EXHIBIT 1.1
2,000,000
PENNSYLVANIA REAL ESTATE INVESTMENT TRUST
Shares of Beneficial Interest
UNDERWRITING AGREEMENT
July 10, 2001
LEHMAN BROTHERS INC.
Three World Financial Center
New York, New York 10285
Dear Sirs:
Pennsylvania Real Estate Investment Trust, an unincorporated
association in business trust form created under Pennsylvania law pursuant to a
Trust Agreement (the "Trust"), proposes to sell 2,000,000 shares (the "Firm
Shares") of the Trust's Shares of Beneficial Interest, par value $1.00 per
share, together with associated rights. In addition, the Trust proposes to grant
to Lehman Brothers Inc. (the "Underwriter") an option to purchase up to an
additional 300,000 Shares of Beneficial Interest on the terms and for the
purposes set forth in Section 2 (the "Option Shares"). The Firm Shares and the
Option Shares, if purchased, are hereinafter collectively called the "Shares."
This is to confirm the agreement between the Trust, PREIT Associates, L.P. (the
"Operating Partnership") and the Underwriter (the "Underwriter") concerning the
purchase of the Shares from the Trust by the Underwriter.
1. Representations, Warranties and Agreements of the Trust and the
Operating Partnership. The Trust and the Operating Partnership, jointly and
severally, represent, warrant and agree that:
(a) A registration statement on Form S-3 (Registration No.
033-61115) with respect to the Shares has (i) been prepared by the
Trust in conformity with the requirements of the United States
Securities Act of 1933, as amended (the "Securities Act") and the
rules and regulations (the "Rules and Regulations") of the United
States Securities and Exchange Commission (the "Commission")
thereunder, (ii) been filed with the Commission under the Securities
Act and (iii) become effective under the Securities Act. Copies of
such registration statement have been delivered by the Trust to you,
as the Underwriter. As used in this Agreement, "Effective Time" means
the date and the time as of which such registration statement, or the
most recent post-effective amendment thereto, if any, was declared
effective by the Commission; "Effective Date" means the date of the
Effective Time; "Preliminary Prospectus" means each prospectus
included in such registration statement, before it became effective
under the Securities Act and any prospectus filed with the Commission
by the Trust with the consent of the Underwriter pursuant to Rule
424(a) of the Rules and Regulations; "Registration Statement" means
such registration statement, as amended at the Effective Time,
including any documents incorporated by reference therein at such time
and all information contained in the final prospectus filed with the
Commission pursuant to Rule 424(b) of the Rules and Regulations in
accordance with Section 3 hereof and "Prospectus" means such final
prospectus, as first filed with the Commission pursuant to paragraph
(1) or (4) or (5) of Rule 424(b) of the Rules and Regulations.
Reference made herein to any Preliminary Prospectus or to the
Prospectus shall be deemed to refer to and include any documents
incorporated by reference therein pursuant to Item 12 of Form S-3
under the Securities Act, as of the date of such Preliminary
Prospectus or the Prospectus, as the case may be, and any reference to
any amendment or supplement to any Preliminary Prospectus or the
Prospectus shall be deemed to refer to and include any document filed
under the United States Securities Exchange Act of 1934 (the "Exchange
Act") after the date of such Preliminary Prospectus or the Prospectus,
as the case may be, and incorporated by reference in such Preliminary
Prospectus or the Prospectus, as the case may be; and any reference to
any amendment to the Registration Statement shall be deemed to include
any annual report of the Trust filed with the Commission pursuant to
Section 13(a) or 15(d) of the Exchange Act after the Effective Time
that is incorporated by reference in the Registration Statement. The
Commission has not issued any order preventing or suspending the use
of any Preliminary Prospectus.
(b) The Registration Statement conforms, and the Prospectus and
any further amendments or supplements to the Registration Statement or
the Prospectus will, when they become effective or are filed with the
Commission, as the case may be, conform in all respects to the
requirements of the Securities Act and the Rules and Regulations and
do not and will not, as of the applicable effective date (as to the
Registration Statement and any amendment thereto) and as of the
applicable filing date (as to the Prospectus and any amendment or
supplement thereto) 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; provided that
no representation or warranty is made as to information contained in
or omitted from the Registration Statement or the Prospectus in
reliance upon and in conformity with written information furnished to
the Trust by or on behalf of the Underwriter specifically for
inclusion therein.
(c) The documents incorporated by reference in the Prospectus,
when they became effective or were filed with the Commission, as the
case may be, as amended through the date hereof, conformed in all
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material respects to the requirements of the Securities Act or the
Exchange Act, as applicable, and the rules and regulations of the
Commission thereunder, and none of such documents 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; and any further documents so filed and
incorporated by reference in the Prospectus, when such documents
become effective or are filed with Commission, as the case may be,
will conform in all material respects to the requirements of the
Securities Act, or the Exchange Act, as applicable, and the rules and
regulations of the Commission thereunder 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.
