U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------------
FORM 8-K
Current Report
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (date of earliest event reported): May 16, 2003
EASTGROUP PROPERTIES, INC.
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(Exact Name of Registrant as Specified in its Charter)
Maryland 1-7094 13-2711135
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(State or Other Jurisdiction (Commission File Number) (IRS Employer
of Incorporation) Identification No.)
300 One Jackson Place, 188 East Capitol Street, Jackson, MS 39201-2195
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(Address of Principal Executive Offices, including zip code)
(601)354-3555
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(Registrant's telephone number, including area code)
Not Applicable
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(Former name or former address, if changed since last report)
ITEM 5. Other Events.
On May 16, 2003, EastGroup Properties, Inc. (the "Company") agreed to sell
571,429 shares of common stock to an institutional buyer at $26.25 per share.
This price was negotiated based on the Company's volume weighted average price
of the 25 trading day period ended May 16, 2003. A.G. Edwards & Sons, Inc. was
the exclusive placement agent for the offering.
The Company intends to use the net proceeds of approximately $14,500,000
from the offering for general corporate purposes, acquisition of assets, new
development and the possible redemption of the Company's Series A Preferred
Stock. Pending such use, the net proceeds will be used to reduce outstanding
variable rate debt.
ITEM 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(c) Exhibits.
(5) Opinion of Jaeckle Fleischmann & Mugel, LLP regarding legality.
(8) Opinion of Jaeckle Fleischmann & Mugel, LLP as to certain tax matters.
(23) Consents of Jaeckle Fleischmann & Mugel, LLP (included as part of
Exhibits 5 and 8).
(99) Placement Agency Agreement between EastGroup Properties, Inc. and A.G.
Edwards & Sons, Inc., dated May 16, 2003.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: May 22, 2003
EASTGROUP PROPERTIES, INC.
By: /s/ N. KEITH MCKEY
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N. Keith McKey
Executive Vice President, Chief Financial
Officer and Secretary
Exhibit Index
Exhibit No. Description
(5) Opinion of Jaeckle Fleischmann & Mugel, LLP regarding legality.
(8) Opinion of Jaeckle Fleischmann & Mugel, LLP as to certain tax
matters.
(23) Consents of Jaeckle Fleischmann & Mugel, LLP (included as part
of Exhibits 5 and 8).
(99) Placement Agency Agreement between EastGroup Properties, Inc. and
A.G. Edwards & Sons, Inc., dated May 16, 2003.
Exhibit 5
May 20, 2003
EastGroup Properties, Inc.
300 One Jackson Place
188 East Capitol Street
Jackson, Mississippi 39201-2195
Re: Issuance and Sale of 571,429 shares of common stock (the "Shares")
pursuant to a Placement Agency Agreement between EastGroup Properties,
Inc. (the "Company") and A.G. Edwards & Sons, Inc.
Ladies and Gentlemen:
As your counsel, we have examined the Placement Agency Agreement, the
Company's Registration Statement on Form S-3 (File No. 333-58309) and the
Company's Prospectus Supplement dated May 19, 2003 with respect to the Shares,
and we are familiar with the documents referred to therein and incorporated
therein by reference. We have also examined the Company's Articles of
Incorporation, as amended, and Bylaws, as amended, such records of proceedings
of the Company as we deemed material, and such other proceedings of the Company
as we deemed necessary for the purpose of this opinion.
We have examined the proceedings heretofore taken and we are informed as to
the procedures proposed to be followed by the Company in connection with the
authorization, issuance and sale of the Shares. In our opinion, the Shares to be
issued by the Company will be, when issued and paid for pursuant to the
Placement Agency Agreement, the Registration Statement and the Prospectus
Supplement, duly authorized for issuance by all necessary corporate action and,
upon the issuance thereof in accordance with their terms, the Shares will be
legally issued, fully paid and non-assessable.
We consent to the filing of this opinion as an exhibit to the Company's
Current Report on Form 8-K and to all references to our firm in the Prospectus
Supplement.
Very truly yours,
/s/ JAECKLE FLEISCHMANN & MUGEL, LLP
Exhibit 8
May 20, 2003
EastGroup Properties, Inc.
300 One Jackson Place
188 East Capitol Street
Jackson, MS 39201-2195
Re: Certain Federal Income Tax Matters
Ladies and Gentlemen:
We are legal counsel to EastGroup Properties, Inc., a Maryland corporation
(the "Company"), and have represented the Company in connection with the
issuance of 571,429 shares of common stock pursuant to a Placement Agency
Agreement dated May 16, 2003 between the Company and A.G. Edwards & Sons, Inc.
For the purposes of this Opinion Letter, the term "Subsidiary" means any
corporation, limited partnership or limited liability company for which the
Company owns fifty percent (50%) or more of the outstanding equity interests.
In rendering this opinion, we have reviewed (i) the Company's Registration
Statement on Form S-3 (No. 333-58309); (ii) the Company's Prospectus Supplement
dated May 19, 2003; (iii) the Company's Articles of Incorporation as filed with
the Secretary of State of Maryland, and the Certificate of Incorporation or
other organizational documents of each Subsidiary, as amended; (iv) the
Company's Bylaws and the Bylaws of each Subsidiary, as amended; (v) the
partnership agreements for partnerships or joint ventures in which the Company
or a Subsidiary is a partner; (vi) the operating agreements for limited
liability companies in which the Company or a Subsidiary is a member; and (vii)
the Company's Federal Income Tax Returns for the years ended December 31, 1997,
1998, 1999, 2000 and 2001.
We have reviewed with management of the Company the investments and
operations of the Company and its Subsidiaries. We have also reviewed certain
documents of the Company and its Subsidiaries relating to the ownership and
operation of selected real estate properties and other investments, including
management agreements and partnership agreements relating to such properties and
forms of leases relating to the Company's or its Subsidiaries' interest in such
properties, and we rely upon representations made to us by management of the
Company that such documents are representative of those existing and in effect
with respect to other properties of the Company and its Subsidiaries. Our
discussions with management focused on, among other things, the number and
holdings of stockholders of the Company; the actual and proposed distribution
policy of the Company; various recordkeeping requirements; the composition of
the assets of the Company; the magnitude of personal property included in its or
its Subsidiaries' real property leases; the income generated from subleases of
its real property; the services rendered to the Company's tenants and
non-tenants; and other matters which we deem relevant and upon which we rely for
purposes of rendering this opinion. Furthermore, where such factual
representations involve terms defined in the Internal Revenue Code of 1986, as
amended (the "Code"), the Treasury regulations thereunder (the "Regulations"),
published rulings of the Internal Revenue Service (the "Service"), or other
relevant authority, we have explained such terms to the Company's
representatives and are satisfied that the Company's representatives understand
such terms and are capable of making such factual representations.
In rendering this opinion we have relied, as to factual matters, upon a
certificate of an officer of the Company (the "Officer's Certificate"). Although
we have not independently verified the truth, accuracy or completeness of the
factual representations contained in the Officer's Certificate and the
underlying assumptions upon which they are based, after reasonable inquiry and
investigation, nothing has come to our attention that would cause us to question
them.
Based upon the foregoing, we are of the opinion that: (1) for its taxable
years ended December 31, 1997 through December 31, 2002, the Company has
continuously been organized and has operated in conformity with the requirements
for qualification as a "real estate investment trust" under the Code; (2) the
Company's current and proposed organization and method of operation will permit
it to continue to meet the requirements for taxation as a "real estate
investment trust" under the Code for its 2003 taxable year and thereafter; and
(3) the federal income tax discussion described in the Prospectus Supplement
under the caption "Material United States Federal Income Tax Consequences" is
correct in all material respects and fairly summarizes in all material respects
the federal income tax laws referred to therein.
We note, however, that the ability of the Company to qualify as a real
estate investment trust for any year will depend upon future events, some of
which are not within the Company's control, and it is not possible to predict
whether the facts set forth in the Registration Statement, the Prospectus
Supplement, the Officer's Certificate and this Opinion Letter will continue to
be accurate in the future. In addition, our opinions are based on the Code and
the regulations thereunder, and the status of the Company as a real estate
investment trust for federal income tax purposes may be affected by changes in
the Code and such regulations.
We consent to being named as Counsel to the Company in the Registration
Statement and the Prospectus Supplement, to the references in the Registration
Statement and the Prospectus Supplement to our firm and to the inclusion of a
copy of this Opinion Letter as an exhibit to the Company's Current Report on
Form 8-K.
Very truly yours,
/s/ JAECKLE FLEISCHMANN & MUGEL, LLP
Exhibit 99
EASTGROUP PROPERTIES, INC.
571,429 Shares
Common Stock
($.0001 Par Value)
PLACEMENT AGENCY AGREEMENT
May 16, 2003
A.G. Edwards & Sons, Inc.
One North Jefferson Avenue
St. Louis, Missouri 63103
The undersigned, EastGroup Properties, Inc., a Maryland corporation (the
"Company"), hereby addresses you ("you," or the "Placement Agent") and confirms
its agreement with you as follows:
1. Description of Shares. The Company has engaged the Placement Agent in
connection with the issuance of securities of the Company in the form of common
stock (the "Common Stock") pursuant to that certain Engagement Letter, dated May
8, 2003, between the Company and A.G. Edwards & Sons, Inc. (the "Engagement
Letter"). Pursuant to such engagement, the Company proposes to issue and sell to
a certain investor (the "Investor") shares (the "Shares") of its Common Stock,
par value $.0001 per share, in a public offering under its registration
statement (Registration No. 333-58309) on Form S-3. The Company desires to
engage the Placement Agent as its placement agent in connection with such
issuance and sale. The Shares are more fully described in the Prospectus
hereinafter defined.
2. Agreement to Act as Placement Agent; Delivery and Payment. On the basis
of the representations, warranties and agreements herein contained, but subject
to the terms and conditions herein set forth, the Placement Agent agrees to act
as the Company's exclusive placement agent to assist the Company, on a best
efforts basis, in connection with the proposed issuance and sale by the Company
of the Shares to the Investor. The Company expressly acknowledges and agrees
that this Agreement does not in any way constitute a commitment by the Placement
Agent to purchase any of the Shares and does not ensure successful placement of
the Shares or any portion thereof. The Company shall pay to the Placement Agent
concurrently with the Closing (as defined below) 2.5% of the gross purchase
price of the Shares (the "Placement Fee").
Upon satisfaction of the conditions set forth in Section 5 hereof, the
closing of the sale and issuance of the Shares (the "Closing") shall occur at
the offices of Jaeckle Fleischmann & Mugel, LLP, or at such other place as may
be agreed upon between you and the Company (the "Place of Closing"), at 8:00
a.m., central time, on May 20, 2003, or at such other time and date not later
than four full business days thereafter as you and the Company may agree, such
time and date of payment and delivery being herein called the "Closing Date."
