of certificates for the Shares, including
any stamp taxes in connection with the original issuance and sale of the Shares;
(iv) the printing (or reproduction) and delivery of this Agreement, the
preliminary and supplemental Blue Sky Memoranda and all other agreements or
documents printed (or reproduced) and delivered in connection with the offering
of the Shares;
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(v) if applicable, the listing of the Shares on the New York Stock Exchange;
(vi) the registration or qualification of the Shares for offer and sale under
the securities or Blue Sky laws of the several states as provided in Section
5(g) hereof (including the reasonable fees, expenses and disbursements of
counsel relating to the preparation, printing or reproduction, and delivery of
the preliminary and supplemental Blue Sky Memoranda and such registration and
qualification); (vii) if applicable, the filing fees and the fees and expenses
of counsel for the Underwriters in connection with any filings required to be
made with the National Association of Securities Dealers, Inc.; (viii) the
transportation and other expenses incurred by or on behalf of Company
representatives in connection with presentations to prospective purchasers of
the Shares; and (ix) the fees and expenses of the Company's accountants and the
fees and expenses of counsel (including local and special counsel) for the
Company.
10. EFFECTIVE DATE OF AGREEMENT. This Agreement shall become
effective: (i) upon the execution and delivery hereof by the parties hereto; or
(ii) if, at the time this Agreement is executed and delivered, it is necessary
for the registration statement or a post-effective amendment thereto to be
declared effective before the offering of the Shares may commence, when
notification of the effectiveness of the registration statement or such
post-effective amendment has been released by the Commission. Until such time as
this Agreement shall have become effective, it may be terminated by the Company,
by notifying you, or by you, by notifying the Company.
If any one or more of the Underwriters shall fail or refuse to purchase
Securities which it or they are obligated to purchase hereunder on the Closing
Date, and the aggregate number of Securities that such defaulting Underwriter or
Underwriters are obligated but fail or refuse to purchase is not more than
one-tenth of the aggregate number of Securities which the Underwriters are
obligated to purchase on the Closing Date, each non-defaulting Underwriter shall
be obligated, severally, in the proportion which the number of Firm Securities
set forth opposite its name in Exhibit A hereto bears to the aggregate number of
Firm Securities set forth opposite the names of all non-defaulting Underwriters
or in such other proportion as you may specify in accordance with Section 20 of
the Master Agreement Among Underwriters of ▇▇▇▇▇ ▇▇▇▇▇▇ Inc., to purchase the
Securities which such defaulting Underwriter or Underwriters are obligated, but
fail or refuse, to purchase. If any one or more of the Underwriters shall fail
or refuse to purchase Securities which it or they are obligated to purchase on
the Closing Date and the aggregate number of Securities with respect to which
such default occurs is more than one-tenth of the aggregate number of Securities
which the Underwriters are obligated to purchase on the Closing Date and
arrangements satisfactory to you and the Company for the purchase of such
Securities by one or more non-defaulting Underwriters or other party or parties
approved by you and the Company are not made within 36 hours after such default,
this Agreement will terminate without liability on the part of any
non-defaulting Underwriter or the Company. In any such case which does not
result in termination of this Agreement, either you or the Company shall have
the right to postpone the Closing Date, but in no event for longer than seven
days, in order that the required changes, if any, in the Registration Statement
and the Prospectus or any other documents or arrangements may be effected. Any
action taken under this paragraph shall not relieve any defaulting Underwriter
from liability in respect of any such default of any such Underwriter under this
Agreement. The term "Underwriter" as used in this Agreement includes, for all
purposes of this Agreement, any party not listed in Schedule I hereto who, with
your approval and the approval of the Company, purchases Shares which a
defaulting Underwriter is obligated, but fails or refuses, to purchase.
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Any notice under this Section 10 may be given by telegram, telecopy or
telephone but shall be subsequently confirmed by letter.