(d) The Trust, the Operating Partnership and each of their
subsidiaries (as defined in Section 15 herein) have been duly formed
and are validly existing as unincorporated business associations
(whether in trust form or otherwise), limited liability companies,
limited partnerships or corporations, as the case may be, in good
standing under the laws of their respective jurisdictions of
formation, are duly qualified to do business and are in good standing
as foreign unincorporated business associations (including in trust
form or otherwise), limited liability companies, limited partnerships
or corporations, as the case may be, in each jurisdiction in which
their respective ownership or lease of property or the conduct of
their respective businesses requires such qualification, and have all
power and authority necessary to own or hold their respective
properties and to conduct the businesses in which they are engaged;
and none of the subsidiaries of the Trust (other than the Operating
Partnership) is a "significant subsidiary," as such term is defined in
Rule 405 of the Rules and Regulations.
(e) The Trust has an authorized capitalization as set forth in
the Prospectus, and all of the issued shares of beneficial interest of
the Trust have been duly and validly authorized and issued, are fully
paid and non-assessable and conform to the description thereof
contained in the Prospectus;
(f) All of the issued shares of beneficial interest, limited
liability company membership interests, partnership interests and
shares of capital stock, as the case may be, of each subsidiary of the
Trust have been duly and validly authorized and issued and are fully
paid and non-assessable and (except for directors' qualifying shares
and except as set forth in the Prospectus) are owned directly or
indirectly by the Trust, free and clear of all liens, encumbrances,
equities or claims.
(g) The unissued Shares to be issued and sold by the Trust to the
Underwriter hereunder have been duly and validly authorized and, when
issued and delivered against payment therefor as provided herein, will
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be duly and validly issued, fully paid and non-assessable; and the
Shares will conform to the description thereof contained in the
Prospectus.
(h) This Agreement has been duly authorized, executed and
delivered by each of the Trust and the Operating Partnership.
(i) The execution, delivery and performance of this Agreement by
each of the Trust and the Operating Partnership and the consummation
of the transactions contemplated hereby will not conflict with or
result in a breach or violation of any of the terms or provisions of,
or constitute a default under, any indenture, mortgage, deed of trust,
loan agreement or other agreement or instrument to which the Trust,
the Operating Partnership or any of their subsidiaries is a party or
by which the Trust, the Operating Partnership or any of their
subsidiaries is bound or to which any of the property or assets of the
Trust, the Operating Partnership or any of their subsidiaries is
subject, nor will such actions result in any violation of the
provisions of the trust agreement, charter, bylaws, limited liability
company agreement or limited partnership agreement of the Trust, the
Operating Partnership or any of their subsidiaries or any statute or
any order, rule or regulation of any court or governmental agency or
body having jurisdiction over the Trust, the Operating Partnership or
any of their subsidiaries or any of their properties or assets; and
except for the registration of the Shares under the Securities Act and
such consents, approvals, authorizations, registrations or
qualifications as may be required and have been obtained under the
Exchange Act and applicable state securities laws in connection with
the purchase and distribution of the Shares by the Underwriter, no
consent, approval, authorization or order of, or filing or
registration with, any such court or governmental agency or body is
required for the execution, delivery and performance of this Agreement
by the Trust and the Operating Partnership and the consummation of the
transactions contemplated hereby.
(j) Except as disclosed in the Prospectus, there are no
contracts, agreements or understandings between the Trust and any
person granting such person the right, other than rights which have
been waived or satisfied, to require the Trust to file a registration
statement under the Securities Act with respect to any securities of
the Trust owned or to be owned by such person or to require the Trust
to include such securities in the securities registered pursuant to
the Registration Statement or in any securities being registered
pursuant to any other registration statement filed by the Trust under
the Securities Act.
(k) Except as described in the Prospectus, the Trust has not sold
or issued any Shares during the six-month period preceding the date of
the Prospectus, including any sales pursuant to Rule 144A, or
Regulations D or S under the Rules and Regulations, other than shares
issued pursuant to employee benefit plans, qualified or non-qualified
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share options plans for officers, employees, or trustees or other
employee compensation plans or pursuant to outstanding options, rights
or warrants.
(l) Neither the Trust, the Operating Partnership nor any of their
subsidiaries has sustained, since the date of the latest audited
financial statements included or incorporated by reference in the
Prospectus, any material loss or interference with its business from
fire, explosion, flood or other calamity, whether or not covered by
insurance, or from any labor dispute or court or governmental action,
order or decree, otherwise than as set forth or contemplated in the
Prospectus; and, since such date, there has not been any change in the
equity or long-term debt of the Trust (other than an increase of
approximately $4.3 million in connection with the refinancing of a
mortgage relating to the Countrywood Apartments on May 16, 2001), the
Operating Partnership or any of their subsidiaries or any material
adverse change, or any development involving a prospective material
adverse change, in or affecting the general affairs, management,
financial position, shareholders' equity or results of operations of
the Trust, the Operating Partnership and their subsidiaries, otherwise
than as set forth or contemplated in the Prospectus.
