EXHIBIT 1.1
[FORM OF UNDERWRITING AGREEMENT]
9,000,000 SHARES
▇▇▇▇▇▇▇ PROPERTIES, INC.
____% SERIES A CUMULATIVE REDEEMABLE PREFERRED STOCK
LIQUIDATION PREFERENCE $25.00 PER SHARE
UNDERWRITING AGREEMENT
DATED JANUARY __, 2004
CITIGROUP GLOBAL MARKETS INC.
FRIEDMAN, BILLINGS, ▇▇▇▇▇▇ & CO., INC.
WACHOVIA CAPITAL MARKETS, LLC
9,000,000 SHARES
▇▇▇▇▇▇▇ PROPERTIES, INC.
____% Series A Cumulative Redeemable Preferred Stock
Liquidation Preference $25.00 Per Share
UNDERWRITING AGREEMENT
January __, 2004
CITIGROUP GLOBAL MARKETS INC.
FRIEDMAN, BILLINGS, ▇▇▇▇▇▇ & CO., INC.
WACHOVIA CAPITAL MARKETS, LLC
As Representatives of the Several Underwriters
c/o Citigroup Global Markets Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇.▇. ▇▇▇▇▇
Dear Sirs:
1. INTRODUCTORY. ▇▇▇▇▇▇▇ Properties, Inc., a Maryland corporation (the
"COMPANY"), ▇▇▇▇▇▇▇ Properties, L.P., a Maryland limited partnership (the
"OPERATING PARTNERSHIP"), ▇▇▇▇▇▇▇ Properties Services, Inc., a Maryland
corporation (the "SERVICES COMPANY," and together with the Company and the
Operating Partnership, the "TRANSACTION ENTITIES"), each confirms its agreement
with Citigroup Global Markets Inc. ("CITIGROUP"), Friedman, Billings, ▇▇▇▇▇▇ &
Co., Inc. ("FBR"), Wachovia Capital Markets, LLC ("WACHOVIA CAPITAL MARKETS")
and each of the other underwriters named in SCHEDULE A hereto (the
"UNDERWRITERS") for whom Citigroup, FBR and Wachovia Capital Markets are acting
as representatives (the "REPRESENTATIVES") with respect to the issue and sale by
the Company and the purchase by the Underwriters, acting severally and not
jointly, of 9,000,000 shares (the "FIRM SECURITIES") of the Company's ____%
Series A Cumulative Redeemable Preferred Stock (liquidation preference $25.00
per share), par value $0.01 per share (the "SERIES A PREFERRED STOCK") and with
respect to the grant by the Company to the Underwriters, acting severally and
not jointly, of an option to purchase an aggregate of not more than 1,000,000
additional shares of Series A Preferred Stock (the "OPTIONAL SECURITIES"),
subject to the terms and conditions set forth below. The Firm Securities and the
Optional Securities are herein collectively called the "OFFERED SECURITIES."
2. REPRESENTATIONS AND WARRANTIES OF THE TRANSACTION ENTITIES. Each of the
Transaction Entities, jointly and severally, represents and warrants to, and
agrees with, the several Underwriters, that:
(a) A registration statement on Form S-11 (File No. 333-111577) relating
to the Offered Securities, including a form of prospectus, has been filed with
the Securities and Exchange Commission (the "COMMISSION") and either (i) has
been declared effective under the Securities Act of 1933, as amended (the "Act")
and is not proposed to be amended or (ii) is proposed to be amended by amendment
or post-effective amendment. If such registration statement ("INITIAL
REGISTRATION STATEMENT") has been declared effective, either (i) an additional
registration statement ("ADDITIONAL REGISTRATION
STATEMENT") relating to the Offered Securities may have been filed with the
Commission pursuant to Rule 462(b) ("RULE 462(b)") under the Act and, if so
filed, has become effective upon filing pursuant to such rule and the Offered
Securities all have been duly registered under the Act pursuant to the initial
registration statement and, if applicable, the additional registration statement
or (ii) such additional registration statement is proposed to be filed with the
Commission pursuant to Rule 462(b) and will become effective upon filing
pursuant to such rule and upon such filing the Offered Securities will all have
been duly registered under the Act pursuant to the initial registration
statement and such additional registration statement. If the Company does not
propose to amend the initial registration statement or if an additional
registration statement has been filed and the Company does not propose to amend
it, and if any post-effective amendment to either such registration statement
has been filed with the Commission prior to the execution and delivery of this
Agreement, the most recent amendment (if any) to each such registration
statement has been declared effective by the Commission or has become effective
upon filing pursuant to Rule 462(c) ("RULE 462(c)") under the Act or, in the
case of the additional registration statement, Rule 462(b). For purposes of this
Agreement, the "EFFECTIVE TIME" with respect to the initial registration
statement or, if filed prior to the execution and delivery of this Agreement,
the additional registration statement means: (i) if the Company has advised the
Representatives that it does not propose to amend such registration statement,
the date and time as of which such registration statement, or the most recent
post-effective amendment thereto (if any) filed prior to the execution and
delivery of this Agreement, was declared effective by the Commission or has
become effective upon filing pursuant to Rule 462(c); or (ii) if the Company has
advised the Representatives that it proposes to file an amendment or
post-effective amendment to such registration statement, the date and time as of
which such registration statement, as amended by such amendment or
post-effective amendment, as the case may be, is declared effective by the
Commission. If an additional registration statement has not been filed prior to
the execution and delivery of this Agreement but the Company has advised the
Representatives that it proposes to file one, "EFFECTIVE TIME" with respect to
such additional registration statement means the date and time as of which such
registration statement is filed and becomes effective pursuant to Rule 462(b).
"EFFECTIVE DATE" with respect to the initial registration statement or the
additional registration statement (if any) means the date of the Effective Time
thereof. The initial registration statement, as amended at its Effective Time,
including all information contained in the additional registration statement (if
any) and deemed to be a part of the initial registration statement as of the
Effective Time of the additional registration statement pursuant to the General
Instructions of the Form on which it is filed and including all information (if
any) deemed to be a part of the initial registration statement as of its
Effective Time pursuant to Rule 430A(b) ("RULE 430A(b)") under the Act, is
hereinafter referred to as the "INITIAL REGISTRATION STATEMENT." The additional
registration statement, as amended at its Effective Time, including the contents
of the initial registration statement incorporated by reference therein and
including all information (if any) deemed to be a part of the additional
registration statement as of its Effective Time pursuant to Rule 430A(b), is
hereinafter referred to as the "ADDITIONAL REGISTRATION STATEMENT." The Initial
Registration Statement and the Additional Registration Statement are herein
referred to collectively as the "REGISTRATION STATEMENTS" and individually as a
"REGISTRATION STATEMENT." The form of prospectus relating to the Offered
Securities, as first filed with the Commission pursuant to and in accordance
with Rule 424(b) ("RULE 424(b)") under the Act or (if no such filing is
required) as included in a Registration Statement, is hereinafter referred to as
the "PROSPECTUS." No document has been or will be prepared or distributed in
reliance on Rule 434 under the Act. For purposes of this Agreement (other than
in connection with any opinion given by counsel in Section 6 hereof, which
hereby expressly excludes any copy filed via Electronic Data Gathering, Analysis
and Retrieval System ("▇▇▇▇▇")), all references to the Registration Statement,
the Prospectus, any preliminary Prospectus, or any amendment or supplement to
any of the foregoing shall be deemed to include the copy filed with the
Commission pursuant to ▇▇▇▇▇.
(b) If the Effective Time of the Initial Registration Statement is prior
to the execution and delivery of this Agreement: (i) on the Effective Date of
the Initial Registration Statement, the Initial
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Registration Statement conformed in all material respects to the requirements of
the Act and the rules and regulations of the Commission ("RULES AND
REGULATIONS") and did not include any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary to
make the statements therein not misleading; (ii) on the Effective Date of the
Additional Registration Statement (if any) each Registration Statement
conformed, or will conform, in all material respects to the requirements of the
Act and the Rules and Regulations and did not include, or will not include, any
untrue statement of a material fact and did not omit, or will not omit, to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading; and (iii) on the date of this Agreement, the
Initial Registration Statement and, if the Effective Time of the Additional
Registration Statement is prior to the execution and delivery of this Agreement,
the Additional Registration Statement each conforms, and at the time of filing
of the Prospectus pursuant to Rule 424(b) or (if no such filing is required) at
the Effective Date of the Additional Registration Statement in which the
Prospectus is included, each of the Registration Statement and the Prospectus
conformed, or will conform, in all respects to the requirements of the Act and
the Rules and Regulations, and neither of such documents includes, or will
include, any untrue statement of a material fact or omits, or will omit, to
state any material fact required to be stated therein or necessary to make the
statements therein (with respect to the Prospectus only, in light of the
circumstances under which they were made) not misleading. If the Effective Time
of the Initial Registration Statement is subsequent to the execution and
delivery of this Agreement, then on the Effective Date of the Initial
Registration Statement, the Initial Registration Statement and the Prospectus
will conform in all respects to the requirements of the Act and the Rules and
Regulations, neither of such documents will include any untrue statement of a
material fact or will omit to state any material fact required to be stated
therein or necessary to make the statements therein (with respect to the
Prospectus only in light of the circumstances under which they were made) not
misleading, and no Additional Registration Statement has been or will be filed.
The two preceding sentences do not apply to statements in or omissions from a
Registration Statement or the Prospectus based upon written information
furnished to the Company by any Underwriter through the Representatives
specifically for use therein, it being understood and agreed that the only such
information is that described as such in Section 7(b) hereof. Each Prospectus
and preliminary Prospectus delivered to the Underwriters and used in connection
with this offering was identical to the electronically transmitted copies
thereof filed with the Commission pursuant to ▇▇▇▇▇, except to the extent
permitted by Regulation S-T under the Act.
(c) All documents filed by the Company pursuant to Sections 12, 13, 14 or
15 of the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"), when
they became or become effective or were or are filed with the Commission, as the
case may be, complied or will comply in all material respects with the
requirements of the Act or the Exchange Act, as applicable, the Exchange Act
Rules and Regulations and the Rules and Regulations.
(d) No stop order suspending the effectiveness of a Registration Statement
or any part thereof has been issued and no proceeding for that purpose has been
instituted or, to the knowledge of any of the Transaction Entities, threatened
by the Commission or by the state securities authority of any jurisdiction. No
order preventing or suspending the use of the Prospectus has been issued and no
proceeding for that purpose has been instituted or, to the knowledge of any of
the Transaction Entities, threatened by the Commission or by the state
securities authority of any jurisdiction.
(e) The Company has been duly formed and is validly existing as a
corporation in good standing under the laws of the State of Maryland, with power
and authority (corporate and other) to own its properties and conduct its
business as described in the Prospectus and to enter into and perform its
obligations under this Agreement and as general partner of the Operating
Partnership to cause the Operating Partnership to enter into and perform the
Operating Partnership's obligations under this Agreement and the Operating
Partnership Agreement (as hereinafter defined). The Company is duly qualified to
do business as a foreign corporation in good standing in all other jurisdictions
in which its
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ownership or lease of property or the conduct of its business requires such
qualification, except where the failure to so qualify would not reasonably be
expected to have, individually or in the aggregate, a material adverse effect on
the condition (financial or other), business, earnings, properties, assets,
results of operations or prospects of the Transaction Entities and their
subsidiaries taken as a whole, whether or not in the ordinary course ("MATERIAL
ADVERSE EFFECT").