11. TERMINATION OF AGREEMENT. This Agreement shall be subject to
termination in your absolute discretion, without liability on the part of any
Underwriter to the Company, by notice to the Company, if prior to the Closing
Date or any Option Closing Date (if different from the Closing Date and then
only as to the Additional Shares), as the case may be, (i) trading in the Common
Stock of the Company shall be suspended or subject to any restriction or
limitation not in effect on the date of this Agreement, (ii) trading in
securities generally on the New York Stock Exchange, the American Stock Exchange
or the Nasdaq National Market shall have been suspended or materially limited,
(iii) there shall have been any downgrading in the rating of any debt securities
or preferred stock of the Company by any "nationally recognized statistical
rating organization" (as defined for purposes of Rule 436(g) under the Act), or
any public announcement that any such organization has under surveillance or
review its rating of any debt securities or preferred stock of the Company
(other than an announcement with positive implications of a possible upgrading,
and no implication of a possible downgrading, of such rating), (iv) a general
moratorium on commercial banking activities in New York shall have been declared
by either federal or state authorities, or (v) there shall have occurred any
outbreak or escalation of hostilities or other international or domestic
calamity, crisis or change in political, financial or economic conditions, the
effect of which on the financial markets of the United States is such as to make
it, in your judgment, impracticable or inadvisable to commence or continue the
offering of the Shares at the offering price to the public set forth on the
cover page of the Prospectus or to enforce contracts for the resale of the
Shares by the Underwriters. Notice of such termination may be given to the
Company by telegram, telecopy or telephone and shall be subsequently confirmed
by letter.
12. INFORMATION FURNISHED BY THE UNDERWRITERS. The only
Information furnished by or on behalf of the Underwriters through you (as such
information is referred to in Sections 6(b) and 7 hereof) shall be the
statements set forth in the last paragraph on the cover page, the stabilization
legend on the inside cover page, and the statements in the first, third and
fifth paragraphs under the caption "Underwriting" in the Prospectus Supplement.
13. MISCELLANEOUS. Except as otherwise provided in Sections 5, 10
and 11 hereof, notice given pursuant to any provision of this Agreement shall be
in writing and shall be delivered (i) if to the Company, at the office of the
Company at Capstone Capital Corporation, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, with a copy to Sirote &
Permutt, P.C., ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇,
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.; or (ii) if to you, care of ▇▇▇▇▇ ▇▇▇▇▇▇ Inc.,
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Manager, Investment
Banking Division, with a copy to ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
This Agreement has been and is made solely for the benefit of the
several Underwriters, the Company, its directors and officers, and the other
controlling persons referred to in Section 7 hereof and their respective
successors and assigns, to the extent provided herein, and no other person shall
acquire or have any right under or by virtue of this Agreement. Neither the term
"successor" nor the term "successors and assigns" as used in this Agreement
shall include a purchaser from any Underwriter of any of the Shares in his
status as such purchaser.
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14. APPLICABLE LAW; COUNTERPARTS. This Agreement shall be governed
by and construed in accordance with the laws of the State of New York applicable
to contracts made and to be performed within the State of New York.
This Agreement may be signed in various counterparts which together
constitute one and the same instrument. If signed in counterparts, this
Agreement shall not become effective unless at least one counterpart hereof
shall have been executed and delivered on behalf of each party hereto.
Please confirm that the foregoing correctly sets forth the agreement
between the Company and the several Underwriters.
Very truly yours,
CAPSTONE CAPITAL CORPORATION
By
-----------------------------------
Name:
Title:
Confirmed as of the date first
above mentioned.
▇▇▇▇▇ ▇▇▇▇▇▇ INC.
[Co-Managers]
As Representatives of the Several Underwriters
By: ▇▇▇▇▇ ▇▇▇▇▇▇ INC.
By
----------------------
Name:
Title:
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SCHEDULE I
Capstone Capital Corporation
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Number of Firm
Underwriter Shares to be Purchased
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▇▇▇▇▇ ▇▇▇▇▇▇ Inc.
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Total
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26
