EXHIBIT 1.1
SALES AGENCY FINANCING AGREEMENT
Sales Agency Financing Agreement (this "Agreement"), dated as of May 19, 2009
between EastGroup Properties, Inc., a Maryland corporation (the "Company"), and
BNY MELLON CAPITAL MARKETS, LLC, a Delaware limited liability company
("BNYMCM").
W I T N E S S E T H:
WHEREAS, the Company has authorized and proposes to issue and sell in the manner
contemplated by this Agreement up to 1,600,000 Common Shares upon the terms and
subject to the conditions contained herein; and
WHEREAS, BNYMCM has been appointed by the Company as its agent to sell the
Common Shares and agrees to use its commercially reasonable efforts to sell the
Common Shares offered by the Company upon the terms and subject to the
conditions contained herein.
NOW THEREFORE, in consideration of the premises, representations, warranties,
covenants and agreements contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
intending to be legally bound hereby, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01 Certain Definitions. For purposes of this Agreement, capitalized
terms used herein and not otherwise defined shall have the following respective
meanings:
"Actual Sold Amount" means the number of Issuance Shares that BNYMCM has
sold during the Selling Period.
"Affiliate" of a Person means another Person that directly or indirectly,
through one or more intermediaries, controls, is controlled by, or is under
common control with, such first- mentioned Person. The term "control" (including
the terms "controlling," "controlled by" and "under common control with") means
the possession, direct or indirect, of the power to direct or cause the
direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise.
"Applicable Time" means the time of sale of any Common Shares pursuant to
this Agreement.
"Closing" has the meaning set forth in Section 2.02.
"Closing Date" means the date on which the Closing occurs.
"Commission" means the United States Securities and Exchange Commission.
"Commitment Period" means the period commencing on the date of this
Agreement and expiring on the earliest to occur of (x) the date on which BNYMCM
shall have sold the Maximum Program Amount pursuant to this Agreement, (y) the
date this Agreement is terminated pursuant to Article VII and (z) the third
anniversary of the date of this Agreement.
"Common Shares" shall mean shares of the Company's Common Stock issued or
issuable pursuant to this Agreement.
"Common Stock" shall mean the Company's Common Stock, $0.0001 par value per
share.
"Effective Date" has the meaning set forth in Section 3.03.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Floor Price" means the minimum price set by the Company in the Issuance
Notice below which BNYMCM shall not sell Common Shares during the Selling
Period, which may be adjusted by the Company at any time during the Selling
Period and which in no event shall be less than $1.00 without the prior written
consent of BNYMCM, which may be withheld in BNYMCM's sole discretion.
"Issuance" means each occasion the Company elects to exercise its right to
deliver an Issuance Notice requiring BNYMCM to use its commercially reasonable
efforts to sell the Common Shares as specified in such Issuance Notice, subject
to the terms and conditions of this Agreement.
"Issuance Amount" means the aggregate Sales Price of the Issuance Shares to
be sold by BNYMCM with respect to any Issuance, which may not exceed $40 million
without the prior written consent of BNYMCM, which may be withheld in BNYMCM's
sole discretion.
"Issuance Date" means any Trading Day during the Commitment Period that an
Issuance Notice is deemed delivered pursuant to Section 2.03(b) hereof.
"Issuance Notice" means a written notice to BNYMCM delivered in accordance
with this Agreement in the form attached hereto as Exhibit A.
"Issuance Price" means the Sales Price less the Selling Commission.
"Issuance Shares" means all shares of Common Stock issued or issuable
pursuant to an Issuance that has occurred or may occur in accordance with the
terms and conditions of this Agreement.
"Material Adverse Effect" means a material adverse effect on the business,
assets, operations, properties, prospects or condition (financial or otherwise)
of the Company and its Subsidiaries, taken as a whole, or any material adverse
effect on the Company's ability to consummate the transactions contemplated by,
or to execute, deliver and perform its obligations under, this Agreement.
"Maximum Program Amount" means 1,600,000 Common Shares (or, if less, the
aggregate amount of Common Shares registered under the Registration Statement).
2
"Person" means an individual or a corporation, partnership, limited
liability company, trust, incorporated or unincorporated association, joint
venture, joint stock company, governmental authority or other entity of any
kind.
"Principal Market" means the New York Stock Exchange.
"Prospectus" has the meaning set forth in Section 3.01.
"Registration Statement" has the meaning set forth in Section 3.01.
"Representation Date" has the meaning set forth in the introductory
paragraph of Article III.
"Sales Price" means the actual sale execution price of each Common Share
sold by BNYMCM on the Principal Market hereunder in the case of ordinary
brokers' transactions, or as otherwise agreed by the parties in other methods of
sale.
"Securities Act" means the Securities Act of 1933, as amended.
"Selling Commission" means 1.0% of the Sales Price of Common Shares sold
during a Selling Period.
"Selling Period" means the period of one to twenty consecutive Trading Days
(as determined by the Company in the Company's sole discretion and specified in
the applicable Issuance Notice) following the Trading Day on which an Issuance
Notice is delivered or deemed to be delivered pursuant to Section 2.03(b)
hereof.
"Settlement Date" means the third business day following each Trading Day
during the applicable Selling Period, when the Company shall deliver to BNYMCM
the amount of Common Shares sold on such Trading Day and BNYMCM shall deliver to
the Company the Issuance Price received on such sales. Alternatively, the
Company may settle all sales for each Selling Period on the business day
following the last day of the Selling Period, whereon the Company shall deliver
to BNYMCM the amount of Common Shares sold during the Selling Period and BNYMCM
shall deliver to the Company the Issuance Price received on such sales.
"Significant Subsidiary" has the meaning set forth in Section 3.05.
"Trading Day" means any day which is a trading day on the New York Stock
Exchange, other than a day on which trading is scheduled to close prior to its
regular weekday closing time.
"Voting Stock" of any Person as of any date means the capital stock of such
Person that is at the time entitled to vote in the election of the Board of
Directors of such Person.
ARTICLE II
ISSUANCE AND SALE OF COMMON STOCK
Section 2.01 Issuance. (a) Upon the terms and subject to the conditions of this
Agreement, the Company may issue Common Shares through BNYMCM and BNYMCM shall
3
use its commercially reasonable efforts to sell Common Shares based on and in
accordance with such number of Issuance Notices as the Company in its sole
discretion shall choose to deliver during the Commitment Period until the
aggregate number of Common Shares sold under this Agreement equals the Maximum
Program Amount or this Agreement is otherwise terminated. Subject to the
foregoing and the other terms and conditions of this Agreement, upon the
delivery of an Issuance Notice, and unless the sale of the Issuance Shares
described therein has been suspended, cancelled or otherwise terminated in
accordance with the terms of this Agreement, BNYMCM will use its commercially
reasonable efforts consistent with its normal trading and sales practices to
sell such Issuance Shares up to the amount specified in such Issuance Notice
into the Principal Market, and otherwise in accordance with the terms of such
Issuance Notice. BNYMCM will provide written confirmation to the Company no
later than the opening of the Trading Day next following the Trading Day on
which it has made sales of Issuance Shares hereunder setting forth the portion
of the Actual Sold Amount for such Trading Day, the corresponding Sales Price
and the Issuance Price payable to the Company in respect thereof. BNYMCM may
sell Issuance Shares in the manner described in Section 2.01(b) herein. The
Company acknowledges and agrees that (i) there can be no assurance that BNYMCM
will be successful in selling Issuance Shares and (ii) BNYMCM will incur no
liability or obligation to the Company or any other Person if it does not sell
Issuance Shares for any reason other than a failure by BNYMCM to use its
commercially reasonable efforts consistent with its normal trading and sales
practices to sell such Issuance Shares as required under this Section 2.01. In
acting hereunder, BNYMCM will be acting as agent for the Company and not as
principal.
(b) Method of Offer and Sale. The Common Shares may be offered and sold (1) in
privately negotiated transactions (if and only if the parties hereto have so
agreed in writing), or (2) by any other method or payment permitted by law
deemed to be an "at the market" offering as defined in Rule 415 under the
Securities Act, including sales made directly on the Principal Market or sales
made to or through a market maker or through an electronic communications
network. Nothing in this Agreement shall be deemed to require either party to
agree to the method of offer and sale specified in clause (1) above, and either
party may withhold its consent thereto in such party's sole discretion.
(c) Issuances. Upon the terms and subject to the conditions set forth herein, on
any Trading Day as provided in Section 2.03(b) hereof during the Commitment
Period on which the conditions set forth in Section 5.01 and 5.02 hereof have
been satisfied, the Company may exercise an Issuance by the delivery of an
Issuance Notice, executed by the Chief Executive Officer or the Chief Financial
Officer of the Company, to BNYMCM. The number of Issuance Shares that BNYMCM
shall use its commercially reasonable efforts to sell pursuant to such Issuance
shall have an aggregate Sales Price equal to the Issuance Amount. Each Issuance
will be settled on the applicable Settlement Date following the Issuance Date.
Section 2.02 Effectiveness. The effectiveness of this Agreement (the "Closing")
shall be deemed to take place concurrently with the execution and delivery of
this Agreement by the parties hereto and the completion of the closing
transactions set forth in the immediately following sentence. At the Closing,
the following closing transactions shall take place, each of which shall be
deemed to occur simultaneously with the Closing: (i) the Company shall deliver
to BNYMCM a certificate executed by the Secretary of the Company, signing in
such capacity, dated the Closing Date (A) certifying that attached thereto are
true and complete copies of the
4
resolutions duly adopted by the Board of Directors of the Company or a duly
authorized committee thereof authorizing the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby
(including, without limitation, the issuance of the Common Shares pursuant to
this Agreement), which authorization shall be in full force and effect on and as
of the date of such certificate and (B) certifying and attesting to the office,
incumbency, due authority and specimen signatures of each Person who executed
the Agreement for or on behalf of the Company; (ii) the Company shall deliver to
BNYMCM a certificate executed by the Chief Executive Officer, the President or
any Senior Vice-President of the Company and by the Chief Financial Officer of
the Company, signing in such respective capacities, dated the Closing Date,
confirming that the representations and warranties of the Company contained in
this Agreement are true and correct and that the Company has performed, in all
material respects, all of its obligations hereunder to be performed on or prior
to the Closing Date and as to the matters set forth in Section 5.01(a) hereof;
(iii) Jaeckle Fleischmann & Mugel, LLP, counsel to the Company, shall deliver to
BNYMCM an opinion, dated the Closing Date and addressed to BNYMCM, substantially
in the form of Exhibit B attached hereto; (iv) KPMG LLP shall deliver to BNYMCM
a letter, dated the Closing Date, in form and substance reasonably satisfactory
to BNYMCM; and (v) the Company shall pay the expenses set forth in Section
9.02(ii), (iv) and (viii) hereof by wire transfer to the account designated by
BNYMCM in writing prior to the Closing.