The delivery of the Shares shall be made to the respective accounts of the
Investor against payment by the Investor of the purchase price thereof (the
"Requisite Funds") to the Placement Agent on behalf of the Company through the
ID System of The Depository Trust Company (the "DTC"). The Placement Agent shall
then immediately transfer the Requisite Funds, less the Placement Fee and any
expenses of the Placement Agent for which the Company is obligated to reimburse,
to the Company by Federal Funds wire transfer payable in same day funds. The
delivery of the Shares to the Investor shall be made through the facilities of
the DTC.
It is understood that the Company proposes to offer the Shares to the
Investor upon the terms and conditions set forth in the Prospectus (as defined
below).
3. Representations, Warranties and Agreements of the Company.
The Company represents and warrants to and agrees with the Placement Agent
that:
(a)
(i) The Company has filed with the Securities and Exchange Commission
(the "SEC") a registration statement (Registration No. 333-58309) on Form
S-3 for the registration of equity securities of the Company, including the
Shares, which has been carefully prepared by the Company pursuant to and in
conformity with the requirements of the Securities Act of 1933, as amended
(the "1933 Act"), and the rules and regulations thereunder (the "1933 Act
Rules and Regulations") of the SEC. Such registration statement has been
declared effective by the SEC. The Company meets the requirements for use
of Form S-3 under the 1933 Act. Copies of such registration statement,
including any amendments thereto, each related preliminary prospectus
(meeting the requirements of Rule 430 or 430A of the 1933 Act Rules and
Regulations) contained therein, and the exhibits, financial statements and
schedules thereto have heretofore been delivered by the Company to you. A
final prospectus containing information permitted to be omitted at the time
of effectiveness by Rule 430A of the 1933 Act Rules and Regulations will be
filed promptly by the Company with the SEC in accordance with Rule 424(b)
of the 1933 Act Rules and Regulations. The term "Registration Statement" as
used herein means the registration statement as amended at the time it
became effective under the 1933 Act (the "Effective Date"), including
financial statements and all exhibits and all documents incorporated by
reference therein pursuant to Item 12 of Form S-3 under the 1933 Act and,
if applicable, the information deemed to be included by Rule 430A of the
1933 Act Rules and Regulations. The term "Prospectus" as used herein means
the prospectus constituting a part of the Registration Statement and
included in the Registration Statement at the Effective Date, as
supplemented by each prospectus supplement relating to the offering of the
Shares, including any such prospectus supplement filed pursuant to Rule
424(b) of the 1933 Act Rules and Regulations (the "Prospectus Supplement")
and including any information and documents included therein by reference
pursuant to Item 12 of Form S-3 under the 1933 Act. For purposes of this
Agreement, the words "amend," "amendment," "amended," "supplement" or
"supplemented" with respect to the Registration Statement or the Prospectus
shall mean amendments or supplements to the Registration Statement or the
Prospectus, as the case may be; as well as documents filed after the date
of this Agreement and prior to the completion of the distribution of the
Shares and incorporated by reference therein as described above.
(ii) Neither the SEC nor any state or other jurisdiction or other
regulatory body has issued, and neither is, to the knowledge of the
Company, threatening to issue, any stop order under the 1933 Act or other
order suspending the effectiveness of the Registration Statement (as
amended or supplemented) or preventing or suspending the use of the
Prospectus or suspending the qualification or registration of the Shares
for offering or sale in any jurisdiction nor instituted or, to the
knowledge of the Company, threatened to institute proceedings for any such
purpose. The Registration Statement and the Prospectus and any amendments
or supplements thereto contain or will contain, as the case may be, all
statements which are required to be stated therein by, and in all material
respects conform or will conform, as the case may be, to the requirements
of, the 1933 Act and the 1933 Act Rules and Regulations. Neither the
Registration Statement nor any amendment thereto, as of the applicable
effective date, contains or will contain, as the case may be, 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, not misleading, and neither the Prospectus nor any supplement
thereto contains or will contain, as the case may be, 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,
in the light of the circumstances under which they were made, not
misleading; provided, however, that the Company makes no representation or
warranty as to information contained in or omitted from the Prospectus in
reliance upon, and in conformity with, written information relating to the
Placement Agent furnished to the Company by the Placement Agent expressly
for use in the preparation thereof (as provided in Section 12 hereof).
There is no contract or document required to be described in the
Registration Statement or Prospectus or to be filed as an exhibit to the
Registration Statement which is not described or filed as required. The
documents incorporated by reference in the Prospectus pursuant to Item 12
of Form S-3 under the 1933 Act, at the time they were filed with the SEC,
complied in all material respects with the requirements of the Securities
Exchange Act of 1934, as amended (the "1934 Act"), and the rules and
regulations adopted by the SEC thereunder (the "1934 Act Rules and
Regulations"). Any future documents incorporated by reference so filed,
when they are filed, will comply in all material respects with the
requirements of the 1934 Act and the 1934 Act Rules and Regulations; no
such incorporated document contained or will contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading; and,
when read together and with the other information in the Prospectus, at the
time the Registration Statement became effective and at the Closing Date,
each such incorporated document did not or will not, as the case may be,
contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein not misleading.
(iii) This Agreement has been duly authorized, executed and delivered
by the Company and constitutes a valid and legally binding obligation of
the Company enforceable against the Company in accordance with its terms,
except as enforceability may be limited by bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar laws
relating to or affecting creditors' rights generally and by general
principles of equity (the "Exceptions").
(iv) The Company and its subsidiaries have been duly organized and are
validly existing as corporations, partnerships or limited liability
companies, as the case may be, in good standing under the laws of the
states or other jurisdictions in which they are incorporated or formed, as
the case may be, with full power and authority (corporate and other) to
own, lease and operate their properties and conduct their businesses as
described in the Prospectus and, with respect to the Company, to execute
and deliver, and perform the Company's obligations under, this Agreement;
the Company and its subsidiaries are duly qualified to do business as
foreign corporations in good standing in each state or other jurisdiction
in which their ownership or leasing of property or conduct of business
legally requires such qualification, except where the failure to be so
qualified, individually or in the aggregate, would not have a Material
Adverse Effect. The term "Material Adverse Effect" as used herein means any
material adverse effect on the condition (financial or other), net worth,
business, affairs, management, prospects, results of operations or cash
flow of the Company and its subsidiaries, taken as a whole.
(v) Neither the Company nor any of its subsidiaries has sustained
since the date of the latest audited financial statements included or
incorporated by reference in the Prospectus any material loss or
interference with its business from fire, explosion, flood or other
calamity, whether or not covered by insurance, or from any labor dispute or
court or governmental action, order or decree. Other than as set forth in
the Prospectus and, since the respective dates as of which information is
given in the Prospectus, there has not been any change in the capital
stock, partnership interests or membership or similar interests, as the
case may be, or long-term debt of the Company or any of its subsidiaries or
any material adverse change, or any development involving a prospective
material adverse change, in or affecting the general affairs, management,
financial position, stockholders' equity or results of operations of the
Company and its subsidiaries taken as a whole, otherwise than as set forth
in the Prospectus.
(vi) The issuance and sale of the Shares and the execution, delivery
and performance by the Company of this Agreement, and the consummation of
the transactions herein contemplated, will not conflict with or result in a
breach or violation of any of the terms or provisions of, or constitute a
default under, or result in the creation or imposition of any lien, charge
or encumbrance upon any properties or assets of the Company or any of its
subsidiaries under, any indenture, mortgage, deed of trust, loan agreement
or other agreement or instrument to which the Company or any of its
subsidiaries is a party or by which the Company or any of its subsidiaries
is bound or to which any of the properties or assets of the Company or any
of its subsidiaries is subject, except to such extent as, individually or
in the aggregate, does not have a Material Adverse Effect, nor will such
action result in any violation of the provisions of the Company's Charter,
Articles Supplementary or bylaws or any statute, rule, regulation or other
law, or any order or judgment, of any court or governmental agency or body
having jurisdiction over the Company or any of its subsidiaries or any of
their properties; and no consent, approval, authorization, order,
registration or qualification of or with any such court or governmental
agency or body is required for the execution, delivery and performance of
this Agreement, the issuance and sale of the Shares or the consummation of
the transactions contemplated hereby, except such as have been, or will be
prior to the Closing Date, obtained under the 1933 Act or as may be
required by the National Association of Securities Dealers, Inc. (the
"NASD") and such consents, approvals, authorizations, registrations or
qualifications as may be required under state securities or blue sky laws
in connection with the purchase of the Shares by the Investor.
(vii) The Company has duly and validly authorized capital stock as set
forth in the Prospectus; all outstanding shares of Common Stock of the
Company and the Shares conform, or when issued will conform, to the
description thereof in the Prospectus and have been, or, when issued and
paid for in the manner described herein will be, duly authorized, validly
issued, fully paid and non-assessable; and the issuance of the Shares to be
purchased from the Company hereunder is not subject to preemptive or other
similar rights, or any restriction upon the voting or transfer thereof
pursuant to applicable law or the Company's Charter, Articles
Supplementary, bylaws or governing documents or any agreement to which the
Company or any of its subsidiaries is a party or by which any of them may
be bound. All corporate action required to be taken by the Company for the
authorization, issuance and sale of the Shares has been duly and validly
taken. Except as disclosed in the Prospectus, there are no outstanding
subscriptions, rights, warrants, options, calls, convertible securities,
commitments of sale or rights related to or entitling any person to
purchase or otherwise to acquire any shares of, or any security convertible
into or exchangeable or exercisable for, the capital stock of, or other
ownership interest in, the Company. The outstanding shares of capital
stock, partnership interests or membership or similar interests, as the
case may be, of the Company's subsidiaries have been duly authorized and
validly issued, are fully paid and non-assessable and are owned by the
Company free and clear of any mortgage, pledge, lien, encumbrance, charge
or adverse claim and are not the subject of any agreement or understanding
with any person and were not issued in violation of any preemptive or
similar rights; and there are no outstanding subscriptions, rights,
warrants, options, calls, convertible securities, commitments of sale or
instruments related to or entitling any person to purchase or otherwise
acquire any shares of, or any security convertible into or exchangeable or
exercisable for, the capital stock of, or other ownership interest in any
of the subsidiaries.
(viii) The statements set forth in the Prospectus describing the
Shares insofar as they purport to describe the provisions of the laws and
documents referred to therein, are accurate, complete and fair.