(m) The financial statements (including the related notes and
supporting schedules) filed as part of the Registration Statement or
included or incorporated by reference in the Prospectus present fairly
the financial condition and results of operations of the entities
purported to be shown thereby, at the dates and for the periods
indicated, and have been prepared in conformity with generally
accepted accounting principles applied on a consistent basis
throughout the periods involved, and all adjustments necessary for a
fair presentation of results for such periods have been made. Other
than the historical financial statements (and schedules) included
therein, no other historical financial statements (or schedules) are
required by the Securities Act or the Rules and Regulations to be
included in the Registration Statement.
(n) Arthur Anderson LLP, who have certified certain financial
statements included or incorporated reference in the Prospectus, whose
reports appear in the Prospectus or are incorporated by reference
therein and who have delivered the initial letter referred to in
Section 7(f) hereof, are independent public accountants as required by
the Securities Act and the Rules and Regulations.
(o) (i) The Trust, the Operating Partnership and each of their
subsidiaries, have good and marketable title in fee simple to all real
property and own all personal property in each case owned by them, in
each case free and clear of all liens, encumbrances and defects except
such as are described in the Prospectus or such as do not materially
affect the value of such property and do not materially interfere with
the use made and proposed to be made of such property by the Trust,
the Operating Partnership and their subsidiaries; and (ii) all real
property, buildings and personal property held under lease by the
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Trust, the Operating Partnership and their subsidiaries are held by
them under valid, existing and enforceable leases in each case free
and clear of all liens, encumbrances and defects with such exceptions
as are not material and do not materially interfere with the use made
and proposed to be made of such property and buildings by the Trust,
the Operating Partnership and their subsidiaries.
(p) Except as described in the Prospectus, the Trust, the
Operating Partnership and each of their subsidiaries carry, or are
covered by, insurance (including title and environmental insurance) in
such amounts and covering such risks as is adequate for the conduct of
their respective businesses and the value of their respective
properties and as is customary for organizations engaged in similar
businesses in similar industries.
(q) The Trust, the Operating Partnership and each of their
subsidiaries own or possess adequate rights to use all trademarks,
service marks, trade names, trademark registrations, service mark
registrations, copyrights and licenses necessary for the conduct of
their respective businesses and have no reason to believe that the
conduct of their respective businesses will conflict with, and have
not received any notice of any claim of conflict with, any such rights
of others.
(r) There are no legal or governmental proceedings pending to
which the Trust, the Operating Partnership or any of their
subsidiaries is a party or of which any property or assets of the
Trust, the Operating Partnership or any of their subsidiaries is the
subject which, if determined adversely to any of them might have a
material adverse effect on the consolidated financial position,
shareholders' equity, results of operations, business or prospects of
the Trust, the Operating Partnership and their subsidiaries ("Material
Adverse Effect"); and to the best of the Trust's and the Operating
Partnership's knowledge, no such proceedings are threatened or
contemplated by governmental authorities or threatened by others.
(s) The conditions for use of Form S-3, as set forth in the
General Instructions thereto, have been satisfied.
(t) There are no contracts or other documents which are required
to be described in the Prospectus or filed as exhibits to the
Registration Statement by the Securities Act or by the Rules and
Regulations which have not been described in the Prospectus or filed
as exhibits to the Registration Statement or incorporated therein by
reference as permitted by the Rules and Regulations.
(u) No relationship, direct or indirect, exists between or among
the Trust or the Operating Partnership on the one hand, and the
trustees, officers, shareholders (in the case of the Trust), limited
partners (in the case of the Operating Partnership), customers or
suppliers of the Trust or the Operating Partnership on the other hand,
which is required to be described in the Prospectus and which is not
so described.
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(v) No labor disturbance by the employees of the Trust, the
Operating Partnership or their subsidiaries exists or, to the
knowledge of the Trust, is imminent, which might be expected to have a
Material Adverse Effect.
(w) Each of the Trust, the Operating Partnership and their
subsidiaries is in compliance in all material respects with all
presently applicable provisions of the Employee Retirement Income
Security Act of 1974, as amended, including the regulations and
published interpretations thereunder ("ERISA"), and the Internal
Revenue Code of 1986, as amended, including the regulations and
published interpretations thereunder (the "Code"); no "reportable
event" (as defined in ERISA) has occurred with respect to any "pension
plan" (as defined in ERISA) for which the Trust, the Operating
Partnership or their subsidiaries would have any liability; neither
the Trust nor the Operating Partnership has incurred or expects to
incur liability under (i) Title IV of ERISA with respect to
termination of, or withdrawal from, any "pension plan" or (ii)
Sections 412 or 4971 of the Code; each "pension plan" for which the
Trust or the Operating Partnership would have any liability that is
intended to be qualified under Section 401(a) of the Code is so
qualified in all material respects and nothing has occurred, whether
by action or by failure to act, which would cause the loss of such
qualification; and none of the Trust, the Operating Partnership, or
their subsidiaries has sought a waiver or the minimum funding standard
under Section 412 of the Code with respect to any pension plan.
