EXHIBIT 1
EASTGROUP PROPERTIES, INC.
1,050,000 Shares*
Common Stock
($.0001 par value)
Underwriting Agreement
New York, New York
April 24, 2008
MERRILL LYNCH,
PIERCE, FENNER & SMITH INCORPORATED
4 World Financial Center
New York, New York 10080
Ladies and Gentlemen:
EastGroup Properties, Inc., a corporation organized under the laws of
Maryland (the "Company"), proposes to sell to Merrill Lynch, Pierce, Fenner &
Smith Incorporated ("you" or the "Underwriter"), 1,050,000 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 157,500 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 19 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") an automatic shelf registration statement (Registration No.
333-134959) 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
became effective upon filing under Rule 462(e) of the 1933 Act Rules and
Regulations. The Company meets the requirements for use of
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* Plus an option to purchase from EastGroup Properties, Inc., up to 157,500
additional shares to cover over-allotments.
Form S-3 under the Act. Copies of such registration statement, including any
amendments thereto, each related preliminary prospectus (meeting the
requirements of Rule 430, Rule 430A or Rule 430B) 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 or Rule 430B
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 "Prospectus" as used
herein means the base 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 incorporated by reference therein
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
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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 Disclosure
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Package and 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 Disclosure
Package and 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 Financial Industry Regulatory Authority ("FINRA") 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, 2007, 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, 2007; all outstanding shares of Common Stock of the
Company and the Shares conform, or when issued will conform, to the description
thereof in the Disclosure Package and 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
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Shares has been duly and validly taken. Except as disclosed in the Disclosure
Package and 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 Disclosure Package and 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 Disclosure Package and 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 Disclosure Package and
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.
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(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 1(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
Disclosure Package and 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 Disclosure Package and 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.
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(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
7
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 Disclosure Package and 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 independent registered 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 independent registered 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
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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 Disclosure
Package and 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 Disclosure Package, 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
9
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 independent registered 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 in the
Company's Annual Report on Form 10-K for the year ended December 31, 2007 under
Item 1A, "Risk Factors" under the caption "Other Risks - We May Fail to Qualify
as a REIT" and under the caption "Material United States Federal Income Tax
Consequences" in the Base Prospectus are accurate in all material respects.
(cc) The Disclosure Package and the price to the public, the number of
Underwritten Securities and the number of Option Securities to be included on
the cover page of the Prospectus, when taken together as a whole, do not contain
any untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. The preceding sentence
does not apply to statements in or omissions from the Disclosure Package based
upon and in conformity with written information furnished to the Company by any
Underwriter specifically for use therein, it being understood and agreed that
the only such information furnished by or on behalf of any Underwriter consists
of the information described as such in Section 8 hereof.
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(dd) (1) At the time of filing the Registration Statement and (2) as of the
Execution Time (with such date being used as the determination date for purposes
of this clause (2)), the Company was not and is not an Ineligible Issuer (as
defined in Rule 405), without taking account of any determination by the
Commission pursuant to Rule 405 that it is not necessary that the Company be
considered an Ineligible Issuer.
(ee) Each Issuer Free Writing Prospectus, if any, does not include any
information that conflicts with the information contained in the Registration
Statement, including any document incorporated by reference therein that has not
been superseded or modified. The foregoing sentence does not apply to statements
in or omissions from any Issuer Free Writing Prospectus based upon and in
conformity with written information furnished to the Company by any Underwriter
specifically for use therein, it being understood and agreed that the only such
information furnished by any Underwriter consists of the information described
as such in Section 8 hereof.