(f) The Operating Partnership has been duly formed and is validly existing
as a limited partnership in good standing under the laws of the State of
Maryland, is duly qualified to do business and is in good standing as a foreign
limited partnership in each jurisdiction in which its ownership or lease of
property or the conduct of its business requires such qualification, except
where the failure to so qualify would not reasonably be expected to have a
Material Adverse Effect, and has all power and authority necessary to own its
properties and conduct its business as described in the Prospectus and to enter
into and perform its obligations under this Agreement. The Company is the sole
general partner of the Operating Partnership. At the First Closing Date (as
hereinafter defined), the Amended and Restated Agreement of Limited Partnership
of the Operating Partnership, as amended (the "OPERATING PARTNERSHIP
AGREEMENT"), and the aggregate percentage interests of the Company and the
limited partners in the Operating Partnership will be as set forth in the
Prospectus. To the extent any portion of such over-allotment option is exercised
subsequent to the First Closing Date, the Company will contribute the proceeds
from the sale of the Optional Securities to the Operating Partnership for a
number of series A preferred limited partnership units (the "PREFERRED OP
UNITS"), the economic terms of which are substantially similar to the Series A
Preferred Stock, equal to the number of Optional Securities issued.
(g) The Services Company and each direct or indirect subsidiary listed on
SCHEDULE B hereto (the "MATERIAL SUBSIDIARIES") of the Company has been duly
formed and is validly existing as a corporation, limited partnership or limited
liability company, as the case may be, in good standing under the laws of the
jurisdiction of its organization, with power and authority (corporate and other)
to own its assets and conduct its business as described in the Prospectus and to
enter into and to perform its obligations under this Agreement; and is duly
qualified to do business as a foreign corporation in good standing in all other
jurisdictions in which its ownership or lease of property or the conduct of its
business requires such qualification, except where the failure to so qualify
would not reasonably be expected to have a Material Adverse Effect; all of its
issued and outstanding capital stock or other ownership interests have been duly
authorized and validly issued and are fully paid and non-assessable; and except
as described in the Prospectus, at the First Closing Date its capital stock or
other ownership interests will be owned by the Company, directly or through
subsidiaries, free and clear of any security interests, liens, mortgages,
encumbrances, pledges, claims, defects or other restrictions of any kind
(collectively, "LIENS"), except where such Liens would not reasonably be
expected to have a Material Adverse Effect. None of such equity interests were
issued in violation of the preemptive or other similar rights of any
securityholder of each Material Subsidiary. There are no outstanding options,
rights (preemptive or otherwise) or warrants to purchase or subscribe for equity
interests or other securities of the Services Company or any Material Subsidiary
of the Company. SCHEDULE C hereto lists all direct and indirect subsidiaries of
the Company.
(h) The authorized capital stock of the Company conforms in all material
respects to the description thereof contained in the Prospectus under the
caption "Description of Securities" and "Description of Series A Preferred
Stock" and the issued and outstanding capital stock of the Company, as of the
First Closing Date, will be, in all material respects, as set forth in the
Prospectus under the caption "Capitalization." None of the outstanding shares of
capital stock of the Company was issued in violation of the preemptive or other
similar rights of any securityholder of the Company. Except as disclosed in the
Prospectus: (i) except for shares of common stock of the Company ("COMMON
STOCK") reserved for issuance upon exchange or redemption of the common limited
partnership units of the Operating Partnership ("OP UNITS") or in connection
with the Company's equity incentive plan described
5
in the Prospectus (the "EQUITY INCENTIVE PLAN"), no shares of the Common Stock
are to be reserved for any purpose; (ii) except for the OP Units and options to
purchase Common Stock under the Equity Incentive Plan, there are no outstanding
securities convertible into or exchangeable for any shares of the Common Stock;
and (iii) except for options to purchase Common Stock under the Equity Incentive
Plan, there are no outstanding options, rights (preemptive or otherwise) or
warrants to purchase or subscribe for shares of Common Stock or any other
securities of the Company.
(i) All of the issued and outstanding OP Units have been duly and validly
authorized and issued and conform in all material respects to the description
thereof contained in the Prospectus. The OP Units owned by the Company are owned
directly by the Company, free and clear of all liens, encumbrances, equities or
claims.
(j) The Preferred OP Units to be issued by the Operating Partnership in
connection with the contribution of the net proceeds from the sale of the
Offered Securities to the Operating Partnership have been duly authorized for
issuance by the Operating Partnership to the holder or the prospective holder
thereof, and at the First Closing Date will be validly issued and fully paid.
The Preferred OP Units will be exempt from registration or qualification under
the Act and applicable state securities laws. None of the Preferred OP Units
will be issued in violation of the preemptive or other similar rights of any
securityholder of the Operating Partnership. Except for Preferred OP Units to be
issued in connection with the offering of the Offered Securities, there are no
outstanding options, rights (preemptive or otherwise) or warrants to purchase or
subscribe for Preferred OP Units or other securities of the Operating
Partnership that rank senior to or on parity with the Preferred OP Units with
respect to dividend or liquidation rights.
(k) On or prior to the Closing Date, the Company will have executed and
filed with the State Department of Assessments and Taxation of Maryland (the
"SDAT") Articles Supplementary ("ARTICLES SUPPLEMENTARY") to the Company Charter
(as defined below) establishing the terms of the Offered Securities.
(l) The Offered Securities and all other outstanding shares of capital
stock of the Company have been duly authorized; all outstanding shares of
capital stock of the Company are, and, when the Offered Securities have been
delivered and paid for in accordance with this Agreement on each Closing Date,
such Offered Securities will have been, validly issued, fully paid and
non-assessable, have been, or will be, offered and sold in compliance with all
applicable federal and state securities laws and will conform, in all material
respects, to the description thereof contained in the Prospectus. Upon payment
of the purchase price and delivery of the Offered Securities in accordance
herewith, the Underwriters will receive good, valid and marketable title to the
Offered Securities, free and clear of all Liens. The form of the certificates to
be used to represent the Offered Securities will, at the First Closing Date (as
hereinafter defined), be in due and proper form and will comply with all
applicable legal requirements, the requirements of the charter of the Company
(the "COMPANY CHARTER") and bylaws of the Company (the "COMPANY BYLAWS") and the
requirements of the New York Stock Exchange, Inc. (the "NYSE").
(m) Except as disclosed in the Prospectus, there are no contracts,
agreements or understandings between the Transaction Entities and any person
that would give rise to a valid claim against the Transaction Entities or any
Underwriter for a brokerage commission, finder's fee or other like payment in
connection with this offering.
(n) Except for the Registration Rights Agreements described in the
Prospectus, (the "REGISTRATION RIGHTS AGREEMENTS"), there are no contracts,
agreements or understandings between the Transaction Entities and any person
granting such person the right to require the Transaction Entities to file a
registration statement under the Act with respect to any securities of the
Transaction Entities owned
6
or to be owned by such person or to require the Transaction Entities to include
such securities in the securities registered pursuant to the Registration
Statement or in any securities being registered pursuant to any other
registration statement filed by the Transaction Entities under the Act.
(o) None of the Transaction Entities (i) is in violation of its charter or
by-laws or other similar organization documents, (ii) is in default (whether
with or without the giving of notice or passage of time or both) in the
performance or observance of any obligation, agreement, term, covenant or
condition contained in a contract, indenture, mortgage, deed of trust, loan or
credit agreement, note, lease (under which such Transaction Entity or a
subsidiary is landlord or otherwise), ground lease or air space lease (under
which such Transaction Entity or a subsidiary is tenant), development agreement,
reciprocal easement agreement, deed restriction, hotel management agreement,
parking management agreements, or other agreement or instrument to which it is a
party or by which it or any of them is a party or may be bound, or to which any
of the Properties (as hereinafter defined) or any of its property or assets of
such Transaction Entity is subject (collectively, "AGREEMENTS AND INSTRUMENTS")
or (iii) is in violation of any law, ordinance, governmental rule, regulation or
court decree to which it or the Properties or any of its other properties or
assets may be subject, except for such defaults or violations that would not
reasonably be expected to have a Material Adverse Effect.
(p) No consent, approval, authorization, or order of, or filing or
registration with, any governmental agency or body or any court or any third
party is required for the consummation of the transactions contemplated by this
Agreement, except as have been obtained or made under the Act and as may be
required under state securities laws, or such consents, approvals,
authorizations, orders, filings or registrations that will be obtained or
completed by the First Closing Date, or that the absence of which, individually
or in the aggregate would not reasonably be expected to have a Material Adverse
Effect.
(q) Except as disclosed in the Prospectus, the execution, delivery and
performance of this Agreement by the Company and the Operating Partnership and
the consummation of the transactions contemplated hereby do not and will not
(whether with or without the giving of notice or passage of time or both)
conflict with or result in a breach or violation of any of the terms and
provisions of, or constitute a default (or give rise to any right of
termination, acceleration, cancellation, repurchase or redemption) or Repayment
Event (as hereinafter defined) under, or result in the creation or imposition of
a Lien upon any property or assets of the Transaction Entities or any subsidiary
thereof pursuant to, (i) any statute, any rule, regulation or order of any
governmental agency or body or any court, domestic or foreign, having
jurisdiction over the Transaction Entities or any of their subsidiaries or any
of their properties, assets or businesses; (ii) any term, condition or provision
of any Agreements or Instruments; or (iii) the charters, by-laws or other
organizational documents, as applicable, of the Transaction Entities or any of
the Material Subsidiaries (except for such conflicts, breaches, violations or
defaults that (with response to subclauses (i) and (ii) above) would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. As used herein, "REPAYMENT EVENT" means any event or condition
which, without regard to compliance with any notice or other procedural
requirements, gives the holder of any note, debenture or other evidence of
indebtedness (or any person acting on such holder's behalf) the right to require
the repurchase, redemption or repayment of all or a portion of such indebtedness
by the Company or any subsidiary.
(r) This Agreement has been duly and validly authorized, executed and
delivered by each of the Transaction Entities party hereto and each of this
Agreement and the Operating Partnership Agreement is a valid and binding
agreement of each of the Transaction Entities that are parties thereto,
enforceable against such Transaction Entity in accordance with its terms, except
(i) to the extent that such enforceability may be limited by applicable
bankruptcy, insolvency, fraudulent transfer, moratorium, reorganization or other
similar laws now or hereafter in effect relating to or affecting creditors'
rights, (ii) as limited by the effect of general principles of equity, whether
enforcement is considered in a
7
proceeding in equity or at law (including the possible unavailability of
specific performance or injunctive relief), concepts of materiality,
reasonableness, good faith and fair dealing, and the discretion of the court
before which any proceeding therefore may be brought; (iii) the unenforceability
under certain circumstances under law or court decisions of provisions providing
for the indemnification of or contribution to a party with respect to a
liability where such indemnification or contribution is contrary to public
policy; and (iv) the unenforceability of any provision requiring the payment of
attorney's fees, except to the extent that a court determines such fees to be
reasonable.
(s) The Transaction Entities and the Material Subsidiaries possess
adequate certificates, authorities, licenses, consents, approvals, permits and
other authorizations ("LICENSES") issued by appropriate governmental agencies or
bodies or third parties necessary to conduct the business now operated by them
and have not received any notice of proceedings relating to the revocation or
modification of any such Licenses that, if determined adversely to the
Transaction Entities or any of the Material Subsidiaries, would individually or
in the aggregate would reasonably be expected to have a Material Adverse Effect.
The Transaction Entities and the Material Subsidiaries are in material
compliance with the terms and conditions of all such Licenses except as would
not reasonably be expected to have a Material Adverse Effect.
