Ex-1.1
April 3, 2001
PERSONAL AND CONFIDENTIAL
Alexandria Real Estate Equities, Inc.
135 North Los Robles Avenue, Suite 250
Pasadena, California 91101
Attention: Mr. Joel S. Marcus, Chief Executive Officer
Ladies and Gentlemen:
We are pleased to confirm the arrangements under which McDonald
Investments Inc. ("McDonald") has been engaged by Alexandria Real Estate
Equities, Inc. (the "Company") to serve as placement agent in connection with a
proposed offering of 500,000 shares of the Company's Common Stock, $.01 par
value (the "Common Stock"), to Lazard Asset Management, a division of Lazard
Freres & Co. LLC, as agent for certain of its investment management clients (the
"Agent"). Capitalized terms used but not defined in this agreement shall have
the meanings ascribed to them in the Purchase Agreement dated April 3, 2001
between the Company and the Agent (the "Purchase Agreement").
1. SERVICES AND PAYMENT. Pursuant to its engagement, McDonald has
introduced the Agent to the Company. McDonald will be responsible for: (a)
effecting the delivery of the Shares to the accounts designated by the Agent;
(b) collecting funds representing the purchase price for the Shares from the
Agent and/or its investment management accounts; and (c) effecting delivery of
the aggregate purchase price paid by the Agent and/or its investment management
accounts to the Company by means of a single wire transfer of immediately
available funds to an account designated by the Company on the Closing Date. If
any of the Specified Clients fails to make timely payment of the purchase price
for the Shares on the Closing Date (other than by reason of the failure of the
Company to satisfy any of the conditions set forth in the Purchase Agreement or
to comply with its obligations under this agreement), McDonald shall advance
such unpaid amounts to the Company on the Closing Date and undertake to collect
such amounts from the Agent or any such Specified Client. It is understood that
assistance rendered by McDonald with respect to the offering of the Shares will
be on a "best efforts" basis, and no obligation on the part of McDonald to
purchase the Shares for its own account or for resale to third parties will
arise by virtue of this agreement. As consideration for McDonald's services, the
Company agrees to pay McDonald a fee in an amount equal to $627,400. Such fee
will be payable in full by the Company upon the closing of the sale of the
Shares to the Agent.
2. REPRESENTATIONS AND WARRANTIES. The Company represents and
warrants to McDonald that:
(a) The Prospectus included as part of the registration
statement as originally filed or as part of any amendment or supplement
thereto, or filed pursuant to Rule 424 under the Act, complied when so
filed in all material respects with the provisions of the Act. The
Commission has not issued any order preventing or suspending the use of
the Prospectus.
(b) The Company and the transactions contemplated by this
Agreement meet the requirements for using Form S-3 under the Act. The
Registration Statement in the form in which it became effective and the
Prospectus and any supplement or amendment thereto relating to the
Shares when filed with the Commission under Rule 424(b) under the Act,
complied or will comply in all material respects with the provisions of
the Act and will not at any such times 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,
except that this representation and warranty does not apply to
statements in or omissions from the Registration Statement or the
Prospectus made in reliance upon and in conformity with information
relating to McDonald furnished to the Company in writing by or on
behalf of McDonald expressly for use therein.
(c) The Incorporated Documents heretofore filed, when
they were filed (or, if any amendment with respect to any such document
was filed, when such amendment was filed), conformed in all material
respects with the requirements of the Exchange Act and the rules and
regulations thereunder, and any further Incorporated Documents so filed
will, when they are filed, conform in all material respects with the
requirements of the Exchange Act and the rules and regulations
thereunder; no such document when it was filed (or, if an amendment
with respect to any such document was filed, when such amendment was
filed), contained an untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary in
order to make the statements therein not misleading; and no such
further document, when it is filed, will contain an untrue statement of
a material fact or will omit to state a material fact required to be
stated therein or necessary in order to make the statements therein not
misleading.
(d) All the outstanding shares of Common Stock of the
Company have been duly authorized and validly issued, are fully paid
and nonassessable and are free of any preemptive or similar rights; the
Shares have been duly authorized and, when issued and delivered to the
Agent against payment therefor in accordance with the terms hereof,
will be validly issued, fully paid and nonassessable and free of any
preemptive or similar rights; and the capital stock of the Company
conforms in all material respects to the description thereof in the
Registration Statement and the Prospectus. Except as described
in the Registration Statement and the Prospectus and except for stock
and/or options to purchase Common Stock pursuant to the Company's
Amended and Restated 1997 Stock Award and Incentive Plan, as amended,
there are no outstanding (i) options, convertible or exchangeable
securities, warrants or other rights calling for the issuance of Common
Stock of the Company or equity, partnership, membership or beneficial
interests in its subsidiaries or (ii) binding commitments or agreements
to issue any such securities.
