EXHIBIT (1)
EASTGROUP PROPERTIES, INC.
800,000 Shares*
Common Stock
($.0001 par value)
Underwriting Agreement
New York, New York
March 28, 2005
Citigroup Global Markets Inc.
388 Greenwich Street
New York, New York 10013
Ladies and Gentlemen:
EastGroup Properties, Inc., a corporation organized under the laws of
Maryland (the "Company"), proposes to sell to Citigroup Global Markets Inc.
("you" or the "Underwriter"), 800,000 shares of Common Stock, $.0001 par value
("Common Stock") of the Company (said shares to be issued and sold by the
Company being hereinafter called the "Underwritten Securities"). The Company
also proposes to grant to the Underwriter an option to purchase up to 120,000
additional shares of Common Stock to cover over-allotments (the "Option
Securities"; the Option Securities, together with the Underwritten Securities,
being hereinafter called the "Shares"). Certain terms used herein are defined in
Section 17 hereof.
1. Representations and Warranties. The Company represents and warrants to,
and agrees with the Underwriter that:
(a) The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement (Registration No. 333-109769) 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 "Act"), and
the rules and regulations thereunder (the "1933 Act Rules and Regulations") of
the Commission. Such registration statement has been declared effective by the
Commission. The Company meets the requirements for use of Form S-3 under the
Act. Copies of such registration statement,
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* Plus an option to purchase from EastGroup Properties, Inc., up to 120,000
additional shares to cover over-allotments.
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 Commission 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 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 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 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.
(b) Neither the Commission 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 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 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 Underwriter furnished to
the Company by the Underwriter expressly for use in the preparation thereof.
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 Act, at the time they were filed with the Commission, complied in all
material respects with the requirements of the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), and the rules and regulations adopted by the
Commission 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 Exchange 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 (as defined in Section 3 herein), 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.
(c) 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").
(d) 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 (except as set
forth in Schedule 1(d)) 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.
(e) 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.
(f) The issuance and sale of the Underwritten Securities 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 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.
(g) As of December 31, 2004, the Company has duly and validly authorized
capital stock as set forth in the Company's Annual Report on Form 10-K for the
year ended December 31, 2004; 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.
(h) 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.
(i) 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.
(j) 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 2(t) 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.
(k) 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.
(l) 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
ss.9601 of the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C.
ss.9601 et seq.
(m) 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.
(n) 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.
(o) 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.
(p) 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 Exchange 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).
(q) 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.
(r) 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").
(s) 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").
(t) KPMG LLP, the registered independent public accounting firm which has
certified the financial statements filed with or incorporated by reference in
and as a part of the Registration Statement, is a registered independent public
accounting firm within the meaning of the 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 Act and the 1933 Act Rules and Regulations and
present fairly the information shown therein.
(u) 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 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 Underwriter for a brokerage commission,
finder's fee or like payment in connection with the issuance, purchase and sale
of the Shares.
(v) 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.
(w) 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.
(x) The Company represents and warrants to you that any certificate signed
by any officer of the Company and delivered to the Underwriter or to counsel for
the Underwriter shall be deemed a representation and warranty by the Company to
the Underwriter as to the matters covered thereby.
(y) 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.
(z) The Company represents and warrants to you that each of the Company's
investments 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.
(aa) The Company has retained KPMG LLP as its registered independent public
accounting firm 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 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.
(bb) 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.
Any certificate signed by any officer of the Company and delivered to the
Underwriter in connection with the offering of the Shares shall be deemed a
representation and warranty by the Company, as to matters covered thereby, to
each Underwriter.
2. Purchase and Sale. (a) Subject to the terms and conditions and in
reliance upon the representations and warranties herein set forth, the Company
agrees to sell to the Underwriter, and the Underwriter agrees, to purchase from
the Company, at a purchase price of $36.90 per share, of 800,000 Underwritten
Securities.
(b) Subject to the terms and conditions and in reliance upon the
representations and warranties herein set forth, the Company hereby grants an
option to the Underwriter to purchase, up to 120,000 Option Securities at the
same purchase price per share as the Underwriter shall pay for the Underwritten
Securities. Said option may be exercised only to cover over-allotments in the
sale of the Underwritten Securities by the Underwriter. Said option may be
exercised in whole or in part at any time on or before the 30th day after the
date of the Prospectus upon written or telegraphic notice by you to the Company
setting forth the number of shares of the Option Securities as to which you are
exercising the option and the settlement date.