(x) Each of the Trust, the Operating Partnership and their
subsidiaries has filed all federal, state and local income and
franchise tax returns required to be filed through the date hereof and
has paid all taxes due thereon (except for the filing of franchise or
similar tax returns which may require franchise or similar taxes to be
paid by the Trust, the Operating Partnership or any of their
subsidiaries in an aggregate amount up to $20,000), and for taxes
being contested in good faith), and no tax deficiency has been
determined adversely to the Trust, the Operating Partnership or any of
their subsidiaries which has had nor does the Trust or the Operating
Partnership have any knowledge of any tax deficiency which, if
determined adversely to the Trust, the Operating Partnership or any of
their subsidiaries, might have a Material Adverse Effect.
(y) Since the date as of which information is given in the
Prospectus through the date hereof, and except as may otherwise be
disclosed in the Prospectus, neither the Trust nor the Operating
Partnership has (i) issued or granted any securities, (ii) incurred
any liability or obligation, direct or contingent, other than
liabilities and obligations which were incurred in the ordinary course
of business, (iii) entered into any transaction not in the ordinary
course of business or (iv) declared or paid any distribution on their
beneficial shares or partnership interests.
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(z) Each of the Trust, the Operating Partnership and their
subsidiaries (i) makes and keeps accurate books and records and (ii)
maintains internal accounting controls which provide reasonable
assurance that (A) transactions are executed in accordance with
management's authorization, (B) transactions are recorded as necessary
to permit preparation of their financial statements and to maintain
accountability for their assets, (C) access to their assets is
permitted only in accordance with management's authorization and (D)
the reported accountability for their assets is compared with existing
assets at reasonable intervals.
(aa) Neither the Trust, the Operating Partnership nor any of
their subsidiaries (i) is in violation of its trust agreement,
charter, limited liability company agreement, limited partnership
agreement or bylaws, as the case may be, (ii) is in default in any
respect, and no event has occurred which, with notice or lapse of time
or both, would constitute such a default, in the due performance or
observance of any term, covenant or condition contained in any
indenture, mortgage, deed of trust, loan agreement or other agreement
or instrument to which it is a party or by which it is bound or to
which any of its properties or assets is subject or (iii) is in
violation in any respect of any law, ordinance, governmental rule,
regulation or court decree to which it or its property or assets may
be subject or has failed to obtain any material license, permit,
certificate, franchise or other governmental authorization or permit
necessary to the ownership of their property or to the conduct of
their business, except in the cases of clauses (ii) and (iii) for such
matters as would not, individually or in the aggregate, have a
Material Adverse Effect.
(bb) Neither the Trust, the Operating Partnership, any of their
subsidiaries, nor any trustee, director, officer, agent, employee or
other person associated with or acting on behalf of them has used any
trust, corporate, company or partnership funds for any unlawful
contribution, gift, entertainment or other unlawful expense relating
to political activity; made any direct or indirect unlawful payment to
any foreign or domestic government official or employee from trust,
corporate, company or partnership funds; violated or is in violation
of any provision of the Foreign Corrupt Practices Act of 1977; or made
any bribe, rebate, payoff, influence payment, kickback or other
unlawful payment.
(cc) Except as disclosed in the Prospectus, (i) there has been no
storage, disposal, generation, use, manufacture, refinement,
transportation, handling, treatment, installation or Release of
Hazardous Substances or other act or omission by the Trust, the
Operating Partnership or any of their subsidiaries or any other person
at, upon, under or from any of the property now or previously owned,
operated or leased, or any of the property for which there is an
option to own, operate or lease, by the Trust, the Operating
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Partnership or any of their subsidiaries (collectively, the
"Properties") in violation of any Applicable Law or which could result
in liability or require Remedial Action under any Applicable Law,
except for any violation, liability or Remedial Action which would
not, singularly or in the aggregate with all such violations and
Remedial Actions, have a Material Adverse Effect; and (ii) there has
been no Release onto such Properties or into the environment
surrounding such Properties, except for any such Release which would
not, singularly or in the aggregate with all such Releases, have a
Material Adverse Effect. No underground storage tanks, PCBs, asbestos,
lead-based paint, wetlands, fill, landfills or other areas used for
the disposal of solid or hazardous waste are located on or in any of
the properties owned, operated or leased by the Trusts, except as
would not have a Material Adverse Effect. For purposes of this
section, the following definitions shall apply: the term "Hazardous
Substances" shall mean wastes, substances, radiation, or materials
(whether solids, liquids or gases): (A) which are hazardous, toxic,
infectious, explosive, radioactive, or carcinogenic; (B) which are or
become defined as "pollutants," "contaminants," "hazardous materials,"
"hazardous wastes," "hazardous substances," "toxic substances,"
"radioactive materials," "solid wastes," or other similar designations
in, or otherwise subject to regulation under, any Applicable Laws; (C)
the presence of which on the Properties cause or threaten to cause a
nuisance pursuant to applicable statutory or common law upon the
Properties or adjacent properties; (D) which contain without
limitation polychlorinated biphenyls (PCBs), asbestos or
asbestos-containing materials, lead-based paints, urea-formaldehyde
foam insulation, or petroleum or petroleum products (including,
without limitation, crude oil or any fraction thereof); or (E) which
pose a hazard to human health, safety, natural resources, employees,
or the environment; the term "Applicable Law" shall mean any
applicable federal, state and local statutes, laws, ordinances,
regulations, rules, resolutions, orders, determinations, writs,
injunctions, common law rulings, awards (including, without
limitation, awards of any arbitrator), judgments and decrees; the term
"Release" shall mean the presence of Hazardous Substances at, or any
threatened or actual emission, spill, seepage, leak, escape, leaching,
discharge, injection, pumping, pouring, emptying, dumping, disposal,
migration, or release of Hazardous Substances into or upon the
environment, including the air, soil, improvements, surface water,
groundwater, the sewer, septic system, storm drain, publicly owned
treatment works, or waste treatment, storage, or disposal systems; and
the term "Remedial Action" shall mean any investigation, clean-up,
removal action, remedial action, restoration, repair, response action,
corrective action, monitoring, sampling and analysis, installation,
reclamation, closure, or post-closure in connection with a Release.