(e) The Company is a corporation duly organized and
validly existing in good standing under the laws of the State of
Maryland with full corporate power and authority to own, lease and
operate its properties and to conduct its business as described in the
Registration Statement and the Prospectus, and is duly registered and
qualified to conduct its business and is in good standing in each
jurisdiction where the nature of its properties or the conduct of its
business requires such registration or qualification, except where the
failure so to register or qualify does not have a material adverse
effect on the business, properties, results of operations or financial
condition of the Company and its subsidiaries, taken as a whole (a
"MATERIAL ADVERSE EFFECT").
(f) All of the Company's subsidiaries that constitute
"Significant Subsidiaries" as defined in Rule 1-02 of Regulation S-X of
the Commission (each a "SIGNIFICANT SUBSIDIARY" and collectively, the
"SIGNIFICANT SUBSIDIARIES") are identified on SCHEDULE I hereto. Each
Significant Subsidiary is a corporation, limited partnership or limited
liability company, as the case may be, duly organized or formed and
validly existing under the laws of its jurisdiction of organization or
formation, with corporate, limited partnership or limited liability
company power and authority, as the case may be, to own, lease and
operate its properties and to conduct its business as described in the
Registration Statement and the Prospectus, and is duly registered and
qualified to conduct its business in each jurisdiction or place where
the nature of its properties or the conduct of its business requires
such registration, except where the failure so to register or qualify
would not have a Material Adverse Effect.
(g) All of the shares of capital stock, partnership
interests or limited liability company membership interests, as the
case may be, issued by the Significant Subsidiaries or created by
agreements to which the Significant Subsidiaries are parties, (i) have
been duly and validly issued or created (and in the case of capital
stock are fully paid and nonassessable) and (ii) are owned or held,
directly or indirectly through Significant Subsidiaries, by the Company
in the percentage amounts set forth on SCHEDULE I hereto free and clear
of any security interest, lien, adverse claim, equity or other
encumbrance (each of the foregoing, a "LIEN") except for such Liens as
(i) are described in the Registration Statement or the Prospectus, (ii)
are set forth on Schedule I, or (iii) would not have a Material Adverse
Effect.
(h) The Company has corporate power and authority to
enter into this Agreement and to issue, sell and deliver the Shares to
the Agent as provided herein. This Agreement has been duly authorized,
executed and delivered by the Company.
(i) There are no material legal or governmental
proceedings pending or, to the
knowledge of the Company, threatened, against the Company or any of the
Significant Subsidiaries, or to which the Company or any of the
Significant Subsidiaries, or to which any of their respective
properties is subject, that are required to be described in the
Registration Statement or the Prospectus but are not described as
required, and there are no material agreements, contracts, indentures,
leases or other instruments that are required to be described in the
Registration Statement or the Prospectus or to be filed as an exhibit
to the Registration Statement or any Incorporated Document that are not
described or filed as required by the Act or the Exchange Act.
(j) Neither the Company nor any of the Significant
Subsidiaries is (i) in violation of its certificate or articles of
incorporation or bylaws or certificates or agreements of limited
partnership, limited liability company or other organizational
documents, or (ii) in violation of any law, ordinance, administrative
or governmental rule or regulation applicable to the Company or the
Significant Subsidiaries or of any decree of any court or governmental
agency or body having jurisdiction over the Company or the Significant
Subsidiaries, or (iii) in default in the performance of any obligation,
agreement or condition contained in any bond, debenture, note or any
other evidence of indebtedness or in any agreement, indenture, lease or
other instrument to which the Company or any of the Significant
Subsidiaries is a party or by which any of them or any of their
respective properties is bound (collectively, "COMPANY AGREEMENTS"),
except, with respect to clauses (ii) and (iii) above, for any defaults
which, singly or in the aggregate, would not have a Material Adverse
Effect.