3. Delivery and Payment. Delivery of and payment for the Underwritten
Securities and the Option Securities (if the option provided for in Section 2(b)
hereof shall have been exercised on or before the third Business Day prior to
the Closing Date) shall be made at 10:00 AM, New York City time, on March 31,
2005, or at such time on such later date not more than three Business Days after
the foregoing date as the Underwriter shall designate, which date and time may
be postponed by agreement between the Underwriter and the Company (such date and
time of delivery and payment for the Shares being herein called the "Closing
Date"). Delivery of the Shares shall be made to the Underwriter against payment
by the Underwriter of the purchase price thereof to or upon the order of the
Company by wire transfer payable in same-day funds to an account specified by
the Company. Delivery of the Underwritten Securities and the Option Securities
shall be made through the facilities of The Depository Trust Company unless the
Underwriter shall otherwise instruct.
If the option provided for in Section 2(b) hereof is exercised after the
third Business Day prior to the Closing Date, the Company will deliver the
Option Securities (at the expense of the Company) to the Underwriter, at 388
Greenwich Street, New York, New York, on the date specified by the Underwriter
(which shall be within three Business Days after exercise of said option) for
the account of the Underwriter, against payment by the Underwriter of the
purchase price thereof to or upon the order of the Company by wire transfer
payable in same-day funds to an account specified by the Company. If settlement
for the Option Securities occurs after the Closing Date, the Company will
deliver to the Underwriter on the settlement date for the Option Securities, and
the obligation of the Underwriter to purchase the Option Securities shall be
conditioned upon receipt of, supplemental opinions, certificates and letters
confirming as of such date the opinions, certificates and letters delivered on
the Closing Date pursuant to Section 6 hereof.
4. Offering by the Underwriter. It is understood that the Underwriter
proposes to offer the Shares for sale to the public as set forth in the
Prospectus.
5. Agreements. The Company agrees with the Underwriter that:
(a) The Company will use its best efforts to cause the Registration
Statement, if not effective at the Execution Time, and any amendment thereof, to
become effective.
Prior to the termination of the offering of the Shares, the Company will not
file any amendment of the Registration Statement or supplement to the Prospectus
or any Rule 462(b) Registration Statement unless the Company has furnished you a
copy for your review prior to filing and will not file any such proposed
amendment or supplement to which you reasonably object. Subject to the foregoing
sentence, if the Registration Statement has become or becomes effective pursuant
to Rule 430A, or filing of the Prospectus is otherwise required under Rule
424(b), the Company will cause the Prospectus, properly completed, and any
supplement thereto to be filed in a form approved by you with the Commission
pursuant to the applicable paragraph of Rule 424(b) within the time period
prescribed and will provide evidence satisfactory to you of such timely filing.
The Company will promptly advise you (1) when the Registration Statement, if not
effective at the Execution Time, shall have become effective, (2) when the
Prospectus, and any supplement thereto, shall have been filed (if required) with
the Commission pursuant to Rule 424(b) or when any Rule 462(b) Registration
Statement shall have been filed with the Commission, (3) when, prior to
termination of the offering of the Shares, any amendment to the Registration
Statement shall have been filed or become effective, (4) of any request by the
Commission or its staff for any amendment of the Registration Statement, or any
Rule 462(b) Registration Statement, or for any supplement to the Prospectus or
for any additional information, (5) of the issuance by the Commission of any
stop order suspending the effectiveness of the Registration Statement or the
institution or threatening of any proceeding for that purpose and (6) of the
receipt by the Company of any notification with respect to the suspension of the
qualification of the Shares for sale in any jurisdiction or the institution or
threatening of any proceeding for such purpose. The Company will use its best
efforts to prevent the issuance of any such stop order or the suspension of any
such qualification and, if issued, to obtain as soon as possible the withdrawal
thereof.
(b) If, at any time when a prospectus relating to the Shares is required to
be delivered under the Act, any event occurs as a result of which the Prospectus
as then supplemented would include any untrue statement of a material fact or
omit to state any material fact necessary to make the statements therein in the
light of the circumstances under which they were made not misleading, or if it
shall be necessary to amend the Registration Statement or supplement the
Prospectus to comply with the Act or the Exchange Act or the respective rules
thereunder, the Company promptly will (1) notify you of such event, (2) prepare
and file with the Commission, subject to the second sentence of paragraph (a) of
this Section 5, an amendment or supplement which will correct such statement or
omission or effect such compliance and (3) supply any supplemented Prospectus to
you in such quantities as you may reasonably request.