(t) The financial statements included in the Registration Statement and
the Prospectus, together with the related schedules and notes, present fairly
the financial position of the Company and its consolidated subsidiaries
(including any predecessor entities) at the dates indicated, and the results of
operations, owners' equity and cash flows of the Company and its consolidated
subsidiaries (including any predecessor entities) for the periods specified;
said financial statements have been prepared in conformity with generally
accepted accounting principles ("GAAP") applied on a consistent basis throughout
the periods involved; said financial statements have been prepared on a
consistent basis with the books and records of the Company and its consolidated
subsidiaries (including any predecessor entities). The supporting schedules
included in the Registration Statement present fairly in accordance with GAAP
the information required to be stated therein. The unaudited pro forma condensed
consolidated financial statements and the related notes thereto included in the
Registration Statement and the Prospectus have been prepared in accordance with
the applicable requirements of Rules 11-01 and 11-02 of Regulation S-X under the
Act, and, in the opinion of the Company, the assumptions used in the preparation
thereof are reasonable and provide a reasonable basis for presenting the
significant effects directly attributable to the transactions or events
described therein, and the related adjustments used therein give appropriate
effect to the transactions and circumstances referred to therein and the pro
forma columns therein reflect the proper application of these adjustments to the
corresponding historical financial statement amounts. Other than the historical
and pro forma financial statements (and schedules) included in the Registration
Statement and Prospectus, no other historical or pro forma financial statements
(or schedules) are required by the Act or the Rules and Regulations to be
included therein.
(u) The accountants who certified the financial statements and supporting
schedules included in the Registration Statement and delivered the initial
letter referred to in Section 6(a) hereof, are independent public accountants as
required by the Act and the Rules and Regulations.
(v) Commencing with the taxable year ended December 31, 2003, the Company
has been organized and operated in conformity with the requirements for
qualification and taxation as a real estate investment trust (a "REIT") under
the Internal Revenue Code 1986, as amended (the "CODE"), and its proposed method
of operation will enable it to meet the requirements for qualification and
taxation as a REIT under the Code.
8
(w) The Transaction Entities and each of the Material Subsidiaries
(including any predecessor entities) have filed all foreign, federal, state and
local tax returns that are required to be filed or have requested extensions
thereof (except in any case in which the failure so to file would not reasonably
be expected to have a Material Adverse Effect) and have paid all taxes required
to be paid by them and any other assessment, fine or penalty levied against
them, to the extent that any of the foregoing is due and payable, except for any
such assessment, fine or penalty that (i) is currently being contested in good
faith, (ii) would not individually or in the aggregate reasonably be expected to
have a Material Adverse Effect or (iii) as described in or contemplated by the
Prospectus.
(x) Except as disclosed in the Prospectus, to the knowledge of the
Transaction Entities, there is no pending or threatened special assessment, tax
reduction proceeding or other action which could increase or decrease the real
property taxes or assessments of any Property, which, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.
(y) The Transaction Entities and each of their subsidiaries (including any
predecessor entities) have not distributed, and prior to the later of the First
Closing Date and the completion of the distribution of the Offered Securities,
will not distribute, any offering material in connection with the offering or
sale of the Offered Securities other than the Registration Statement, the
Prospectus or any other materials, if any, permitted by the Act (which were
disclosed to the Representatives and their counsel).
(z) Each Transaction Entity is in compliance, in all material respects,
with all presently applicable provisions of the Employee Retirement Income
Security Act of 1974, as amended, including the regulations and published
interpretations thereunder ("ERISA"); no "reportable event" (as defined in ERISA
other than an event for which the notice requirements have been waived by
regulations) has occurred with respect to any "pension plan" (as defined in
ERISA) for which any Transaction Entity would have any liability; no Transaction
Entity has incurred or expects to incur liability under (i) Title IV of ERISA
with respect to termination of, or withdrawal from, any "pension plan" or (ii)
Sections 412 or 4971 of the Code including the regulations and published
interpretations thereunder; and each "pension plan" for which any Transaction
Entity would have any liability that is intended to be qualified under Section
401(a) of the Code has received a favorable determination or opinion letter from
the Internal Revenue Service that such plan is so qualified in all material
respects and, to the knowledge of the Transaction Entities, nothing has
occurred, whether by action or by failure to act, which would cause the loss of
such qualification, except where such non-compliance, reportable events,
liabilities or failure to be so qualified would not reasonably be expected to
have a Material Adverse Effect.
(aa) The assets of the Transactions Entities and their subsidiaries do not
constitute "plan assets" of an ERISA regulated employee benefit plan.
(bb) At the First Closing Date, the Company will be a "real estate
operating company" as such term is defined in paragraph (e) of the plan assets
regulation in 29 C.F.R. Section 2510.3-101, or will be an "operating company" as
defined in the first sentence of paragraph (c) thereof.
(cc) (1) The Transaction Entities or their subsidiaries have fee simple
title (or in the case of Plaza Las ▇▇▇▇▇▇▇, Cerritos Corporate Center, Phase I
and II and One California Plaza, a leasehold interest) to all of the properties
described in the Prospectus as owned or leased by them (the "PROPERTIES"), in
each case, free and clear of all Liens except such as (i) are disclosed in the
Prospectus; or (ii) would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect. (2) None of the Transaction Entities
nor any Material Subsidiary has received from any governmental authority any
written notice of any condemnation of or zoning change affecting the Properties
or any part thereof, and none of the Transaction Entities nor any Material
Subsidiary knows of
9
any such condemnation or zoning change which is threatened and which if
consummated would reasonably be expected to have a Material Adverse Effect. (3)
True, correct and complete copies of the leases, exhibits, schedules or other
documents that comprise the leases described in the "Business and Properties"
section of the Prospectus where the tenant has been specifically identified (the
"MAJOR LEASES") have been provided to the Underwriters or their counsel. (4)
There are no other material agreements between any Transaction Entity and a
tenant under a Major Lease relating to any of the Properties. (5) Except as
described in the Prospectus, reflected in the Pro Forma Financial Statements or
as disclosed in any tenant estoppel certificates: (i) to the knowledge of the
Transaction Entities, none of the Major Leases has been assigned; (ii) no
brokerage fees, commissions or any similar payments are owed or payable by the
lessor under any of the Major Leases to any third party in connection with the
existence or execution thereof, or in connection with any renewal, expansion or
extension of any Major Leases which has occurred prior to, or may occur after,
Closing Date, except as is due in the ordinary course of business; (iii) to the
knowledge of the Transaction Entities, all of the Major Leases, and, all
guaranties related thereto, if any, are in full force and effect; (iv) no
rentals or other amounts due under the Major Leases have been paid more than one
(1) month in advance; (v) no tenant has asserted in writing any defense or
set-off against the payment of rent in connection with the Major Leases nor has
any tenant contested any tax, operating cost or other escalation payment or
occupancy charge, or any other amounts payable under its Major Leases; (vi) to
the knowledge of the Transaction Entities, all tenants, sub-lessees, licensees,
franchisees or other parties under the Major Leases are in possession of their
respective premises; (vii) to the knowledge of the Transaction Entities, except
for the mortgage loans encumbering the Properties and described in the
Prospectus, none of the Major Leases has been assigned, mortgaged, pledged,
sublet, hypothecated or otherwise encumbered; (viii) no Transaction Entity has
waived in writing any material provision under any Major Lease; (ix) to the
knowledge of the Transaction Entities, there are no uncured events of default,
or events that with the giving of notice or passage of time, or both, would
constitute an event of default, by any tenant under any of the terms and
provisions of the Major Leases; and (x) no tenant under any of the leases at the
Properties has a right of first refusal to purchase the premises demised under
such lease.
(dd) To the knowledge of the Transaction Entities, water, stormwater,
sanitary sewer, electricity and telephone service are all available at the
property lines of each Property over duly dedicated streets or perpetual
easements of record benefiting the applicable Property.
(ee) Except as set forth in the Registration Statement and the Prospectus,
the mortgages and deeds of trust encumbering the Properties and assets described
in the Prospectus are not convertible and neither the Transaction Entities, any
of their subsidiaries, nor any person affiliated therewith holds a participating
interest therein, and such mortgages and deeds of trust are not cross-defaulted
or cross-collateralized to any property not owned directly or indirectly by the
Transaction Entities or any of their subsidiaries. None of the Transaction
Entities or any of their subsidiaries hold participating interests in such
mortgages or deeds of trust.
(ff) Except as described or referred to in the Prospectus, the Operating
Partnership and any Material Subsidiary that owns, or leases under ground
leases, real property have title insurance on the fee interests (or leasehold
interests in the case of Plaza Las ▇▇▇▇▇▇▇, Cerritos Corporate Center, Phases I
and II and One California Plaza) in each of the Properties covering such risks
and in amounts that are commercially reasonable for the assets owned by them,
and in each case such title insurance is in full force and effect. Neither the
Transaction Entities nor any of the Material Subsidiaries has any reason to
believe that any of them will not be able to renew its existing insurance
coverage as and when such coverage expires or to obtain similar coverage from
similar insurers as may be necessary to continue its business.
10
(gg) Except as otherwise disclosed in the Prospectus, (i) to the best
knowledge of the Transaction Entities, the Transaction Entities and their
subsidiaries have been and are in material compliance with, and neither the
Transaction Entities nor their subsidiaries have any material liability under,
applicable Environmental Laws (as hereinafter defined), except as would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect; (ii) neither the Transaction Entities, any of their
subsidiaries, nor, to the best knowledge of the Transaction Entities, any prior
owners or occupants of the property at any time or any other party has at any
time released (as such term is defined in Section 101 (22) of CERCLA (as
hereinafter defined)) or otherwise disposed of or dealt with, Hazardous
Materials (as hereinafter defined) on, to or from the Properties or other assets
owned by the Transaction Entities or their subsidiaries, except as would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect; (iii) the Transaction Entities do not intend to use the
Properties or other assets owned by the Transaction Entities or their
subsidiaries other than in compliance with applicable Environmental Laws, (iv)
neither the Transaction Entities nor any of their subsidiaries know of any
seepage, leak, discharge, release, emission, spill, or dumping of Hazardous
Materials into waters (including, but not limited to, groundwater and surface
water) on, beneath or adjacent to the Properties or onto lands or other assets
owned by the Transaction Entities or their subsidiaries from which Hazardous
Materials might seep, flow or drain into such waters, except as would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect; (v) neither the Transaction Entities nor any of their
subsidiaries has received any written notice of, or has any knowledge of any
occurrence or circumstance which, with notice or passage of time or both, would
give rise to a claim under or pursuant to any Environmental Law by any
governmental or quasi-governmental body or any third party with respect to the
Properties or the assets described in the Prospectus or arising out of the
conduct of the Transaction Entities or their subsidiaries, except for such
claims that would not be reasonably likely have a Material Adverse Effect on the
Transaction Entities and that would not require disclosure pursuant to
Environmental Laws or federal or state laws regulating the issuance of
securities; and (vi) to the best knowledge of the Transaction Entities, none of
the Properties are included or proposed for inclusion on the National Priorities
List issued pursuant to CERCLA by the United States Environmental Protection
Agency or to the best of the Transaction Entities' knowledge, proposed for
inclusion on any similar list or inventory issued pursuant to any other
Environmental Law or issued by any other federal, state or local governmental
authority having or claiming jurisdiction over the Properties and other assets
described in the Prospectus. Except as otherwise disclosed in the Prospectus, to
the knowledge of the Transaction Entities, there have been no and are no (i)
aboveground or underground storage tanks; (ii) polychlorinated biphenyls
("PCBS") or PCB-containing equipment; (iii) asbestos or asbestos containing
materials; (iv) lead based paints; or (v) dry-cleaning facilities in, on, under,
or about any Property owned by the Transaction Entities or their subsidiaries.
As used herein, "HAZARDOUS MATERIAL" shall include, without limitation,
any flammable explosives, radioactive materials, hazardous materials, hazardous
wastes, toxic substances, asbestos or any hazardous material as defined by any
federal, state or local environmental law, ordinance, rule or regulation
including, without limitation, the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, 42 U.S.C. (S) (S) 9601-9675
("CERCLA"), the Hazardous Materials Transportation Act, as amended, 49 U.S.C.