(k) Neither the issuance and sale of the Shares, the
execution, delivery or performance of this Agreement by the Company nor
the consummation by the Company of the transactions contemplated hereby
(i) requires any consent, approval, authorization or other order of or
registration or filing with, any court, regulatory body, administrative
agency or other governmental body, agency or official (except such as
may be required for compliance with the securities or Blue Sky or real
estate syndication laws of various jurisdictions, all of which have
been or will be effected in accordance with this Agreement) or
conflicts with, or constitutes a breach of, or a default under, the
certificate or articles of incorporation or bylaws or certificates or
agreements of limited partnership, limited liability company or other
organizational documents of the Company or the Significant Subsidiaries
or (ii) conflicts with or constitutes a breach of, or a default under,
any Company Agreement or violates any statute, law, regulation or
filing or judgment, injunction, order or decree applicable to the
Company or the Significant Subsidiaries or any of their respective
properties, or will result in the creation or imposition of any Lien
upon any property or assets of the Company or the Significant
Subsidiaries pursuant to the terms of any Company Agreement, except,
with respect to clauses (i) and (ii) above, as would not, singly or in
the aggregate, have a Material Adverse Effect.
(l) Ernst & Young LLP, who have certified the financial
statements included or incorporated by reference in the Registration
Statement and the Prospectus (or any the amendment or supplement
thereto), are independent public accountants with respect to the
Company as required by the Act.
(m) The financial statements, together with related
schedules and notes, of the Company and of any properties acquired by
the Company included or incorporated by reference in the Registration
Statement and the Prospectus (and any amendment or supplement thereto),
present fairly (i) the consolidated financial position, results of
operations and cash flows of the Company and its subsidiaries and (ii)
revenues and certain expenses of the properties acquired by the
Company, as the case may be, on the basis stated in the Registration
Statement (or in the document incorporated by reference) 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 (and any amendment or supplement thereto) are accurately
presented and prepared on a basis consistent with such financial
statements and the books and records (i) of the Company and its
subsidiaries or (ii) the properties acquired by the Company, as the
case may be.
(n) Except as disclosed in or contemplated by the
Registration Statement and the Prospectus (or any amendment or
supplement thereto), subsequent to the respective dates as of which
such information is given in the Registration Statement and the
Prospectus (or any amendment or supplement thereto), neither the
Company nor any of the Significant Subsidiaries has incurred any
liability or obligation, direct or contingent, or entered into any
transaction, not in the ordinary course of business, that is material
to the Company and the Significant Subsidiaries taken as a whole, and
there has not been any change in (or repurchase or declaration of
dividends or distributions on) the capital stock, or material increase
in the short-term debt or long-term debt, of the Company or any of the
Significant Subsidiaries, or any material adverse change, or any
development involving or which may reasonably be expected to involve, a
prospective material adverse change, in the business, properties,
results of operations or financial condition of the Company and the
Significant Subsidiaries taken as a whole.
(o) To the best of the Company's knowledge, the Company
and each Significant Subsidiary (i) is in compliance with all
applicable federal and state laws and regulations relating to the
protection of human health and safety, the environment or hazardous or
toxic substances or wastes, pollutants or contaminants ("ENVIRONMENTAL
LAWS"), (ii) has received all permits, licenses or other approvals
required of them under applicable Environmental Laws to conduct their
respective businesses and (iii) is in compliance with all terms and
conditions of any such permit, license or approval, except, with
respect to clauses (i), (ii) and (iii) above, where such noncompliance
with Environmental Laws, failure to receive required permits, licenses
or other approvals or failure to comply with the terms and conditions
of such permits, licenses or approvals are otherwise disclosed in the
Prospectus or would not, singly or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
(p) There are no costs or liabilities associated with
Environmental Laws (including, without limitation, any capital or
operating expenditures required for clean-
up, closure of properties or compliance with Environmental Laws or any
permit, license or approval, any related constraints on operating
activities and any potential liabilities to third parties or in
connection with off-site disposal of hazardous substances) that would,
singly or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
(q) (i) Except as set forth in the Registration Statement
and Prospectus, the Company and the Significant Subsidiaries have good
and marketable title to all property described in the Registration
Statement and Prospectus as owned by them which is material to the
business of the Company and the Significant Subsidiaries, and (ii) any
real property and buildings described in the Registration Statement and
Prospectus as held under lease by the Company and the Significant
Subsidiaries are held under valid, subsisting and enforceable leases
with such exceptions as are not material and do not interfere with the
use made and proposed to be made of such property and buildings by the
Company and the Significant Subsidiaries, in each case except as
described in the Registration Statement and the Prospectus or as would
not reasonably be expected, singly or in the aggregate, to have a
Material Adverse Effect.