Section 2.03 Mechanics of Issuances. (a) Issuance Notice. On any Trading Day
during the Commitment Period, the Company may deliver an Issuance Notice to
BNYMCM, subject to the satisfaction of the conditions set forth in Sections 5.01
and 5.02; provided, however, that (1) the Issuance Amount for each Issuance as
designated by the Company in the applicable Issuance Notice shall in no event
exceed $40 million without the prior written consent of BNYMCM, which may be
withheld in BNYMCM's sole discretion and (2) notwithstanding anything in this
Agreement to the contrary, BNYMCM shall have no further obligations with respect
to any Issuance Notice if and to the extent the number of Issuance Shares sold
pursuant thereto, together with the number of Common Shares previously sold
under this Agreement, shall exceed the Maximum Program Amount. The Company shall
have the right, in its sole discretion, to amend at any time and from time to
time any Issuance Notice and, if so notified, BNYMCM shall as soon as
practicable, modify its offers to sell consistent with any such amendment
notice.
(b) Delivery of Issuance Notice. An Issuance Notice shall be deemed delivered on
the Trading Day that it is received by facsimile or e-mail (and the Company
confirms such delivery by telephone (including voicemail message)) by BNYMCM. No
Issuance Notice or amendment thereto may be delivered other than on a Trading
Day during the Commitment Period.
(c) Floor Price. BNYMCM shall not sell Common Shares below the Floor Price
during the applicable Selling Period and such Floor Price may be adjusted by the
Company at any time during the applicable Selling Period upon notice to BNYMCM
and confirmation by BNYMCM to the Company.
5
(d) Determination of Issuance Shares to be Sold. The number of Issuance Shares
to be sold by BNYMCM with respect to any Issuance shall be the Actual Sold
Amount during the Selling Period.
(e) Trading Guidelines. BNYMCM may, to the extent permitted under the Securities
Act and the Exchange Act, purchase and sell Common Stock for its own account
while this Agreement is in effect provided that (i) no such purchase or sale
shall take place while an Issuance Notice is in effect (except to the extent
BNYMCM may engage in sales of Issuance Shares purchased or deemed purchased from
the Company as a "riskless principal" or in a similar capacity), (ii) in no
circumstances shall BNYMCM have a short position in the Common Stock for its own
account and (iii) the Company shall not be deemed to have authorized or
consented to any such purchases or sales by BNYMCM. In addition, the Company
hereby acknowledges and agrees that BNYMCM's affiliates may make markets in the
Common Stock or other securities of the Company, in connection with which they
may buy and sell, as agent or principal, for long or short account, shares of
Common Stock or other securities of the Company, at the same time BNYMCM is
acting as agent pursuant to this Agreement.
Section 2.04 Settlements. Subject to the provisions of Article V, on or before
each Settlement Date, the Company will, or will cause its transfer agent to,
electronically transfer the Issuance Shares being sold by crediting BNYMCM or
its designee's account at The Depository Trust Company through its
Deposit/Withdrawal At Custodian (DWAC) System, or by such other means of
delivery as may be mutually agreed upon by the parties hereto and, upon receipt
of such Issuance Shares, which in all cases shall be freely tradeable,
transferable, registered shares in good deliverable form, BNYMCM will deliver
the related Issuance Price in same day funds delivered to an account designated
by the Company prior to the Settlement Date. If the Company defaults in its
obligation to deliver Issuance Shares on a Settlement Date, the Company agrees
that it will (i) hold BNYMCM harmless against any loss, claim, damage or expense
(including, without limitation, penalties, interest and reasonable legal fees
and expenses), as incurred, arising out of or in connection with such default by
the Company, and (ii) pay to BNYMCM any Selling Commission to which it would
otherwise have been entitled absent such default. The parties hereto acknowledge
and agree that, in performing its obligations under this Agreement, BNYMCM may
borrow shares of Common Stock from stock lenders, and may use the Issuance
Shares to settle or close out such borrowings.
Section 2.05 Use of Free Writing Prospectus. Neither the Company nor BNYMCM has
prepared, used, referred to or distributed, or will prepare, use, refer to or
distribute, without the other party's prior written consent, any "written
communication" which constitutes a "free writing prospectus" as such terms are
defined in Rule 405 under the Securities Act with respect to the offering
contemplated by this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to, and agrees with, BNYMCM that as of
the Closing Date, as of each Issuance Date, as of each Settlement Date and as of
any time that the Registration Statement or the Prospectus shall be amended or
supplemented (each of the times referenced above is referred to herein as a
"Representation Date"), except as may be disclosed in
6
the Prospectus (including any documents incorporated by reference therein and
any supplements thereto) on or before a Representation Date:
Section 3.01 Registration. The Common Stock is registered pursuant to
Section 12(b) of the Exchange Act and is currently listed and quoted on the
Principal Market under the trading symbol "EGP", and the Common Shares have been
or will have been listed on the Principal Market prior to delivery of the first
Issuance Notice hereunder, subject to notice of issuance. The Company (i) meets
the requirements for the use of Form S-3 under the Securities Act and the rules
and regulations thereunder for the registration of the transactions contemplated
by this Agreement and (ii) has been subject to the requirements of Section 12 of
the Exchange Act and has timely filed all the material required to be filed
pursuant to Sections 13 and 14 of the Exchange Act for a period of more than 12
calendar months (other than a report that is required solely pursuant to Item
1.01, 1.02, 2.03, 2.04, 2.05, 2.06, 4.02(a) or 5.02(e) of Form 8-K).
The Company has filed with the Commission an automatic shelf registration
statement on Form S-3 (Registration No. 333-159328) which registration
statement, as amended, became effective upon filing under Rule 462(c) under the
Securities Act, for the registration of an indeterminate amount of Common Shares
and other securities under the Securities Act, and the offering thereof from
time to time pursuant to Rule 415 promulgated by the Commission under the
Securities Act. Such registration statement (and any further registration
statements that may be filed by the Company for the purpose of registering
additional Common Shares to be sold pursuant to this Agreement), and the
prospectus constituting a part of such registration statement, together with the
Prospectus Supplement (as defined in Section 5.01(k)) and any pricing supplement
relating to a particular issuance of the Issuance Shares (each, an "Issuance
Supplement"), including all documents incorporated or deemed to be incorporated
therein by reference pursuant to Item 12 of Form S-3 under the Securities Act,
in each case, as from time to time amended or supplemented, are referred to
herein as the "Registration Statement" and the "Prospectus," respectively,
except that if any revised prospectus is provided to BNYMCM by the Company for
use in connection with the offering of the Common Shares that is not required to
be filed by the Company pursuant to Rule 424(b) promulgated by the Commission
under the Securities Act, the term "Prospectus" shall refer to such revised
prospectus from and after the time it is first provided to BNYMCM for such use.
Promptly after the execution and delivery of this Agreement, the Company will
prepare and file the Prospectus Supplement relating to the Issuance Shares
pursuant to Rule 424(b) promulgated by the Commission under the Securities Act,
as contemplated by Section 5.01(k) of this Agreement. As used in this Agreement,
the terms "amendment" or "supplement" when applied to the Registration Statement
or the Prospectus shall be deemed to include the filing by the Company with the
Commission of any document under the Exchange Act after the date hereof that is
or is deemed to be incorporated therein by reference.
Section 3.02 Incorporated Documents. The documents incorporated or deemed
to be incorporated by reference in the Registration Statement and the Prospectus
pursuant to Item 12 of Form S-3 (collectively, the "Incorporated Documents"), as
of the date filed with the Commission under the Exchange Act, complied and will
comply in all material respects to the requirements of the Exchange Act and the
rules and regulations of the Commission promulgated as applicable, and none of
such documents contained or will contain at such time an untrue statement of a
material fact or omitted or will omit to state a material fact necessary to make
the
7
statements therein, in the light of the circumstances under which they were
made, not misleading.
Section 3.03 Registration Statement; Prospectus. No stop order suspending
the effectiveness of the Registration Statement has been issued and no
proceeding for that purpose has been initiated or threatened by the Commission.
The Registration Statement, as of the Effective Date, conformed or will conform
in all material respects to the requirements of the Securities Act, and the
rules and regulations of the Commission promulgated thereunder and, as of the
Effective Date, does not and will not 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, and the Prospectus, as of its
original issue date, as of the date of any filing of an Issuance Supplement
thereto pursuant to Rule 424(b) promulgated by the Commission under the
Securities Act, as of each Applicable Time and as of the date of any other
amendment or supplement thereto, conforms or will conform in all material
respects to the requirements of the Securities Act and the rules and regulations
of the Commission promulgated thereunder and, as of such respective dates, does
not and will not contain an untrue statement of a material fact or omit to state
a material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided, however,
that this representation and warranty shall not apply to any statements or
omissions made in reliance upon and in conformity with information furnished in
writing to the Company by BNYMCM expressly for use in the Prospectus. As used
herein, with respect to the Registration Statement, the term "Effective Date"
means, as of a specified time, the later of (i) the date that the Registration
Statement or the most recent post-effective amendment thereto was or is declared
effective by the Commission under the Securities Act and (ii) the date that the
Company's Annual Report on Form 10-K for its most recently completed fiscal year
is filed with the Commission under the Exchange Act.
Section 3.04 Changes. Neither the Company nor any Significant Subsidiary
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, otherwise than as set forth or contemplated in the Prospectus;
and, since the respective dates as of which information is given in the
Registration Statement and the Prospectus, (i) neither the Company nor any
Significant Subsidiary has incurred any liabilities or obligations, direct or
contingent, or entered into any transactions, not in the ordinary course of
business, that are material to the Company and its Significant Subsidiary and
(ii) there has not been any material change in the capital stock, except for
issuances of capital stock pursuant to the Company's dividend reinvestment
program and employee benefit plans, or long-term debt, other than the repayment
of current maturities of long-term debt, of the Company or any Significant
Subsidiary or any material adverse change, or any development involving a
prospective material adverse change, in or affecting the business, assets,
general affairs, management, financial position, prospects, shareholders' equity
or results of operations of the Company and its Subsidiaries, otherwise than as
set forth or contemplated in the Prospectus.
Section 3.05 Organizational Matters. The Company has been duly incorporated
and is validly existing as a corporation in good standing under the laws of the
State of Maryland, with
8
corporate power and authority to own or lease its properties and to conduct its
business as described in the Registration Statement and the Prospectus; the
Company is duly qualified to transact business and is in good standing in each
jurisdiction in which the failure to so qualify would have a Material Adverse
Effect. Each significant subsidiary, as defined in Rule 405 under the Securities
Act, including, but not limited to, EastGroup Properties, L.P. and EastGroup
Properties General Partners, Inc. (each a "Significant Subsidiary"), has been
duly incorporated or formed and is validly existing as a corporation,
partnership or limited liability company in good standing under the laws of its
jurisdiction of incorporation or formation with corporate, partnership or
limited liability company power and authority to own or lease its properties and
conduct its business as described in the Registration Statement and the
Prospectus. Each Significant Subsidiary is duly qualified as a foreign
corporation, partnership or limited liability company to transact business and
is in good standing in each jurisdiction in which such qualification is
required, whether by reason of the ownership or leasing of property or the
conduct of business, except where the failure to be duly incorporated or formed,
validly existing, have such power or authority or be so qualified would not have
a Material Adverse Effect.