(S) (S) 1801-1819, the Resource Conservation and Recovery Act, as amended, 42
U.S.C. (S) (S) 6901-K, the Emergency Planning and Community Right-to-Know Act of
1986, 42 U.S.C. (S) (S) 11001-11050, the Toxic Substances Control Act, 15 U.S.C.
(S) (S) 2601-2671, the Federal Insecticide, Fungicide and Rodenticide Act, 7
U.S.C. (S) (S) 136-136y, the Clean Air Act, 42 U.S.C. (S) (S) 7401-7642, the
Clean Water Act (Federal Water Pollution Control Act), 33 U.S.C. (S) (S)
1251-1387, and the Safe Drinking Water Act, 42 U.S.C. (S) (S) 300f-300j-26, as
any of the above statutes may be amended from time to time, and in the
regulations promulgated pursuant to any of the foregoing (individually, an
"ENVIRONMENTAL LAW" and collectively "ENVIRONMENTAL LAWS").
(hh) Application has been made for the listing the Offered Securities on
the NYSE.
11
(ii) No labor dispute with the employees of the Transaction Entities or
any subsidiary exists or, to the knowledge of the Company, is imminent that
might reasonably be expected to have a Material Adverse Effect.
(jj) The Transaction Entities and their subsidiaries own, possess or can
acquire on reasonable terms, adequate trademarks, trade names and other rights
to inventions, know-how, patents, copyrights, confidential information and other
intellectual property (collectively, "INTELLECTUAL PROPERTY Rights") necessary
to conduct the business now operated by them, or presently employed by them, and
have not received any notice of infringement of or conflict with asserted rights
of others with respect to any Intellectual Property Rights that, if determined
adversely to the Transaction Entities or any of their subsidiaries, would
reasonably be expected to have a Material Adverse Effect.
(kk) Except as disclosed in the Prospectus, there are no pending actions,
suits or proceedings against or affecting the Transaction Entities, any of the
Material Subsidiaries or any of the Properties or other assets that, if
determined adversely to the Transaction Entities or any of the Material
Subsidiaries, would reasonably be expected to have a Material Adverse Effect, or
would materially and adversely affect the ability of the Transaction Entities to
perform their obligations under this Agreement or the Operating Partnership
Agreement or the transactions contemplated therein; and no such actions, suits
or proceedings are threatened or, to the Transaction Entities' knowledge,
contemplated.
(ll) Except as disclosed in the Prospectus, since the date of the latest
audited financial statements included in the Prospectus (1) there has been no
material adverse change, nor any development or event involving a prospective
material adverse change, individually or in the aggregate, in the condition
(financial or other), business, properties, earnings, results of operations or
prospects of the Company and its subsidiaries taken as a whole whether or not in
the ordinary course; or (2) there have been no transaction entered into by the
Company or any of its subsidiaries which are material with respect to the
Company and its subsidiaries considered as one entity.
(mm) No Transaction Entity is and, after giving effect to the offering and
sale of the Offered Securities and the application of the proceeds thereof as
described in the Prospectus, no Transaction Entity will be, an "investment
company" as defined in the Investment Company Act of 1940, as amended.
(nn) There are no contracts or documents which are required to be
described in the Registration Statement or the Prospectus or to be filed as
exhibits thereto which have not been so described and filed as required.
(oo) No relationship, direct or indirect, exists between or among any of
the Transaction Entities on the one hand, and the directors, officers,
stockholders, customers or suppliers of the Transaction Entities on the other
hand, which is required to be described in the Prospectus which is not so
described.
(pp) Each Transaction Entity (i) makes and keeps books and records that
are accurate in all material respects and (ii) maintains internal accounting
controls which provide reasonable assurance that (A) transactions are executed
in accordance with management's authorization, (B) transactions are recorded as
necessary to permit preparation of its financial statements and to maintain
accountability for its assets, (C) access to its assets is permitted only in
accordance with management's authorization and (D) the reported accountability
for its assets is compared with existing assets at reasonable intervals.
(qq) Except as stated in this Agreement and in the Prospectus, none of the
Transaction Entities nor any of their respective officers, directors, members or
controlling persons has taken, or will take, directly or indirectly, any action
designed to or that might reasonably be expected to result in a violation
12
of Regulation M under the Exchange Act or cause or result in stabilization or
manipulation of the price of the Series A Preferred Stock to facilitate the sale
or resale of the Offered Securities.
(rr) The Company intends to apply the net proceeds from the sale of the
Offered Securities being sold by the Company in accordance with the description
set forth in the Prospectus under the heading "Use of Proceeds."
(ss) Each of the Operating Partnership and any other Material Subsidiary
that is a partnership or a limited liability company has been properly
classified either as a partnership or as an entity disregarded as separate from
the Company for Federal income tax purposes throughout the period from its
formation through the date hereof.
(tt) There are no contracts, letters of intent, term sheets, agreements,
arrangements or understandings with respect to the direct or indirect
acquisition or disposition by the Company of interests in assets or real
property that is required to be described in the Prospectus that is not already
so described.
3. PURCHASE, SALE AND DELIVERY OF OFFERED SECURITIES. On the basis of the
representations, warranties and agreements herein contained, but subject to the
terms and conditions herein set forth, the Company agrees to sell to the
Underwriters, and the Underwriters agree, severally and not jointly, to purchase
from the Company, at a purchase price of $_____ per share, the respective
numbers of shares of Firm Securities set forth opposite the names of the
Underwriters in SCHEDULE A hereto.
The Company will deliver the Firm Securities to the Representatives for
the accounts of the Underwriters, against payment of the purchase price in
Federal (same day) funds by official bank check or checks or wire transfer to an
account at a bank acceptable to Citigroup, FBR and Wachovia Capital Markets
drawn to the order of ▇▇▇▇▇▇▇ Properties, Inc. at the office of ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
LLP, ▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, at 11:00 a.m., New
York time, on January __, 2004, or at such other time not later than seven full
business days thereafter as Citigroup, FBR, Wachovia Capital Markets and the
Company determine, such time being herein referred to as the "FIRST CLOSING
DATE." For purposes of Rule 15c6-1 under the Exchange Act, the First Closing
Date (if later than the otherwise applicable settlement date) shall be the
settlement date for payment of funds and delivery of securities for all the
Offered Securities sold pursuant to the offering. The certificates for the Firm
Securities so to be delivered will be in definitive form, in such denominations
and registered in such names as Citigroup, FBR and Wachovia Capital Markets
request and will be made available for checking and packaging at the office of
▇▇▇▇▇▇▇▇ Chance US LLP, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ at least 24 hours
prior to the First Closing Date.
In addition, upon written notice from Citigroup, FBR and Wachovia Capital
Markets given to the Company from time to time not more than 30 days subsequent
to the date of the Prospectus, the Underwriters may purchase all or less than
all of the Optional Securities at the purchase price per share to be paid for
the Firm Securities. The Company agrees to sell to the Underwriters the number
of Optional Securities specified in such notice and the Underwriters agree,
severally and not jointly, to purchase such Optional Securities. Such Optional
Securities shall be purchased for the account of each Underwriter in the same
proportion as the number of shares of Firm Securities set forth opposite such
Underwriter's name bears to the total number of shares of Firm Securities
(subject to adjustment by Citigroup, FBR and Wachovia Capital Markets to
eliminate fractions) and may be purchased by the Underwriters only for the
purpose of covering over-allotments made in connection with the sale of the Firm
Securities. No Optional Securities shall be sold or delivered unless the Firm
Securities previously have been, or simultaneously are, sold and delivered. The
right to purchase the Optional Securities or any portion thereof may be
exercised from time to time and to the extent not previously exercised may be
surrendered
13
and terminated at any time upon notice by Citigroup, FBR and Wachovia Capital
Markets and to the Company.
Each time for the delivery of and payment for the Optional Securities,
being herein referred to as an "OPTIONAL CLOSING DATE," which may be the First
Closing Date (the First Closing Date and each Optional Closing Date, if any,
being sometimes referred to as a "CLOSING DATE"), shall be determined by
Citigroup, FBR and Wachovia Capital Markets, but shall be not later than five
full business days after written notice of election to purchase Optional
Securities is given. The Company will deliver the Optional Securities being
purchased on each Optional Closing Date to the Representatives for the accounts
of the several Underwriters, against payment of the purchase price therefor in
Federal (same day) funds by official bank check or checks or wire transfer to an
account at a bank acceptable to Citigroup, FBR and Wachovia Capital Markets
drawn to the order of ▇▇▇▇▇▇▇ Properties, Inc., at the office of ▇▇▇▇▇▇ &
▇▇▇▇▇▇▇ LLP. The certificates for the Optional Securities being purchased on
each Optional Closing Date will be in definitive form, in such denominations and
registered in such names as Citigroup, FBR and Wachovia Capital Markets request
upon reasonable notice prior to such Optional Closing Date and will be made
available for checking and packaging at the office of ▇▇▇▇▇▇▇▇ Chance US LLP at
a reasonable time in advance of such Optional Closing Date.
4. OFFERING BY UNDERWRITERS. It is understood that the several Underwriters
propose to offer their respective portions of the Offered Securities for sale to
the public as set forth in the Prospectus.
5. CERTAIN AGREEMENTS OF THE COMPANY. The Company agrees with the several
Underwriters that:
(a) If the Effective Time of the Initial Registration Statement is prior
to the execution and delivery of this Agreement, the Company will file the
Prospectus with the Commission pursuant to and in accordance with Rule 424(b)
under the Act not later than the Commission's close of business on the second
business day following the execution and delivery of this Agreement.
The Company will advise Citigroup, FBR and Wachovia Capital Markets
promptly of any such filing pursuant to Rule 424(b). If the Effective Time of
the Initial Registration Statement is prior to the execution and delivery of
this Agreement and an additional registration statement is necessary to register
a portion of the Offered Securities under the Act but the Effective Time thereof
has not occurred as of such execution and delivery, the Company will file the
additional registration statement or, if filed, will file a post-effective
amendment thereto with the Commission pursuant to and in accordance with Rule
462(b) on or prior to 10:00 p.m., New York time, on the date of this Agreement
or, if earlier, on or prior to the time the Prospectus is printed and
distributed to any Underwriter, or will make such filing at such later date as
shall have been consented to by Citigroup, FBR and Wachovia Capital Markets.
(b) The Company will advise Citigroup, FBR and Wachovia Capital Markets
promptly of any proposal to amend or supplement the initial or any additional
registration statement as filed or the related prospectus or the Initial
Registration Statement, the Additional Registration Statement (if any), the
Prospectus or any preliminary Prospectus and will not effect such amendment or
supplementation without the consent of Citigroup, FBR and Wachovia Capital
Markets; and the Company will also advise Citigroup, FBR and Wachovia Capital
Markets promptly of the effectiveness of each Registration Statement (if its
Effective Time is subsequent to the execution and delivery of this Agreement)
and of any amendment or supplementation of a Registration Statement or the
Prospectus and of the institution by the Commission of any stop order
proceedings in respect of a Registration Statement and will use its best efforts
to prevent the issuance of any such stop order and to obtain as soon as possible
its lifting, if issued.
(c) If, at any time when a prospectus relating to the Offered Securities
is required to be delivered under the Act in connection with sales by any
Underwriter or dealer, any event occurs as a result of which the Prospectus as
then amended or supplemented would include an untrue statement of a
14
material fact or omit to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, or if it is necessary at any time to amend the Prospectus
to comply with the Act, the Company will promptly notify Citigroup, FBR and
Wachovia Capital Markets of such event and will promptly prepare and file with
the Commission, at its own expense, an amendment or supplement which will
correct such statement or omission or an amendment which will effect such
compliance. Neither Citigroup's, FBR's and Wachovia Capital Markets', consent
to, nor the Underwriters' delivery of, any such amendment or supplement shall
constitute a waiver of any of the conditions set forth in Section 6.