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
the 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 $47.81 per share, of 1,050,000 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 157,500 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 April 29,
2008, 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
11
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 any post-effective
amendment to the Registration Statement, if not effective at the Execution Time,
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
(including the Final Prospectus or any Preliminary Prospectus) to the Base
Prospectus or any new 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 filing of the Prospectus is 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 any post-effective amendment to the
Registration Statement, if not effective at the Execution Time, shall become
effective, (2) when the Prospectus, and any supplement thereto, shall have been
filed (if required) with the Commission pursuant to Rule 424(b); (3) when, prior
to termination of the offering of the Shares, any post-effective amendment to
the Registration Statement or new registration statement relating to the Shares
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 the filing of a
new registration statement relating to the Shares or for any supplement to the
Prospectus or for any additional information, (5) of the issuance by the
Commission of
12
any stop order suspending the effectiveness of the Registration Statement or
such new 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 prior to the filing of the Final Prospectus pursuant to
Rule 424(b), any event occurs as a result of which the Disclosure Package 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 at such time not misleading, the Company will (1)
notify promptly the Underwriter so that any use of the Disclosure Package may
cease until it is amended or supplemented; (2) amend or supplement the
Disclosure Package to correct such statement or omission; and (3) supply any
amendment or supplement to you in such quantities as you may reasonably request.
(c) If, at any time when a prospectus relating to the Shares is required to
be delivered under the Act (including in circumstances where such requirement
may be satisfied pursuant to Rule 172), 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
at such time 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.
(d) 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.
(e) 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 (including in circumstances where such requirement may be satisfied
pursuant to Rule 172), as many copies of each Preliminary Prospectus, the Final
Prospectus and each Issuer Free Writing Prospectus and any supplement thereto as
the Underwriter may reasonably request.
(f) 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
13
qualifications in effect so long as required for the distribution of the Shares
and will pay any fee of FINRA 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.
(g) The Company agrees that, unless it has or shall have obtained the prior
written consent the Underwriter agrees with the Company that, unless it has or
shall have obtained, as the case may be, the prior written consent of the
Company, it has not and will not make any offer relating to the Shares that
would constitute an Issuer Free Writing Prospectus or that would otherwise
constitute a "free writing prospectus" (as defined in Rule 405) required to be
filed by the Company with the Commission or retained by the Company under Rule
433; provided that the prior written consent of the parties hereto shall be
deemed to have been given in respect of the Free Writing Prospectuses included
in Schedule I hereto. Any such free writing prospectus consented to by the
Underwriter or the Company is hereinafter referred to as a "Permitted Free
Writing Prospectus." The Company agrees that (x) it has treated and will treat,
as the case may be, each Permitted Free Writing Prospectus as an Issuer Free
Writing Prospectus and (y) it has complied and will comply, as the case may be,
with the requirements of Rules 164 and 433 applicable to any Permitted Free
Writing Prospectus, including in respect of timely filing with the Commission,
legending and record keeping.
(h) 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 60 days after the date of the
Underwriting Agreement, provided, however, that the Company may issue and sell
Common Stock pursuant to any director or 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. Notwithstanding the foregoing, if (x) during the last 17 days of
the restricted period the Company issues an earnings release or material news or
a material event relating to the Company occurs, or (y) prior to the expiration
of the restricted period, the Company announces that it will release earnings
results during the 16-day period beginning on the last day of the restricted
period, the restrictions imposed in this clause
14
shall continue to apply until the expiration of the 18-day period beginning on
the issuance of the earnings release or the occurrence of the material news or
material event. The Company will provide the Underwriter and any co-managers and
each individual subject to the restricted period pursuant to the lockup letters
described in Section 6(i) with prior notice of any such announcement that gives
rise to an extension of the restricted period.
(i) 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.
(j) 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.