(c) As soon as practicable, the Company will make generally available to
its security holders and to you an earnings statement or statements of the
Company and its subsidiaries which will satisfy the provisions of Section 11(a)
of the Act and Rule 158 under the Act.
(d) The Company will furnish to you and your counsel, without charge,
signed copies of the Registration Statement (including exhibits thereto) and, so
long as delivery of a prospectus by the Underwriter or dealer may be required by
the Act, as many copies of each Prospectus and the Prospectus Supplement and any
supplement thereto as the Underwriter may reasonably request. The Company will
pay the expenses of printing or other production of all documents relating to
the offering.
(e) The Company will arrange, if necessary, for the qualification of the
Shares for sale under the laws of such jurisdictions as you may designate, will
maintain such qualifications in effect so long as required for the distribution
of the Shares and will pay any fee of the National Association of Securities
Dealers, Inc., in connection with its review of the offering; provided that in
no event shall the Company be obligated to qualify to do business in any
jurisdiction where it is not now so qualified or to take any action that would
subject it to service of process in suits, other than those arising out of the
offering or sale of the Shares, in any jurisdiction where it is not now so
subject.
(f) The Company will not, without your prior written consent, offer, sell,
contract to sell, pledge, or otherwise dispose of, (or enter into any
transaction which is designed to, or might reasonably be expected to, result in
the disposition (whether by actual disposition or effective economic disposition
due to cash settlement or otherwise) by the Company or any affiliate of the
Company or any person in privity with the Company or any affiliate of the
Company) directly or indirectly, including the filing (or participation in the
filing) of a registration statement with the Commission in respect of, or
establish or increase a put equivalent position or liquidate or decrease a call
equivalent position within the meaning of Section 16 of the Exchange Act, any
other shares of Common Stock or any securities convertible into, or exercisable,
or exchangeable for, shares of Common Stock; or publicly announce an intention
to effect any such transaction, for a period of 45 days after the date of the
Underwriting Agreement, provided, however, that the Company may issue and sell
Common Stock pursuant to any employee stock option plan, stock ownership plan or
dividend reinvestment plan of the Company in effect at the Execution Time and
the Company may issue Common Stock issuable upon the conversion of securities or
the exercise of warrants outstanding at the Execution Time.
(g) The Company will comply with all applicable securities and other
applicable laws, rules and regulations, including, without limitation, the
Sarbanes Oxley Act of 2002, and to use its best efforts to cause the Company's
directors and officers, in their capacities as such, to comply with such laws,
rules and regulations, including, without limitation, the provisions of the
Sarbanes Oxley Act of 2002.
(h) The Company will not take, directly or indirectly, any action designed
to or that would constitute or that might reasonably be expected to cause or
result in, under the Exchange Act or otherwise, stabilization or manipulation of
the price of any security of the Company to facilitate the sale or resale of the
Shares.
(i) 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.
6. Conditions to the Obligations of the Underwriter. The obligations of the
Underwriter to purchase the Underwritten Securities and the Option Securities,
as the case may be, shall be subject to the accuracy of the representations and
warranties on the part of the Company contained herein as of the Execution Time,
the Closing Date and any settlement date pursuant to Section 3 hereof, to the
accuracy of the statements of the Company made in any certificates pursuant to
the provisions hereof, to the performance by the Company of its obligations
hereunder and to the following additional conditions:
(a) If the Registration Statement has not become effective prior to the
Execution Time, unless the Underwriter agrees in writing to a later time, the
Registration Statement will become effective not later than (i) 6:00 PM New York
City time on the date of determination of the public offering price, if such
determination occurred at or prior to 3:00 PM New York City time on such date or
(ii) 9:30 AM on the Business Day following the day on which the public offering
price was determined, if such determination occurred after 3:00 PM New York City
time on such date; if filing of the Prospectus, or any supplement thereto, is
required pursuant to Rule 424(b), the Prospectus, and any such supplement, will
be filed in the manner and within the time period required by Rule 424(b); and
no stop order suspending the effectiveness of the Registration Statement shall
have been issued and no proceedings for that purpose shall have been instituted
or threatened.
(b) The Company shall have requested and caused Jaeckle Fleischmann &
Mugel, LLP, counsel for the Company, to have furnished to the Underwriter their
opinion, dated the Closing Date and addressed to the Underwriter, to the effect
that:
(i) The Registration Statement and all post-effective amendments
thereto have become effective under the 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 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 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 Commission, 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 Exchange 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 Act and the 1933 Act Rules
and Regulations.