(d) As soon as practicable, but not later than the Availability Date (as
hereinafter defined), the Company will make generally available to its
securityholders an earnings statement covering a period of at least 12 months
beginning after the Effective Date of the Initial Registration Statement (or, if
later, the Effective Date of the Additional Registration Statement) which will
satisfy the provisions of Section 11(a) of the Act. For the purpose of the
preceding sentence, "AVAILABILITY DATE" means the 45th day after the end of the
fourth fiscal quarter following the fiscal quarter that includes such Effective
Date, except that, if such fourth fiscal quarter is the last quarter of the
Company's fiscal year, "AVAILABILITY DATE" means the 90th day after the end of
such fourth fiscal quarter.
(e) The Company will furnish to the Representatives copies of each
Registration Statement (three of which will be signed and will include all
exhibits), each related preliminary Prospectus, and, so long as a prospectus
relating to the Offered Securities is required to be delivered under the Act in
connection with sales by any Underwriter or dealer, the Prospectus and all
amendments and supplements to such documents, in each case in such quantities as
Citigroup, FBR and Wachovia Capital Markets request. The Prospectus shall be so
furnished on or prior to 3:00 p.m., New York time, on the business day following
the later of the execution and delivery of this Agreement or the Effective Time
of the Initial Registration Statement. All other documents shall be so furnished
as soon as available. The Company will pay the expenses of printing and
distributing to the Underwriters all such documents. The aforementioned
documents furnished to the Underwriters or to any dealer shall be identical to
the electronically transmitted copies thereof filed with the Commission pursuant
to ▇▇▇▇▇, except to the extent permitted by Regulation S-T under the Act.
(f) During the period of five years hereafter, the Company will furnish to
the Representatives and, upon request, to each of the other Underwriters, as
soon as practicable after the end of each fiscal year, a copy of its annual
report to stockholders for such year; and the Company will furnish to the
Representatives (i) as soon as available, a copy of each report and any
definitive proxy statement of the Company filed with the Commission under the
Exchange Act or mailed to stockholders, and (ii) from time to time, such other
information concerning the Company as the Representatives may reasonably
request.
(g) The Company will arrange for the qualification of the Offered
Securities for sale under the laws of such jurisdictions as Citigroup, FBR and
Wachovia Capital Markets designate and will continue such qualifications in
effect so long as required for the distribution.
(h) The Company will pay all expenses incident to the performance of its
obligations under this Agreement, for any filing fees and other expenses
(including fees and disbursements of accountants, printers and counsel) incurred
in connection with (1) the registration of the Offered Securities; (2) the
qualification of the Offered Securities for sale under the laws of such
jurisdictions as Citigroup, FBR and Wachovia Capital Markets designate and the
printing of memoranda relating thereto (including any fees of Underwriters'
counsel (in an amount not to exceed $______)); (3) for the filing fee incident
to the review by the National Association of Securities Dealers, Inc. (the
"NASD") of the Offered Securities; (4) for any travel expenses of the Company's
officers and employees and any other expenses of the
15
Company in connection with attending or hosting meetings with prospective
purchasers of the Offered Securities; (5) for the preparation, issuance and
delivery of the Offered Securities to the Underwriters, including any stock or
other transfer, taxes and any stamp or other duties payable upon the sale,
issuance or delivery of the Offered Securities to the Underwriters; (6) the fees
and expenses (x) of any transfer agent or registrar and (y) incurred in
connection with the listings of the Offered Securities on the NYSE and; (7) for
expenses incurred in preparing, printing, filing and distributing preliminary
prospectuses and the Prospectus (including any amendments and supplements
thereto) to the Underwriters. To the extent that the Company has paid for legal
fees and expenses of the Representatives prior the date hereof, such amounts
will be a credit against amounts owing by the Company to the Underwriters under
this Agreement.
(i) Prior to the Closing Date, the Company will file the Articles
Supplementary with the SDAT establishing and fixing the rights and preferences
of the Offered Securities. The Company shall first provide the form of Articles
Supplementary to counsel to the Underwriters and shall not file any form of
Articles Supplementary to which counsel to the Underwriters has objected in good
faith.
(j) Commencing with the taxable year ended December 31, 2003, the Company
has been organized and operated in conformity with the requirements for
qualification and taxation of the Company as a REIT under the Code, and the
Company's proposed methods of operation will enable the Company to continue to
meet the requirements for qualification and taxation as a REIT under the Code
for subsequent taxable years.
(k) The Company will use its best efforts to effect the listing of the
Series A Preferred Stock (including the Offered Securities) on the NYSE.
(l) During the period when the Prospectus is required to be delivered
under the Act or the Exchange Act, the Company will (1) comply with all
provisions of the Act and the Rules and Regulations and (2) file all documents
required to be filed with the Commission pursuant to the Exchange Act within the
time periods required by the Exchange Act and the rules and regulations of the
Commission thereunder.
(m) The Company will take such steps as shall be necessary to ensure that
neither the Company nor the Operating Partnership shall become an "investment
company" within the meaning of such term under the Investment Company Act of
1940, as amended, and the rules and regulations of the Commission thereunder.
(n) The Company will file with the Commission such reports as may be
required pursuant to Rule 463 of the Rules and Regulations.
(o) Except for the authorization of actions permitted to be taken by the
Underwriters as contemplated herein or in the Prospectus, neither the Company
nor the Operating Partnership will (1) take, directly or indirectly, any action
designated to cause or to result in, or that might reasonably be expected to
constitute, the stabilization or manipulation of the price of any security of
the Company to facilitate the sale or resale of the Offered Securities; (2)
until the Closing Date, (2) sell, bid for or purchase the Offered Securities or
pay any person any compensation for soliciting purchases of the Offered
Securities; or (3) pay or agree to pay to any person any compensation for
soliciting another to purchase any other securities of the Company.
(p) For a period of 90 days after the date of the initial public offering
of the Offered Securities, the Company will not offer, sell, contract to sell,
pledge or otherwise dispose of, directly or indirectly, or file with the
Commission a registration statement under the Act relating to, any additional
16
shares of its preferred stock or securities convertible into or exchangeable or
exercisable for any shares of its preferred stock, or publicly disclose the
intention to make any such offer, sale, pledge, disposition or filing, without
the prior written consent of Citigroup, FBR and Wachovia Capital Markets.
6. CONDITIONS OF THE OBLIGATIONS OF THE UNDERWRITERS. The obligations of the
several Underwriters to purchase and pay for the Firm Securities on the First
Closing Date and the Optional Securities to be purchased on each Optional
Closing Date will be subject to the accuracy of the representations and
warranties on the part of the Transaction Entities herein, to the accuracy of
the statements of Company officers made pursuant to the provisions hereof, to
the performance by the Company of its obligations hereunder and to the following
additional conditions precedent:
(a) The Representatives shall have received a letter, dated the date of
delivery thereof (which, if the Effective Time of the Initial Registration
Statement is prior to the execution and delivery of this Agreement, shall be on
or prior to the date of this Agreement or, if the Effective Time of the Initial
Registration Statement is subsequent to the execution and delivery of this
Agreement, shall be prior to the filing of the amendment or post-effective
amendment to the registration statement to be filed shortly prior to such
Effective Time), of KPMG LLP ("KPMG") confirming that they are independent
public accountants within the meaning of the Act and the applicable Rules and
Regulations and stating to the effect that:
(i) in their opinion the financial statements examined by them and
included in the Registration Statements comply as to form in all material
respects with the applicable accounting requirements of the Act and the related
Rules and Regulations;
(ii) they have performed the procedures specified by the American
Institute of Certified Public Accountants for a review of interim financial
information as described in Statement of Auditing Standards No. 100, Interim
Financial Information, on the unaudited financial statements included in the
Registration Statements (as hereinafter defined);
(iii) on the basis of the review referred to in clause (ii) above, a
reading of the latest available interim financial statements of the Company,
inquiries of officials of the Company who have responsibility for financial and
accounting matters and other specified procedures, nothing came to their
attention that caused them to believe that:
(A) the unaudited financial statements, included in the
Registration Statements do not comply as to form in all material respects with
the applicable accounting requirements of the Act and the related Rules and
Regulations or any material modifications should be made to such unaudited
financial statements and summary of earnings for them to be in conformity with
generally accepted accounting principles;
(B) at the date of the latest available balance sheet read by
such accountants, or at a subsequent specified date not more than three business
days prior to the date of this Agreement, there was any change in the capital
stock or any increase in long-term debt of the Company and its consolidated
subsidiaries or, at the date of the latest available balance sheet read by such
accountants, there was any decrease in stockholders' equity, as compared with
amounts shown on the latest balance sheet included in the Prospectus; or
(C) for the period from the closing date of the latest income
statement included in the Prospectus to the date of the letter from such
accountants, there were any decreases, as compared with the corresponding period
of the previous year total revenue;
17
except in all cases set forth in one of the above clauses for changes, increases
or decreases which the Prospectus discloses have occurred or may occur or which
are described in such letter; and
(iv) they have compared specified dollar amounts (or percentages
derived from such dollar amounts) and other financial information contained in
the Registration Statements (in each case to the extent that such dollar
amounts, percentages and other financial information are derived from the
general accounting records of the ▇▇▇▇▇▇▇ Predecesser and its subsidiaries
subject to the internal controls of the ▇▇▇▇▇▇▇ Predecesser's accounting system
or are derived directly from such records by analysis or computation) with the
results obtained from inquiries, a reading of such general accounting records
and other procedures specified in such letter and have found such dollar
amounts, percentages and other financial information to be in agreement with
such results, except as otherwise specified in such letter.
For purposes of this subsection, (i) if the Effective Time of the Initial
Registration Statement is subsequent to the execution and delivery of this
Agreement, "REGISTRATION STATEMENTS" shall mean the initial registration
statement as proposed to be amended by the amendment or post-effective amendment
to be filed shortly prior to its Effective Time, (ii) if the Effective Time of
the Initial Registration Statement is prior to the execution and delivery of
this Agreement but the Effective Time of the Additional Registration is
subsequent to such execution and delivery, "REGISTRATION STATEMENTS" shall mean
the Initial Registration Statement and the additional registration statement as
proposed to be filed or as proposed to be amended by the post-effective
amendment to be filed shortly prior to its Effective Time, and (iii)
"PROSPECTUS" shall mean the prospectus included in the Registration Statements.
(b) If the Effective Time of the Initial Registration Statement is not
prior to the execution and delivery of this Agreement, such Effective Time shall
have occurred not later than 10:00 p.m., New York time, on the date of this
Agreement or such later date as shall have been consented to by Citigroup, FBR
and Wachovia Capital Markets. If the Effective Time of the Additional
Registration Statement (if any) is not prior to the execution and delivery of
this Agreement, such Effective Time shall have occurred not later than 10:00
p.m., New York time, on the date of this Agreement or, if earlier, the time the
Prospectus is printed and distributed to any Underwriter, or shall have occurred
at such later date as shall have been consented to by Citigroup, FBR and
Wachovia Capital Markets. If the Effective Time of the Initial Registration
Statement is prior to the execution and delivery of this Agreement, the
Prospectus shall have been filed with the Commission in accordance with the
Rules and Regulations and Section 5(a) of this Agreement. Prior to such Closing
Date, no stop order suspending the effectiveness of a Registration Statement
shall have been issued and no proceedings for that purpose shall have been
instituted or, to the knowledge of the Company or the Representatives, shall be
contemplated by the Commission.