(k) The Company agrees to pay the costs and expenses relating to the
following matters: (1) the preparation, printing or reproduction and filing with
the Commission of the Registration Statement (including financial statements and
exhibits thereto), each Preliminary Prospectus, the Prospectus and each Issuer
Free Writing Prospectus, and each amendment or supplement to any of them; (2)
the printing (or reproduction) and delivery (including postage, air freight
charges and charges for counting and packaging) of such copies of the
Registration Statement, each Preliminary Prospectus, the Prospectus and each
Issuer Free Writing Prospectus, and all amendments or supplements to any of
them, as may, in each case, be reasonably requested for use in connection with
the offering and sale of the Shares; (3) the preparation, printing,
authentication, issuance and delivery of certificates for the Shares, including
any stamp or transfer taxes in connection with the original issuance and sale of
the Shares; (4) the printing (or reproduction) and delivery of this Agreement,
any blue sky memorandum and all other agreements or documents printed (or
reproduced) and delivered in connection with the offering of the Shares; (5)
listing of the Shares on the New York Stock Exchange; (6) any registration or
qualification of the Shares for offer and sale under the securities or blue sky
laws of the several states (including filing fees and the reasonable fees and
expenses of counsel for the Underwriter relating to such registration and
qualification); (7) any filings required to be made with FINRA (including filing
fees and the reasonable fees and expenses of counsel for the Underwriter
relating to such filings); (8) the transportation and other expenses incurred by
or on behalf of Company representatives in connection with presentations to
prospective purchasers of the Shares; (9) the fees and expenses of the Company's
accountants and the fees and expenses of counsel (including local and special
counsel) for the Company; and (10) all other costs and expenses incident to the
performance by the Company of its obligations hereunder.
15
(l) 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) The Prospectus, and any supplement thereto, have been filed in the
manner and within the time period required by Rule 424(b); any material required
to be filed by the Company pursuant to Rule 433(d) under the Act shall have been
filed with the Commission within the applicable time periods prescribed for such
filings by Rule 433 and no stop order suspending the effectiveness of the
Registration Statement or any notice objecting to its use 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 and 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).
16
(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 Disclosure
Package and 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 Disclosure Package and 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
17
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 FINRA 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.
18
(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, 2007; 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 Disclosure Package and 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, 2007 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.
19
(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.
20
(xviii) To the knowledge of such counsel after due inquiry and except
as disclosed in the Disclosure Package and 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, 2007, 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 2008 and
thereafter.
(xx) The statements in the Company's Annual Report on Form 10-K for
the year ended December 31, 2007 under Item 1A "Risk Factors" under the
caption "Other Risks - We May Fail to Qualify as a REIT" and under the
caption "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 applicable 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
21
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 Disclosure Package, 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 Disclosure Package, the Prospectus, as well as each electronic
road show used in connection with the offering of the Shares, 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 Disclosure Package and 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
22
business, except as set forth in or contemplated in the Disclosure Package
and 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,
(which may refer to letters previously delivered to the Underwriter), 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 an independent registered public accounting firm, with
respect to the Company within the meaning of the Act and the applicable
rules and regulations thereunder adopted by the Commission and the Public
Company Accounting Oversight Board (United States) (PCAOB).
(ii) In their opinion, the Company's consolidated financial statements
and financial statement schedule 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
Exchange Act and the related rules and regulations adopted by the
Commission.
(iii) They have not audited any consolidated financial statements of
the Company, or the effectiveness of internal control over financial
reporting as of any date or for any period subsequent to December 31, 2007;
although they have conducted an audit for the year ended December 31, 2007,
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, 2007, and for the year then ended, and the effectiveness of
internal control over financial reporting as of December 31, 2007, but not
on the consolidated financial statements or internal control over financial
reporting for any interim period within that year. Therefore, they are
unable to and do not express any opinion on the financial position, results
of operations, or cash flows or the effectiveness of internal control over
financial reporting as of any date or for any period subsequent to December
31, 2007.
(iv) They have read the 2008 minutes of meetings of the board of
directors, the investment committee, the audit committee, the compensation
committee, and the nominating and corporate governance committee of the
Company and its subsidiaries, as set forth in the minute books at April 22,
2008, 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 April 22, 2008, as follows (their work did not
extend to the period from April 23, 2008 to April 24, 2008, inclusive). The
minutes of the board of directors'
23
meetings, dated March 5, 2008, March 6, 2008 and April 3, 2008, are in
draft form and have not yet been approved. Also, the minutes of the audit
committee meeting, dated April 21, 2008; the investment committee meeting,
dated April 14, 2008; the compensation committee meetings, dated March 6,
2008 and April 2, 2008; and the nominating and corporate governance
committee meetings, dated March 6, 2008 and April 1, 2008; are in draft
form and have not yet been approved.
a. With respect to the period from January 1, 2008 to March 31, 2008, they
have:
(A) Read the unaudited consolidated financial statements of the Company and
subsidiaries as of March 31, 2008 and for the three-month periods ended
March 31, 2008 and 2007, furnished us by the Company, officials of the
Company having advised us that no such financial statements as of any date
or for any period subsequent to March 31, 2008, were available. The
financial information for the three-month periods ended March 31, 2008 and
2007 is incomplete in that it omits disclosures.