Section 3.06 Authorization; Enforceability. The Company has the corporate
power and authority to execute, deliver and perform the terms and provisions of
this Agreement and has taken all necessary corporate action to authorize the
execution, delivery and performance by it of, and the consummation of the
transactions to be performed by it contemplated by, this Agreement. No other
corporate proceeding on the part of the Company is necessary, and no consent of
any shareholder in its capacity as such of the Company is required, for the
valid execution and delivery by the Company of this Agreement, and the
performance and consummation by the Company of the transactions contemplated by
this Agreement to be performed by the Company. The Company has duly executed and
delivered this Agreement. This Agreement constitutes the valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the enforcement
of creditors' rights generally and by general principles of equity (regardless
of whether enforcement is sought in a proceeding in equity or at law) and by
limitations imposed by law and public policy on indemnification or exculpation.
Section 3.07 Capitalization. The Company has an authorized capitalization
as set forth in the Prospectus, and all of the issued shares of capital stock of
the Company have been duly and validly authorized and issued and are fully paid
and non-assessable; none of the outstanding shares of capital stock of the
Company was issued in violation of the preemptive or other similar rights of any
security holder of the Company; all of the issued shares of capital stock or
other ownership interests of each Significant Subsidiary have been duly and
validly authorized and issued and are fully paid and non-assessable; and all
shares of capital stock or other ownership interests of each Significant
Subsidiary (other than directors' qualifying shares) are owned directly or
indirectly by the Company, free and clear of any liens, encumbrances or security
interests, except as described in the Registration Statement and the Prospectus.
The Common Shares (in an amount up to the Maximum Program Amount) have been duly
and validly authorized by all necessary corporate action on the part of the
Company. When issued against payment therefor as provided in this Agreement, the
Common Shares will be validly issued, fully paid and nonassessable, free and
clear of all preemptive rights, claims, liens, charges, encumbrances and
security interests of any nature whatsoever, other than any of the foregoing
9
created by BNYMCM. The capital stock of the Company, including the Common
Shares, conforms to the description contained in the Registration Statement.
Except as set forth in the Prospectus, there are no outstanding options,
warrants, conversion rights, subscription rights, preemptive rights, rights of
first refusal or other rights or agreements of any nature outstanding to
subscribe for or to purchase any shares of Common Stock of the Company or any
other securities of the Company of any kind binding on the Company (except
pursuant to dividend reinvestment, stock purchase or ownership, stock option,
director or employee benefit plans ) and there are no outstanding securities or
instruments of the Company containing anti-dilution or similar provisions that
will be triggered by the issuance of the Common Shares as described in this
Agreement. Except as set forth in the Prospectus, there are no restrictions upon
the voting or transfer of any shares of the Company's Common Stock pursuant to
the Company's Articles of Incorporation or bylaws. There are no agreements or
other obligations (contingent or otherwise) that may require the Company to
repurchase or otherwise acquire any shares of its Common Stock. No Person has
the right, contractual or otherwise, to cause the Company to issue to it, or to
register pursuant to the Securities Act, any shares of capital stock or other
securities of the Company upon the filing of the Registration Statement or the
issuance or sale of the Common Shares hereunder.
Section 3.08 No Conflicts. The issuance and sale of the Common Shares, the
compliance by the Company with all of the provisions of this Agreement and the
consummation of the transactions contemplated herein do not and 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 imposition of a
lien or security interest under, any material indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument to which the Company or
any Significant Subsidiary is a party or by which the Company or any Significant
Subsidiary is bound or to which any of the property or assets used in the
conduct of the business of the Company or any Significant Subsidiary is subject,
nor will such action result in any violation of the provisions of the Articles
of Incorporation or other organizational document or the by-laws of the Company
or any Significant Subsidiary or, to the best of the Company's knowledge, any
statute or any order, rule or regulation of any court or governmental agency or
body having jurisdiction over the Company or any Significant Subsidiary or any
of their properties; and no consent, approval, authorization, order,
registration or qualification of or with any court or governmental agency or
body is required for the consummation by the Company of the transactions
contemplated by this Agreement or in connection with the issuance and sale of
the Common Shares hereunder, except such as have been, or will have been prior
to the Closing Date, obtained under the Securities Act, and for such consents,
approvals, authorizations, orders, registrations or qualifications as may be
required under state securities or blue sky laws, as the case may be, and except
in any case where the failure to obtain such consent, approval, authorization,
order, registration or qualification would not have a Material Adverse Effect.
Section 3.09 Legal Proceedings. 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 which, if determined adversely to the
Company or any of its Subsidiaries, would individually or in the aggregate have
a Material Adverse Effect and, to the best of the Company's knowledge, no such
proceedings are threatened or contemplated by governmental authorities or
threatened by others.
10
Section 3.10 Sale of Common Shares. Immediately after any sale of Common
Shares by the Company hereunder, the aggregate amount of Common Stock that has
been issued and sold by the Company hereunder will not exceed the aggregate
amount of Common Stock registered under the Registration Statement (in this
regard, the Company acknowledges and agrees that BNYMCM shall have no
responsibility for maintaining records with respect to the aggregate amount of
Common Shares sold, or of otherwise monitoring the availability of Common Stock
for sale, under the Registration Statement).
Section 3.11 Permits.
Each of the Company and its Significant Subsidiaries has such permits,
licenses, franchises and authorizations of governmental or regulatory
authorities (the "permits") as are necessary to own its respective properties
and to conduct its business in the manner described in the Prospectus, except
where the failure to obtain such permits would not reasonably be expected to
have a Material Adverse Effect; to the best knowledge of the Company after due
inquiry, each of the Company and its Significant Subsidiaries has fulfilled and
performed all its material obligations with respect to such permits, except
where the failure to fulfill or perform any such obligation would not reasonably
be expected to have a Material Adverse Effect; and no event has occurred that
allows, or after notice or lapse of time would allow, revocation or termination
of any material permits or would result in any other material impairment of the
rights of the holder of any such material permits, subject in each case to such
qualifications as may be set forth in the Prospectus.
Section 3.12 Investment Company. The Company is not, and after giving
effect to the offering and sale of the Common Shares, will not be, an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended (the "1940 Act").
Section 3.13 Financial Condition; No Adverse Changes.
(a) The financial statements, together with related schedules and notes,
included in, or incorporated by reference into, the Registration Statement and
the Prospectus, present fairly in all material respects the consolidated
financial position, results of operations and changes in financial position of
the Company and its consolidated subsidiaries on the basis stated in the
Registration Statement and the Prospectus at the respective dates or for the
respective periods to which they apply; such statements and related schedules
and notes have been prepared in accordance with generally accepted accounting
principles consistently applied throughout the periods involved, except as
disclosed therein; and the other financial and statistical information and data
included or incorporated by reference in the Registration Statement and the
Prospectus are accurately presented and prepared on a basis consistent with such
financial statements and the books and records of the Company and its
consolidated subsidiaries. No other financial statements are required to be set
forth or to be incorporated by reference in the Registration Statement or the
Prospectus under the Securities Act.
(b) The Company and its consolidated subsidiaries maintain systems of
internal control over financial reporting (as such term is defined in Rule
13a-15(f) under the Exchange Act) sufficient to provide reasonable assurance
that (i) transactions are executed in accordance with management's general or
specific authorizations; (ii) transactions are recorded as necessary
11
to permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain asset accountability; (iii)
access to assets is permitted only in accordance with management's general or
specific authorization; (iv) the recorded accounting for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences; and (v) material information relating to the Company
and its subsidiaries is made known to the Company by its officers and employees.
The Company's internal control over financial reporting was effective as of
December 31, 2008, and the Company is not aware of any material weaknesses
therein. Since the date of the latest audited financial statements included or
incorporated by reference in the Prospectus, there has been no change that has
materially affected, or is reasonably likely to materially affect, the Company's
internal control over financial reporting.
(c) The Company maintains disclosure controls and procedures (as such term
is defined in Rule 13a-15(e) of the Exchange Act) that comply with the
requirements of the Exchange Act and have been designed to ensure that material
information relating to the Company and its Subsidiaries is communicated to the
Company's principal executive officer and principal financial officer. The
Company's disclosure controls and procedures were effective as of March 31,
2009.
(d) KPMG LLP, who has audited the financial statements of the Company and
its consolidated subsidiaries that are incorporated by reference in the
Registration Statement and the Prospectus and has audited the effectiveness of
the Company's internal control over financial reporting, is an independent
registered public accounting firm as required by the Securities Act and the
rules and regulations of the Commission promulgated thereunder and the Public
Company Accounting Oversight Board.
Section 3.14 Use of Proceeds. The Company will use the net proceeds from
the offering of Common Shares in the manner specified in the Prospectus under
"Use of Proceeds."
Section 3.15 Environmental Matters. Other than as set forth in the
Prospectus, (a) the Company and its subsidiaries are in compliance in with all
applicable state and federal environmental laws, except for instances of
noncompliance that, individually or in the aggregate, would not have a Material
Adverse Effect, and (b) no event or condition has occurred that may interfere
with the compliance by the Company and its subsidiaries with any environmental
law or that may give rise to any liability under any environmental law, in each
case that, individually or in the aggregate, would have a Material Adverse
Effect.
Section 3.16 Insurance. Each of the Company and its subsidiaries is insured
by insurers of recognized financial responsibility against such losses and risks
and in such amounts as management of the Company believes to be prudent.
Section 3.17 Officer's Certificate. Any certificate signed by any officer
of the Company and delivered to BNYMCM or to counsel for BNYMCM in connection
with an Issuance shall be deemed a representation and warranty by the Company to
BNYMCM as to the matters covered thereby on the date of such certificate.
12
Section 3.18 Finder's Fees. The Company has not incurred (directly or
indirectly) nor will it incur, directly or indirectly, any liability for any
broker's, finder's, financial advisor's or other similar fee, charge or
commission in connection with this Agreement or the transactions contemplated
hereby.
Section 3.19 Non-affiliated Market Capitalization. As of the Effective
Date, the aggregate market value of the voting stock held by non-affiliates of
the Company (computed using the price at which the Common Stock was last sold as
of a date within 60 days prior to such date) exceeds $150 million.