(iv) This Agreement has been duly authorized, executed and delivered
by 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 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 in the Company's Form 10-K for the year ended December
31, 2004; 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; 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, 2003 under Item 1, "Business," 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 Exchange 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 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, 2004, 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 2005 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
Underwriter 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 Exchange 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 Exchange 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
Exchange 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 the State of New York or the
United States of America, upon opinions addressed to the Underwriter of other
counsel satisfactory to it and Morrison & Foerster LLP, counsel to the
Underwriter, 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 Underwriter are justified in relying thereon.
(c) The Underwriter shall have received from Morrison & Foerster LLP,
counsel for the Underwriter, such opinion or opinions, dated the Closing Date
and addressed to you, with respect to the issuance and sale of the Shares, the
Registration Statement, the Prospectus (together with any supplement thereto)
and other related matters as you may reasonably require, and the Company shall
have furnished to such counsel such documents as they request for the purpose of
enabling them to pass upon such matters.
(d) The Company shall have furnished to you a certificate of the Company,
signed by the Chairman of the Board or the President and the principal financial
or accounting officer of the Company, dated the Closing Date, to the effect that
the signers of such certificate have carefully examined the Registration
Statement, the Prospectus, any supplements to the Prospectus and this Agreement
and that:
(i) the representations and warranties of the Company in this
Agreement are true and correct on and as of the Closing Date with the same
effect as if made on the Closing Date and the Company has complied with all
the agreements and satisfied all the conditions on its part to be performed
or satisfied at or prior to the Closing Date;
(ii) no stop order suspending the effectiveness of the Registration
Statement has been issued and no proceedings for that purpose have been
instituted or, to the Company's knowledge, threatened; and
(iii) since the date of the most recent financial statements included
or incorporated by reference in the Prospectus (exclusive of any supplement
thereto), there has been no material adverse effect on the condition
(financial or otherwise), prospects, earnings, business or properties of
the Company and its subsidiaries, taken as a whole, whether
or not arising from transactions in the ordinary course of business, except
as set forth in or contemplated in the Prospectus (exclusive of any
supplement thereto).
(e) The Company shall have requested and caused KPMG LLP to have furnished
to the Underwriter, at the Execution Time and at the Closing Date, letters,
dated respectively as of the Execution Time and as of the Closing Date, in form
and substance satisfactory to the Underwriter, confirming that:
(i) 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 Commission.
(ii) 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 Commission.
(iii) They have not audited any financial statements of the Company as
of any date or for any period subsequent to December 31, 2004; although
they have conducted an audit for the year ended December 31, 2004, 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, 2004, and for the year then ended, but not on the financial
statements for any interim period within that year.
(iv) They have read the 2004 minutes of meetings of the stockholders,
the board of directors, the investment committee, and the audit committee
of the Company and its subsidiaries, as set forth in the minute books at
March 25, 2005, 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 March 25, 2005, as follows (their work
did not extend to the period from March 26, 2005 to March 28, 2005,
inclusive). The minutes of the board of directors' meeting, dated March 15,
2005, are in draft form and have not yet been approved. Also, the minutes
of the audit committee meetings, dated March 9, 2005 and March 11, 2005;
the compensation committee meeting, dated March 14, 2005; the nominating
and corporate governance committee meeting, dated March 15, 2005; are in
draft form and have not yet been approved.
With respect to the period from January 1, 2005 to March 25, 2005, they
have been advised by officials of the Company that no consolidated
financial statements as of any date or for any period subsequent to
December 31, 2004 were available.
As mentioned in (iv), Company officials have advised them that no consolidated
financial statements as of any date or for any period subsequent to December 31,
2004 are available; accordingly, the procedures carried out by them with respect
to changes in financial statement items after December 31, 2004 have, of
necessity, been limited. They have inquired of certain officials of the Company
who have responsibility for financial and accounting matters whether at March
25, 2005 there was any change in the capital stock, increase in debt or any
decreases in consolidated stockholders' equity of the consolidated companies as
compared with amounts shown on the December 31, 2004 audited 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 (iv), 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 60,462 shares between December 31,
2004 and March 25, 2005 due to the issuance of 27,865 shares related to the
Company's stock option plan and 33,447 shares related to the Company's incentive
restricted stock plan, offset by a decrease of 850 shares related to a
forfeiture of incentive restricted stock. In addition, the Company's debt
increased by approximately $42.8 million between December 31, 2004 and March 25,
2005 due to the assumption of a $20.5 million mortgage note payable and advances
on the Company's revolving credit facilities.