(r) The Company and the Significant Subsidiaries self
insure or maintain insurance with insurers of recognized financial
responsibility against such losses and risks and in such amounts as are
generally deemed adequate for their respective businesses and
consistent with coverage maintained by similar companies in the
businesses in which they are engaged; and neither the Company nor any
Significant Subsidiary has any reason to believe that it will not be
able to renew its insurance coverage as and when such coverage expires
or to obtain similar coverage from similar insurers as may be necessary
to continue its business at a cost that would not have a Material
Adverse Effect.
(s) To the best of the Company's knowledge, (i) the
Company and each of the Significant Subsidiaries has such permits,
licenses, franchises and authorizations of governmental or regulatory
authorities ("PERMITS") as are necessary to own its respective
properties and to conduct its business in the manner described in the
Prospectus, subject to such qualifications as may be set forth in the
Prospectus, (ii) the Company and each of the Significant Subsidiaries
has fulfilled and performed all its obligations with respect to such
permits and no event has occurred which allows, or after notice or
lapse of time would allow, revocation or termination thereof or results
in any other impairment of the rights of the holder of any such permit,
subject in each case to such qualification as may be set forth in the
Prospectus, and (iii) except as described in the Prospectus, none of
such permits contains any restriction that is materially burdensome to
the Company or any of the Significant Subsidiaries, except, with
respect to clauses (i) and (ii) above, for any such failure to obtain
permits or failure to fulfill or perform obligations, or the occurrence
of events, that would not, singly or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
(t) The Company and each of the Significant Subsidiaries
has filed all federal and state tax returns required to be filed and
have paid all taxes shown thereon as due and there is no tax deficiency
that has been, or to the knowledge of the Company, is
threatened to be, asserted that could reasonably be expected to have a
Material Adverse Effect.
(u) The Company and the Significant Subsidiaries are not
now, and after the sale of the Shares to be sold hereunder and
application of the net proceeds from such sale as described in the
Prospectus Supplement under the caption "Use of Proceeds," none of them
will be, an "investment company" or an entity "controlled" by an
"investment company" as such terms are defined in the Investment
Company Act of 1940, as amended.
(v) The Company has been organized and operated in a
manner so as to qualify as a REIT under Sections 856 through 860 of the
Code and expects to continue to be organized and to operate in a manner
so as to qualify as a REIT in the taxable year ending December 31, 2001
and succeeding taxable years.
(w) The Shares have been listed on the New York Stock
Exchange.
3. OPINIONS OF COUNSEL. The Company agrees that any opinions of
counsel or comfort or similar letters delivered to the Agent under the terms of
the Purchase Agreement also will be addressed to McDonald.
4. INDEMNITY AND CONTRIBUTION. (a) The Company will indemnify and
hold harmless McDonald against any losses, claims, damages or liabilities, joint
or several, to which it may become subject, under the Act or otherwise, insofar
as such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon an untrue statement of a material fact contained
in the Registration Statement or the Prospectus, or any amendment or supplement
thereto, or arise out of or are based upon the omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and will reimburse McDonald for any legal or other
expenses reasonably incurred by it in connection with investigating or defending
any such action or claim as such expenses are incurred; provided, however, that
the Company shall not be liable in any such case to the extent that any such
loss, claim, damage or liability arises out of or is based upon an untrue
statement or omission made in the Registration Statement or the Prospectus or
any such amendment or supplement in reliance upon and in conformity with written
information furnished to the Company by McDonald expressly for use therein.
(b) McDonald will indemnify and hold harmless the Company
against any losses, claims, damages or liabilities to which the Company may
become subject, under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon an untrue statement of a material fact contained in the Registration
Statement or the Prospectus, or any amendment or supplement thereto, or arise
out of or are based upon the omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
in each case to the extent, but only to the extent, that such untrue statement
or omission was made in the Registration Statement or the Prospectus or any such
amendment or supplement in reliance upon and in conformity with written
information furnished to the Company by McDonald expressly for use therein; and
will reimburse the Company for any legal or other expenses reasonably incurred
by the Company in
connection with investigating or defending any such action or claim as such
expenses are incurred.