(c) Subsequent to the execution and delivery of this Agreement, there
shall not have occurred: (i) any change, or any development or event involving a
prospective change, in the condition (financial or other), business, properties,
earnings, results of operations or prospects of the Company and its subsidiaries
taken as one enterprise, whether or not in the ordinary course, which,
individually or in the aggregate, in the judgment of the Representatives, is
material and adverse and makes it impractical or inadvisable to proceed with
completion of the public offering or the sale of and payment for the Offered
Securities; (ii) any downgrading in the rating of any debt securities 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 of the Company (other than an announcement with positive
implications of a possible upgrading, and no implication of a possible
downgrading, of such rating); (iii) any change in U.S. or international
financial, political or economic conditions or currency exchange rates or
exchange controls as would, in the judgment of the Representatives, be likely to
prejudice materially the success of the proposed issue, sale or distribution of
the Offered Securities, whether in the primary market or in respect of dealings
in the secondary market; (iv) any suspension or limitation of trading in
securities generally on
18
the New York Stock Exchange, or any setting of minimum prices for trading on
such exchange, (v) any suspension of trading of any securities of the Company on
any exchange or in the over-the-counter market; (vi) any banking moratorium
declared by U.S. Federal or New York authorities; (vii) any major disruption of
settlements of securities or clearance services in the United States; or (viii)
any attack on, outbreak or escalation of hostilities or act of terrorism
involving the United States, any declaration of war by Congress or any other
national or international calamity, crisis or emergency if, in the sole judgment
of the Representatives, the effect of any such attack, outbreak, escalation,
act, declaration, calamity, crisis or emergency makes it impractical or
inadvisable to proceed with completion of the public offering or the sale of and
payment for the Offered Securities.
(d) The Representatives shall have received an opinion, dated such Closing
Date, of ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP, special securities law counsel for the Company,
to the effect that:
(i) Based solely on certificates from public officials, such counsel
confirms that the Company is qualified to do business in California;
(ii) Based solely on certificates from public officials, such
counsel confirms that the Operating Partnership is qualified to do business in
California;
(iii) Based solely on certificates from public officials, such
counsel confirms that the Services Company is qualified to do business in
California;
(iv) Each Material Subsidiary is a limited liability company with
power and authority to own its assets and to conduct its business as described
in the Registration Statement and the Prospectus. Based on certificates from
public officials, such counsel confirms that each Material Subsidiary is in good
standing under the laws of the State of Delaware and is qualified to do business
in California. Based solely on an officer's certificate, each of the operating
agreements of the Material Subsidiaries is in full force and effect;
(v) With the consent of the Representatives based solely on a
certificate of an officer of the Company and the Operating Partnership as to
factual matters, each of the Company and the Operating Partnership is not, and
immediately after giving effect to the sale of the Offered Securities in
accordance with the Underwriting Agreement and the application of the proceeds
as described in the Prospectus under the caption "Use of Proceeds" will not be
required to be registered as, an "investment company" within the meaning of the
Investment Company Act of 1940, as amended;
(vi) The execution and delivery of the Underwriting Agreement by the
Transaction Entities and the issuance and sale of the Offered Securities by the
Company to the Underwriters pursuant to the Underwriting Agreement on the date
hereof do not:
(A) conflict with, result in the breach or violation of or
constitute a default under any of the agreements filed as exhibits to the
Registration Statement;
(B) violate any federal or California statute, rule or
regulation applicable to any such Transaction Entities;
(C) violate the provisions of the operating agreements of the
Material Subsidiaries; or
(D) require any consents, approvals or authorizations to be
obtained by any such Transaction Entities, or any registrations, declarations or
filings to be made by such Transaction
19
Entities, in each case, under any federal or California statute, rule or
regulation applicable to the Transaction Entities that have not been obtained or
made;
(vii) The Registration Statement has become effective under the Act.
With the consent of the Representatives, based solely on telephonic confirmation
by a member of the Staff of the Commission on the date of such opinion, no stop
order suspending the effectiveness of the Registration Statement has been issued
under the Act and no proceedings therefor have been initiated by the Commission.
Any required filing of the Prospectus pursuant to Rule 424 under the Act has
been made in accordance with Rule 424 under the Act;
(viii) To the best knowledge of such counsel, there are no
contracts, documents, statutes or regulations of a character required to be
described in the Registration Statement or Prospectus or to be filed as exhibits
to the Registration Statement that are not described or filed. Based solely on
the procedures stated therein to which the Representatives have consented, there
are no or legal or governmental proceedings of a character required to be
described in the Registration Statement or Prospectus that are not so described;
(ix) The Registration Statement, as of the date it was declared
effective, and the Prospectus, as of its date, complied as to form in all
material respects with the requirements for registration statements on Form S-11
under the Act and the rules and regulations of the Commission thereunder; it
being understood, however, that such counsel need express no opinion with
respect to Regulation S-T under the Act or the financial statements, schedules,
or other financial data, included in, or omitted from, the Registration
Statement or Prospectus. In passing upon the compliance as to form of the
Registration Statement and the Prospectus, such counsel may assume that the
statements made therein are correct and complete;
(x) The statements in the Prospectus under the captions
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources -- Material Provisions of
Consolidated Indebtedness to ," "Management -- Non-Competition Agreements,"
"Business and Properties -- Legal Proceedings," "Certain Relationships and
Related Transactions -- Description of Contribution Agreements, Tax Indemnity
and Debt Guarantees" and "Option Agreements," and "ERISA Considerations,"
insofar as they purport to describe or summarize certain provisions of the
agreements, statutes, regulations or the subject legal proceedings referred to
therein, are accurate descriptions or summaries in all material respects; and
(xi) Except for the Registration Rights Agreements, to the best
knowledge of such counsel, no Transaction Entity is a party to any agreement
that would (a) require the inclusion in the Registration Statement of shares of
Common Stock or preferred stock of the Company owned by any person or entity
other than the Company or (b) entitle such person to require the Company to file
a registration statement under the Act with respect to any securities of the
Company.
In rendering such opinions, such counsel may limit its opinions to the
federal laws of the United States of America and the laws of the State of
California, and matters specifically governed thereby. In rendering such
opinions, such counsel may also rely, as to matters of fact (but not as to legal
conclusions), to the extent they deem proper, on certificates of responsible
officers of the Company and public officials.
In addition, such counsel shall state that:
The primary purpose of our professional engagement was not to
establish or confirm factual matters or financial or quantitative information.
Therefore, we are not passing upon and do not assume any responsibility for the
accuracy, completeness or fairness of the statements contained in the
Registration Statement or the Prospectus, (except to the extent expressly set
forth in the numbered
20
paragraph (x) of our opinion letter to you of even date), and have not made an
independent check or verification thereof (except as aforesaid). However, in the
course of acting as counsel to the Company in connection with the preparation by
the Company of the Registration Statement and Prospectus, we reviewed the
Registration Statement, and the Prospectus, and participated in conferences and
telephone conversations with officers and other representatives of the Company,
the independent public accountants for the Company, your representatives, and
your counsel, during which conferences and conversations the contents of the
Registration Statement and the Prospectus and related matters were discussed. We
also reviewed and relied upon certain corporate records and documents, and oral
and written statements of officers and other representatives of the Company and
others as to the existence and consequence of certain factual and other matters.
Based on our participation, review and reliance as described above,
we advise you that no facts came to our attention that caused us to believe that
the Registration Statement, at the time it 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 date hereof, contained an
untrue statement of a material fact or omitted to state a material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; it being understood that we express
no belief with respect to the financial statements, schedules, or other
financial data included in, or omitted from, the Registration Statement or the
Prospectus.
(e) The Representatives shall have received an opinion, dated such Closing
Date, of ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP, special tax counsel for the Company, to the
effect that:
(i) The statements in the Prospectus under the caption "Federal
Income Tax Considerations" and "Restrictions on Ownership of Stock" insofar as
they purport to describe or summarize certain provisions of the agreements,
statutes, regulations and other legal matters referred to therein, are accurate
descriptions or summaries in all material respects;
(ii) Commencing with its taxable year ended December 31, 2003, the
Company has been organized in conformity with the requirements for qualification
and taxation as a REIT under the Code, and its proposed method of operation will
enable it to meet the requirements for qualification and taxation as a REIT
under the Code; and
(iii) The Operating Partnership is classified as a partnership for
United States federal income tax purposes and not as (a) an association taxable
as a corporation or (b) a "publicly traded partnership" taxable as a corporation
under Section 7704 (a) of the Code.
In rendering such opinion, such counsel may rely, as to matters of fact
(but not as to legal conclusions), to the extent they deem proper, on
certificates of responsible officers of the Company and public officials. In
addition, in rendering such opinion, counsel may rely on and assume the accuracy
of an opinion of ▇▇▇▇▇▇▇ LLP ("VENABLE"), special Maryland counsel of the
Company, dated as of the Closing Date, with respect to certain matters of
Maryland law.
(f) Opinion of General Maryland Counsel of Company. The Representatives
shall have received an opinion, dated such Closing Date, of Venable, special
Maryland counsel of the Company, to the effect that:
(i) The Company is a corporation duly incorporated and existing
under and by virtue of the laws of the State of Maryland and is in good standing
with the SDAT. The Company has the corporate power to own its properties and to
conduct its business in all material respects as described in
21
the Prospectus under the caption "Business and Properties" and to enter into and
perform its obligations under the Underwriting Agreement.
(ii) The Operating Partnership is a limited partnership duly formed
and existing under and by virtue of the laws of the State of Maryland and is in
good standing with the SDAT. The Operating Partnership has the limited
partnership power to own its properties and to conduct its business in all
material respects as described in the Prospectus under the caption "Business and
Properties," and to enter into and perform its obligations under the
Underwriting Agreement. The Company is the sole general partner of the Operating
Partnership, and the aggregate percentage interests of the Company and the
limited partners in the Operating Partnership will be as set forth in the
Prospectus.
(iii) The Services Company is a corporation duly incorporated and
existing under and by virtue of the laws of the State of Maryland and is in good
standing with the SDAT. The Services Company has the corporate power to own its
assets and to conduct its business in all material respects as described in the
Prospectus under the caption "Business and Properties," and to enter into and
perform its obligations under the Underwriting Agreement. As of the date hereof,
the issued and outstanding shares of stock of the Services Company (the
"SERVICES COMPANY OUTSTANDING SHARES") have been duly authorized and validly
issued and are fully paid and non-assessable. The Operating Partnership is the
sole stockholder of record of the Services Company Outstanding Shares. Based
solely on the Officers Certificate (as defined in such counsel's opinion) and
upon any facts otherwise known to such counsel, there are no outstanding
options, rights (preemptive or otherwise) or warrants to purchase or subscribe
for securities of such subsidiary.
(iv) The Company has an authorized capitalization as set forth in
the Prospectus under the caption "Capitalization," and the issued and
outstanding shares of Common Stock as of November 3, 2003 or other capital stock
(other than the Offered Securities) (the "COMPANY OUTSTANDING SHARES") have been
duly authorized and validly issued and are fully paid and non-assessable. The
terms of the Series A Preferred Stock conform, in all material respects, to the
statements and descriptions related thereto contained in the Prospectus. The
issuance of the Company Outstanding Shares by the Company is not subject to
preemptive or other similar rights arising under the MGCL, the Company Charter
or the Company Bylaws or, based solely on the Officers Certificate (as defined
in such counsel's opinion) and upon any facts otherwise known to such counsel,
any agreement or other instrument to which the Company is a party known to such
counsel. Except as disclosed in the Prospectus and based solely on the Officers
Certificate (as defined in such counsel's opinion) and upon any facts otherwise
known to such counsel: (a) no shares of Series A Preferred Stock are reserved
for any purpose; (b) except for the Preferred OP Units, there are no outstanding
securities convertible into or exchangeable for any shares of Series A Preferred
Stock or other capital stock of the Company that ranks senior to or on parity
with the Series A Preferred Stock with respect to dividend or liquidation
rights; and (c) there are no outstanding options, rights (preemptive or
otherwise) or warrants to purchase or subscribe for shares of Series A Preferred
Stock or other capital stock of the Company that ranks senior to or on parity
with the Series A Preferred Stock with respect to dividend or liquidation
rights.