(ix) Each of the Company and its subsidiaries is in possession of and
is operating in compliance with all franchises, grants, authorizations,
licenses, certificates, permits, easements, consents, orders and approvals
("Permits") from all state, federal, foreign and other regulatory
authorities, and has satisfied the requirements imposed by regulatory
bodies, administrative agencies or other governmental bodies, agencies or
officials, that are required for the Company and its subsidiaries lawfully
to own, lease and operate their properties and conduct their businesses as
described in the Prospectus, and, each of the Company and its subsidiaries
is conducting its business in compliance with all of the laws, rules and
regulations of each jurisdiction in which it conducts its business, in each
case with such exceptions, individually or in the aggregate, as would not
have a Material Adverse Effect; each of the Company and its subsidiaries
has filed all notices, reports, documents or other information ("Notices")
required to be filed under applicable laws, rules and regulations, in each
case, with such exceptions, individually or in the aggregate, as would not
have a Material Adverse Effect; and, except as otherwise specifically
described in the Prospectus, neither the Company nor any of its
subsidiaries has received any notification from any court or governmental
body, authority or agency, relating to the revocation or modification of
any such Permit or, to the effect that any additional authorization,
approval, order, consent, license, certificate, permit, registration or
qualification ("Approvals") from such regulatory authority is needed to be
obtained by any of them, in any case where it could be reasonably expected
that obtaining such Approvals or the failure to obtain such Approvals,
individually or in the aggregate, would have a Material Adverse Effect.
(x) The Company and its subsidiaries have filed all necessary federal,
state and foreign income and franchise tax returns and paid all taxes shown
as due thereon; all such tax returns are complete and correct in all
material respects; all tax liabilities are adequately provided for on the
books of the Company and its subsidiaries except to such extent as would
not have a Material Adverse Effect; the Company and its subsidiaries have
made all necessary tax payments (including payroll and/or withholding
taxes)and are current and up-to-date; and the Company and its subsidiaries
have no knowledge of any tax proceeding or action pending or threatened
against the Company or its subsidiaries which, individually or in the
aggregate, might have a Material Adverse Effect. The Company has made
adequate charges, accruals and reserves in the applicable financial
statements referred to in Section 3(a)(xx) hereof in respect of all
federal, state, local and foreign income and franchise taxes for all
periods as to which the tax liability of the Company or any of the
subsidiaries has not been finally determined.
(xi) The Company and its subsidiaries have good and marketable title
in fee simple to all items of real property and good and marketable title
to all personal property owned by them, in each case free and clear of all
liens, encumbrances, restrictions and defects except such as are described
in the Prospectus or do not materially affect the value of such property
and do not interfere with the use made and proposed to be made of such
property; and any property held under lease or sublease by the Company or
any of its subsidiaries is held under valid, subsisting and enforceable
leases or subleases with such exceptions as are not material and do not
interfere with the use made and proposed to be made of such property by the
Company and its subsidiaries; and neither the Company nor any of its
subsidiaries has any notice or knowledge of any material claim of any sort
which has been, or may be, asserted by anyone adverse to the Company's or
any of its subsidiaries' rights as lessee or sublessee under any lease or
sublease described above, or affecting or questioning the Company's or any
of its subsidiaries' rights to the continued possession of the leased or
subleased premises under any such lease or sublease in conflict with the
terms thereof.
(xii) Except as described in the Prospectus, there is no factual basis
for any action, suit or other proceeding involving the Company or any of
its subsidiaries or any of their material assets for any failure of the
Company or any of its subsidiaries, or any predecessor thereof, to comply
with any requirements of federal, state or local regulation relating to
air, water, solid waste management, hazardous or toxic substances, or the
protection of health or the environment. Except as described in the
Prospectus, none of the property owned or leased by the Company or any of
its subsidiaries is, to the best knowledge of the Company, contaminated
with any waste or hazardous substances, and neither the Company nor any of
its subsidiaries may be deemed an "owner or operator" of a "facility" or
"vessel" which owns, possesses, transports, generates or disposes of a
"hazardous substance" as those terms are defined in section 9601 of the
Comprehensive Environmental Response, Compensation and Liability Act of
1980, 42 U.S.C. section 9601 et seq.
(xiii) No labor disturbance exists with the employees of the Company
or any of its subsidiaries or is imminent which, individually or in the
aggregate, would have a Material Adverse Effect. None of the employees of
the Company or any of its subsidiaries is represented by a union and, to
the best knowledge of the Company and its subsidiaries, no union organizing
activities are taking place. Neither the Company nor any of its
subsidiaries has violated any federal, state or local law or foreign law
relating to discrimination in hiring, promotion or pay of employees, nor
any applicable wage or hour laws, or the rules and regulations thereunder,
or analogous foreign laws and regulations, which might, individually or in
the aggregate, result in a Material Adverse Effect.
(xiv) The Company and its subsidiaries are 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) has occurred with respect to any
"pension plan" (as defined in ERISA) for which the Company and its
subsidiaries would have any liability; the Company and its subsidiaries
have not incurred and do not expect to incur liability under (A) Title IV
of ERISA with respect to termination of, or withdrawal from, any pension
plan or (B) Sections 412 or 4971 of the Internal Revenue Code of 1986, as
amended, including the regulations and published interpretations thereunder
(the "Code"); and each pension plan for which the Company or any of its
subsidiaries would have any liability that is intended to be qualified
under Section 401(a) of the Code is so qualified in all material respects,
and nothing has occurred, whether by action or by failure to act, which
would cause the loss of such qualification.
(xv) The Company and its subsidiaries maintain insurance of the types
and in the amounts generally deemed adequate for their business, including,
but not limited to, directors' and officers' insurance, insurance covering
real and personal property owned or leased by the Company and its
subsidiaries against theft, damage, destruction, acts of vandalism and all
other risks customarily insured against, all of which insurance is in full
force and effect. Neither the Company nor any of its subsidiaries has been
refused any insurance coverage applied for, and the Company has no reason
to believe that it and its subsidiaries will not be able to renew their
existing insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue
their business at a cost that would not have a Material Adverse Effect.
(xvi) Neither the Company nor any of its subsidiaries is, or with the
giving of notice or lapse of time or both would be, in default or violation
with respect to its Charter, Articles Supplementary, bylaws, partnership
agreements, operating agreements or other governing documents, as the case
may be. Neither the Company nor any of its subsidiaries is, or with the
giving of notice or lapse of time or both would be, in default in the
performance or observance of any material obligation, agreement, covenant
or condition contained in any indenture, mortgage, deed of trust, loan
agreement, lease or other agreement or instrument to which the Company or
any of its subsidiaries is a party or by which the Company or any of its
subsidiaries is bound or to which any of the properties or assets of the
Company or any of its subsidiaries is subject, or in violation of any
statutes, laws, ordinances or governmental rules or regulations or any
orders or decrees to which it is subject, including, without limitation,
Section 13 of the 1934 Act, which default or violation, individually or in
the aggregate, would have a Material Adverse Effect. Neither the Company
nor any of its subsidiaries has, at any time during the past five years,
(A) made any unlawful contributions to any candidate for any political
office, or failed fully to disclose any contribution in violation of law,
or (B) made any payment to any state, federal or foreign government
official, or other person charged with similar public or quasi-public duty
(other than payment required or permitted by applicable law).
(xvii) Other than as set forth in the Prospectus, there are no legal
or governmental proceedings pending to which the Company or any of its
subsidiaries is a party or of which any property of the Company or any of
its subsidiaries is the subject that, if determined adversely to the
Company or any of its subsidiaries, would individually or in the aggregate
have a Material Adverse Effect or which would materially and adversely
affect the consummation of the transactions contemplated hereby or which is
required to be disclosed in the Prospectus; to the best of the Company's
knowledge, no such proceedings are threatened or contemplated.
(xviii) The Company is not and, after giving effect to the offering
and sale of the Shares, will not be a "holding company," or a "subsidiary
company" of a "holding company," or an "affiliate" of a "holding company"
or of a "subsidiary company," as such terms are defined in the Public
Utility Holding Company Act of 1935, as amended (the "1935 Act").
(xix) The Company is not and, after giving effect to the offering and
sale of the Shares, will not be an "investment company" or an entity
"controlled" by an "investment company," as such terms are defined in the
Investment Company Act of 1940, as amended (the "1940 Act").
(xx) KPMG LLP, the accounting firm which has certified the financial
statements filed with or incorporated by reference in and as a part of the
Registration Statement, is an independent public accounting firm within the
meaning of the 1933 Act and the 1933 Act Rules and Regulations. The Company
and each of its subsidiaries maintains a system of internal accounting
controls sufficient to provide reasonable assurance that: (A) transactions
are executed in accordance with management's general or specific
authorizations; (B) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain accountability for assets; (C) access
to assets is permitted only in accordance with management's general or
specific authorization; and (D) the recorded accounts for assets is
compared with the existing assets at reasonable intervals and appropriate
action is taken with respect thereto. The consolidated financial statements
and schedules of the Company, including the notes thereto, filed with (or
incorporated by reference) and as a part of the Registration Statement or
Prospectus, are accurate in all material respects and present fairly the
financial condition of the Company and its subsidiaries as of the
respective dates thereof and the consolidated results of operations and
changes in financial position and consolidated statements of cash flow for
the respective periods covered thereby, all in conformity with generally
accepted accounting principles applied on a consistent basis throughout the
periods involved except as otherwise disclosed therein. All adjustments
necessary for a fair presentation of results for such periods have been
made. The selected financial data included or incorporated by reference in
the Registration Statement and Prospectus present fairly the information
shown therein and have been compiled on a basis consistent with that of the
audited financial statements. Any operating or other statistical data
included or incorporated by reference in the Registration Statement and
Prospectus comply in all material respects with the 1933 Act and the 1933
Act Rules and Regulations and present fairly the information shown therein.
(xxi) Except to the extent such rights have been waived with respect
to the sale of the Shares, no holder of any security of the Company, or
security convertible into a security of the Company, has any right to
require registration of shares of Common Stock or any other security of the
Company because of the filing of the Registration Statement or the
consummation of the transactions contemplated hereby and, except as
disclosed in the Prospectus, no person has the right to require
registration under the 1933 Act of any shares of Common Stock or other
securities of the Company. No person has the right, contractual or
otherwise, to cause the Company to permit such person to underwrite the
sale of any of the Shares. Except for this Agreement, there are no
contracts, agreements or understandings between the Company or any of its
subsidiaries and any person that would give rise to a valid claim against
the Company, its subsidiaries or the Placement Agent for a brokerage
commission, finder's fee or like payment in connection with the issuance,
purchase and sale of the Shares.
(xxii) The Company has not distributed and, prior to the later to
occur of (A) the Closing Date and (B) completion of the distribution of the
Shares, will not distribute any offering material in connection with the
offering and sale of the Shares other than the Registration Statement, the
Prospectus or documents incorporated therein by reference.
(xxiii) The Company has not taken and will not take, directly or
indirectly, any action designed to or which might reasonably be expected to
cause or result in stabilization or manipulation of the price of the
Company's Common Stock, and the Company is not aware of any such action
taken or to be taken by affiliates of the Company.
(xxiv) The Company represents and warrants to you that any certificate
signed by any officer of the Company and delivered to the Placement Agent
or to counsel for the Placement Agent shall be deemed a representation and
warranty by the Company to the Placement Agent as to the matters covered
thereby.