(dd) Neither the Trust, the Operating Partnership nor any
subsidiary is an "investment company" within the meaning of such term
under the Investment Company Act of 1940, as amended, and the rules
and regulations of the Commission thereunder.
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(ee) Except as described in the Prospectus, the Operating
Partnership is not currently prohibited, directly or indirectly, from
paying any distributions to the Trust to the extent permitted by
applicable law, from making any other distribution on the Operating
Partnership's partnership interest, from repaying to the Trust any
loans or advances to the Operating Partnership from the Trust or from
transferring any of the Operating Partnership's property or assets to
the Trust.
(ff) The Trust is and has been organized in conformity with the
requirements for qualification as a real estate investment trust
("REIT") under the Code, has qualified as a REIT for each taxable year
since its formation, and its proposed method of operation and capital
structure will enable it to continue to meet the requirements for
qualification and taxation as a REIT under the Code. All statements in
the Prospectus regarding the Trust's qualification as a REIT are true,
complete and correct in all material respects.
2. Purchase of the Shares by the Underwriter. On the basis of the
representations and warranties contained in, and subject to the terms and
conditions of, this Agreement, the Trust agrees to sell 2,000,000 Firm Shares to
the Underwriter and the Underwriter agrees to purchase 2,000,000 Firm Shares
from the Trust.
In addition, the Trust grants to the Underwriter an option to purchase
up to 300,000 Option Shares. Such option is granted solely for the purpose of
covering over-allotments in the sale of the Firm Shares and is exercisable as
provided in Section 4 hereof.
The Trust shall not be obligated to deliver any of the Shares to be
delivered on the First Delivery Date or the Second Delivery Date (as hereinafter
defined), as the case may be, except upon payment for all the Shares to be
purchased on such Delivery Date as provided herein.
3. Offering of Shares by the Underwriter.
The Underwriter proposes to offer the Firm Shares for sale upon the
terms and conditions set forth in the Prospectus.
4. Delivery of and Payment for the Shares. Delivery of and payment for
the Firm Shares shall be made at the office of Hogan & Hartson L.L.P., Columbia
Square, 555 Thirteenth Street, N.W., Washington, D.C. 20004, at 10:00 a.m., New
York City time, on the fourth full business day following the date of this
Agreement or at such other date or place as shall be determined by agreement
between the Underwriter and the Trust. This date and time are sometimes referred
to as the "First Delivery Date." On the First Delivery Date, the Trust shall
deliver or cause to be delivered the Firm Shares to Lehman Brothers Inc. through
the facilities of the Depositary Trust Company ("DTC") for the account of the
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Underwriter against payment to or upon the order of the Trust of the purchase
price in immediately available funds. Time shall be of the essence, and delivery
at the time and place specified pursuant to this Agreement is a further
condition of the obligations of the Underwriter hereunder. Upon delivery, the
Firm Shares shall be registered in such names and in such denominations as the
Underwriter shall request in writing not less than two full business days prior
to the First Delivery Date. For the purpose of expediting the checking and
packaging of the global certificates representing the Firm Shares, the Trust
shall make such certificates available for inspection by the Underwriter in New
York, New York, not later than 2:00 p.m., New York City time, on the business
day prior to the First Delivery Date.
At any time on or before the thirtieth day after the date of this
Agreement the option granted in Section 2 may be exercised by written notice
being given to the Trust by the Underwriter. Such notice shall set forth the
aggregate number of Option Shares as to which the option is being exercised, the
names in which the Option Shares are to be registered, the denominations in
which the Option Shares are to be issued and the date and time, as determined by
the Underwriter, when the Option Shares are to be delivered; provided, however,
that this date and time shall not be earlier than the First Delivery Date nor
earlier than the second business day after the date on which the option shall
have been exercised nor later than the fifth business day after the date on
which the option shall have been exercised. The date and time the Option Shares
are delivered are sometimes referred to as the "Second Delivery Date" and the
First Delivery Date and the Second Delivery Date are sometimes each referred to
as a "Delivery Date."