Section 3.20 Taxes. The Company and its subsidiaries have filed all
necessary federal, state and foreign income and franchise tax returns and paid
all taxes shown as due thereon; all such tax returns are complete and correct in
all material respects; all tax liabilities are adequately provided for on the
books of the Company and its subsidiaries except to such extent as would not
have a Material Adverse Effect; the Company and its subsidiaries have made all
necessary tax payments (including payroll and/or withholding taxes) and are
current and up-to-date; and the Company and its subsidiaries have no knowledge
of any tax proceeding or action pending or threatened against the Company or its
subsidiaries which, individually or in the aggregate, might have a Material
Adverse Effect. The Company has made adequate charges, accruals and reserves in
the applicable financial statements referred to in Section 3.13 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.
Section 3.21 Partnership Status. Each of the Company's subsidiaries that is
a partnership or a limited liability company, other than any entity for which a
taxable REIT subsidiary election has been made ("Subsidiary Partnerships"), is
properly classified either as a disregarded entity or as a partnership, and not
as a corporation or as an association taxable as a corporation, for federal
income tax purposes throughout the period from its formation through the date
hereof, or, in the case of any Subsidiary Partnerships that have terminated,
through the date of termination of such Subsidiary Partnerships.
Section 3.22 REIT Status. The Company 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.
Section 3.23 REIT Compliance. KPMG LLP (i) periodically tests procedures
and conducts annual compliance reviews designed to determine compliance with the
REIT provisions of the Internal Revenue Code of 1986, as amended (the "Code")
and (ii) assists the Company in monitoring what it believes are appropriate
accounting systems and procedures designed to determine compliance with the REIT
provisions of the Code.
Section 3.24 Tax Disclosure. The statements under the caption "Material
United States Federal Income Tax Consequences" in the Prospectus are accurate in
all material respects.
13
ARTICLE IV
COVENANTS
The Company covenants and agrees during the term of this Agreement with
BNYMCM as follows:
Section 4.01 Registration Statement and Prospectus. (i) To make no
amendment or supplement to the Registration Statement or the Prospectus (other
than (x) an amendment or supplement relating solely to the issuance or offering
of securities other than the Common Shares and (y) by means of a Current Report
on Form 8-K filed with the Commission under the Exchange Act and incorporated or
deemed to be incorporated by reference in the Registration Statement or the
Prospectus; provided, that the Company will give prior written notice to BNYMCM
of the intention to file such report and describing the subject matter to be
included in such report as soon as reasonably practicable prior to the filing of
such report) after the date of delivery of an Issuance Notice and prior to the
related Settlement Date at any time prior to having afforded BNYMCM a reasonable
opportunity to review and comment thereon; (ii) to prepare, with respect to any
Issuance Shares to be sold pursuant to this Agreement, an Issuance Supplement
with respect to such Common Shares in a form previously approved by BNYMCM and
to file such Issuance Supplement pursuant to Rule 424(b) promulgated by the
Commission under the Securities Act within the time period required thereby and
to deliver such number of copies of each Issuance Supplement to each exchange or
market on which such sales were effected, in each case unless delivery and
filing of such an Issuance Supplement is not required by applicable law or by
the rules and regulations of the Commission; (iii) to make no amendment or
supplement to the Registration Statement or the Prospectus (other than (x) an
amendment or supplement relating solely to the issuance or offering of
securities other than the Common Shares and (y) by means of an Annual Report on
Form 10-K, a Quarterly Report on Form 10-Q, a Current Report on Form 8-K or a
Registration Statement on Form 8-A or any amendments thereto filed with the
Commission under the Exchange Act and incorporated or deemed to be incorporated
by reference into the Registration Statement or the Prospectus except to the
extent required by Section 4.01(i)) at any time prior to having afforded BNYMCM
a reasonable opportunity to review and comment thereon; (iv) to file within the
time periods required by the Exchange Act all reports and any definitive proxy
or information statements required to be filed by the Company with the
Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act for
so long as the delivery of a prospectus is required under the Securities Act or
under the blue sky or securities laws of any jurisdiction in connection with the
offering or sale of the Common Shares, and during such same period to advise
BNYMCM, promptly after the Company receives notice thereof, of the time when any
amendment to the Registration Statement has been filed or has become effective
or any supplement to the Prospectus or any amended Prospectus has been filed
with the Commission, of the issuance by the Commission of any stop order or of
any order preventing or suspending the use of any prospectus relating to the
Common Shares, of the suspension of the qualification of the Common Shares for
offering or sale in any jurisdiction, of the initiation or threatening of any
proceeding for any such purpose, of any request by the Commission for the
amendment or supplement of the Registration Statement or the Prospectus or for
additional information relating thereto, or the receipt of any comments from the
Commission with respect to the Registration Statement or the Prospectus
(including, without limitation, any Incorporated Documents) and (v) in the event
of the issuance of any such stop order or of any such order preventing or
suspending the use of any such prospectus or
14
suspending any such qualification during a Selling Period, to use promptly its
commercially reasonable efforts to obtain its withdrawal;
Section 4.02 Blue Sky. To use its commercially reasonable efforts to cause
the Common Shares to be listed on the Principal Market and promptly from time to
time to take such action as BNYMCM may reasonably request to cooperate with
BNYMCM in the qualification of the Common Shares for offering and sale under the
blue sky or securities laws of such jurisdictions within the United States of
America and its territories as BNYMCM may reasonably request and to use its
commercially reasonable efforts to comply with such laws so as to permit the
continuance of sales and dealings therein for as long as may be necessary to
complete the sale of the Common Shares; provided, however, that in connection
therewith the Company shall not be required to qualify as a foreign corporation,
to file a general consent to service of process or to subject itself to taxation
in respect of doing business in any jurisdiction;
Section 4.03 Copies of Registration Statement and Prospectus. To furnish
BNYMCM with copies (which may be electronic copies) of the Registration
Statement and each amendment thereto, and with copies of the Prospectus and each
amendment or supplement thereto in the form in which it is filed with the
Commission pursuant to the Securities Act or Rule 424(b) promulgated by the
Commission under the Securities Act, both in such quantities as BNYMCM may
reasonably request from time to time; and, if the delivery of a prospectus is
required under the Securities Act or under the blue sky or securities laws of
any jurisdiction at any time on or prior to the applicable Settlement Date for
any Selling Period in connection with the offering or sale of the Common Shares
and if at such time any event has occurred as a result of which the Prospectus
as then amended or supplemented would include an 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
when such Prospectus is delivered, not misleading, or, if for any other reason
it is necessary during such same period to amend or supplement the Prospectus or
to file under the Exchange Act any document incorporated by reference in the
Prospectus in order to comply with the Securities Act or the Exchange Act, to
notify BNYMCM and request BNYMCM to suspend offers to sell Common Shares (and,
if so notified, BNYMCM shall cease such offers as soon as practicable); and if
the Company decides to amend or supplement the Registration Statement or the
Prospectus as then amended or supplemented, to advise BNYMCM promptly by
telephone (with confirmation in writing or e-mail) and to prepare and cause to
be filed promptly with the Commission an amendment or supplement to the
Registration Statement or the Prospectus as then amended or supplemented that
will correct such statement or omission or effect such compliance; provided,
however, that if during such same period BNYMCM is required to deliver a
prospectus in respect of transactions in the Common Shares, the Company shall
promptly prepare and file with the Commission such an amendment or supplement;
Section 4.04 Rule 158. To make generally available to its holders of the
Common Shares as soon as practicable, but in any event not later than 18 months
after the effective date of the Registration Statement (as defined in Rule
158(c) promulgated by the Commission under the Securities Act), an earnings
statement of the Company and its consolidated subsidiaries (which need not be
audited) complying with Section 11(a) of the Securities Act and the rules and
regulations of the Commission promulgated thereunder (including the option of
the Company to file periodic reports in order to make generally available such
earnings statement, to the extent
15
that it is required to file such reports under Section 13 or Section 15(d) of
the Exchange Act, pursuant to Rule 158 promulgated by the Commission under the
Securities Act);
Section 4.05 Information. Except where such reports, communications,
financial statements or other information is available on the Commission's EDGAR
system, to furnish to BNYMCM (in paper or electronic format) copies of all
publicly available reports or other communications (financial or other)
furnished generally to stockholders and filed with the Commission pursuant to
the Exchange Act, and deliver to BNYMCM (in paper or electronic format) (i)
promptly after they are available, copies of any publicly available reports and
financial statements furnished to or filed with the Commission or any national
securities exchange on which any class of securities of the Company is listed;
and (ii) such additional publicly available information concerning the business
and financial condition of the Company as BNYMCM may from time to time
reasonably request (such financial statements to be on a consolidated basis to
the extent the accounts of the Company and its subsidiaries are consolidated in
reports furnished to its stockholders generally or to the Commission);
Section 4.06 Representations and Warranties. That each delivery of an
Issuance Notice and each delivery of Common Shares on a Settlement Date shall be
deemed to be (i) an affirmation to BNYMCM that the representations and
warranties of the Company contained in or made pursuant to this Agreement are
true and correct as of the date of such Issuance Notice or of such Settlement
Date, as the case may be, as though made at and as of each such date, except as
may be disclosed in the Prospectus (including any documents incorporated by
reference therein and any supplements thereto) , and (ii) an undertaking that
the Company will advise BNYMCM if any of such representations and warranties
will not be true and correct as of the Settlement Date for the Common Shares
relating to such Issuance Notice, as though made at and as of each such date
(except that such representations and warranties shall be deemed to relate to
the Registration Statement and the Prospectus as amended and supplemented
relating to such Common Shares);
Section 4.07 Opinions of Counsel. That each time the Registration Statement
or the Prospectus is amended or supplemented (other than by means of (x) an
amendment or supplement relating solely to the offering of securities other than
the Common Shares, (y) an Issuance Supplement or (z) a Current Report on Form
8-K, unless reasonably requested by BNYMCM within 30 days of the filing thereof
with the Commission), including by means of an Annual Report on Form 10-K or a
Quarterly Report on Form 10-Q filed with the Commission under the Exchange Act
and incorporated or deemed to be incorporated by reference into the Prospectus
(each such amendment or supplement an "Opinion Triggering Event"), the Company
shall as soon as practicable thereafter furnish or cause to be furnished
forthwith to BNYMCM a written opinion of Jaeckle Fleischmann & Mugel, LLP,
counsel for the Company, dated the date of delivery and in form reasonably
satisfactory to BNYMCM, (i) if such counsel has previously furnished an opinion
to the effect set forth in Exhibit B hereto, to the effect that BNYMCM may rely
on such previously furnished opinion of such counsel to the same extent as
though it were dated the date of such letter authorizing reliance (except that
the statements in such last opinion shall be deemed to relate to the
Registration Statement and the Prospectus as amended and supplemented to such
date) or (ii) if such counsel has not previously furnished an opinion to the