(v) The Company has the full power to authorize, issue and sell the
Offered Securities as contemplated by the Underwriting Agreement. The issuance
of the Offered Securities has been duly authorized and, when issued and
delivered by the Company pursuant to the Resolutions (as defined in such
opinion) and the Underwriting Agreement against payment of the consideration set
forth therein, the Offered Securities will be validly issued, fully paid and
non-assessable and will conform, in all material respects, to the description
thereof contained in the Prospectus. The issuance of the Offered Securities by
the Company is not subject to preemptive or other similar rights arising under
the MGCL, the Company Charter or the Company Bylaws or, based solely on the
Officers Certificate (as defined in such counsel's opinion) and upon any facts
otherwise known to such counsel, any agreement or other
22
instrument to which the Company is a party known to such counsel. The form of
certificate used to represent the Offered Securities is in due and proper form
and complies with all applicable statutory requirements under the laws of the
State of Maryland and the Company Charter and the Company Bylaws.
(vi) The Preferred OP Units have been duly authorized and validly
issued and, when issued and delivered by the Operating Partnership pursuant to
the Resolutions (as defined in such counsel's opinion) and the Underwriting
Agreement against payment of the consideration set forth therein, will be fully
paid and non-assessable. The terms of the Preferred OP Units conform, in all
material respects, to the description thereof contained in the Prospectus. Based
solely on the Officer's Certificate (as defined in such counsel's opinion) and
upon any facts otherwise know to such counsel, there are no outstanding options,
rights (preemptive or otherwise) or warrants to purchase or subscribe for
Preferred OP Units.
(vii) The execution, delivery and performance of the Underwriting
Agreement and the transactions contemplated hereby and the sale and issuance of
the Offered Securities do not conflict with or result in a breach or violation
of, or constitute a default under, (a) any Maryland law, or any decree, rule or
regulation of any Maryland governmental authority applicable to the Transaction
Entities or (b) the Company Charter, the Company Bylaws, the Services Company
Charter (as defined in such counsel's opinion), the Services Company Bylaws (as
defined in such counsel's opinion) or the Operating Partnership Agreement (as
defined in such counsel's opinion).
(viii) The execution and delivery of the Underwriting Agreement has
been duly authorized by all necessary corporate or limited partnership action,
as applicable, of each Transaction Entity which is a party thereto. The
Underwriting Agreement has been executed and, so far as is known to us,
delivered by each Transaction Entity which is a party thereto. The Operating
Partnership Agreement constitutes the legal, valid and binding obligation of
each Transaction Entity which is a party thereto, enforceable against each
Transaction Entity which is a party thereto in accordance with its terms,
subject to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws affecting creditors' rights and
remedies generally, and subject, as to enforceability, to general principles of
equity and, with respect to equitable relief, the discretion of the court before
which any proceeding therefor may be brought (regardless of whether enforcement
is sought in a proceeding at law or in equity).
(ix) The information in the Prospectus under the captions "Risk
Factors-Risks Related to Our Organization and Structure," "Policies with Respect
to Certain Activities-Conflict of Interest Policies," "Policies with Respect to
Certain Activities-Interested Director and Officer Transactions," "Description
of Securities," "Description of Series A Preferred Stock," "Material Provisions
of Maryland Law and of Our Charter and Bylaws" and "Description of the
Partnership Agreement of ▇▇▇▇▇▇▇ Properties, L.P.," as of the date of the
Prospectus, insofar as such information relates to provisions of Maryland law or
the Company's or the Operating Partnership's organizational documents, fairly
summarizes such provisions of Maryland law or the Company's or the Operating
Partnership's organizational documents, in all material respects.
(x) The execution, delivery and performance of the Underwriting
Agreement and the transactions contemplated thereby and the sale and issuance of
the Offered Securities do not require any consents, approvals, authorizations or
orders to be obtained by any such Transaction Entities, or any registrations,
declarations or filings to be made by such Transaction Entities, in each case,
under any federal, Maryland statute, rule or regulation applicable to the
Transaction Entities that have not been obtained or made.
23
In rendering such opinions, such counsel may limit its opinions to the
laws of the State of Maryland, and matters specifically governed thereby. In
rendering such opinion, such counsel may rely, as to matters of fact (but not as
to legal conclusions), to the extent they deem proper, on certificates of
responsible officers of the Company and public officials.
(g) The Representatives shall have received from ▇▇▇▇▇▇▇▇ Chance US LLP,
counsel for the Underwriters, such opinion or opinions, dated such Closing Date,
with respect to the incorporation of the Company, the validity of the Offered
Securities delivered on such Closing Date, the Registration Statements, the
Prospectus and other related matters as the Representatives may require, and the
Company shall have furnished to such counsel such documents as they request for
the purpose of enabling them to pass upon such matters. In rendering such
opinion, ▇▇▇▇▇▇▇▇ Chance US LLP may rely as to the organization or incorporation
of the Transaction Entities and all other matters governed by Maryland law upon
the opinion of Venable, referred to above.
(h) Each Transaction Entity shall have furnished the Representatives a
certificate, dated such Closing Date, of its, or its general partner's or
managing member's chief executive officer(s) and the chief financial officer in
which such officers, to the best of their knowledge after reasonable
investigation, shall state that: (i) the representations and warranties of the
Transaction Entities in this Agreement are true and correct; (ii) the
Transaction Entities have complied with all agreements and satisfied all
conditions on their part to be performed or satisfied hereunder at or prior to
such Closing Date; (iii) no stop order suspending the effectiveness of any
Registration Statement has been issued and no proceedings for that purpose have
been instituted or are contemplated by the Commission; and (iv) the Additional
Registration Statement (if any) satisfying the requirements of subparagraphs (1)
and (3) of Rule 462(b) was filed pursuant to Rule 462(b), including payment of
the applicable filing fee in accordance with Rule 111(a) or (b) under the Act,
prior to the time the Prospectus was printed and distributed to any Underwriter.
(i) The Representatives shall have received a letter, dated such Closing
Date, of KPMG which meets the requirements of subsection (a) of this Section,
except that the specified date referred to in such subsection will be a date not
more than three days prior to such Closing Date for the purposes of this
subsection.
(j) The NASD shall have confirmed that it has not raised any objection
with respect to the fairness and reasonableness of the underwriting terms and
arrangements.
(k) At the Closing Date, the Company shall have applied for the listing of
the Offered Securities on the NYSE.
(l) On the Closing Date, counsel for the Underwriters shall have been
furnished with such other documents as they may reasonably require for the
purpose of enabling them to pass upon the issuance and sale of the Offered
Securities as herein contemplated and related proceedings, or in order to
evidence the accuracy of any of the representations or warranties, or the
fulfillment of any of the conditions, herein contained; and all proceedings
taken by the Transaction Entities in connection with the issuance and sale of
the Offered Securities as herein contemplated shall be satisfactory in form and
substance to the Underwriters and counsel for the Underwriters.
All opinions, letters, evidence and certificates mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance reasonably satisfactory
to counsel for the Underwriters.
The Company will furnish the Representatives with such conformed copies of
such opinions, certificates, letters and documents as the Representatives
reasonably request. Citigroup, FBR and Wachovia Capital Markets may in their
sole discretion waive on behalf of the Underwriters compliance
24
with any conditions to the obligations of the Underwriters hereunder, whether in
respect of an Optional Closing Date or otherwise.
7. INDEMNIFICATION AND CONTRIBUTION.
(a) The Transaction Entities, jointly and severally, will indemnify and
hold harmless each Underwriter, its partners, members, directors, officers,
employees and agents and each person, if any, who controls such Underwriter
within the meaning of Section 15 of the Act or Section 20 of the Exchange Act,
against any losses, claims, damages, liabilities or expenses, joint or several,
to which any of them may become subject under the Act, the Exchange Act or other
Federal state statutory law or regulation or at common law, insofar as such
losses, claims, damages, liabilities or expenses (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue statement
of any material fact contained in any Registration Statement, the Prospectus, or
any amendment or supplement thereto, or any related preliminary prospectus, 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, and will reimburse each indemnified party for
any legal or other expenses reasonably incurred by such Underwriter in
connection with investigating or defending any such loss, claim, damage,
liability, action or expense as such expenses are incurred; provided, however,
that the Transaction Entities will not be liable in any such case to the extent
that any such loss, claim, damage, liability or expense arises out of or is
based upon an untrue statement or alleged untrue statement in or omission or
alleged omission from any of such documents in reliance upon and in conformity
with written information furnished to the Company by any Underwriter through the
Representatives specifically for use therein, it being understood and agreed
that the only such information furnished by any Underwriter consists of the
information described as such in subsection (b) below; provided further that
with respect to any untrue statement or omission of material fact made in any
Preliminary Prospectus, the indemnity agreement contained in this Section 7(a)
shall not inure to the benefit of any Underwriter from whom the person asserting
any such loss, claim, damage or liability purchased the Offered Securities
concerned, to the extent that any such loss, claim, damage or liability of such
Underwriter occurs under the circumstances where it shall have been determined
by a court of competent jurisdiction by final and non-appealable judgment that
(w) the Company had previously furnished copies of the Prospectus to the
Representatives, (x) delivery of the Prospectus was required by the Act to be
made to such person, (y) the untrue statement or omission of a material fact
contained in the Preliminary Prospectus was corrected in the Prospectus and (z)
there was not sent or given to such person, at or prior to the written
confirmation of the sale of such Offered Securities to such person, a copy of
the Prospectus.
(b) Each Underwriter, severally and not jointly, will indemnify and hold
harmless each Transaction Entity, each of its directors and officers who signs
the Registration Statement and each person, if any who controls the Company
within the meaning of Section 15 of the Act or Section 20 of the Exchange Act,
against any losses, claims, damages, liabilities or expenses to which any of
them may become subject, under the Act to which they may become subject under
the Act, the Exchange Act or other Federal state statutory law or regulation or
at common law or otherwise, insofar as such losses, claims, damages, liabilities
or expenses (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
any Registration Statement, the Prospectus, or any amendment or supplement
thereto, or any related preliminary prospectus, or arise out of or are based
upon the omission or the 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 reliance upon and in conformity with written information furnished to the
Company by such Underwriter through the Representatives specifically for use
therein, and will reimburse any legal or other expenses reasonably incurred by
each indemnified party in connection with investigating or defending any such
loss, claim, damage, liability, action or expense as such expenses are incurred,
it being
25
understood and agreed that the only such information furnished on behalf of each
Underwriter consists of the following information: the list of Underwriters and
their respective participation in the sale of the Offered Securities, the
concession and reallowance sentences and paragraph related to stabilization,
syndicate covering transactions and penalty bids appearing under the caption
"Underwriting" in the Prospectus.
(c) Promptly after receipt by an indemnified party under this Section of
notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under
subsection (a) or (b) above, notify, in writing, the indemnifying party of the
commencement thereof; but the omission to so notify the indemnifying party will
not relieve it from any liability which it may have to any indemnified party
otherwise than under subsection (a) or (b) above unless and to the extent it did
not otherwise learn of such action and such failure results in the forfeiture by
the indemnifying party of substantial rights and defenses. In case any such
action is brought against any indemnified party and it notifies the indemnifying
party of the commencement thereof, the indemnifying party will be entitled to
participate therein and, to the extent that it may 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 will not be
liable to such indemnified party under this Section for any legal or other
expenses subsequently incurred by such indemnified party in connection with the
defense thereof other than reasonable costs of investigation. Notwithstanding
anything to the contrary contained herein, if indemnity may be sought pursuant
to the last paragraph in Section 7(a) hereof in respect to any such action or
proceeding then the indemnifying party shall be liable for the reasonable fees
and expenses of not more than one separate firm (in addition to any local
counsel) for the indemnified parties. No indemnifying party shall, without the
prior written consent of the indemnified party, effect any settlement of any
pending or threatened action 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 (i) includes an unconditional release
of such indemnified party from all liability on any claims that are the subject
matter of such action and (ii) does not include a statement as to, or an
admission of, fault, culpability or a failure to act by or on behalf of an
indemnified party.