(B) Inquired of certain officials of the Company who have responsibility
for financial and accounting matters whether (1) the unaudited consolidated
financial statements referred to in (iv)a.(A) are stated on a basis
substantially consistent with that of the audited consolidated financial
statements incorporated by reference in the Registration Statement, and (2)
at March 31, 2008, there was any change in the common stock or increase in
debt of the consolidated companies as compared with the amounts shown in
the December 31, 2007 audited financial statements incorporated by
reference in the Registration Statement.
Those officials stated that (1) the unaudited consolidated financial
statements referred to in (iv)a.(A) are stated on a basis substantially
consistent with that of the audited consolidated financial statements
incorporated by reference in the Registration Statement, and (2) at March
31, 2008, the number of shares of the Company's common stock increased by
31,072 shares between December 31, 2007 and March 31, 2008 due to the
issuance of 1,220 shares related to the Company's stock option plan, 1,523
shares related to the Company's dividend reinvestment plan, and 34,668
shares related to the Company's incentive restricted stock plan, offset by
a decrease of 6,339 shares related to forfeitures of incentive restricted
stock. In addition, the Company's debt increased by approximately $71.5
million between December 31, 2007 and March 31, 2008 due to the execution
of a $78 million mortgage note payable.
24
(v) The Company officials have advised them that no consolidated
financial statements as of any date or for any period subsequent to March
31, 2008, are available; accordingly, the procedures carried out by them
with respect to changes in financial statement items after March 31, 2008,
have, of necessity, been even more limited than those with respect to the
periods referred to in (iv)(a) above. They have inquired of certain
officials of the Company who have responsibility for financial and
accounting matters whether at April 22, 2008, there was any change in the
common stock or increase in debt of the consolidated companies as compared
with amounts shown on the December 31, 2007, consolidated balance sheet
incorporated by reference in the Registration Statement, except in all
instances for changes or increases 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 Section 6(e)(iv), Company
officials advised them that the number of shares of the Company's common
stock increased by 31,072 shares between December 31, 2007 and April 22,
2008 due to the issuance of 1,220 shares related to the Company's stock
option plan, 1,523 shares related to the Company's dividend reinvestment
plan, and 34,668 shares related to the Company's incentive restricted stock
plan, offset by a decrease of 6,339 shares related to forfeitures of
incentive restricted stock. In addition, the Company's debt increased by
approximately $72.6 million between December 31, 2007 and April 22, 2008
due to the execution of a $78 million mortgage note payable.
The foregoing procedures do not constitute an audit conducted in accordance
with the standards of the PCAOB. They make no representations about the
sufficiency of the foregoing procedures for your purposes. Had they
performed additional procedures or had they conducted an audit or a review,
other matters might have come to their attention that would have been
reported to you.
(vi) They have also read the items identified by the Underwriter on
the attached copies of certain pages of the Company's 2007 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(e) of Regulation S-K. They also make no comment as to the
appropriateness or completeness of the Company's determination of
Regulation S-K requirements for quantitative and qualitative disclosures
about market risks or with respect to the reasonableness of the
assumptions. In addition, with respect to Item 305
25
of Regulation S-K, they make no comment as to the appropriateness or
completeness of the Company's classification of its market risk-sensitive
instruments into market risk categories. 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 2004 and 2003 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
26
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.
It should be understood that their procedures with respect to the
information contained in Management's Discussion and Analysis of Financial
Condition and Results of Operations (MD&A) incorporated by reference in the
Registration Statement were limited to applying the procedures stated above
and therefore they make no representations regarding the accuracy of the
discussion contained therein, whether any facts have been omitted, or
regarding the adequacy of the disclosures in MD&A, other than with respect
to the results of the procedures performed as described above.