(xxv) The Company represents and warrants to you that it is organized
and has operated in conformity with the requirements for qualification and
taxation as a real estate investment trust ("REIT") for each of its taxable
years since its formation and its current organization and current and
proposed method of operation will enable it to continue to meet the
requirements for qualification and taxation as a REIT. No transaction event
has occurred which could cause the Company not to be able to qualify as a
REIT for its current taxable year or any future taxable year.
(xxvi) The Company represents and warrants to you that each of the
Company's subsidiaries that is a partnership or a limited liability
company, other than any entity for which a taxable REIT subsidiary election
has been made ("Subsidiary Partnerships"), is properly classified either as
a disregarded entity or as a partnership, and not as a corporation or as an
association taxable as a corporation, for federal income tax purposes
throughout the period from its formation through the date hereof, or, in
the case of any Subsidiary Partnerships that have terminated, through the
date of termination of such Subsidiary Partnerships.
(xxvii) The Company has retained KPMG LLP as its qualified accountants
and qualified tax experts, and KPMG LLP (i) periodically tests procedures
and conduct annual compliance reviews designed to determine compliance with
the REIT provisions of the Internal Revenue Code of 1986, as amended (the
"Code") and (ii) assists the Company in monitoring what it believes are
appropriate accounting systems and procedures designed to determine
compliance with the REIT provisions of the Code.
(xxviii) The Company represents and warrants to you that the
statements under the captions "Risk Factors--Other Risks--We May Fail to
Qualify as a REIT" and "Material United States Federal Income Tax
Consequences" in the Prospectus are accurate in all material respects.
4. Additional Covenants. The Company covenants and agrees with the
Placement Agent that:
(a) The Company will timely transmit copies of the Prospectus, and any
amendments or supplements thereto, to the SEC for filing pursuant to Rule 424(b)
of the 1933 Act Rules and Regulations.
(b) The Company has furnished or will deliver to the Placement Agent and
counsel for the Placement Agent, without charge, conformed copies of the
Registration Statement as originally filed and of each amendment thereto
(including exhibits filed therewith or incorporated by reference therein and
documents incorporated or deemed to be incorporated by reference therein) and
conformed copies of all consents and certificates of experts. The copies of the
Registration Statement and each amendment thereto furnished to the Placement
Agent will be identical to the electronically transmitted copies thereof filed
with the SEC pursuant to EDGAR, except to the extent permitted by Regulation S-T
or by Rule 424(b) of the 1933 Rules and Regulations. The Company will promptly
notify the Placement Agent of the issuance by the SEC of any stop order
suspending the effectiveness of the Registration Statement or of the initiation
or threatening of any proceedings for any of such purposes. The Company will use
its best efforts to prevent the issuance of any stop order and, if any stop
order is issued, to obtain the lifting thereof at the earliest possible moment.
(c) The Company will not file any amendment or supplement to the
Registration Statement, the Prospectus (or any other prospectus relating to the
Shares filed pursuant to Rule 424(b) of the 1933 Act Rules and Regulations that
differs from the Prospectus as filed pursuant to such Rule 424(b)) and will not
file any document under the 1934 Act before the termination of the offering of
the Shares by the Company if the document would be deemed to be incorporated by
reference into the Registration Statement or the Prospectus, of which the
Placement Agent shall not previously have been advised and furnished with a copy
or to which the Placement Agent shall have reasonably objected or which is not
in compliance with the 1933 Act Rules and Regulations; and the Company will
promptly notify you after it shall have received notice thereof of the time when
any amendment to the Registration Statement becomes effective or when any
supplement to the Prospectus has been filed.
(d) During the period when a Prospectus relating to any of the Shares is
required to be delivered under the 1933 Act by any Placement Agent or dealer,
the Company will comply, at its own expense, with all requirements imposed by
the 1933 Act and the 1933 Act Rules and Regulations, as now and hereafter
amended, and by the rules and regulations of the SEC thereunder, as from time to
time in force, so far as necessary to permit the continuance of sales of or
dealing in the Shares during such period in accordance with the provisions
hereof and as contemplated by the Prospectus.
(e) If, during the period when a Prospectus relating to any of the Shares
is required to be delivered under the 1933 Act by any Placement Agent or dealer,
(i) any event relating to or affecting the Company or of which the Company shall
be advised in writing by the Placement Agent shall occur as a result of which,
in the opinion of the Company or the Placement Agent, the Prospectus as then
amended or supplemented would include any untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements therein,
in the light of the circumstances under which they were made, not misleading or
(ii) it shall be necessary to amend or supplement the Registration Statement or
the Prospectus to comply with the 1933 Act, the 1933 Act Rules and Regulations,
the 1934 Act or the 1934 Act Rules and Regulations, the Company will forthwith
at its expense prepare and file with the SEC, and furnish to the Placement Agent
a reasonable number of copies of, such amendment or supplement or other filing
that will correct such statement or omission or effect such compliance.
(f) During the period when a Prospectus relating to any of the Shares is
required to be delivered under the 1933 Act by the Placement Agent, the Company
will furnish such proper information as may be lawfully required and otherwise
cooperate in qualifying the Shares for offer and sale under the securities or
blue sky laws of such jurisdictions as the Placement Agent may reasonably
designate and will file and make in each year such statements or reports as are
or may be reasonably required by the laws of such jurisdictions; provided,
however, that the Company shall not be required to qualify as a foreign
corporation or shall be required to qualify as a dealer in securities or to file
a general consent to service of process under the laws of any jurisdiction.
(g) In accordance with Section 11(a) of the 1933 Act and Rule 158 of the
1933 Act Rules and Regulations, the Company will make generally available to its
security holders and to holders of the Shares, as soon as practicable, an
earning statement (which need not be audited) in reasonable detail covering the
12 months beginning not later than the first day of the month next succeeding
the month in which occurred the effective date (within the meaning of Rule 158)
of the Registration Statement.
(h) During the period when a Prospectus relating to any of the Shares is
required to be delivered under the 1933 Act by the Placement Agent, the Company
will file promptly all documents required to be filed with the SEC pursuant to
Sections 13(a), 13(c), 14 or 15(d) of the 1934 Act. The Company will furnish to
its security holders annual reports containing financial statements audited by
independent public accountants. The Company will, for a period of one year from
the Closing Date, deliver to the Placement Agent at its principal executive
office a reasonable number of copies of annual reports, quarterly reports,
current reports and copies of all other documents, reports and information
furnished by the Company to its shareholders or filed with any securities
exchange or market pursuant to the requirements of such exchange or market or
with the SEC pursuant to the 1933 Act or the 1934 Act. The Company will deliver
to the Placement Agent similar reports with respect to any significant
subsidiaries, as that term is defined in the 1933 Act Rules and Regulations,
which are not consolidated in the Company's financial statements. Any report,
document or other information required to be furnished under this paragraph (h)
shall be furnished as soon as practicable after such report, document or
information becomes available.
(i) During the period beginning from the date of this Agreement and
continuing to and including the date that is 30 days after the Closing Date, the
Company will not, without the prior written consent of the Placement Agent,
offer for sale, sell or enter into any agreement to sell, or otherwise dispose
of, any equity securities of the Company, except for the Shares; provided,
however, that the Company may issue, or grant options to purchase, shares of
Common Stock pursuant to any employee stock incentive plan existing on the date
hereof.
(j) The Company will apply the proceeds from the sale of the Shares as set
forth in the description under "Use of Proceeds" in the Prospectus, which
description complies in all respects with the requirements of Item 504 of
Regulation S-K.
(k) The Company will promptly provide you with copies of all correspondence
to and from, and all documents issued to and by, the SEC in connection with the
registration of the Shares under the 1933 Act or relating to any documents
incorporated by reference into the Registration Statement or the Prospectus.
(l) Prior to the Closing Date, the Company will furnish to you, as soon as
they have been prepared, copies of any unaudited interim consolidated financial
statements of the Company and its subsidiaries for any periods subsequent to the
periods covered by the financial statements appearing in the Registration
Statement and the Prospectus or incorporated therein by reference.
(m) Except as required by law, prior to the Closing Date, the Company will
issue no press release or other communication, directly or indirectly, and will
hold no press conferences with respect to the Company or any of its
subsidiaries, the financial condition, results of operations, business,
properties, assets or liabilities of the Company or any of its subsidiaries, or
the offering of the Shares, without your prior written consent. In the event
that any such disclosure is required by law, the Company will promptly notify
you of such required disclosure prior to issuing any press release or other
communication or holding any press conference, and, to the extent reasonably
practicable, the Company will permit you to comment on any press release or
other communication.
(n) The Company will use its best efforts to obtain approval for, and
maintain the quotation of the Shares on, the New York Stock Exchange.
(o) The Company and its subsidiaries will maintain and keep accurate books
and records reflecting their assets and maintain internal accounting controls
which provide reasonable assurance that (i) transactions are executed in
accordance with management's authorization, (ii) transactions are recorded as
necessary to permit the preparation of the Company's consolidated financial
statements and to maintain accountability for the assets of the Company and its
subsidiaries, (iii) access to the assets of the Company and its subsidiaries is
permitted only in accordance with management's authorization, and (iv) the
recorded accounts of the assets of the Company and its subsidiaries are compared
with existing assets at reasonable intervals.
(p) The Company will use its best efforts to continue to meet the
requirements for qualification as a REIT under Sections 856 through 860 of the
Code.
5. Conditions of Closing. The Closing shall be subject to the accuracy, as
of the date hereof and as of the Closing Date, of the representations and
warranties of the Company contained herein, to the performance by the Company of
its covenants and obligations hereunder, and to the following additional
conditions, and the Company shall not issue or sell the Shares unless and until
all of the conditions of this Section 5 shall have been satisfied or waived by
the Placement Agent:
(a) The Registration Statement and all post-effective amendments thereto
shall have become effective not later than 1:00 p.m., New York time, on the date
hereof, or, with your consent, at a later date and time, not later than 1:00
p.m., New York time, on the first business day following the date hereof, or at
such later date and time as may be approved by the Placement Agent. All filings
required by Rule 424 and Rule 430A of the 1933 Act Rules and Regulations shall
have been made. No stop order suspending the effectiveness of the Registration
Statement, as amended from time to time, shall have been issued and no
proceeding for that purpose shall have been initiated or, to the knowledge of
the Company or the Placement Agent, threatened or contemplated by the SEC, and
any request of the SEC for additional information (to be included in the
Registration Statement or the Prospectus or otherwise) shall have been complied
with to the reasonable satisfaction of the Placement Agent.
(b) The Placement Agent shall not have advised the Company on or prior to
the Closing Date, that the Registration Statement or Prospectus or any amendment
or supplement thereto contains an untrue statement of fact which, in the opinion
of counsel to the Placement Agent, is material, or omits to state a fact which,
in the opinion of such counsel, is material and is required to be stated therein
or is necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading.