(v) They have also read the items identified by the Underwriter on
certain pages of the Company's 2004 annual report on Form 10-K, and have
performed the following procedures, which were applied as indicated with
respect to the symbols explained below. With respect to the disclosure by
the Company of any non-GAAP financial measures as defined in Regulation G,
they make no comment as to whether such measures or the resulting
disclosures comply with the requirements of Regulation G or Item 10 of
Regulation S-K. For the purpose of reporting their findings, in those
instances in which one or both of the compared or recalculated amounts were
rounded to some degree, and the amounts were in agreement or recalculated
except that they were not rounded to the same degree, or in those instances
in which one or both of the compared amounts were found to be within
$10,000 (except for per share data) and within 1,000 square feet, they have
nevertheless stated that they found the compared amounts to be in agreement
or that the amounts were recalculated.
FS Compared the amount for the period indicated with the corresponding
amount in the applicable consolidated financial statements incorporated by
reference in the Registration Statement and found them to be in agreement.
F Compared the amount for the period indicated with the corresponding
amount in the applicable consolidated financial statements included in the
Company's annual report on Form 10-K. Certain 2001 and 2000 amounts have
been reclassified to conform with the presentation of more recent periods.
In those instances they have compared the updated amounts to schedules
prepared by the Company under the direction of the Chief Financial Officer
of the Company and found them to be in agreement.
A Compared the amount for the period indicated with the corresponding
amount in the Company's general accounting records and found them to be in
agreement.
C Compared the amount for the period indicated to a report or schedule
prepared by the Company under the direction of the Chief Financial Officer
of the Company and found them to be in agreement.
R Proved the arithmetic accuracy (percentage or amount or ratio) based on
appropriate amounts for the period indicated included in either the
applicable consolidated financial statements incorporated by reference in
the Registration Statement or a report or schedule prepared by the Company
under the direction of the Chief Financial Officer of the Company and found
them to be in agreement.
They have also read the section captioned "Selected Consolidated Financial Data"
included in the Company's annual report on Form 10-K and incorporated by
reference in the Registration Statement. They compared the information included
under the heading "Selected Consolidated Financial Data" with the requirements
of item 301 of Regulation S-K. They also inquired of certain officials of the
Company who have responsibility for financial and accounting matters whether
this information conforms in all material respects with the disclosure
requirements of Item 301 of Regulation S-K. Nothing came to their attention as a
result of the foregoing procedures that caused them to believe that this
information does not conform in all material respects with the disclosure
requirements of Item 301 of Regulation S-K.
(vi) Their audits of the consolidated financial statements for the
years ended December 31, 2002, 2003 and 2004 comprised audit tests and
procedures deemed necessary for the purpose of expressing an opinion on
such financial statements taken as a whole. For none of the periods
referred to therein, or any other period, did they perform audit tests for
the purpose of expressing an opinion on individual balances of accounts or
summaries of selected transactions such as those enumerated above, and,
accordingly, they express no opinion thereon.
(vii) They make no representations regarding questions of legal
interpretation or regarding the sufficiency of the procedures enumerated in
the preceding paragraph for purposes of this Agreement; also, such
procedures would not necessarily reveal any material misstatement of the
amounts or percentages referred to above. Further, they have addressed
themselves solely to the foregoing data as set forth in the Registration
Statement and make no representations regarding the adequacy of disclosure
or regarding whether any material facts have been omitted.
(viii) Their letter is solely for the information of the addressees
and to assist the Underwriter in conducting and documenting their
investigation of the affairs of the Company in connection with the offering
of the securities covered by the Registration Statement, and it is not to
be used, circulated, quoted, or otherwise referred to within or without the
underwriting group for any other purpose, including but not limited to the
registration, purchase, or sale of securities, nor is it to be filed with
or referred to in whole or in part in the Registration Statement or any
other document, except that reference may be made to it in the underwriting
agreement or in any list of closing documents pertaining to the offering of
the securities covered by the Registration Statement.