(vii) Their audit of the consolidated financial statements for the
years ended December 31, 2007 and 2006 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.
(viii) It should be understood that 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.
(ix) Their letter is solely for the information of the addressees and
to assist the Underwriter in conducting and documenting its 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
27
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 Disclosure Package and the Final 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 Disclosure Package and the Final 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.
28
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 Base Prospectus, any
Preliminary Prospectus or any other preliminary prospectus supplement relating
to the Shares, the Final Prospectus or any Issuer Free Writing Prospectus, 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,
29
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 fourth 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 Preliminary Prospectus, the Final
Prospectus, or any Issuer Free Writing Prospectus constitute the only
information furnished in writing by or on behalf of the Underwriter for
inclusion in any Preliminary Prospectus, the Final Prospectus and any Issuer
Free Writing Prospectus.
(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
30
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 in 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]
31
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 Merrill Lynch, Pierce, Fenner & Smith Incorporated, General
Counsel (fax no.: (212) 449-3207) and confirmed to the General Counsel, Merrill
Lynch, Pierce, Fenner & Smith Incorporated 4 World Financial Center, New York,
New York 10080, 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. No Fiduciary Duty. The Company hereby acknowledges that (a) the
purchase and sale of the Shares pursuant to this Agreement is an arm's-length
commercial transaction between the Company, on the one hand, and the Underwriter
and any affiliate through which it may be acting, on the other, (b) the
Underwriter is acting as principal and not as an agent or fiduciary of the
Company and (c) the Company's engagement of the Underwriter in connection with
the offering and the process leading
32
up to the offering is as independent contractors and not in any other capacity.
Furthermore, the Company agrees that it is solely responsible for making its own
judgments in connection with the offering (irrespective of whether the
Underwriter has advised or is currently advising the Company on related or other
matters). The Company agrees that it will not claim that the Underwriter has
rendered advisory services of any nature or respect, or owes an agency,
fiduciary or similar duty to the Company, in connection with the transaction
contemplated by this Agreement or the process leading thereto.
15. 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.
16. Waiver of Jury Trial. The Company hereby irrevocably waives, to the
fullest extent permitted by applicable law, any and all right to trial by jury
in any legal proceeding arising out of or relating to this Agreement or the
transactions contemplated hereby.
17. 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.
18. Headings. The section headings used herein are for convenience only and
shall not affect the construction hereof.
19. Definitions. The terms which follow, when used in this Agreement, shall
have the meanings indicated.
"Base Prospectus" shall mean the base prospectus referred to in
paragraph 1(a) above contained in the Registration Statement at the
Execution Time.
"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.
"Disclosure Package" shall mean (i) the Base Prospectus, (ii) the
Preliminary Prospectus, if any, used most recently prior to the Execution
Time, (iii) the Issuer Free Writing Prospectus, if any, identified in
Schedule I hereto, and (iv) any other Free Writing Prospectus that the
parties hereto shall hereafter expressly agree in writing to treat as part
of the Disclosure Package.
"Effective Date" shall mean each date and time that the Registration
Statement, any post-effective amendment or amendments thereto became or
become effective.
33
"Execution Time" shall mean the date and time that this Agreement is
executed and delivered by the parties hereto.
"Final Prospectus" shall mean the prospectus supplement relating to
the Shares that will be first filed pursuant to Rule 424(b) after the
Execution Time, together with the Base Prospectus.
"Free Writing Prospectus" shall mean a free writing prospectus, as
defined in Rule 405.
"Issuer Free Writing Prospectus" shall mean an issuer free writing
prospectus, as defined in Rule 433.
"Preliminary Prospectus" shall mean any preliminary prospectus
supplement to the Base Prospectus which is used prior to filing of the
Final Prospectus, together with the Base Prospectus.
"Registration Statement" shall mean the registration statement
referred to in paragraph 1(a) above, including exhibits, financial
statements and all documents incorporated by reference therein pursuant to
Item 12 of Form S-3 under the Act and, if applicable, the Rule 430A
Information and the Rule 430B Information.