(c) On the Closing Date, you shall have received the opinion of Jaeckle
Fleischmann & Mugel, LLP, counsel for the Company, addressed to you and dated
the Closing Date, to the effect that:
(i) The Registration Statement and all post-effective amendments
thereto have become effective under the 1933 Act; any required filing of
the Prospectus or any supplement thereto pursuant to Rule 424(b) or
otherwise has been made in the manner and within the time period required
thereby; and, to the knowledge of such counsel after due inquiry, no stop
or other order suspending the effectiveness of the Registration Statement
has been issued and no proceedings for that purpose have been instituted or
are pending or contemplated under the 1933 Act or under the securities laws
of any jurisdiction.
(ii) The Registration Statement and the Prospectus, and each amendment
or supplement thereto (including any document incorporated by reference
into the Prospectus), as of their respective effective or issue date,
comply as to form and appear on their face to be appropriately responsive
in all material respects to the requirements of Form S-3 under the 1933 Act
and the applicable 1933 Act Rules and Regulations (except that such counsel
need express no opinion as to the financial statements or other financial
or statistical data); the conditions for use of Form S-3 have been
satisfied; and, as of the date they were filed with the SEC, the documents
incorporated by reference in the Prospectus appear on their face to comply
as to form and be appropriately responsive in all material respects with
the requirements of the 1934 Act and the applicable 1934 Act Rules and
Regulations (except that such counsel need express no opinion as to the
financial statements or other financial data).
(iii) The descriptions in the Registration Statement and Prospectus of
statutes, laws, ordinances, rules, regulations, legal or governmental
proceedings, contracts and other documents are accurate and fairly present
the information required to be shown under the 1933 Act and the 1933 Act
Rules and Regulations.
(iv) This Agreement has been duly authorized, executed and delivered
by the Company and constitutes a valid and legally binding obligation of
the Company.
(v) The Company and its subsidiaries have been duly organized and are
validly existing as corporations partnerships and limited liability
companies in good standing under the laws of the states or other
jurisdictions in which they are incorporated and organized, with full power
and authority (corporate and other) to own, lease and operate their
properties and conduct their businesses as described in the Prospectus and,
with respect to the Company, to execute and deliver, and perform the
Company's obligations under, this Agreement; the Company and its
subsidiaries are duly qualified to do business as foreign corporations or
similar entities in good standing in each state or other jurisdiction in
which their ownership or leasing of property or conduct of business legally
requires such qualification, except where the failure to be so qualified,
individually or in the aggregate, would not have a Material Adverse Effect.
(vi) The entities listed on Schedule II hereto are the only
subsidiaries, direct or indirect, of the Company. The Company owns,
directly or indirectly through other subsidiaries, the percentage indicated
on Schedule II of the outstanding shares of capital stock, partnership
interests, membership or similar interests, as the case may be, or other
securities evidencing equity ownership of such subsidiaries, and all such
securities have been duly authorized and validly issued, are fully paid and
non-assessable and, to the knowledge of such counsel, are owned by the
Company free and clear of any mortgage, pledge, lien, encumbrance, charge
or adverse claim and are not the subject of any agreement or understanding
with any person, and were not issued in violation of any preemptive or
similar rights; and, to the knowledge of such counsel, except as disclosed
in the Prospectus, there are no outstanding subscriptions, rights,
warrants, options, calls, convertible securities, commitments of sale, or
instruments related to or entitling any person to purchase or otherwise
acquire any shares of, or any security convertible into or exercisable or
exchangeable for, any such shares of capital stock or other ownership
interest of any of such subsidiaries.
(vii) The issuance and sale of the Shares and the execution, delivery
and performance by the Company of this Agreement, and the consummation of
the transactions herein contemplated, will not conflict with or result in a
breach or violation of any of the terms or provisions of, or constitute a
default under, or result in the creation or imposition of any lien, charge
or encumbrance upon any properties or assets of the Company or any of its
subsidiaries under, any indenture, mortgage, deed of trust, loan agreement
or other agreement or instrument known to such counsel after due inquiry to
which the Company or any of its subsidiaries is a party or by which the
Company or any of its subsidiaries is bound or to which any of the
properties or assets of the Company or any of its subsidiaries is subject,
except to such extent as, individually or in the aggregate, does not have a
Material Adverse Effect, nor will such action result in any violation of
the provisions of the Company's Charter, Articles Supplementary or bylaws
or any statute, rule, regulation or other law, or any order or judgment
known to such counsel after due inquiry, of any court or governmental
agency or body having jurisdiction over the Company or any of its
subsidiaries or any of their properties.
(viii) No consent, approval, authorization, order, registration or
qualification of or with any court or governmental agency or body is
required in connection with the execution, delivery and performance of this
Agreement, and the issuance and sale of the Shares or the consummation of
the transactions contemplated hereby, except such as may be required under
the 1933 Act or the 1933 Act Rules and Regulations and have been obtained,
or as may be required by the NASD or under state securities or blue sky
laws in connection with the purchase of the Shares by the Investor. Each of
the Company and its subsidiaries has filed all Notices pursuant to, and has
obtained all Approvals required to be obtained under, and has otherwise
complied with all requirements of, all applicable laws and regulations in
connection with the issuance and sale of the Shares, in each case with such
exceptions, individually or in the aggregate, as would not affect the
validity of the Shares, their issuance or the transactions contemplated
hereby or have a Material Adverse Effect; and no such Notices or Approvals
are required to be filed or obtained by the Company or any of its
subsidiaries in connection with the execution, delivery and performance of
this Agreement, the issuance and sale of the Shares or the transactions
contemplated hereby, in each case with such exceptions, individually or in
the aggregate, as would not affect the validity of the Shares, their
issuance or the transactions contemplated hereby or have a Material Adverse
Effect.
(ix) To the knowledge of such counsel after due inquiry and other than
as set forth in the Prospectus, there are no legal or governmental
proceedings pending to which the Company or any of its subsidiaries is a
party or of which any property of the Company or any of its subsidiaries is
the subject that, if determined adversely to the Company or any of its
subsidiaries, would individually or in the aggregate have a Material
Adverse Effect on the current or future consolidated financial position,
stockholders' equity or results of operations of the Company and its
subsidiaries taken as a whole; and, to the knowledge of such counsel after
due inquiry, no such proceedings are threatened or contemplated by
governmental authorities or threatened by others.
(x) The Company has duly and validly authorized and issued capital
stock as set forth under the caption "Description of Capital Stock" in the
Prospectus; all outstanding shares of Common Stock of the Company and the
Shares conform, or when issued will conform, as to legal matters to the
description thereof in the Prospectus: and all shares of Common Stock
issued by the Company have been duly authorized, validly issued, fully paid
and non-assessable; and the Shares to be sold by the Company have been duly
authorized and, when delivered and paid for in accordance with this
Agreement, will be validly issued, fully paid and non-assessable. All
corporate action required to be taken by the Company for the authorization,
issue and sale of the Shares has been duly and validly taken. The Shares
are duly authorized for trading, subject to official notice of issuance and
evidence of satisfactory distribution, on the New York Stock Exchange. The
form of specimen certificate representing the Shares filed with the
Securities and Exchange Commission is in valid and sufficient form. The
issuance of the Shares to be purchased from the Company hereunder is not
subject to preemptive or other similar rights, or any restriction upon the
voting or transfer thereof pursuant to applicable law or the Charter,
Articles Supplementary, bylaws or governing documents of the Company or any
agreement to which the Company or any of its subsidiaries is a party or by
which any of them may be bound; and, to such counsel's knowledge, except as
described in the Prospectus, there are no outstanding subscriptions,
rights, warrants, options, calls, convertible securities, commitments of
sale or rights related to or entitling any person to purchase or otherwise
acquire any shares of, or any security convertible into or exercisable or
exchangeable for, the capital stock of, or other ownership interest in, the
Company.
(xi) To the knowledge of such counsel after due inquiry, the Company
and each of its subsidiaries hold all licenses, certificates, permits and
approvals from all state, federal and other regulatory authorities, and
have satisfied in all material respects the requirements imposed by
regulatory bodies, administrative agencies or other governmental bodies,
agencies or officials, that are required for the Company and its
subsidiaries lawfully to own, lease and operate its properties and conduct
its business as described in the Prospectus, and, to the knowledge of such
counsel after due inquiry, each of the Company and its subsidiaries is
conducting its business in compliance in all material respects with all of
the laws, rules and regulations of each jurisdiction in which it conducts
its business.
(xii) The statements made in the Prospectus under the captions "Risk
Factors" and "Description of Capital Stock," Item 15 of Part II of the
Registration Statement, and in the Company's Annual Report on Form 10-K for
the year ended December 31, 2002 under Item 1, "Business," Item 11,
"Executive Compensation" and Item 13, "Certain Relationships and Related
Transactions," to the extent that they constitute summaries of documents
referred to therein or matters of law or legal conclusions, have been
reviewed by such counsel and are accurate summaries and fairly present the
information disclosed therein.
(xiii) Neither the Company nor any of its subsidiaries is, or with the
giving of notice or lapse of time or both would be, in default or violation
with respect to its Charter, or bylaws, partnership agreements or other
governing documents, as the case may be. To the knowledge of such counsel
after due inquiry, neither the Company nor any of its subsidiaries is, or
with the giving of notice or lapse of time or both would be, in default in
the performance or observance of any material obligation, agreement,
covenant or condition contained in any indenture, mortgage, deed of trust,
loan agreement, lease or other agreement or instrument to which the Company
or any of its subsidiaries is a party or by which the Company or any of its
subsidiaries is bound or to which any of the properties or assets of the
Company or any of its subsidiaries is subject, or in violation of any
statutes, laws, ordinances or governmental rules or regulations or any
orders or decrees to which it is subject, including, without limitation,
Section 13 of the 1934 Act, and neither the Company nor any of its
subsidiaries has failed to obtain any other license, permit, franchise,
easement, consent, or other governmental authorization necessary to the
ownership, leasing and operation of its properties or to the conduct of its
business, which default, violation or failure, individually or in the
aggregate, would have a Material Adverse Effect.
(xiv) To the knowledge of such counsel after due inquiry, (A) there
are no material (individually, or in the aggregate) legal, governmental or
regulatory proceedings pending or threatened to which the Company or any of
its subsidiaries is a party or of which the business or properties of the
Company or any of its subsidiaries is the subject which are not disclosed
in the Registration Statement and Prospectus; (B) there are no contracts or
documents of a character required to be described in the Registration
Statement or the Prospectus or to be filed as an exhibit to the
Registration Statement which are not described or filed as required; and
(C) there are no statutes, ordinances, laws, rules or regulations required
to be described in the Registration Statement or Prospectus which are not
described as required.