effect set forth in Exhibit B hereto, of the same tenor as such an opinion of
such counsel but modified to relate to the Registration Statement and the
Prospectus as amended and
16
supplemented to such date; provided, however, that the Company shall not be
obligated to deliver any such opinion unless and until such time as the Company
delivers an Issuance Notice or the Opinion Trigger Event occurs during a Selling
Period;
Section 4.08 Comfort Letters. That each time the Registration Statement or
the Prospectus is amended or supplemented, including by means of an Annual
Report on Form 10-K, a Quarterly Report on Form 10-Q or a Current Report on Form
8-K (but only a Current Report on Form 8-K that contains financial statements of
the Company filed with the Commission under the Exchange Act and incorporated or
deemed to be incorporated by reference into the Prospectus), other than an
amendment or supplement relating solely to the offering of securities other than
the Common Shares, in any case to set forth financial information included in or
derived from the Company's financial statements or accounting records) (each
such amendment or supplement a "Comfort Letter Triggering Event"), the Company
shall as soon as practicable thereafter cause the independent registered public
accounting firm who has audited the financial statements of the Company included
or incorporated by reference in the Registration Statement forthwith to furnish
to BNYMCM a letter, dated the date of delivery, in form reasonably satisfactory
to BNYMCM, of the same tenor as the letter referred to in Section 5.01(g) hereof
but modified to relate to the Registration Statement and the Prospectus as
amended or supplemented to the date of such letter, with such changes as may be
necessary to reflect changes in the financial statements and other information
derived from the accounting records of the Company, to the extent such financial
statements and other information are available as of a date not more than five
business days prior to the date of such letter; provided, however, that, with
respect to any financial information or other matters, such letter may reconfirm
as true and correct at such date as though made at and as of such date, rather
than repeat, statements with respect to such financial information or other
matters made in the letter referred to in Section 5.01(g) hereof that was last
furnished to BNYMCM; provided, however, that the Company shall not be obligated
to deliver any such comfort letter unless and until such time as the Company
delivers an Issuance Notice or the Comfort Letter Trigger Event occurs during a
Selling Period;
Section 4.09 Officer's Certificate. That each time the Registration
Statement or the Prospectus is amended or supplemented (other than by means of
(x) an amendment or supplement relating solely to the offering of securities
other than the Common Shares, (y) an Issuance Supplement or (z) a Current Report
on Form 8-K, unless reasonably requested by BNYMCM within 30 days of the filing
thereof with the Commission), including by means of an Annual Report on Form
10-K or a Quarterly Report on Form 10-Q filed with the Commission under the
Exchange Act and incorporated or deemed to be incorporated by reference into the
Prospectus (each such amendment or supplement an "Officers' Certificate
Triggering Event"), the Company shall as soon as practicable thereafter furnish
or cause to be furnished forthwith to BNYMCM a certificate, dated the date of
delivery, in such form and executed by such officers of the Company as is
reasonably satisfactory to BNYMCM, of the same tenor as the certificate referred
to in Section 2.02(ii) but modified to relate to the Registration Statement and
the Prospectus as amended and supplemented to such date; provided, however, that
the Company shall not be obligated to deliver any such officers' certificate
unless and until such time as the Company delivers an Issuance Notice or the
Officers' Certificate Trigger Event occurs during a Selling Period;
17
Section 4.10 Stand Off Agreement. Without the written consent of BNYMCM,
the Company will not, directly or indirectly, offer to sell, sell, contract to
sell, grant any option to sell or otherwise dispose of any shares of Common
Stock or securities convertible into or exchangeable for Common Stock (other
than Common Shares hereunder), warrants or any rights to purchase or acquire,
Common Stock during the period beginning on the first (1st) Trading Day
immediately prior to the date on which any Issuance Notice is delivered to
BNYMCM hereunder and ending on the first (1st) Trading Day immediately following
the Settlement Date with respect to Common Shares sold pursuant to such Issuance
Notice (the "Stand Off Period"); provided, however, that such restriction will
not be required in connection with the Company's issuance or sale of (i) Common
Stock, options to purchase shares of Common Stock or Common Stock issuable upon
the exercise of options or other equity awards pursuant to any employee or
director stock option, incentive or benefit plan, stock purchase or ownership
plan or dividend reinvestment plan (but not shares subject to a waiver to exceed
plan limits in its stock purchase plan) of the Company, (ii) Common Stock
issuable upon conversion of securities or the exercise of warrants, options or
other rights disclosed in the Company's Commission filings and (iii) Common
Stock issuable as consideration in connection with acquisitions of business,
assets or securities of other Persons; and
Section 4.11 Market Activities. The Company will not, directly or
indirectly, (i) take any action designed to cause or result in, or that
constitutes or might reasonably be expected to constitute, the stabilization or
manipulation of the price of any security of the Company to facilitate the sale
or resale of the Common Shares or (ii) during the Stand Off Period, sell, bid
for or purchase the Common Shares, or pay anyone any compensation for soliciting
purchases of the Common Shares other than BNYMCM.
Section 4.12 REIT Status. 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.
ARTICLE V
CONDITIONS TO DELIVERY OF ISSUANCE
NOTICES AND TO SETTLEMENT
Section 5.01 Conditions Precedent to the Right of the Company to Deliver an
Issuance Notice and the Obligation of BNYMCM to Sell Common Shares During the
Selling Period(s). The right of the Company to deliver an Issuance Notice
hereunder is subject to the satisfaction, on the date of delivery of such
Issuance Notice, and the obligation of BNYMCM to sell Common Shares during the
applicable Selling Period is subject to the satisfaction, on the applicable
Settlement Date, of each of the following conditions:
(a) Effective Registration Statement and Authorizations. The Registration
Statement shall remain effective and sales of all of the Common Shares
(including all of the Issuance Shares issued with respect to all prior Issuances
and all of the Issuance Shares expected to be issued in connection with the
Issuance specified by the current Issuance Notice) may be made by BNYMCM
thereunder, and (i) no stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceeding for that purpose
shall have been initiated or, to the Company's knowledge, threatened by the
Commission; (ii) no other suspension of the use or withdrawal of the
effectiveness of the Registration Statement or Prospectus shall exist; (iii) all
18
requests for additional information on the part of the Commission shall have
been complied with to the reasonable satisfaction of BNYMCM and (iv) no event
specified in Section 4.03 hereof shall have occurred and be continuing without
the Company amending or supplementing the Registration Statement or the
Prospectus as provided in Section 4.03. The authorizations referred to in
Section 3.08 of this Agreement shall have been issued and shall be in full force
and effect, and such authorizations shall not be the subject of any pending or,
to the Company's knowledge, threatened application for rehearing or petition for
modification, and are sufficient to authorize the issuance and sale of the
Common Shares.
(b) Accuracy of the Company's Representations and Warranties. The
representations and warranties of the Company shall be true and correct as of
the Closing Date, as of the applicable date referred to in Section 4.09 that is
prior to such Issuance Date or Settlement Date, as the case may be, and as of
such Issuance Date and Settlement Date as though made at such time.
(c) Performance by the Company. The Company shall have performed, satisfied
and complied, in all material respects, with all covenants, agreements and
conditions required by this Agreement to be performed, satisfied or complied
with by the Company at or prior to such date.
(d) No Injunction. No statute, rule, regulation, executive order, decree,
ruling or injunction shall have been enacted, entered, promulgated or endorsed
by any court or governmental authority of competent jurisdiction or any
self-regulatory organization having authority over the matters contemplated
hereby that prohibits or directly and materially adversely affects any of the
transactions contemplated by this Agreement, and no proceeding shall have been
commenced that may have the effect of prohibiting or materially adversely
affecting any of the transactions contemplated by this Agreement.
(e) Material Adverse Changes. Since the date of this Agreement, no event
that had or is reasonably likely to have a Material Adverse Effect shall have
occurred that has not been disclosed in the Registration Statement or the
Prospectus (including the documents incorporated by reference therein and any
supplements thereto).
(f) No Suspension of Trading In or Delisting of Common Stock; Other Events.
The trading of the Common Stock (including without limitation the Issuance
Shares) shall not have been suspended by the Commission, the Principal Market or
the Financial Industry Regulatory Authority since the immediately preceding
Settlement Date or, if there has been no Settlement Date, the Closing Date, and
the Common Shares (including without limitation the Issuance Shares) shall have
been approved for listing or quotation on and shall not have been delisted from
the Principal Market. There shall not have occurred (and be continuing in the
case of occurrences under clauses (i) and (ii) below) any of the following: (i)
if trading generally on the American Stock Exchange, the New York Stock
Exchange, the Pacific Stock Exchange or The Nasdaq Stock Market has been
suspended or materially limited, or minimum and maximum prices for trading have
been fixed, or maximum ranges for prices have been required, by any of said
exchanges or by such system or by order of the Commission, the Financial
Industry Regulatory Authority or any other governmental authority, or a material
disruption has occurred in commercial banking or securities settlement or
clearance services in the United States; (ii) a general moratorium on commercial
banking activities in New York declared by either federal or
19
New York state authorities; or (iii) any material adverse change in the
financial markets in the United States or in the international financial
markets, any outbreak or escalation of hostilities or other calamity or crisis
involving the United States or the declaration by the United States of a
national emergency or war or any change or development involving a prospective
change in national or international political, financial or economic conditions,
if the effect of any such event specified in this clause (iii) in the sole
judgment of BNYMCM makes it impracticable or inadvisable to proceed with the
sale of Common Shares of the Company.
(g) Comfort Letter. The independent registered public accounting firm who
has audited the financial statements included or incorporated by reference in
the Registration Statement shall have furnished to BNYMCM a letter required to
be delivered pursuant to Section 4.08 on or before the date on which
satisfaction of this condition is determined.
(h) No Defaults. The execution and delivery of this Agreement and the
issuance and sale of the Common Shares and the compliance by the Company with
all of the provisions of this Agreement will not result in the Company or any of
the Significant Subsidiaries being in default of (whether upon the passage of
time, the giving of notice or both) its organizational and other governing
documents, or any provision of any security issued by the Company or any of its
Significant Subsidiaries, or of any agreement, instrument or other undertaking
to which the Company or any of its Significant Subsidiaries is a party or by
which it or any of its property or assets is bound, or the applicable provisions
of any law, statute, rule, regulation, order, writ, injunction, judgment or
decree of any court or governmental authority to or by which the Company, any of
its Significant Subsidiaries or any of their property or assets is bound, in
each case which default, either individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect.
(i) Trading Cushion. The Selling Period for any previous Issuance Notice
shall have expired.
(j) Maximum Issuance Amount. In no event may the Company issue an Issuance
Notice to sell an Issuance Amount to the extent that (I) the sum of (x) the
Sales Price of the requested Issuance Amount, plus (y) the aggregate Sales Price
of all Common Shares issued under all previous Issuances effected pursuant to
this Agreement, would exceed the Maximum Program Amount or (II) the requested
Issuance Amount exceeds $40 million.