(f) Subsequent to the Execution Time or, if earlier, the dates as of which
information is given in the Registration Statement (exclusive of any amendment
thereof) and the Prospectus (exclusive of any supplement thereto), there shall
not have been (i) any change or decrease specified in the letter or letters
referred to in paragraph (e) of this Section 6 or (ii) any change, or any
development involving a prospective change, in or affecting the condition
(financial or otherwise), earnings, business or properties of the Company and
its subsidiaries, taken as a whole, whether or not arising from transactions in
the ordinary course of business, except as set forth in or contemplated in the
Prospectus (exclusive of any supplement thereto) the effect of which, in any
case referred to in clause (i) or (ii) above, is, in the sole judgment of the
Underwriter, so material and adverse as to make it impractical or inadvisable to
proceed with the offering or delivery of the Shares as contemplated by the
Registration Statement (exclusive of any amendment thereof) and the Prospectus
(exclusive of any supplement thereto).
(g) Prior to the Closing Date, the Company shall have furnished to the
Underwriter such further information, certificates and documents as the
Underwriter may reasonably request.
(h) Subsequent to the Execution Time, there shall not have been any
decrease in the rating of any of the Company's debt securities by any
"nationally recognized statistical rating organization" (as defined for purposes
of Rule 436(g) under the Act) or any notice given of any intended or potential
decrease in any such rating or of a possible change in any such rating that does
not indicate the direction of the possible change.
(i) At the Execution Time, the Company shall have furnished to the
Underwriter a letter substantially in the form of Exhibit A hereto from each
executive officer and director of the Company addressed to the Underwriter.
If any of the conditions specified in this Section 6 shall not have been
fulfilled when and as provided in this Agreement, or if any of the opinions and
certificates mentioned above or elsewhere in this Agreement shall not be
reasonably satisfactory in form and substance to the Underwriter and counsel for
the Underwriter, this Agreement and all obligations of the Underwriter hereunder
may be canceled at, or at any time prior to, the Closing Date by the
Underwriter. Notice of such cancellation shall be given to the Company in
writing or by telephone or facsimile confirmed in writing.
The documents required to be delivered by this Section 6 shall be delivered
at the office of Morrison & Foerster LLP, counsel for the Underwriter, at 755
Page Mill Road, Palo Alto, California 94304-1018, on the Closing Date.
7. Reimbursement of Underwriter's Expenses. If the sale of the Shares
provided for herein is not consummated because any condition to the obligations
of the Underwriter set forth in Section 6 hereof is not satisfied, because of
any termination pursuant to Section 10 hereof or because of any refusal,
inability or failure on the part of the Company to perform any agreement herein
or comply with any provision hereof other than by reason of a default by the
Underwriter, the Company will reimburse the Underwriter within a reasonable time
after the Company receives a demand for all reasonable out-of-pocket expenses
(including reasonable fees and disbursements of counsel) that shall have been
incurred by them in connection with the proposed purchase and sale of the
Shares.
8. Indemnification and Contribution. (a) The Company agrees to indemnify
and hold harmless Underwriter, the directors, officers, employees and agents of
the Underwriter and each person who controls the Underwriter within the meaning
of either the Act or the Exchange Act against any and all losses, claims,
damages or liabilities, joint or several, to which they or any of them may
become subject under the Act, the Exchange Act or other Federal or state
statutory law or regulation, at common law or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon any untrue statement or alleged untrue statement of a material
fact contained in the registration statement for the registration of the Shares
as originally filed or in any amendment thereof, or in any Prospectus or the
Prospectus Supplement, or in any amendment thereof or supplement thereto, or
arise out of or are based upon the omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein not misleading, and agrees to reimburse each such indemnified
party, as incurred, for any legal or other expenses reasonably incurred by them
in connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the Company will not be liable in
any such case to the extent that any such loss, claim, damage or liability
arises out of or is based upon any such untrue statement or alleged untrue
statement or omission or alleged omission made therein in reliance upon and in
conformity with written information furnished to the Company by the Underwriter
specifically for inclusion therein. This indemnity agreement will be in addition
to any liability which the Company may otherwise have.
(b) The Underwriter agrees to indemnify and hold harmless the Company, each
of its directors, each of its officers who signs the Registration Statement, and
each person who controls the Company within the meaning of either the Act or the
Exchange Act, to the same extent as the foregoing indemnity from the Company to
the Underwriter, but only with reference to written information relating to the
Underwriter furnished to the Company by the Underwriter specifically for
inclusion in the documents referred to in the foregoing indemnity. This
indemnity agreement will be in addition to any liability which the Underwriter
may otherwise have. The Company acknowledges that the statements set forth in
the last paragraph of the cover page regarding delivery of the Shares and, under
the heading "Underwriting", the paragraph related to stabilization, syndicate
covering transactions and penalty bids in any Prospectus and the Prospectus
Supplement constitute the only information furnished in writing by or on behalf
of the Underwriter for inclusion in any Prospectus or the Prospectus Supplement.