(xv) The Company is not and, after giving effect to the offering and
sale of the Shares, will not be a "holding company," or a "subsidiary
company" of a "holding company," or an "affiliate" of a "holding company"
or of a "subsidiary company," as such terms are defined in the 1935 Act.
(xvi) The Company is not and, after giving effect to the offering and
sale of the Shares, will not be an "investment company" or an entity
"controlled" by an "investment company," as such terms are defined in the
1940 Act.
(xvii) All the shares of capital stock of the Company have been issued
and sold in compliance with all applicable federal and state securities
laws.
(xviii) To the knowledge of such counsel after due inquiry and except
as disclosed in the Prospectus, no holder of any security of the Company
has any right to require registration of shares of Common Stock or any
other security of the Company because of the filing of the Registration
Statement or the consummation of the transactions contemplated hereby and,
except to the extent such rights have been waived with respect to the sale
of the Shares no person has the right to require registration under the
1933 Act of any shares of Common Stock or other securities of the Company.
(xviv) The Company has been organized and has operated in conformity
with the requirements for qualification and taxation as a REIT for each of
its taxable years beginning with the taxable year ended December 31, 1997
through December 31, 2002, and its current organization and proposed method
of operation will enable it to continue to meet the requirements for
qualification and taxation as a REIT for the taxable year 2003 and
thereafter.
(xx) The statements under the captions "Risk Factors--Other Risks--We
May Fail to Qualify as a REIT" and "Material United States Federal Income
Tax Consequences" in the Prospectus have been reviewed by counsel and, to
the extent they constitute descriptions of legal matters or legal
conclusions, are accurate in all material respects.
Such counsel shall confirm that during the preparation of the Registration
Statement and Prospectus, such counsel participated in conferences with the
Placement Agent and its counsel and with officers and representatives of the
Company and its independent accountants, at which conferences the contents of
the Registration Statement and the Prospectus (including all documents filed
under the 1934 Act and deemed incorporated by reference therein) were discussed,
reviewed and revised. On the basis of the information which was developed in the
course thereof, considered in light of such counsel's understanding of
applicable law and the experience gained by such counsel through their practice
thereunder, without such counsel assuming responsibility for the accuracy and
completeness of such statements except to the extent expressly provided above,
such counsel shall confirm that nothing came to their attention that would lead
them to believe that (i) the Registration Statement (including any document
filed under the 1934 Act and deemed incorporated by reference therein), as of
the Effective Date, 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 (ii) the Prospectus or any amendment or
supplement thereto (including any document filed under the 1934 Act and deemed
incorporated by reference therein) as of its respective issue date and as of the
Closing Date, contained or contains any untrue statement of a material fact or
omitted or omits to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading (other than the financial statements
and schedules, or other financial data, as to which such counsel need express no
opinion).
In rendering the foregoing opinion, such counsel may rely, (1) as to
matters involving laws of any jurisdiction other than State of New York or the
United States of America, upon opinions addressed to the Placement Agent of
other counsel satisfactory to it and Morrison & Foerster LLP, counsel to the
Placement Agent, and (2) as to all matters of fact, upon certificates and
written statements of the executive officers of, and accountants for, the
Company; provided, in either case, that such counsel shall state in their
opinion that they and the Placement Agent are justified in relying thereon.
(d) You shall have received on the Closing Date, from Morrison & Foerster
LLP, counsel to the Placement Agent, such opinion or opinions, dated the Closing
Date, with respect to such matters as you may reasonably require; and the
Company shall have furnished to such counsel such documents as they reasonably
request for the purposes of enabling them to review or pass on the matters
referred to in this Section 5 and in order to evidence the accuracy,
completeness and satisfaction of the representations, warranties and conditions
herein contained.
(e) You shall have received at or prior to the Closing Date from Morrison &
Foerster LLP a memorandum or memoranda, in form and substance satisfactory to
you, with respect to the qualification for offering and sale by the Company of
the Shares under state securities or Blue Sky laws of such jurisdictions as the
Placement Agent may have designated to the Company.
(f) On the business day immediately preceding the date of this Agreement
and on the Closing Date, you shall have received from KPMG LLP, letters, dated
the respective dates of delivery, in form and substance satisfactory to you,
confirming that they are independent public accountants with respect to the
Company within the meaning of the 1933 Act, the 1933 Act Rules and Regulations,
the 1934 Act, and the 1934 Act Rules and Regulations, and stating to the effect
set forth in Schedule I hereto.
(g) Except as contemplated in the Prospectus, (i) neither the Company nor
any of its subsidiaries shall have sustained since the date of the latest
audited financial statements included or incorporated by reference in the
Prospectus any loss or interference with its business from fire, explosion,
flood or other calamity, whether or not covered by insurance, or from any labor
dispute or court or governmental action, order or decree; and (ii) subsequent to
the respective dates as of which information is given in the Registration
Statement and the Prospectus, neither the Company nor any of its subsidiaries
shall have incurred any liability or obligation, direct or contingent, or
entered into any transactions, and there shall not have been any change in the
capital stock, partnership interests or membership or similar interests, as the
case may be, or short-term or long-term debt of the Company and its subsidiaries
or any change, or any development involving or which might reasonably be
expected to involve a prospective change in the condition (financial or other),
net worth, business, affairs, management, prospects, results of operations or
cash flow of the Company or its subsidiaries, the effect of which, in any such
case described in clause (i) or (ii), is in the Placement Agent's judgment so
material or adverse as to make it impracticable or inadvisable to proceed with
the public offering or the delivery of the Shares being delivered on such
Closing Date on the terms and in the manner contemplated in the Prospectus.
(h) There shall not have occurred any of the following: (i) a suspension or
material limitation in trading in securities generally on the New York Stock
Exchange or the Nasdaq National Market or the establishment on such exchanges or
market by the SEC or by such exchanges or markets of minimum or maximum prices
which are not in force and effect on the date hereof; (ii) a suspension or
material limitation in trading in the Company's securities on the New York Stock
Exchange or the establishing on such market by the SEC or by such market of
minimum or maximum prices which are not in force and effect on the date hereof;
(iii) a general moratorium on commercial banking activities declared by either
federal or any state authorities; (iv) the outbreak or escalation of hostilities
involving the United States or the declaration by the United States of a
national emergency or war, which in your judgment makes it impracticable or
inadvisable to proceed with the public offering or the delivery of the Shares in
the manner contemplated in the Prospectus; or (v) any calamity or crisis, change
in national, international or world affairs, act of God, change in the
international or domestic markets, or change in the existing financial,
political or economic conditions in the United States or elsewhere, which in
your judgment makes it impracticable or inadvisable to proceed with the public
offering or the delivery of the Shares in the manner contemplated in the
Prospectus.
(i) You shall have received certificates, dated the Closing Date and signed
by the President and the Chief Financial Officer of the Company, in their
capacities as such, stating that:
(i) the condition set forth in Section 5(a) has been fully satisfied;
(ii) they have carefully examined the Registration Statement and the
Prospectus as amended or supplemented and all documents incorporated by
reference therein and nothing has come to their attention that would lead
them to believe that either the Registration Statement or the Prospectus,
or any amendment or supplement thereto or any documents incorporated by
reference therein as of their respective effective, issue or filing dates,
contained, and the Prospectus as amended or supplemented and all documents
incorporated by reference therein and when read together with the documents
incorporated by reference therein, at such Closing Date, contains any
untrue statement of a material fact, or omits to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading;
(iii) since the Effective Date, there has occurred no event required
to be set forth in an amendment or supplement to the Registration Statement
or the Prospectus which has not been so set forth and there has been no
document required to be filed under the 1934 Act and the 1934 Act Rules and
Regulations that upon such filing would be deemed to be incorporated by
reference into the Prospectus that has not been so filed;
(iv) all representations and warranties made herein by the Company are
true and correct at such Closing Date, with the same effect as if made on
and as of such Closing Date, and all agreements herein to be performed or
complied with by the Company on or prior to such Closing Date have been
duly performed and complied with by the Company;
(v) neither the Company nor any of its subsidiaries has sustained
since the date of the latest audited financial statements included or
incorporated by reference in the Prospectus any material loss or
interference with its business from fire, explosion, flood or other
calamity, whether or not covered by insurance, or from any labor dispute or
court or governmental action, order or decree;
(vi) except as disclosed in the Prospectus, subsequent to the
respective dates as of which information is given in the Registration
Statement and the Prospectus, neither the Company nor any of its
subsidiaries has incurred any liabilities or obligations, direct or
contingent, other than in the ordinary course of business, or entered into
any transactions not in the ordinary course of business, which in either
case are material to the Company or such subsidiary; and there has not been
any change in the capital stock, partnership interests or membership or
similar interests, as the case may be, or material increase in the
short-term debt or long-term debt of the Company or any of its subsidiaries
or any material adverse change or any development involving or which may
reasonably be expected to involve a prospective material adverse change, in
the condition (financial or other), net worth, business, affairs,
management, prospects, results of operations or cash flow of the Company
and its subsidiaries taken as a whole; and there has been no dividend or
distribution of any kind, paid or made by the Company on any class of its
capital stock;
(vii) there has not been any change or decrease specified in
paragraphs (iii)(E) or (iii)(F) of the letter or letters delivered to the
Placement Agent referred to in Section 5(f) above, except those changes and
decreases that are disclosed therein; and
(viii) covering such other matters as you may reasonably request.
(j) The Company shall have furnished to you at the Closing Date such
further information, opinions, certificates, letters and documents as you may
have reasonably requested.
(k) The Shares shall have been approved for trading upon official notice of
issuance on the New York Stock Exchange.
All such opinions, certificates, letters and documents will be in
compliance with the provisions hereof only if they are satisfactory in form and
substance to you and to Morrison & Foerster LLP, counsel for the Placement
Agent. The Company will furnish you with such signed and conformed copies of
such opinions, certificates, letters and documents as you may request.
If any of the conditions specified above in this Section 5 shall not have
been satisfied at or prior to the Closing Date or waived by you in writing, this
Agreement may be terminated by you on notice to the Company, whereupon the
Company shall not issue or sell the Shares.
6. Indemnification and Contribution.
(a) The Company will indemnify and hold harmless the Placement Agent from
and against any losses, damages or liabilities, joint or several, to which the
Placement Agent may become subject, under the 1933 Act, the 1934 Act or
otherwise, insofar as such losses, damages or liabilities (or actions or claims
in respect thereof) arise out of or are based upon (i) an untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement, the Prospectus or any other prospectus relating to the Shares, or any
amendment or supplement thereto, or in any blue sky application or other
document executed by the Company or based on any information furnished in
writing by the Company, filed in any state or other jurisdiction in order to
qualify any or all of the Shares under the securities laws thereof (the "Blue
Sky Application"), or (ii) 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 the Placement Agent for any legal or
other expenses incurred by the Placement Agent in connection with investigating,
preparing, pursuing or defending against or appearing as a third party witness
in connection with any such loss, damage, liability or action or claim,
including, without limitation, any investigation or proceeding by any
governmental agency or body, commenced or threatened, including the reasonable
fees and expenses of counsel to the indemnified party, as such expenses are
incurred (including such losses, damages, liabilities or expenses to the extent
of the aggregate amount paid in settlement of any such action or claim, provided
that (subject to Section 6(c) hereof) any such settlement is effected with the
written consent of the Company); provided, however, that the Company shall not
be liable in any such case to the extent, but only to the extent, that any such
loss, damage or liability arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in any Prospectus
relating to the Shares in reliance upon and in conformity with written
information relating to the Placement Agent furnished to the Company by the
Placement Agent expressly for use in the preparation thereof (as provided in
Section 12 hereof).