(k) Prospectus Supplement and Issuance Supplement. (a) A supplement to the
prospectus included in the Registration Statement related to the offering and
sale of Common Shares pursuant to this Agreement (the "Prospectus Supplement"),
in form and substance to be agreed upon by the parties hereto, setting forth
information regarding this Agreement including, without limitation, the Maximum
Program Amount, shall have been filed with the Commission pursuant to Rule
424(b) promulgated by the Commission under the Securities Act within the time
period required thereby and sufficient copies thereof delivered to BNYMCM on or
prior to the Issuance Date.
(b) To the extent required by Section 4.01(ii), an Issuance
Supplement, in form and substance to be agreed upon by the parties, shall have
been filed with the Commission
20
pursuant to Rule 424(b) promulgated by the Commission under the Securities Act
within the time period required thereby and sufficient copies thereof delivered
to BNYMCM on or prior to the Issuance Date.
(l) Counsel Letter. The counsel specified in Section 4.07, or other counsel
selected by the Company and reasonably satisfactory to BNYMCM, shall have
furnished to BNYMCM their written opinion required to be delivered pursuant to
Section 4.07 on or before the date on which satisfaction of this condition is
determined.
(m) Officers' Certificate. The Company shall have furnished or caused to be
furnished to BNYMCM an officers' certificate executed by the Chief Executive
Officer, the President or any Senior Vice President of the Company and by the
Chief Financial Officer of the Company, signing in such respective capacities,
required to be delivered pursuant to Section 4.09 on or before the date on which
satisfaction of this condition is determined, as to the matters specified in
Section 2.02(ii).
(n) Other Documents. On the Closing Date and prior to each Issuance Date
and Settlement Date, BNYMCM and its counsel shall have been furnished with such
documents as they may reasonably require in order to evidence the accuracy and
completeness of any of the representations or warranties, or the fulfillment of
the conditions, herein contained; and all proceedings taken by the Company in
connection with the issuance and sale of the Common Shares as herein
contemplated shall be reasonably satisfactory in form and substance to BNYMCM
and its counsel.
Section 5.02 Documents Required to be Delivered on each Issuance Date.
BNYMCM's obligation to sell Common Shares pursuant to an Issuance hereunder
shall additionally be conditioned upon the delivery to BNYMCM on or before the
Issuance Date of a certificate in form and substance reasonably satisfactory to
BNYMCM, executed by the Chief Executive Officer or the Chief Financial Officer
of the Company, to the effect that all conditions to the delivery of such
Issuance Notice shall have been satisfied as at the date of such certificate
(which certificate shall not be required if the foregoing representations shall
be set forth in the Issuance Notice).
Section 5.03 Suspension of Sales. The Company or BNYMCM may, upon notice to
the other party hereto in writing, including by e-mail, or by telephone
(confirmed immediately by verifiable facsimile transmission), suspend any sale
of Issuance Shares, and the Selling Period shall immediately terminate;
provided, however, that such suspension and termination shall not affect or
impair either party's obligations with respect to any Issuance Shares sold
hereunder after a reasonably practicable period of time following receipt of
such notice, but in no event shall there be no Issuance Shares sold beyond the
trading day in which the notice was received. The Company agrees that no such
notice shall be effective against BNYMCM unless it is made to one of the
individuals named on Schedule 1 hereto, as such Schedule may be amended from
time to time. BNYMCM agrees that no such notice shall be effective against the
Company unless it is made to one of the individuals named on Schedule 1 annexed
hereto, as such Schedule may be amended from time to time.
21
ARTICLE VI
INDEMNIFICATION AND CONTRIBUTION
Section 6.01 Indemnification by the Company. The Company agrees to
indemnify and hold harmless BNYMCM, its officers, directors, employees and
agents, and each Person, if any, who controls BNYMCM within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act, together
with each such Person's respective officers, directors, employees and agents
(collectively, the "Controlling Persons"), from and against any and all losses,
claims, damages or liabilities, and any action or proceeding in respect thereof,
to which BNYMCM, its officers, directors, employees and agents, and any such
Controlling Person may become subject under the Securities Act, the Exchange Act
or otherwise, insofar as such losses, claims, damages or liabilities (or actions
or proceedings 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, the Prospectus or any other prospectus relating to the
Common Shares, or any amendment or supplement thereto, or any preliminary
prospectus, or arise out of, or are based upon, any omission or alleged omission
to state therein a material fact required to be stated therein or necessary to
make the statements therein (in the case of the Prospectus or any amendment or
supplement thereto or any preliminary prospectus, in light of the circumstances
in which they were made) not misleading, except insofar as the same are made in
reliance upon and in conformity with information related to BNYMCM or its plan
of distribution furnished in writing to the Company by or on behalf of BNYMCM
expressly for use therein, and the Company shall reimburse BNYMCM, its officers,
directors, employees and agents, and each Controlling Person for any reasonable
legal and other expenses incurred thereby in investigating or defending or
preparing to defend against any such losses, claims, damages or liabilities, or
actions or proceedings in respect thereof, as such expenses are incurred.
Section 6.02 Indemnification by BNYMCM. BNYMCM agrees to indemnify and hold
harmless the Company, its officers, directors, employees and agents and each
Person, if any, who controls the Company within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, together with each such
Person's respective officers, directors, employees and agents, from and against
any losses, claims, damages or liabilities, and any action or proceeding in
respect thereof, to which the Company, its officers, directors, employees or
agents, any such controlling Person and any officer, director, employee or agent
of such controlling Person may become subject under the Securities Act, the
Exchange Act or otherwise, insofar as losses, claims, damages or liabilities (or
action or proceeding 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, the Prospectus or any other prospectus relating to the
Common Shares, or any amendment or supplement thereto, or any preliminary
prospectus, or arise out of, or are based upon, any omission or alleged omission
to state therein a material fact required to be stated therein or necessary to
make the statements therein (in the case of the Prospectus or any other
prospectus relating to the Common Shares, or any amendment or supplement thereto
or any preliminary prospectus, in light of the circumstances in which they were
made) not misleading in each case to the extent, but only to the extent that
such untrue statement or alleged untrue statement or omission or alleged
omission was made therein in reliance upon and in conformity with written
information related to BNYMCM or its plan of distribution furnished to the
Company by or on behalf of BNYMCM expressly for use therein.
22
Section 6.03 Conduct of Indemnification Proceedings. Promptly after receipt
by any Person (an "Indemnified Party") of notice of any claim or the
commencement of any action in respect of which indemnity may be sought pursuant
to Section 6.01 or 6.02, the Indemnified Party shall, if a claim in respect
thereof is to be made against the Person against whom such indemnity may be
sought (an "Indemnifying Party"), notify the Indemnifying Party in writing of
the claim or the commencement of such action. In the event an Indemnified Party
shall fail to give such notice as provided in this Section 6.03 and the
Indemnifying Party to whom notice was not given was unaware of the proceeding to
which such notice would have related and was materially prejudiced by the
failure to give such notice, the indemnification provided for in Sections 6.01
or 6.02 shall be reduced to the extent of any actual prejudice resulting from
such failure to so notify the Indemnifying Party; provided, that the failure to
notify the Indemnifying Party shall not relieve it from any liability that it
may have to an Indemnified Party otherwise than under Section 6.01 or 6.02. If
any such claim or action shall be brought against an Indemnified Party, the
Indemnifying Party shall be entitled to participate therein, and, to the extent
that it wishes, jointly with any other similarly notified Indemnifying Party, to
assume the defense thereof with counsel reasonably satisfactory to the
Indemnified Party. After notice from the Indemnifying Party to the Indemnified
Party of its election to assume the defense of such claim or action, the
Indemnifying Party shall not be liable to the Indemnified Party for any legal or
other expenses subsequently incurred by the Indemnified Party in connection with
the defense thereof other than reasonable costs of investigation; provided that
the Indemnified Party shall have the right to employ separate counsel to
represent the Indemnified Party, but the fees and expenses of such counsel shall
be for the account of such Indemnified Party unless (i) the Indemnifying Party
and the Indemnified Party shall have mutually agreed to the retention of such
counsel or (ii) such Indemnified Party reasonably concludes that representation
of both parties by the same counsel would be inappropriate due to actual or
potential conflicts of interest with the Company, it being understood, however,
that the Indemnifying Party shall not, in connection with any one such claim or
action or separate but substantially similar or related claims or actions in the
same jurisdiction arising out of the same general allegations or circumstances,
be liable for the fees and expenses of more than one separate firm of attorneys
(together with appropriate local counsel) at any time for all Indemnified
Parties or for fees and expenses that are not reasonable. No Indemnifying Party
shall, without the prior written consent of the Indemnified Party, effect any
settlement of any claim or pending or threatened proceeding in respect of which
the Indemnified Party is or could have been a party and indemnification could
have been sought hereunder by such Indemnified Party unless such settlement
includes an unconditional release of each such Indemnified Party from all
losses, claims, damages or liabilities arising out of such claim or proceeding
and such settlement does not admit or constitute an admission of fault, guilt,
failure to act or culpability on the part of any such Indemnified Party. Whether
or not the defense of any claim or action is assumed by an Indemnifying Party,
such Indemnifying Party will not be subject to any liability for any settlement
made without its prior written consent, which consent will not be unreasonably
withheld.
Section 6.04 Contribution. If for any reason the indemnification provided
for in this Article VI is unavailable to the Indemnified Parties in respect of
any losses, claims, damages or liabilities referred to herein, then each
Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall
contribute to the amount paid or payable by such Indemnified Party as a result
of such losses, claims, damages or liabilities as between the Company, on the
one hand,
23
and BNYMCM, on the other hand, in such proportion as is appropriate to reflect
the relative benefits received by the Company on the one hand and BNYMCM on the
other hand from the offering of the Common Shares to which such losses, claims,
damages or liabilities relate. If, however, the allocation provided by the
immediately preceding sentence is not permitted by applicable law, then each
Indemnifying Party shall contribute to such amount paid or payable by such
Indemnifying Party in such proportion as is appropriate to reflect not only such
relative benefits but also the relative fault of the Company and of BNYMCM in
connection with such statements or omissions, as well as any other relevant
equitable considerations. The relative benefits received by the Company, on the
one hand, and by BNYMCM, on the other, shall be deemed to be in the same
proportion as the total net proceeds from the sale of Common Shares (before
deducting expenses) received by the Company bear to the total commissions
received by BNYMCM in respect thereof. The relative fault of the Company, on the
one hand, and of BNYMCM, on the other hand, shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information supplied by the Company on one hand or by BNYMCM on the other hand,
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
The Company and BNYMCM agree that it would not be just and equitable if
contribution pursuant to this Section 6.04 were determined by pro rata
allocation or by any other method of allocation that does not take account of
the equitable considerations referred to in the immediately preceding paragraph.