(c) Promptly after receipt by an indemnified party under this Section 8 of
notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under this
Section 8, notify the indemnifying party in writing of the commencement thereof;
but the failure so to notify the indemnifying party (i) will not relieve it from
liability under paragraph (a) or (b) above unless and to the extent it did not
otherwise learn of such action and such failure results in the forfeiture by the
indemnifying party of substantial rights and defenses and (ii) will not, in any
event, relieve the indemnifying party from any obligations to any indemnified
party other than the indemnification obligation provided in paragraph (a) or (b)
above. The indemnifying party shall be entitled to appoint counsel of the
indemnifying party's choice at the indemnifying party's expense to represent the
indemnified party in any action for which indemnification is sought (in which
case the indemnifying party shall not thereafter be responsible for the fees and
expenses of any separate counsel retained by the indemnified party or parties
except as set forth below); provided, however, that such counsel shall be
satisfactory to the indemnified party. Notwithstanding the indemnifying party's
election to appoint counsel to represent the indemnified party in an action, the
indemnified party shall have the right to employ separate counsel (including
local counsel), and the indemnifying party shall bear the reasonable fees, costs
and expenses of such separate counsel if (i) the use of counsel chosen by the
indemnifying party to represent the indemnified party would present such counsel
with a conflict of interest, (ii) the actual or potential defendants in, or
targets of, any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that there may be legal defenses available to it and/or other indemnified
parties which are different from or additional to
those available to the indemnifying party, (iii) the indemnifying party shall
not have employed counsel satisfactory to the indemnified party to represent the
indemnified party within a reasonable time after notice of the institution of
such action or (iv) the indemnifying party shall authorize the indemnified party
to employ separate counsel at the expense of the indemnifying party. An
indemnifying party will not, without the prior written consent of the
indemnified parties, settle or compromise or consent to the entry of any
judgment with respect to any pending or threatened claim, action, suit or
proceeding in respect of which indemnification or contribution may be sought
hereunder (whether or not the indemnified parties are actual or potential
parties to such claim or action) unless such settlement, compromise or consent
includes an unconditional release of each indemnified party from all liability
arising out of such claim, action, suit or proceeding.
(d) In the event that the indemnity provided in paragraph (a), (b) or (c)
of this Section 8 is unavailable to or insufficient to hold harmless an
indemnified party for any reason, the Company and the Underwriter severally
agree to contribute to the aggregate losses, claims, damages and liabilities
(including legal or other expenses reasonably incurred in connection with
investigating or defending same) (collectively "Losses") to which the Company
and the Underwriter may be subject in such proportion as is appropriate to
reflect the relative benefits received by the Company on the one hand and the
Underwriter on the other from the offering of the Shares; provided, however,
that in no case shall (i) the Underwriter be responsible for any amount in
excess of the underwriting discount or commission applicable to the Shares
purchased by the Underwriter hereunder. If the allocation provided by the
immediately preceding sentence is unavailable for any reason, the Company and
the Underwriter severally shall contribute in such proportion as is appropriate
to reflect not only such relative benefits but also the relative fault of the
Company on the one hand and the Underwriter on the other in connection with the
statements or omissions which resulted in such Losses as well as any other
relevant equitable considerations. Benefits received by the Company shall be
deemed to be equal to the total net proceeds from the offering (before deducting
expenses) received by it, and benefits received by the Underwriter shall be
deemed to be equal to the total underwriting discounts and commissions, as set
forth on the cover page of the Prospectus. Relative fault shall be determined by
reference to, among other things, whether any untrue or any alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information provided by the Company on the one hand or
the Underwriter on the other, the intent of the parties and their relative
knowledge, access to information and opportunity to correct or prevent such
untrue statement or omission. The Company and the Underwriter agree that it
would not be just and equitable if contribution were determined by pro rata
allocation or any other method of allocation which does not take account of the
equitable considerations referred to above. Notwithstanding the provisions of
this paragraph (d), no person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation. For purposes of
this Section 8, each person who controls an Underwriter within the meaning of
either the Act or the Exchange Act and each director,
officer, employee and agent of the Underwriter shall have the same rights to
contribution as the Underwriter, and each person who controls the Company within
the meaning of either the Act or the Exchange Act, each officer of the Company
who shall have signed the Registration Statement and each director of the
Company shall have the same rights to contribution as the Company, subject in
each case to the applicable terms and conditions of this paragraph (d).