(b) The Placement Agent will indemnify and hold harmless the Company from
and against any losses, damages or liabilities to which the Company may become
subject, under the 1933 Act, the 1934 Act or otherwise, insofar as such losses,
damages or liabilities (or actions or claims in respect thereof) arise out of or
are based upon an untrue statement or alleged untrue statement of a material
fact contained in any Prospectus relating to the Shares, or arise out of are
based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, in each case to the extent, but only to the extent, that such untrue
statement or alleged untrue statement or omission or alleged omission was made
in any Prospectus relating to the Shares in reliance upon and in conformity with
written information relating to the Placement Agent furnished to the Company by
the Placement Agent expressly for use in the preparation thereof (as provided in
Section 12 hereof), and will reimburse the Company for any legal or other
expenses incurred by the Company in connection with investigating or defending
any such action or claim as such expenses are incurred (including such losses,
damages, liabilities or expenses to the extent of the aggregate amount paid in
settlement of any such action or claim, provided that (subject to Section 6(c)
hereof) any such settlement is effected with the written consent of the
Placement Agent).
(c) Promptly after receipt by an indemnified party under Section 6(a) or
6(b) hereof of notice of the commencement of any action, such indemnified party
shall, if a claim in respect thereof is to be made against an indemnifying party
under Section 6(a) or 6(b) hereof, notify each such indemnifying party in
writing of the commencement thereof, but the failure so to notify such
indemnifying party shall not relieve such indemnifying party from any liability
except to the extent that it has been prejudiced in any material respect by such
failure or from any liability that it may have to any such indemnified party
otherwise than under Section 6(a) or 6(b) hereof. In case any such action shall
be brought against any such indemnified party and it shall notify each
indemnifying party of the commencement thereof, each such indemnifying party
shall be entitled to participate therein and, to the extent that it shall wish,
jointly with any other indemnifying party under Section 6(a) or 6(b) hereof
similarly notified, to assume the defense thereof, with counsel satisfactory to
such indemnified party (who shall not, except with the consent of such
indemnified party, be counsel to such indemnifying party), and, after notice
from such indemnifying party to such indemnified party of its election so to
assume the defense thereof, such indemnifying party shall not be liable to such
indemnified party under Section 6(a) or 6(b) hereof for any legal expenses of
other counsel or any other expenses, in each case subsequently incurred by such
indemnified party, in connection with the defense thereof other than reasonable
costs of investigation. The indemnified party shall have the right to employ its
own counsel in any such action, but the fees and expenses of such counsel shall
be at the expense of such indemnified party unless (i) the employment of counsel
by such indemnified party at the expense of the indemnifying party has been
authorized by the indemnifying party, (ii) the indemnified party shall have been
advised by such counsel that there may be a conflict of interest between the
indemnifying party and the indemnified party in the conduct of the defense, or
certain aspects of the defense, of such action (in which case the indemnifying
party shall not have the right to direct the defense of such action with respect
to those matters or aspects of the defense on which a conflict exists or may
exist on behalf of the indemnified party) or (iii) the indemnifying party shall
not in fact have timely employed counsel reasonably satisfactory to such
indemnified party to assume the defense of such action, in any of which events
such fees and expenses to the extent applicable shall be borne, and shall be
paid as incurred, by the indemnifying party. If at any time such indemnified
party shall have requested such indemnifying party under Section 6(a) or 6(b)
hereof to reimburse such indemnified party for fees and expenses of counsel,
such indemnifying party agrees that it shall be liable for any settlement of the
nature contemplated by Section 6(a) or 6(b) hereof effected without its written
consent if (A) such settlement is entered into more than 45 days after receipt
by such indemnifying party of such request for reimbursement, (B) such
indemnifying party shall have received notice of the terms of such settlement at
least 30 days prior to such settlement being entered into and (C) such
indemnifying party shall not have reimbursed such indemnified party in
accordance with such request for reimbursement prior to the date of such
settlement. No such indemnifying party shall, without the written consent of
such indemnified party, effect the settlement or compromise of, or consent to
the entry of any judgment with respect to, any pending or threatened action or
claim in respect of which indemnification or contribution may be sought
hereunder (whether or not such indemnified party is an actual or potential party
to such action or claim) unless such settlement, compromise or judgment (1)
includes an unconditional release of such indemnified party from all liability
arising out of such action or claim and (2) does not include a statement as to
or an admission of fault, culpability or a failure to act, by or on behalf of
any such indemnified party. In no event shall such indemnifying parties be
liable for the fees and expenses of more than one counsel, including any local
counsel, for all such indemnified parties in connection with any one action or
separate but similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances.
(d) If the indemnification provided for in this Section 6 is by its terms
due and owing but is unavailable or insufficient to indemnify or hold harmless
an indemnified party under Section 6(a) or 6(b) hereof in respect of any losses,
damages or liabilities (or actions or claims in respect thereof) referred to
therein, then each indemnifying party under Section 6(a) or 6(b) hereof shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, damages or liabilities (or actions or claims in respect thereof)
in such proportion as is appropriate to reflect the relative benefits received
by the Company, on the one hand, and the Placement Agent, on the other hand,
from the offering of the Shares. If, however, the allocation provided by the
immediately preceding sentence is not permitted by applicable law or if the
indemnified party failed to give the notice required under Section 6(c) hereof
and such indemnifying party was prejudiced in a material respect by such
failure, then each such indemnifying party shall contribute to such amount paid
or payable by such indemnified party in such proportion as is appropriate to
reflect not only such relative benefits but also the relative fault, as
applicable, of the Company, on the one hand, and the Placement Agent, on the
other hand, in connection with the statements or omissions that resulted in such
losses, damages or liabilities (or actions or claims in respect thereof), as
well as any other relevant equitable considerations. The relative benefits
received by, as applicable, the Company, on the one hand, and the Placement
Agent, on the other hand, shall be deemed to be in the same proportion as the
total net proceeds from such offering (before deducting expenses) received by
the Company bear to the portion of the total Placement Fee received by each
Placement Agent. The relative fault, as applicable, of the Company, on the one
hand, and the Placement Agent, on the other hand, shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company, on the one hand, or the
Placement Agent, on the other hand, and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission. The Company and the Placement Agent agree that it would not be just
and equitable if contribution pursuant to this Section 6(d) were determined by
pro rata allocation or by any other method of allocation that does not take
account of the equitable considerations referred to above in this Section 6(d).
The amount paid or payable by such an indemnified party as a result of the
losses, damages or liabilities (or actions or claims in respect thereof)
referred to above in this Section 6(d) shall be deemed to include any legal or
other expenses incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 6(d), the Placement Agent shall not be required to
contribute any amount in excess of the amount by which the total price at which
the Shares were sold to the Investor exceeds the amount of any damages that the
Placement Agent has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933
Act) shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation.
(e) The obligations of the Company under this Section 6 shall be in
addition to any liability that the Company may otherwise have and shall extend,
upon the same terms and conditions, to each officer, director, employee, agent
or other representative and to each person, if any, who controls the Placement
Agent within the meaning of the 1933 Act; and the obligations of the Placement
Agent under this Section 6 shall be in addition to any liability that the
Placement Agent may otherwise have and shall extend, upon the same terms and
conditions, to each officer and director of the Company who signed the
Registration Statement and to each person, if any, who controls the Company
within the meaning of the 1933 Act.
(f) The parties to this Agreement hereby acknowledge that they are
sophisticated business persons who were represented by counsel during the
negotiations regarding the provisions hereof, including, without limitation, the
provisions of this Section 6, and are fully informed regarding such provisions.
They further acknowledge that the provisions of this Section 6 fairly allocate
the risks in light of the ability of the parties to investigate the Company and
its business in order to assure that adequate disclosure is made in the
Registration Statement, any Preliminary Prospectus, the Prospectus, and any
supplement or amendment thereof, as required by the 1933 Act.
7. Representations and Agreements to Survive Delivery. The respective
representations, warranties, agreements and statements of the Company and the
Placement Agent, as set forth in this Agreement or made by or on behalf of them,
respectively, pursuant to this Agreement, shall remain operative and in full
force and effect regardless of any investigation (or any statement as to the
results thereof) made by or on behalf of the Placement Agent or any controlling
person of the Placement Agent, the Company or any of its officers, directors or
any controlling persons, and shall survive the Closing.
8. Engagement Period. Pursuant to the Engagement Letter, if the Company
sells or agrees to sell any shares of Common Stock to the Investor during the
Term or within six months after the end of the Term either (i) privately (i.e.,
in a transaction not registered under federal securities laws) or (ii) publicly
pursuant to a shelf registration, the Company shall pay to the Placement Agent,
upon the closing of each such sale, a placement fee. The placement fee shall be
equal to 2.5% of the aggregate gross purchase price of the shares of Common
Stock sold. The Company agrees to reimburse you, upon request made from time to
time, for reasonable out-of-pocket fees and expenses incurred by you in
connection with the services provided hereunder, including without limitation
the fees and expenses of legal counsel and other advisors. The Company agrees to
reimburse the Placement Agent within 10 days of receiving an invoice for such
expenses. The terms "Investor" and "term" used in this paragraph shall have the
same meaning as used and defined in the Engagement Letter.
9. Effective Date and Termination.
(a) This Agreement may be terminated (i) by you at any time at or prior to
the Closing Date if any condition specified in Section 5 hereof shall not have
been satisfied on or prior to the Closing Date or (ii) by either party if the
Closing has not occurred on or before May 23, 2003; provided, however, that the
provisions of this Section 9 and of Section 6, Section 8 and Section 10 hereof
shall at all times be effective. Any such termination shall be without liability
of any party to any other party except as provided in Section 6, Section 8 or
Section 10 hereof.
(b) If either party terminates this Agreement as provided in Section 9(a),
such party shall so notify the other party by telephone, facsimile or telegram,
confirmed by letter.