The amount paid or payable by an Indemnified Party as a result of the losses,
claims, damages or liabilities referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth
above, any reasonable legal or other expenses reasonably incurred by such
Indemnified Party in connection with investigating or defending any such action
or claim. Notwithstanding the provisions of this Section 6.04, BNYMCM shall in
no event be required to contribute any amount in excess of the commissions
received by it under this Agreement. No Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation. For purposes of this Section 6.04, each officer,
director, employee and agent of BNYMCM, and each Controlling Person, shall have
the same rights to contribution as BNYMCM, and each director of the Company,
each officer of the Company who signed the Registration Statement, and each
Person, if any, who controls the Company within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act shall have the same rights to
contribution as the Company. The obligations of the Company and BNYMCM under
this Article VI shall be in addition to any liability that the Company and
BNYMCM may otherwise have.
ARTICLE VII
TERMINATION
Section 7.01 Term. Subject to the provisions of this Article VII, the term
of this Agreement shall run until the end of the Commitment Period.
Section 7.02 Termination by BNYMCM. BNYMCM may terminate the right of the
Company to effect any Issuances under this Agreement upon one (1) Trading Day's
notice if any of the following events shall occur:
24
(a) The Company or any Significant Subsidiary shall make an assignment for
the benefit of creditors, or apply for or consent to the appointment
of a receiver or trustee for it or for all or substantially all of its
property or business; or such a receiver or trustee shall otherwise be
appointed;
(b) Bankruptcy, insolvency, reorganization or liquidation proceedings or
other proceedings for relief under any bankruptcy law or any law for
the relief of debtors shall be instituted by or against the Company or
any of its Significant Subsidiaries;
(c) The Company shall fail to maintain the listing of the Common Stock on
the Principal Market;
(d) Since the Effective Date, there shall have occurred any event,
development or state of circumstances or facts that has had or would
reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect; or
(e) BNYMCM shall have given ten (10) days' notice of its election to
terminate this Agreement, in its sole discretion, at any time.
Section 7.03 Termination by the Company. The Company shall have the right,
by giving ten (10) days' notice as hereinafter specified, to terminate this
Agreement in its sole discretion at any time. After delivery of such notice, the
Company shall no longer have any right to deliver any Issuance Notices
hereunder.
Section 7.04 Liability; Provisions that Survive Termination. If this
Agreement is terminated pursuant to this Article VII, such termination shall be
without liability of any party hereto to any other party hereto except as
provided in Section 9.02 and for the Company's obligations in respect of all
prior Issuance Notices, and provided further that in any case the provisions of
Article VI, Article VIII and Article IX shall survive termination of this
Agreement without limitation.
ARTICLE VIII
REPRESENTATIONS AND WARRANTIES TO SURVIVE DELIVERY
All representations and warranties of the Company herein or in certificates
delivered pursuant hereto shall remain operative and in full force and effect
regardless of (i) any investigation made by or on behalf of BNYMCM and its
officers, directors, employees and agents and any Controlling Persons, (ii)
delivery and acceptance of the Common Shares and payment therefor or (iii) any
termination of this Agreement.
ARTICLE IX
MISCELLANEOUS
Section 9.01 Press Releases and Disclosure. The Company may issue a press
release describing the material terms of the transactions contemplated hereby as
soon as practicable following the Closing Date, and may file with the Commission
a Current Report on Form 8-K describing the material terms of the transactions
contemplated hereby, and the Company shall consult with BNYMCM prior to making
such disclosures, and the parties hereto shall use all
25
commercially reasonable efforts, acting in good faith, to agree upon a text for
such disclosures that is reasonably satisfactory to all parties hereto. No party
hereto shall issue thereafter any press release or like public statement
(including, without limitation, any disclosure required in reports filed with
the Commission pursuant to the Exchange Act) related to this Agreement or any of
the transactions contemplated hereby that has not been previously disclosed
without the prior written approval of the other party hereto, which such
approval will not unreasonably withheld, except as may be necessary or
appropriate in the opinion of the party seeking to make disclosure to comply
with the requirements of applicable law or stock exchange rules. If any such
press release or like public statement is so required, the party making such
disclosure shall consult with the other party prior to making such disclosure,
and the parties shall use all commercially reasonable efforts, acting in good
faith, to agree upon a text for such disclosure that is reasonably satisfactory
to all parties hereto. Notwithstanding the foregoing, the Company may disclose
the results of any Issuance, including the Issuance Price and number of shares
of Common Stock issued pursuant to an Issuance in an earnings release, quarterly
report on Form 10-Q or annual report on Form 10-K and the Company may provide
oral updates of such previously publicly disclosed information to investors
and/or shareholders without the prior written approval of BNYMCM.
Section 9.02 Expenses. The Company covenants and agrees with BNYMCM that
the Company shall pay or cause to be paid the following: (i) the fees,
disbursements and expenses of the Company's counsel and accountants in
connection with the preparation, printing and filing of the Registration
Statement, the Prospectus and any Issuance Supplements and all other amendments
and supplements thereto and the mailing and delivery of copies thereof to BNYMCM
and the Principal Market; (ii) BNYMCM's reasonable documented out-of-pocket
expenses (up to $60,000 in the aggregate), including the reasonable fees,
disbursements and expenses of counsel for BNYMCM (including in connection with
the qualification of the Common Shares for offering and sale under state
securities laws as provided in Section 4.02 hereof and in connection with
preparing any blue sky survey), in connection with this Agreement and the
Registration Statement and any Issuances hereunder and ongoing services in
connection with the transactions contemplated hereunder; (iii) the cost (other
than those expenses described in clause (ii) above) of printing, preparing or
reproducing this Agreement and any other documents in connection with the
offering, purchase, sale and delivery of the Common Shares; (iv) all filing fees
and expenses (other than those expenses described in clause (ii) above) in
connection with the qualification of the Common Shares for offering and sale
under state securities laws as provided in Section 4.02 hereof; (v) the cost of
preparing the Common Shares; (vi) the fees and expenses of any transfer agent of
the Company; (vii) the cost of providing any CUSIP or other identification
numbers for the Common Shares; (viii) the fees and expenses incurred in
connection with the listing or qualification of the Common Shares on the
Principal Markets and any filing fees incident to any required review by the
Financial Industry Regulatory Authority of the terms of the sale of the Common
Shares in connection with this Agreement and the Registration Statement
(including the reasonable fees, disbursements and expenses of counsel for
BNYMCM), and (ix) all other costs and expenses incident to the performance of
the Company's obligations hereunder that are not otherwise specifically provided
for in this Section. During the term of this Agreement, the Company shall pay
BNYMCM's attorneys' fees for its quarterly or other periodic due diligence
review in connection with the delivery by the Company of an Issuance Notice and
review of the opinions, letters and certificates delivered pursuant to Sections
4.07, 4.08 and 4.09 and related matters (amount not to exceed $5,000 per fiscal
quarter).
26
Section 9.03 Notices. All notices, demands, requests, consents, approvals
or other communications required or permitted to be given hereunder or that are
given with respect to this Agreement shall be in writing and shall be personally
served or deposited in the mail, registered or certified, return receipt
requested, postage prepaid or delivered by reputable air courier service with
charges prepaid, or transmitted by hand delivery, telegram, telex or facsimile,
addressed as set forth below, or to such other address as such party shall have
specified most recently by written notice: (i) if to the Company to: 190 East
Capitol Street, Suite 400, Jackson, MS 39201-2195, Attention: N. Keith McKey,
Facsimile No.: (601) 352-1441, with a copy to Jaeckle Fleischmann & Mugel, LLP,
Attention: Joseph P. Kubarek, Facsimile No.: (716) 856-0432; and (ii) if to
BNYMCM, BNY Capital Markets, LLC, One Wall Street, 17th Floor, New York, NY
10286, Attention: Daniel C. de Menocal, Jr., Facsimile No.: 212-635-6536, with a
copy (which shall not constitute notice) to: Morrison & Foerster LLP, 755 Page
Mill Road, Palo Alto, CA 94304, Attention: Justin L. Bastian, Facsimile No.:
(650) 494-0792. Except as set forth in Sections 2.03, 4.03 and 5.03, notice
shall be deemed given on the date of service or transmission if personally
served or transmitted by telegram, telex or confirmed facsimile. Notice
otherwise sent as provided herein shall be deemed given on the third business
day following the date mailed or on the next business day following delivery of
such notice to a reputable air courier service for next day delivery.
Section 9.04 Entire Agreement. This Agreement constitutes the entire
agreement of the parties hereto with respect to the subject matter hereof and
supersedes all prior and contemporaneous agreements, representations,
understandings, negotiations and discussions between the parties, whether oral
or written, with respect to the subject matter hereof.
Section 9.05 Amendment and Waiver. This Agreement may not be amended,
modified, supplemented, restated or waived except by a writing executed by the
party against which such amendment, modification, supplement, restatement or
waiver is sought to be enforced. Waivers may be made in advance or after the
right waived has arisen or the breach or default waived has occurred. Any waiver
may be conditional. No waiver of any breach of any agreement or provision herein
contained shall be deemed a waiver of any preceding or succeeding breach thereof
nor of any other agreement or provision herein contained. No waiver or extension
of time for performance of any obligations or acts shall be deemed a waiver or
extension of the time for performance of any other obligations or acts.
Section 9.06 No Assignment; No Third Party Beneficiaries. This Agreement
and the rights, duties and obligations hereunder may not be assigned or
delegated by the Company or BNYMCM. Any purported assignment or delegation of
rights, duties or obligations hereunder shall be void and of no effect. This
Agreement and the provisions hereof shall be binding upon and shall inure to the
benefit of each of the parties hereto and their respective successors and, to
the extent provided in Article VI, the controlling persons, officers, directors,
employees and agents referred to in Article VI. This Agreement is not intended
to confer any rights or benefits on any Persons other than as set forth in
Article VI or elsewhere in this Agreement.
Section 9.07 Severability. This Agreement shall be deemed severable, and
the invalidity or unenforceability of any term or provision hereof shall not
affect the validity or enforceability of this Agreement or of any other term or
provision hereof. Furthermore, in lieu of any such invalid or unenforceable term
or provision, the parties hereto intend that there shall be
27
added as a part of this Agreement a provision as similar in terms to such
invalid or unenforceable provision as may be possible and be valid and
enforceable.
Section 9.08 Further Assurances. Each party hereto, upon the request of any
other party hereto, shall do all such further acts and execute, acknowledge and
deliver all such further instruments and documents as may be necessary or
desirable to carry out the transactions contemplated by this Agreement.