(d) If the indemnification provided for in this Section is unavailable or
insufficient to hold harmless an indemnified party under subsection (a) or (b)
above for any reason, then each indemnifying party (with respect to the
Transaction Entities, jointly and severally) shall contribute to the amount paid
or payable by such indemnified party as a result of the losses, claims, damages,
liabilities or expenses referred to in subsection (a) or (b) above (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Transaction Entities on the one hand and one or more of the Underwriters on the
other from the offering of the Offered Securities 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 Transaction Entities
on the one hand and the Underwriters on the other in connection with the
statements or omissions which resulted in such losses, claims, damages,
liabilities or expenses as well as any other relevant equitable considerations.
The relative benefits received by the Transaction Entities 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 Transaction Entities bear to the total underwriting discounts and
commissions received by the 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 Transaction Entities or the
Underwriters and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such untrue statement or omission. The
amount paid by an indemnified party as a result of the losses, claims,
26
damages, liabilities or expenses referred to in the first sentence of 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 action or claim which is the subject of this subsection (d). Notwithstanding
the provisions of this subsection (d), no Underwriter (except as may be provided
in any agreement among underwriters relating to the offering of the Offered
Securities) shall be required to contribute any amount in excess of the
underwriting discount commission applicable to the Offered Securities purchased
by such Underwriter hereunder 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 Underwriters' obligations in this subsection (d) to
contribute are several in proportion to their respective underwriting
obligations and not joint. The Transaction Entities and the Underwriters agree
that it would not be just and equitable if contribution were determined by pro
rata allocation or another method of allocation with does not take account of
the equitable considerations referred to above.
8. DEFAULT OF UNDERWRITERS. If any Underwriter or Underwriters default in their
obligations to purchase Offered Securities hereunder on either the First or any
Optional Closing Date and the aggregate number of shares of Offered Securities
that such defaulting Underwriter or Underwriters agreed but failed to purchase
does not exceed 10% of the total number of shares of Offered Securities that the
Underwriters are obligated to purchase on such Closing Date, Citigroup, FBR and
Wachovia Capital Markets may make arrangements satisfactory to the Company for
the purchase of such Offered Securities by other persons, including any of the
Underwriters, but if no such arrangements are made by such Closing Date, the
non-defaulting Underwriters shall be obligated severally, in proportion to their
respective commitments hereunder, to purchase the Offered Securities that such
defaulting Underwriters agreed but failed to purchase on such Closing Date. If
any Underwriter or Underwriters so default and the aggregate number of shares of
Offered Securities with respect to which such default or defaults occur exceeds
10% of the total number of shares of Offered Securities that the Underwriters
are obligated to purchase on such Closing Date and arrangements satisfactory to
Citigroup, FBR and Wachovia Capital Markets and the Company for the purchase of
such Offered Securities by other persons 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 (provided that if such default occurs
with respect to Optional Securities after the First Closing Date, this Agreement
will not terminate as to the Firm Securities or any Optional Securities
purchased prior to such termination). As used in this Agreement, the term
"Underwriter" includes any person substituted for an Underwriter under this
Section. Nothing herein will relieve a defaulting Underwriter from liability for
its default.
9. SURVIVAL OF CERTAIN REPRESENTATIONS AND OBLIGATIONS. The respective
indemnities, agreements, representations, warranties and other statements of the
Transaction Entities and of the several Underwriters set forth in or made
pursuant to this Agreement will remain in full force and effect, regardless of
any investigation, or statement as to the results thereof, made by or on behalf
of any Underwriter, the Transaction Entities or any of their respective
representatives, officers or directors or any controlling person, and will
survive delivery of and payment for the Offered Securities. If this Agreement is
terminated pursuant to Section 8 or if for any reason the purchase of the
Offered Securities by the Underwriters is not consummated, the Company shall
remain responsible for the expenses to be paid or reimbursed by it pursuant to
Section 5 and the respective obligations of the Transaction Entities and the
Underwriters pursuant to Section 7 shall remain in effect, and if any Offered
Securities have been purchased hereunder the representations and warranties in
Section 2 and all obligations under Section 5 shall also remain in effect. If
the purchase of the Offered Securities by the Underwriters is not consummated
for any reason other than solely because of the termination of this Agreement
pursuant to Section 8 or the occurrence of any event specified in clause (iii),
(iv), (vi), (vii) or (viii) of Section 6(c), the Company will reimburse the
Underwriters for all out-of-pocket expenses (including fees and
27
disbursements of counsel) reasonably incurred by them in connection with the
offering of the Offered Securities.
10. NOTICES. All communications hereunder will be in writing and, if sent to the
Underwriters, will be mailed, delivered or telegraphed and confirmed to the
Representatives, c/o Citigroup Global Markets Inc., ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇.▇., ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇: Transaction Structuring Group with a copy to
▇▇▇▇▇▇▇▇ Chance US LLP, Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ or, if sent to the
Transaction Entity, will be mailed, delivered or telegraphed and confirmed to
the Company, Attention: General Counsel with a copy to ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP,
Attention: Julian T.H. ▇▇▇▇▇▇▇▇▇▇▇; provided, however, that any notice to an
Underwriter pursuant to Section 7 will be mailed, delivered or telegraphed and
confirmed to such Underwriter.
11. SUCCESSORS. This Agreement will inure to the benefit of and be binding upon
the parties hereto and their respective successors and the officers and
directors and controlling persons referred to in Section 7, and no other person
will have any right or obligation hereunder.
12. REPRESENTATION OF UNDERWRITERS. The Representatives will act for the several
Underwriters in connection with this financing, and any action under this
Agreement taken by the Representatives jointly or by Citigroup, FBR and Wachovia
Capital Markets will be binding upon all the Underwriters.
13. COUNTERPARTS. This Agreement may be executed in any number of counterparts,
each of which shall be deemed to be an original, but all such counterparts shall
together constitute one and the same Agreement.
14. APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES
OF CONFLICTS OF LAWS. THE COMPANY HEREBY SUBMITS TO THE NON-EXCLUSIVE
JURISDICTION OF THE FEDERAL AND STATE COURTS IN THE BOROUGH OF MANHATTAN IN THE
CITY OF NEW YORK IN ANY SUIT OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
15. SEVERABILITY. In case any provision in this Agreement shall be invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.
(Signature page follows.)
28
If the foregoing is in accordance with the Representatives' understanding
of our agreement, kindly sign and return to the Company one of the counterparts
hereof, whereupon it will become a binding agreement between the Company and the
several Underwriters in accordance with its terms.
Very truly yours,
▇▇▇▇▇▇▇ PROPERTIES, INC.
By:
------------------------------------
Name:
Title:
▇▇▇▇▇▇▇ PROPERTIES, L.P.
By: ▇▇▇▇▇▇▇ Properties, Inc., its
general partner
By:
------------------------------------
Name:
Title:
▇▇▇▇▇▇▇ PROPERTIES SERVICES, INC.
By:
------------------------------------
Name:
Title:
The foregoing Underwriting Agreement
is hereby confirmed and accepted as of
the date first above written.
CITIGROUP GLOBAL MARKETS INC.
By:
------------------------------------
Name:
Title:
FRIEDMAN, BILLINGS, ▇▇▇▇▇▇ & CO., INC.
By:
------------------------------------
Name:
Title:
WACHOVIA CAPITAL MARKETS, LLC
By:
------------------------------------
Name:
Title:
Acting on behalf of themselves and as the
Representatives of the several Underwriters
listed on Schedule A hereto.
SCHEDULE A
UNDERWRITING COMMITMENTS
NUMBER OF
UNDERWRITER FIRM SECURITIES
----------- ---------------
Citigroup Capital Markets Inc. .................................
Friedman, Billings, ▇▇▇▇▇▇ & Co., Inc. .........................
Wachovia Capital Markets, LLC ..................................
▇.▇. ▇▇▇▇▇▇▇ & Sons, Inc. ......................................
Credit Suisse First Boston LLC .................................
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, Incorporated ...........................
▇▇▇▇▇▇▇ ▇▇▇▇▇ & Associates, Inc. ...............................
RBC ▇▇▇▇ ▇▇▇▇▇▇▇▇ Inc. .........................................
UBS Securities LLC .............................................
Advest, Inc. ...................................................
Banc of America Securities LLC .................................
BB&T Capital Markets, a Division of ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇▇▇, Inc. .
Deutsche Bank Securities Inc. ..................................
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, Incorporated ..............................
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ LLC ....................................
▇▇▇▇▇▇▇▇▇▇▇ & Co. Inc. .........................................
Quick & ▇▇▇▇▇▇, Inc. ...........................................
Southwest Securities, Inc. .....................................
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & Company, Inc. ...............................
---------------
TOTAL ..........................................................
===============
SCHEDULE B
MATERIAL SUBSIDIARIES
Jurisdiction of Formation /
Name Incorporation
---- -------------
Library Square Associates, LLC Delaware
▇▇▇▇▇▇▇ Properties-555 W. Fifth, LLC Delaware
▇▇▇▇▇▇▇ Properties-808 S. Olive, LLC Delaware
North Tower, LLC Delaware
▇▇▇▇▇▇▇ Partners-355 S. Grand, LLC Delaware
▇▇▇▇▇▇▇ Partners-611 N. Brand, LLC Delaware
▇▇▇▇▇▇▇ Partners-Glendale II, LLC Delaware
▇▇▇▇▇▇▇/Cerritos I, LLC Delaware
▇▇▇▇▇▇▇ Partners - Plaza Las ▇▇▇▇▇▇▇, LLC Delaware
▇▇▇▇▇▇▇ Properties - One Cal Plaza, LLC Delaware
SCHEDULE C
DIRECT AND INDIRECT SUBSIDIARIES OF ▇▇▇▇▇▇▇ PROPERTIES, INC.
Jurisdiction of Formation /
Name Incorporation
---- -------------
▇▇▇▇▇▇▇ Properties, L.P. Maryland
▇▇▇▇▇▇▇ Properties Services, Inc. Maryland
▇▇▇▇▇▇▇ Properties-Solana Services, L.P. Texas
MP-Solana Services GP, LLC California
MP-Solana Services LP, LLC California
New BHE, LLC Delaware
Bunker Hill Junior Mezzanine, LLC Delaware
Bunker Hill Senior Mezzanine, LLC Delaware
Library Square Associates, LLC Delaware
▇▇▇▇▇▇▇ Properties-555 W. Fifth Mezzanine, LLC Delaware
▇▇▇▇▇▇▇ Properties-555 W. Fifth, LLC Delaware
▇▇▇▇▇▇▇ Properties-808 S. Olive Mezzanine, LLC Delaware
▇▇▇▇▇▇▇ Properties-808 S. Olive, LLC Delaware
North Tower Manager, LLC Delaware
North Tower Member, LLC Delaware
North Tower, LLC Delaware
MP-355 S. Grand Mezzanine, LLC Delaware
▇▇▇▇▇▇▇ Partners-355 S. Grand, LLC Delaware
▇▇▇▇▇▇▇ Partners-Glendale, LLC California
▇▇▇▇▇▇▇ Partners - Glendale Center, LLC California
▇▇▇▇▇▇▇ Partners-611 N. Brand, LLC Delaware
▇▇▇▇▇▇▇ Partners-Glendale II, LLC Delaware
▇▇▇▇▇▇▇/Cerritos I, LLC Delaware
▇▇▇▇▇▇▇ Partners - Plaza Las ▇▇▇▇▇▇▇, LLC Delaware
▇▇▇▇▇▇▇ Properties -- One Cal Plaza, LLC Delaware