10. Costs and Expenses. The Company, whether or not the transactions
contemplated hereby are consummated or this Agreement is terminated, will bear
and pay the costs and expenses incident to the registration of the Shares and
public offering thereof, including, without limitation, (a) all expenses
(including stock transfer taxes) incurred in connection with the delivery to the
Investor of the Shares, the filing fees of the SEC, the fees and expenses of the
Company's counsel and accountants and the fees and expenses of counsel for the
Placement Agent, (b) the preparation, printing, filing, delivery and shipping of
the Registration Statement, each Preliminary Prospectus, the Prospectus and any
amendments or supplements thereto and the printing, delivery and shipping of
this Agreement and other offering documents, including the Blue Sky Memoranda,
and any instruments or documents related to any of the foregoing, (c) the
furnishing of copies of such documents to the Placement Agent, (d) the
registration or qualification of the Shares for offering and sale under the
securities laws of the various states and other jurisdictions, (e) the filing
fees of the NASD (if any) and fees and disbursements of counsel to the Placement
Agent relating to any review of the offering by the NASD, (f) all printing and
engraving costs related to preparation of the certificates for the Shares,
including transfer agent and registrar fees, (g) all fees and expenses relating
to the authorization of the Shares for trading on the New York Stock Exchange,
(h) all travel expenses, including air fare and accommodation expenses, of
representatives of the Company in connection with the offering of the Shares,
and (i) all of the other costs and expenses incident to the performance by the
Company of the registration and offering of the Shares; provided, that the
Placement Agent will bear and pay any advertising costs and expenses incurred by
the Placement Agent incident to the public offering of the Shares. The Company
shall reimburse the Placement Agent within 10 days of receiving an invoice (and
such other supporting documentation as may be reasonably requested by the
Company) from the Placement Agent for such costs and expenses.
11. Notices. All notices or communications hereunder, except as herein
otherwise specifically provided, shall be in writing and, if sent to the
Placement Agent, shall be mailed, delivered, sent by facsimile transmission, or
telegraphed and confirmed, to A.G. Edwards & Sons, Inc. at One North Jefferson
Avenue, St. Louis, Missouri 63103, Attention: Albert F. Bender, III, facsimile
number (314) 955-6996, with a copy to Morrison & Foerster LLP, Attention: Justin
L. Bastian, facsimile number (650) 494-0792; or if sent to the Company shall be
mailed, delivered, sent by facsimile transmission, or telegraphed and confirmed
to the Company at 300 One Jackson Place, 188 East Capitol Street, Jackson, MS,
39201-2195, Attention N. Keith McKey, facsimile number (601) 352-1441.
12. Information Furnished by Placement Agent. The Company acknowledges and
agrees that the statements set forth under the caption "Plan of Distribution" in
the Prospectus Supplement constitute the only information furnished by or on
behalf of the Placement Agent for use in the preparation of the Prospectus as
referred to in Section 3(a)(ii) and Section 6 hereof.
13. Parties. This Agreement shall inure to the benefit of and be binding
upon the Placement Agent, the Company and, to the extent provided in Sections 6
and 7, the officers and directors of the Company and each person who controls
the Company or the Placement Agent and their respective heirs, executors,
administrators, successors and assigns. Nothing expressed or mentioned in this
Agreement is intended or shall be construed to give any person, corporation or
other entity any legal or equitable right, remedy or claim under or in respect
of this Agreement or any provision herein contained; this Agreement and all
conditions and provisions hereof being intended to be and being for the sole and
exclusive benefit of the parties hereto and their respective successors and
assigns and said controlling persons and said officers and directors, and for
the benefit of no other person, corporation or other entity.
14. Counterparts. This Agreement may be executed by any one or more of the
parties hereto 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 instrument.
15. Pronouns. Whenever a pronoun of any gender or number is used herein, it
shall, where appropriate, be deemed to include any other gender and number.
16. Time of Essence. Time shall be of the essence of this Agreement.
17. Applicable Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Missouri, without giving effect to the
choice of law or conflict of laws principles thereof.
If the foregoing is in accordance with your understanding, please so
indicate in the space provided below for that purpose, whereupon this letter
shall constitute a binding agreement between the Company and the Placement
Agent.
EASTGROUP PROPERTIES, INC.
By: /s/ N. Keith McKey
-------------------------
Title: Chief Financial Officer
Accepted in St. Louis,
Missouri as of the date
first above written.
A.G. EDWARDS & SONS, INC.
By: /s/ John Moriarty
--------------------
Title: Managing Director
SCHEDULE I
Pursuant to Section 5(e) of the Placement Agency Agreement, KPMG LLP shall
furnish letters to the Placement Agent to the effect that:
1. They are independent certified public accountants with respect to the
Company within the meaning of the Act and the applicable rules and regulations
thereunder adopted by the SEC.
2. In their opinion, the Company's consolidated financial statements and
financial statement schedules audited by them and incorporated by reference in
the Registration Statement comply as to form in all material respects with the
applicable accounting requirements of the Act and the Securities Exchange Act of
1934 and the related rules and regulations adopted by the SEC.
3. They have not audited any financial statements of the Company as of any
date or for any period subsequent to December 31, 2002; although they have
conducted an audit for the year ended December 31, 2002, the purpose (and
therefore the scope) of the audit was to enable them to express their opinion on
the consolidated financial statements as of December 31, 2002, and for the year
then ended, but not on the financial statements for any interim period within
that year. Therefore, they are unable to and do not express any opinion on the
unaudited consolidated balance sheet as of March 31, 2003, and the unaudited
consolidated statements of income, changes in stockholders' equity and cash
flows for the three-month periods ended March 31, 2003 and 2002, included in the
Company's quarterly report on Form 10-Q for the quarter ended March 31, 2003,
incorporated by referenced in the Registration Statement, or on the financial
position, results of operations or cash flows as of any date or for any period
subsequent to December 31, 2002.
4. They have read the 2003 minutes of meetings of the stockholders, the
board of directors, the investment committee, the compensation committee and the
audit committee of the Company and its subsidiaries, as set forth in the minute
books at May 13, 2003, officials of the Company having advised them that the
minutes of all such meetings through that date were set forth therein; they have
carried out other procedures to May 13, 2003, as follows:
a. With respect to the three-month periods ended March 31, 2003 and 2002,
they have:
(i) Performed the procedures specified by the American Institute of
Certified Public Accountants for a review of interim financial information as
described in SAS Nos. 100 and 71, Interim Financial Information, on the
unaudited consolidated financial statements for those periods, described in 3,
included in the Company's quarterly report on Form 10-Q for the quarter ended
March 31, 2003, incorporated by reference in the Registration Statement.
(ii) Inquired of certain officials of the Company who have responsibility
for financial and accounting matters regarding whether the unaudited
consolidated financial statements referred to in 4a(i) comply as to form in all
material respects with the applicable accounting requirements of the Securities
Exchange Act of 1934 as it applies to Form 10-Q and the related rules and
regulations adopted by the SEC.
b. With respect to the period from April 1, 2003 to May 13, 2003, they have
been advised by officials of the Company that no consolidated financial
statements as of any date or for any period subsequent to March 31, 2003 were
available.
The foregoing procedures do not constitute an audit conducted in accordance
with auditing standards generally accepted in the United States of America.
Also, they would not reveal matters of significance with respect to the comments
in the following paragraph. Accordingly, KPMG LLP makes no representations
regarding the sufficiency of the foregoing procedures for purposes of the
Placement Agency Agreement.
5. Nothing came to their attention as a result of the foregoing procedures,
however, that caused them to believe that:
a. Any material modification should be made to the unaudited consolidated
financial statements described in 3, incorporated by reference in the
Registration Statement, for them to be in conformity with accounting principles
generally accepted in the United States of America.
b. The unaudited consolidated financial statements described in 3 do not
comply as to form in all material respects with the applicable accounting
requirements of the Securities Exchange Act of 1934 as it applies to Form 10-Q
and the related rules and regulations adopted by the SEC.
6. As mentioned in 4b, Company officials have advised them that no
consolidated financial statements as of any date or for any period subsequent to
March 31, 2003, are available; accordingly, the procedures carried out by them
with respect to changes in financial statement items after March 31, 2003 have,
of necessity, been even more limited than those with respect to the periods
referred to in 4a. They have inquired of certain officials of the Company who
have responsibility for financial and accounting matters whether at May 13, 2003
there was any change in the capital stock, increase in long-term debt or any
decreases in consolidated stockholders' equity of the consolidated companies as
compared with amounts shown on the March 31, 2003 unaudited consolidated balance
sheet incorporated by reference in the Registration Statement, except in all
instances for changes, increases, or decreases that the Registration Statement
discloses have occurred or may occur. On the basis of these inquiries and their
reading of the minutes as described in 4, nothing came to their attention that
caused them to believe that there was any such change, increase, or decrease,
except that those officials advised them that the number of shares of the
Company's common stock increased by 227,780 shares between March 31, 2003 and
May 13, 2003 due to the issuance of 500 shares related to the Company's stock
option plan and 227,280 shares related to the conversion of 200,000 shares of
the Company's Series B Convertible Preferred Stock. In addition, the Company's
common stock decreased by 2,250 shares between March 31, 2003 and May 13, 2003
related to a forfeiture of restricted stock.
7. In addition to the audit referred to in their report(s) included or
incorporated by reference in the Prospectus and the limited procedures,
inspection of minute books, inquiries and other procedures referred to in
paragraph 6 above, they have carried out certain specified procedures, not
constituting an audit in accordance with generally accepted auditing standards,
with respect to certain amounts, percentages and financial information specified
by the Placement Agent, which are derived from the general accounting records of
the Company and its subsidiaries for the periods covered by their reports and
any interim or other periods since the latest period covered by their reports,
which appear or are incorporated by reference in the Prospectus, or in Part II
of, or in exhibits and schedules to, the Registration Statement specified by the
Placement Agent, and have compared certain of such amounts, percentages and
financial information with the accounting records of the Company and its
subsidiaries and have found them to be in agreement.
SCHEDULE II
SUBSIDIARIES
100% Owned Subsidiaries of EastGroup Properties, Inc.
EastGroup Properties General Partners, Inc.
EastGroup Properties Holdings, Inc.
Nash IND Corporation
EastGroup TRS, Inc.
Partnerships and LLC's with Partners and Members Indented:
EastGroup Properties, LP
99% EastGroup Properties Holdings, Inc.
1% EastGroup Properties General Partners, Inc.
M.O.R. XXXVI Associates Limited
99% EastGroup Properties, Inc.
1% EastGroup Properties LP
Sample I-95 Associates
99% EastGroup Properties LP
1% EastGroup Properties General Partners, Inc.
University Business Center Associates
80% Profit interest EastGroup Properties, LP
49% Capital interest EastGroup Properties, LP
31% Capital interest EastGroup Properties, Inc.
20% JCB Limited
EastGroup Southbay, LLC
100% EastGroup Properties, LP
EastGroup Property Services, LLC
100% EastGroup Properties, LP
EastGroup Property Services of Florida, LLC
100% EastGroup Property Services, LLC