Section 9.09 Titles and Headings. Titles, captions and headings of the
sections of this Agreement are for convenience of reference only and shall not
affect the construction of any provision of this Agreement.
Section 9.10 Governing Law; Jurisdiction. THIS AGREEMENT SHALL BE GOVERNED
BY, INTERPRETED UNDER AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE
STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED WITHIN THE
STATE OF NEW YORK WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAWS
THEREOF. Any action, suit or proceeding to enforce any provision of, or based on
any matter arising out of or in connection with, this Agreement or the
transactions contemplated hereby shall be brought in any federal court located
in the Southern District of the State of New York or any New York state court
located in the Borough of Manhattan, and the Company agrees to the exclusive
jurisdiction of such courts (and of the appropriate appellate courts therefrom)
and each party hereto waives (to the full extent permitted by law) any objection
it may have to the laying of venue of any such suit, action or proceeding in any
such court or that any such suit, action or proceeding has been brought in an
inconvenient forum.
Section 9.11 Waiver of Jury Trial. The Company and BNYMCM each hereby
irrevocably waives any right it may have to a trial by jury in respect of any
claim based upon or arising out of this Agreement or any transaction
contemplated hereby.
Section 9.12 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, and all of which taken
together shall constitute one and the same instrument. Delivery of an executed
Agreement by one party to the other may be made by facsimile transmission.
Section 9.13 Adjustments for Stock Splits, etc. The parties hereto
acknowledge and agree that share related numbers contained in this Agreement
(including the minimum Floor Price) shall be equitably adjusted to reflect stock
splits, stock dividends, reverse stock splits, combinations and similar events.
Section 9.14 No Fiduciary Duty. The Company acknowledges and agrees that
BNYMCM is acting solely in the capacity of an arm's length contractual
counterparty to the Company with respect to the offering of Common Shares
contemplated hereby (including in connection with determining the terms of the
offering) and not as a financial advisor or a fiduciary to, or an agent of, the
Company or any other person and will not claim that BNYMCM is acting in such
capacity in connection with the offering of the Common Shares contemplated
hereby. Additionally, BNYMCM is not advising the Company or any other person as
to any
28
legal, tax, investment, accounting or regulatory matters in any jurisdiction
with respect to the offering of Common Shares contemplated hereby. The Company
shall consult with its own advisors concerning such matters and shall be
responsible for making its own independent investigation and appraisal of the
transactions contemplated hereby, and BNYMCM shall have no responsibility or
liability to the Company with respect thereto. Any review by BNYMCM of the
Company, the transactions contemplated hereby or other matters relating to such
transactions will be performed solely for the benefit of BNYMCM and shall not be
on behalf of the Company.
29
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by the undersigned, thereunto duly authorized, as of the date first set
forth above.
EASTGROUP PROPERTIES, INC.
By: /s/ N. KEITH MCKEY
---------------------------
Name: N. Keith McKey
Title: Chief Financial Officer
BNY CAPITAL MARKETS, LLC
By: /S/ DANIEL C. de MENOCAL, JR.
------------------------------
Name: Daniel C. de Menocal, Jr.
Title: Managing Director
30
EXHIBIT A
ISSUANCE NOTICE
[Date]
BNY Capital Markets, LLC
One Wall Street, 17th Floor
New York, New York 10286
Attn: Daniel C. de Menocal, Jr.
Reference is made to the Sales Agency Financing Agreement between EastGroup
Properties, Inc. (the "Company") and BNY Capital Markets, LLC dated as of May
19, 2009. The Company confirms that all conditions to the delivery of this
Issuance Notice are satisfied as of the date hereof.
Effective Date of Delivery of Issuance Notice (determined pursuant to Section
2.03(b)): _______________________
Number of Days in Selling Period: __________________________
First Date of Selling Period: __________________________
Last Date of Selling Period: __________________________
Settlement Date(s): __________________________
Issuance Amount: ___$______________________
Floor Price Limitation (Adjustable by Company during the Selling Period, and in
no event less than $1.00 without the prior written consent of BNYMCM, which
consent may be withheld in BNYMCM's sole discretion): $ ____ per share
Comments: _____________________________________________________________________
EASTGROUP PROPERTIES, INC.
By: _________________________
Name: N. Keith McKey
Title: Chief Financial Officer
A-1
EXHIBIT B
Form of Opinion of Jaeckle Fleischmann & Mugel, LLP, Counsel for the Company
1. The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Maryland, with
corporate power and authority to own or lease its properties and conduct
its business as described in the Registration Statement and the Prospectus
and to enter into and perform its obligations under the Sales Agency
Financing Agreement.
2. The Company is duly qualified to transact business and is in good standing
in each jurisdiction in which the failure to so qualify would have a
Material Adverse Effect.
3. Each Significant Subsidiary of the Company has been duly incorporated and
is validly existing as a corporation in good standing under the laws of its
jurisdiction of incorporation.
4. The Company has the corporate power and authority to execute, deliver and
perform the terms and provisions of Sales Agency Financing Agreement and
has taken all necessary corporate action to authorize the execution,
delivery and performance by it of, and the consummation of the transactions
to be performed by it contemplated by, Sales Agency Financing Agreement.
5. The Company has an authorized capitalization as set forth in the
Prospectus, and all of the issued shares of capital stock of the Company
have been duly and validly authorized and issued and are fully paid and
non-assessable.
6. The issuance and sale of the Common Shares, the compliance by the Company
with all of the provisions of the Sales Agency Financing Agreement and the
consummation of the transactions contemplated thereby do not and 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 imposition
of a lien or security interest under, any material indenture, mortgage,
deed of trust, loan agreement or other agreement or instrument to which the
Company or any Significant Subsidiary is a party or by which the Company or
any Significant Subsidiary is bound or to which any of the property or
assets used in the conduct of the business of the Company or any
Significant Subsidiary is subject, nor will such action result in any
violation of the provisions of the Articles of Incorporation or the by-laws
of the Company or any Significant Subsidiary or any statute or any order,
rule or regulation of any court or governmental agency or body having
jurisdiction over the Company or any Significant Subsidiary or any of their
properties.
7. No consent, approval, authorization, order, registration or qualification
of or with any court or governmental agency or body is required for the
consummation by the Company of the transactions contemplated by the Sales
Agency Financing Agreement or in connection with the issuance and sale of
the Common Shares thereunder, except (i) such as have been obtained under
the Securities Act, and or (ii) such consents, approvals, authorizations,
orders, registrations or qualifications as may be required under state
securities or blue sky laws, as the case may be, and except in any case
where the failure to obtain such consent,
S-1
approval, authorization, order, registration or qualification would not
have a Material Adverse Effect.
8. Except as set forth in the Prospectus, there are no outstanding options,
warrants, conversion rights, subscription rights, preemptive rights, rights
of first refusal or other rights or agreements of any nature outstanding to
subscribe for or to purchase any shares of Common Stock of the Company or
any other securities of the Company of any kind binding on the Company
(except pursuant to dividend reinvestment, stock purchase or ownership,
stock option, director or employee benefit plans ) and there are no
outstanding securities or instruments of the Company containing
anti-dilution or similar provisions that will be triggered by the issuance
of the Common Shares as described in the Sales Agency Financing Agreement.
9. 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 which, if determined adversely to the
Company or any of its Subsidiaries, would individually or in the aggregate
have a Material Adverse Effect and, to the best of knowledge of such
counsel, no such proceedings are threatened or contemplated by governmental
authorities or threatened by others.
10. The Common Shares have been duly and validly authorized by all necessary
corporate action on the part of the Company. When issued against payment
therefor as provided in the Sales Agency Financing Agreement, the Common
Shares will be validly issued, fully paid and nonassessable, free and clear
of all preemptive rights, claims, liens, charges, encumbrances and security
interests of any nature whatsoever.
11. The capital stock of the Company, including the Common Shares, conforms to
the description contained in the Registration Statement.
12. The Registration Statement has become effective under the Securities Act,
and such counsel is not aware that any stop order suspending the
effectiveness thereof has been issued or that any proceedings for that
purpose have been instituted or are pending or threatened by the Commission
under the Securities Act.
13. The Registration Statement, as of the Effective Date, the Prospectus, as of
the date it was filed with the Commission, and the documents incorporated
by reference in the Prospectus, on the respective dates they were filed
with the Commission complied as to form in all material respects with the
applicable requirements of the Securities Act and the Exchange Act.
14. The Company is not, and after giving effect to the offering and sale of the
Common Shares, will not be, an "investment company" within the meaning of
the Investment Company Act of 1940, as amended.
15. For its taxable years beginning with the taxable year ended December 31,
1997 through December 31, 2008, the Company has continuously been organized
and has operated in conformity with the requirements for qualification as a
real estate investment trust under the Code.
2
16. The Company's current proposed organization and method of operation will
permit it to continue to meet the requirements for and taxation as a "real
estate investment trust" for its 2009 taxable year and thereafter.
17. The federal income tax discussion described in the Prospectus under the
caption "Material United States Federal Income Tax Consequences" is
accurate and fairly presents the federal income tax considerations that are
likely to be material to a holder of the Shares referred to therein.
Such counsel shall confirm that during the preparation of the Registration
Statement and Prospectus, such counsel participated in conferences with BNYMCM
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 the Incorporated Documents) were
discussed, reviewed and revised. Based on such counsel's examination of the
Registration Statement, the Prospectus and the Incorporated Documents, such
counsel's investigations made in connection with the preparation of the
Registration Statement and the Prospectus and such counsel's participation in
the conferences referred to above, nothing has come to such counsel's attention
that would lead such counsel to believe that (i) the Registration Statement, at
the Effective Date and as of the date of such opinion, 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, at the time it was filed with the Commission pursuant to
Rule 424(b) under the Securities Act or as of the date of such opinion included
or includes an untrue statement of a material fact or omitted or omits to state
a material fact necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading (other than the
financial statements and schedules, or other financial data, as to which such
counsel need express no opinion).
In rendering the foregoing opinion, such counsel may rely, (1) as to
matters involving laws of any jurisdiction other than the State of New York or
the United States of America, upon opinions addressed to BNYMCM of other counsel
satisfactory to it and Morrison & Foerster LLP, counsel to BNYMCM, 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 BNYMCM are justified in
relying thereon.
3
SCHEDULE 1
BNYMCM
Daniel C. de Menocal, Jr.
Telephone: (212) 635-7784
Facsimile: (212) 635-6536
Address: One Wall Street, 17th Floor
New York, New York 10286
Harold J. Skirlis
Telephone: (212) 635-6530
Facsimile: (212) 635-6536
Address: One Wall Street, 17th Floor
New York, New York 10286
EastGroup Properties, Inc.
N. Keith McKey
Telephone: (601) 354-3555
Facsimile: (601) 352-1441
Address: 190 East Capitol Street, Suite 400
Jackson, MS 39201-2195
S-1