9. [Intentionally Omitted]
10. Termination. This Agreement shall be subject to termination in the
absolute discretion of the Underwriter, by notice given to the Company prior to
delivery of and payment for the Shares, if at any time prior to such time (i)
trading in the Company's Common Stock shall have been suspended by the
Commission or the New York Stock Exchange or trading in securities generally on
the New York Stock Exchange shall have been suspended or limited or minimum
prices shall have been established, (ii) a banking moratorium shall have been
declared either by Federal or New York State authorities or (iii) there shall
have occurred any outbreak or escalation of hostilities, declaration by the
United States of a national emergency or war, or other calamity or crisis the
effect of which on financial markets is such as to make it, in the sole judgment
of the Underwriter, impractical or inadvisable to proceed with the offering or
delivery of the Shares as contemplated by the Prospectus (exclusive of any
supplement thereto).
11. Representations and Indemnities to Survive. The respective agreements,
representations, warranties, indemnities and other statements of the Company or
its officers and of the Underwriter set forth in or made pursuant to this
Agreement will remain in full force and effect, regardless of any investigation
made by or on behalf of any Underwriter or the Company or any of the officers,
directors, employees, agents or controlling persons referred to in Section 8
hereof, and will survive delivery of and payment for the Shares. The provisions
of Sections 7 and 8 hereof shall survive the termination or cancellation of this
Agreement.
12. Notices. All communications hereunder will be in writing and effective
only on receipt, and, if sent to the Underwriter, will be mailed, delivered or
telefaxed to the Citigroup Global Markets Inc. General Counsel (fax no.: (212)
816-7912) and confirmed to the General Counsel, Citigroup Global Markets Inc.,
at 388 Greenwich Street, New York, New York, 10013, Attention: General Counsel,
with a copy to Morrison & Foerster LLP, Attention Justin L. Bastian, (fax no.:
(650) 494-0792); or, if sent to the Company, will be mailed, delivered or
telefaxed to 300 One Jackson Place, 188 East Capitol Street, Jackson, MS,
39201-2195, attention. N. Keith McKey, (fax no. (601) 352-1441, with a copy to
Jaeckle Fleishmann & Mugel, LLP, Attn: Joseph P. Kubarek, (fax no. (716)
856-0432).
13. Successors. This Agreement will inure to the benefit of and be binding
upon the parties hereto and their respective successors and the officers,
directors,
employees agents and controlling persons referred to in Section 8 hereof, and no
other person will have any right or obligation hereunder.
14. Applicable Law. This Agreement will be governed by and construed in
accordance with the laws of the State of New York applicable to contracts made
and to be performed within the State of New York.
15. Counterparts. This Agreement may be signed in one or more counterparts,
each of which shall constitute an original and all of which together shall
constitute one and the same agreement.
16. Headings. The section headings used herein are for convenience only and
shall not affect the construction hereof.
17. Definitions. The terms which follow, when used in this Agreement, shall
have the meanings indicated.
"Business Day" shall mean any day other than a Saturday, a Sunday or a
legal holiday or a day on which banking institutions or trust companies are
authorized or obligated by law to close in New York City.
"Effective Date" shall mean each date and time that the Registration
Statement, any post-effective amendment or amendments thereto and any Rule
462(b) Registration Statement became or become effective.
"Execution Time" shall mean the date and time that this Agreement is
executed and delivered by the parties hereto.
"Rule 424", "Rule 430A" and "Rule 462" refer to such rules under the
Act.
"Rule 430A Information" shall mean information with respect to the
Shares and the offering thereof permitted to be omitted from the
Registration Statement when it becomes effective pursuant to Rule 430A.
"Rule 462(b) Registration Statement" shall mean a registration
statement and any amendments thereto filed pursuant to Rule 462(b) relating
to the offering covered by the registration statement referred to in
Section 1(a) hereof.
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to us the enclosed duplicate hereof, whereupon this
letter and your acceptance shall represent a binding agreement between the
Company and the Underwriter.
Very truly yours,
EastGroup Properties, Inc.
By: /s/ DAVID H. HOSTER II
-----------------------
Name: David H. Hoster II
Title President
The foregoing Agreement is hereby confirmed and accepted as of the date first
above written.
Citigroup Global Markets Inc.
By: /s/ JOHN TODD
---------------------------
Name: John Todd
Title: Director