(c) Promptly after receipt by an indemnified party under
subsection (a) or (b) above of notice of the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made against the
indemnifying party under such subsection, notify the indemnifying party in
writing of the commencement thereof; but the omission so to notify the
indemnifying party shall not relieve it from any liability which it may have to
any indemnified party otherwise than under such subsection. In case any such
action shall be brought against any indemnified party and it shall notify the
indemnifying party of the commencement thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it shall wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel satisfactory to such indemnified party (who shall not,
except with the consent of the indemnified party, be counsel to the indemnifying
party), and, after notice from the indemnifying party to such indemnified party
of its election so to assume the defense thereof, the indemnifying party shall
not be liable to such indemnified party under such subsection for any legal
expenses of other counsel or any other expenses, in each case subsequently
incurred by such indemnified party, in connection with the defense thereof other
than reasonable costs of investigation. No indemnifying party shall, without the
written consent of the indemnified party, effect the settlement or compromise
of, or consent to the entry of any judgment with respect to, any pending or
threatened action or claim in respect of which indemnification or contribution
may be sought hereunder (whether or not the indemnified party is an actual or
potential party to such action or claim) unless such settlement, compromise or
judgment (i) includes an unconditional release of the indemnified party from all
liability arising out of such action or claim and (ii) does not include a
statement as to or an admission of fault, culpability or a failure to act, by or
on behalf of any indemnified party.
(d) If the indemnification provided for in this agreement
is unavailable to or insufficient to hold harmless an indemnified party under
subsection (a) or (b) in respect of any losses, claims, damages or liabilities
(or actions in respect thereof) referred to therein, then each indemnifying
party shall contribute to the amount paid or payable by such indemnified party
as a result of such losses, claims, damages or liabilities (or actions in
respect thereof) in such proportion as is appropriate to reflect the relative
benefits received by the Company on the one hand and McDonald on the other from
the offering of the Shares. If, however, the allocation provided by the
immediately preceding sentence is not permitted by applicable law or if the
indemnified party failed to give the notice required under subsection (c) above,
then each indemnifying party shall contribute to such amount paid or payable by
such indemnified party in such proportion as is appropriate to reflect not only
such relative benefits but also the relative fault of the Company on the one
hand and McDonald on the other in connection with the statements or omissions
which resulted in such losses, claims, damages or liabilities (or actions in
respect thereof), as well as any other relevant equitable considerations.
Notwithstanding the provisions of this subsection (d), McDonald shall not be
required to contribute any amount in excess of the amount by which the total
price at which the Shares underwritten by it and distributed to the public were
offered to the public exceeds the amount of any damages which McDonald has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation
(within the meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
5. RECORD DATE. McDonald acknowledges that April 6, 2001 is the
record date for a dividend on the Common Stock previously declared by the Board
of Directors of the Company, and that the Company shall have no liability to
McDonald, the Agent or any of the Specified Clients for its or their failure to
receive such dividend unless the same is attributable to the Company's failure
to perform or delay in performing its responsibilities under the Purchase
Agreement or this Agreement.
6. PUBLICITY. McDonald shall not advertise or publicly announce
any of the transactions covered by this agreement or the Purchase Agreement
without the prior written consent of the Company.
7. MISCELLANEOUS PROVISIONS Except to the extent set forth in
paragraph 3 hereof, each party hereto shall bear its own expenses in connection
with the proposed offering, whether or not the offering closes. It is understood
that the expenses referred to in Section 7 of the Purchase Agreement shall be
the sole responsibility of the Company. This agreement is solely for the benefit
of McDonald and the Company and their respective legal representatives,
successors and assigns, and no other person shall acquire or have any right
under or by virtue of this agreement.
This agreement may not be amended or modified except in
writing and shall be governed by and construed in accordance with the laws of
the State of New York, without regard to principles of conflicts of laws.
If this letter accurately sets forth the understanding between
us, please sign the enclosed copy of this letter below and return it to
McDonald, at which time this letter will become a mutually binding obligation.
Very truly yours,
McDONALD INVESTMENTS INC.
By:
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Its:
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Agreed to as of the above date:
ALEXANDRIA REAL ESTATE
EQUITIES, INC.
By:
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Its:
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SCHEDULE 1: SUBSIDIARIES
ENTITY NAME STATE OF FORMATION INTERESTS
Alexandria Real Estate Equities, Inc. ("AREE") MD publicly traded NYSE
Alexandria Real Estate Equities, L.P. ("ARE, LP") DE 1% GP: QRS
1% LP QRS
98% LP: AREE
AREE-HOLDINGS, L.P. ("Holdings") DE 1% GP: ARE-GP
99% LP: ARE, LP
ARE-GP HOLDINGS QRS CORP. ("ARE-GP") DE 100% AREE
ARE-QRS Corp. ("QRS") MD 100% AREE