Delivery of and payment for the Option Shares shall be made at the
place specified in the first sentence of the first paragraph of this Section 4
(or at such other place as shall be determined by agreement between the
Underwriter and the Trust) at 10:00 a.m., New York City time, on the Second
Delivery Date. On the Second Delivery Date, the Trust shall deliver or cause to
be delivered the Option Shares to Lehman Brothers Inc. through the facilities of
DTC for the account of the Underwriter against payment to or upon the order of
the Trust of the purchase price in immediately available funds. Time shall be of
the essence, and delivery at the time and place specified pursuant to this
Agreement is a further condition of the obligation of the Underwriter hereunder.
Upon delivery, the Option Shares shall be registered in such names and in such
denominations as the Underwriter shall request in the aforesaid written notice.
For the purpose of expediting the checking and packaging of the global
certificates representing the Option Shares, the Trust shall make such
certificates available for inspection by the Underwriter in New York, New York,
not later than 2:00 p.m., New York City time, on the business day prior to the
Second Delivery Date.
5. Further Agreements of the Trust and the Operating Partnership. The
Trust and the Operating Partnership agree:
(a) To prepare the Prospectus in a form approved by the
Underwriter and to file such Prospectus pursuant to Rule 424(b) under
the Securities Act not later than Commission's close of business on
the second business day following the execution and delivery of this
Agreement or, if applicable, such earlier time as may be required by
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Rule 430A(a)(3) under the Securities Act; to make no further amendment
or any supplement to the Registration Statement or to the Prospectus
prior to the last Delivery Date except as permitted herein; to advise
the Underwriter, promptly after it receives notice thereof, of the
time when any amendment to the Registration Statement has been filed
or becomes effective or any supplement to the Prospectus or any
amended Prospectus has been filed and to furnish the Underwriter with
copies thereof; to file promptly all reports and any definitive proxy
or information statements required to be filed by the Trust with the
Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the
Exchange Act subsequent to the date of the Prospectus and for so long
as the delivery of a prospectus is required in connection with the
offering or sale of the Shares, to advise the Underwriter, promptly
after it receives notice thereof, of the issuance by the Commission of
any stop order or of any order preventing or suspending the use of any
Preliminary Prospectus or the Prospectus, of the suspension of the
qualification of the Shares for offering or sale in any jurisdiction,
of the initiation or threatening of any proceeding for any such
purpose, or of any request by the Commission for the amending or
supplementing of the Registration Statement or the Prospectus or for
additional information; and, in the event of the issuance of any stop
order or of any order preventing or suspending the use of any
Preliminary Prospectus or the Prospectus or suspending any such
qualification, to use promptly its best efforts to obtain its
withdrawal;
(b) To furnish promptly to the Underwriter and to counsel for the
Underwriter a signed copy of the Registration Statement as originally
filed with the Commission, and each amendment thereto filed with the
Commission, including all consents and exhibits filed therewith;
(c) To deliver promptly to the Underwriter such number of the
following documents as the Underwriter shall reasonably request: (i)
conformed copies of the Registration Statement as originally filed
with the Commission and each amendment thereto (in each case excluding
exhibits other than this Agreement and the computation of per share
earnings) and, (ii) each Preliminary Prospectus, the Prospectus and
any amended or supplemented Prospectus and (iii) any document
incorporated by reference in the Prospectus (excluding exhibits
thereto); and, if the delivery of a prospectus is required at any time
after the Effective Time in connection with the offering or sale of
the Shares or any other securities relating thereto and if at such
time any events shall have 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 shall be
necessary 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 the Underwriter and, upon its request, to file such document
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and to prepare and furnish without charge to each Underwriter and to
any dealer in securities as many copies as the Underwriter may from
time to time reasonably request of an amended or supplemented
Prospectus which will correct such statement or omission or effect
such compliance.