"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 430B Information" shall mean any information included in the
Prospectus that was omitted from the Registration Statement at the time it
became effective but that is deemed part of and included in the
Registration Statement pursuant to Rule 430B.
"Rule 158", "Rule 163", "Rule 164", "Rule 172", "Rule 405", "Rule
415", "Rule 424", "Rule 430A", "Rule 430B", "Rule 433", and "Rule 462"
refer to such rules as set forth in the 1933 Act Rules and Regulations.
34
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
35
The foregoing Agreement is hereby confirmed and accepted as of the date first
above written.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
By: /s/ROSS NUSSBAUM
-------------------------
Name: Ross Nussbaum
Title: Managing Director
36
[Letterhead of officer, director or major stockholder
of EastGroup Properties, Inc.]
EastGroup Properties, Inc.
Public Offering of Common Stock
April , 2008
MERRILL LYNCH,
PIERCE, FENNER & SMITH INCORPORATED
4 World Financial Center
New York, New York 10080
Ladies and Gentlemen:
This letter is being delivered to you in connection with the proposed
Underwriting Agreement (the "Underwriting Agreement"), between EastGroup
Properties, Inc., a Maryland corporation (the "Company"), and Merrill Lynch,
Pierce, Fenner & Smith Incorporated ("Merrill Lynch"), relating to an
underwritten public offering of shares of common stock, $0.0001 par value per
share (the "Common Stock"), of the Company.
In order to induce you to enter into the Underwriting Agreement, the
undersigned will not, without the prior written consent of Merrill Lynch, 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 undersigned or any affiliate of the
undersigned or any person in privity with the undersigned or any affiliate of
the undersigned), directly or indirectly, including the filing (or participation
in the filing) of a registration statement with the Securities and Exchange
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 Securities Exchange Act of 1934, as amended, and the rules and
regulations of the Securities and Exchange Commission promulgated thereunder
with respect to, any shares of capital stock of the Company or any securities
convertible into or exercisable or exchangeable for such capital stock, or
publicly announce an intention to effect any such transaction, for a period of
60 days after the date of the Underwriting Agreement, other than (i) shares of
Common Stock disposed of as bona fide gifts as approved by Merrill Lynch, or
(ii) after two weeks following the closing of the offering with respect to the
Underwritten Securities (as defined in the Underwriting Agreement), transfers in
an aggregate amount
of 50,000 shares of Common Stock made by all officers and directors of the
Company combining all such transfers.
If (i) the Company issues an earnings release or material news, or a
material event relating to the Company occurs, during the last 17 days of the
lock-up period, or (ii) prior to the expiration of the lock-up period, the
Company announces that it will release earnings results during the 16-day period
beginning on the last day of the lock-up period, the restrictions imposed by
this agreement shall continue to apply until the expiration of the 18-day period
beginning on the issuance of the earnings release or the occurrence of the
material news or material event, unless Merrill Lynch, waives, in writing, such
extension. The undersigned hereby acknowledges that the Company has agreed in
the Underwriting Agreement to provide written notice of any event that would
result in an extension of the lock-up period and agrees that any such notice
properly delivered will be deemed to have given to, and received by, the
undersigned.
If for any reason the Underwriting Agreement shall be terminated prior to
the Closing Date (as defined in the Underwriting Agreement), the agreement set
forth above shall likewise be terminated.
Very truly yours,
[Signature of officer, director or
major stockholder]
[Name and address of officer, director or major stockholder]
2
Schedule I
None.
Schedule II
List of Subsidiaries
100% Owned Subsidiaries of EastGroup Properties, Inc.
EastGroup Properties General Partners, Inc.
EastGroup Properties Holdings, Inc.
EastGroup TRS, Inc.
Partnerships and LLC's:
EastGroup Properties, LP
EastGroup Property Services, LLC
EastGroup Property Services of Florida, LLC
EastGroup Kearn Creek, LLC
Sample I-95 Associates
University Business Center Associates
EastGroup Jacksonville, LLC
55 Castilian, LLC