(d) To file promptly with the Commission any amendment to the
Registration Statement or the Prospectus or any supplement to the
Prospectus that may be requested by the Commission or is, in the
reasonable judgment of the Trust or the Underwriter, required by the
Securities Act;
(e) Prior to filing with the Commission, at any time on or before
the Second Delivery Date, any amendment to the Registration Statement
or supplement to the Prospectus, any document incorporated by
reference in the Prospectus or any Prospectus pursuant to Rule 424 of
the Rules and Regulations, to furnish a copy thereof to the
Underwriter and counsel for the Underwriter and afford them a
reasonable opportunity to comment on any such filing prior to the
filing thereof;
(f) For a period of five years following the Effective Date, to
furnish to the Underwriter copies of all materials furnished by the
Trust to its shareholders and all public reports and all reports and
financial statements furnished by the Trust to the principal national
securities exchange upon which the Shares may be listed pursuant to
requirements of or agreements with such exchange or to the Commission
pursuant to the Exchange Act or any rule or regulation of the
Commission thereunder;
(g) Promptly from time to time to take such action as the
Underwriter may reasonably request to qualify the Shares for offering
and sale under the securities laws of such jurisdictions as the
Underwriter may request and to comply with such laws so as to permit
the continuance of sales and dealings therein in such jurisdictions
for as long as may be necessary to complete the distribution of the
Shares, provided, that no foreign qualification of the Trust in any
jurisdiction be required in connection therewith;
(h) For a period of 90 days from the date of the Prospectus, not
to, directly or indirectly, (1) offer for sale, sell, pledge or
otherwise dispose of (or enter into any transaction or device which is
designed to, or could be expected to, result in the disposition by any
person at any time in the future of) any shares of beneficial interest
or securities convertible into or exchangeable for shares of
beneficial interest (other than (a) the shares issued upon conversion
of currently outstanding OP Units, (b) shares issued pursuant to
employee benefit plans, qualified stock option plans or other employee
compensation plans existing on the date hereof, or pursuant to
currently outstanding options, warrants or rights or as a stock bonus
(in the case of stock bonuses, not to exceed 2,000 shares in the
aggregate) or (c) any offer for sale of shares in connection with any
acquisition by the Trust or Operating Partnership of securities or
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assets of a party that is not an affiliate of the Trust or the
Operating Partnership), or sell or grant options, rights or warrants
with respect to shares of beneficial interest or securities
convertible into or exchangeable for shares of beneficial interest
(other than the grant of options pursuant to option plans existing on
the date hereof and the issuance by the Operating Partnership of OP
Units in connection with property acquisitions, provided, that such OP
Units are not redeemable prior to 90 days from the date of the
Prospectus, or (2) enter into any swap or other derivatives
transaction that transfers to another, in whole or in part, any of the
economic benefits or risks of ownership of such shares of beneficial
interest, whether any such transaction described in clause (1) or (2)
above is to be settled by delivery of shares of beneficial interest or
other securities, in cash or otherwise, in each case without the prior
written consent of Lehman Brothers Inc.; and to cause the holder(s) of
the currently outstanding Class B OP Units of the Operating
Partnership and each officer and trustee of the Trust to furnish to
the Underwriter, prior to the First Delivery Date, a letter or
letters, in form and substance satisfactory to counsel for the
Underwriter, pursuant to which each such person shall agree not to,
directly or indirectly, (1) offer for sale, sell, pledge or otherwise
dispose of (or enter into any transaction or device which is designed
to, or could be expected to, result in the disposition by any person
at any time in the future of) any shares of beneficial interest or
securities convertible into or exchangeable for shares of beneficial
interest or (2) enter into any swap or other derivatives transaction
that transfers to another, in whole or in part, any of the economic
benefits or risks of ownership of such shares of beneficial interest,
whether any such transaction described in clause (1) or (2) above is
to be settled by delivery of shares of beneficial interest or other
securities, in cash or otherwise, in each case for a period of 90 days
from the date of the Prospectus, without the prior written consent of
Lehman Brothers Inc. Notwithstanding the foregoing, any officer or
trustee of the Trust may transfer any shares of beneficial interest to
such person's spouse or children, or, in the event of any death or
disability of such officer or trustee, if the transferee of such
shares agrees in writing to be bound by the terms hereof;
(i) Prior to the Effective Date, to apply for the listing of the
Shares on the New York Share Exchange, and to complete that listing,
subject only to official notice of issuance and evidence of
satisfactory distribution, prior to the First Delivery Date;
(j) To apply the net proceeds from the sale of the Shares being
sold by the Trust as set forth in the Prospectus;
(k) To take such steps as shall be necessary to ensure that
neither the Trust, the Operating Partnership nor any subsidiary shall
become an "investment company" within the meaning of such term under
the Investment Company Act of 1940, as amended, and the rules and
regulations of the Commission thereunder.
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6. Expenses. The Trust agrees to pay (a) the costs incident to the
authorization, issuance, sale and delivery of the Shares and any taxes payable
in that connection; (b) the costs incident to the preparation, printing and
filing under the Securities Act of the Registration Statement and any amendments
and exhibits thereto; (c) the costs of distributing the Registration Statement
as originally filed and each amendment thereto and any post-effective amendments
thereof (including, in each case, exhibits), any Preliminary Prospectus, the
Prospectus and any amendment or supplement to the Prospectus or any document
incorporated by reference therein, all as provided in this Agreement; (d) any
applicable listing or other fees; (e) up to $20,000 in the aggregate in fees and
expenses of qualifying the Shares under the securities laws of the several
jurisdictions and of preparing, printing and distributing a Blue Sky Memorandum
(including related fees and expenses of counsel to the Underwriter) under this
Agreement; provided that, except as provided in this Section 6 and in Section 11
the Underwriter shall pay its own costs and expenses, including the costs and
expenses of its counsel, any stock transfer taxes on the resale of any of the
Shares by the Underwriter and the expenses of advertising any offering of the
Shares made by the Underwriter.
7. Conditions of Underwriter's Obligations. The obligations of the
Underwriter on each Delivery Date hereunder are subject to the accuracy, when
made and on each Delivery Date, of the representations and warranties of the
Trust and the Operating Partnership contained herein, to the performance by the
Trust of its obligations hereunder, and to each of the following additional
terms and conditions:
(a) The Prospectus shall have been timely filed with the
Commission in accordance with Section 5(a); no stop order suspending
the effectiveness of the Registration Statement or any part thereof
shall have been issued and no proceeding for that purpose shall have
been initiated or threatened by the Commission; and any request of the
Commission for inclusion of additional information in the Registration
Statement or the Prospectus or otherwise shall have been complied
with.
(b) No Underwriter shall have discovered and disclosed to the
Trust on or prior to such Delivery Date that the Registration
Statement or the Prospectus or any amendment or supplement thereto
contains an untrue statement of a fact which, in the opinion of Hogan
& Hartson L.L.P., counsel for the Underwriter, is material or omits to
state a fact which, in the opinion of such counsel, is material and is
required to be stated therein or is necessary to make the statements
therein not misleading.
(c) All corporate proceedings and other legal matters incident to
the authorization, form and validity of this Agreement, the Shares,
the Registration Statement and the Prospectus, and all other legal
matters relating to this Agreement and the transactions contemplated
hereby shall be reasonably satisfactory in all material respects to
counsel for the Underwriter, and the Trust shall have furnished to
such counsel all documents and information that they may reasonably
request to enable them to pass upon such matters.
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(d) Drinker Biddle & Reath LLP shall have furnished to the
Underwriter its written opinion, as counsel to the Trust and the
Operating Partnership, addressed to the Underwriter and dated such
Delivery Date, in form and substance reasonably satisfactory to the
Underwriter, to the effect that:
(i) The Trust and the Operating Partnership have been duly
organized, and each of their subsidiaries have been duly
organized, and all of the foregoing entities are validly existing
organizations in good standing under the laws of their respective
jurisdictions, are duly qualified to do business and are in good
standing in each jurisdiction listed on a schedule to the opinion
and have all power and authority necessary to own or hold their
respective properties and conduct the businesses in which they
are engaged;
(ii) The Trust has an authorized capitalization as set forth
in the Prospectus under the caption "Capitalization," and all of
the issued shares of beneficial interest of the Trust (including
the Shares being delivered on such Delivery Date) have been duly
and validly authorized and issued, are fully paid and
non-assessable and conform in all material respects to the
description thereof contained in the Prospectus; and all of the
equity interests in the Operating Partnership and each subsidiary
have been duly and validly authorized, assuming receipt of
consideration therefor as provided in the resolutions authorizing
issuance thereof of the board of directors of the Trust, as
general partner of the Operating Partnership, or by the board of
directors of such subsidiary, are fully paid and (except as set
forth in the Prospectus) are owned of record by the Trust, the
Operating Partnership or another subsidiary; and to the knowledge
of such counsel, are owned free and clear of all liens,
encumbrances, equities or claims;
(iii) There are no preemptive or other rights to subscribe
for or to purchase, nor any restriction upon the voting or
transfer of, any of the Trust's shares of beneficial interest
pursuant to the Trust's Trust Agreement or bylaws or any
agreement or other instrument known to such counsel; nor are
there any restrictions upon the voting or transfer of, any
limited partnership interests ("Units") beneficially owned by the
Trust pursuant to the Operating Partnership Agreement of Limited
Partnership or, to the knowledge of such counsel, any other
agreement or instrument to which the Operating Partnership is a
party, except those arising under the securities laws;
(iv) To the knowledge of such counsel and other than as set
forth in the Prospectus, there are no legal or governmental
proceedings pending to which the Trust, the Operating Partnership
or any of their subsidiaries is a party or of which any property
or assets of them is the subject which, if determined adversely
to the Trust, the Operating Partnership or any of their
-16-
subsidiaries, as the case may be, could reasonably be expected to
have a Material Adverse Effect; and, to the knowledge of such
counsel, no such proceedings are threatened or contemplated by
governmental authorities or threatened by others which, if
commenced, could reasonably be expected to have a Material
Adverse Effect;
(v) The Registration Statement was declared effective under
the Securities Act as of the date and time specified in such
opinion, the Prospectus was filed with the Commission pursuant to
the subparagraph of Rule 424(b) of the Rules and Regulations
specified in such opinion on the date specified therein and, to
the knowledge of such counsel, no stop order suspending the
effectiveness of the Registration Statement has been issued and
no proceeding for that purpose is pending or threatened by the
Commission;
(vi) The Registration Statement and the Prospectus and any
further amendments or supplements thereto made by the Trust prior
to such Delivery Date (other than the financial statements and
related schedules and numerical and statistical data therein, as
to which such counsel need express no opinion) comply as to form
in all material respects with the requirements of the Securities
Act and the Rules and Regulations; and the documents incorporated
by reference in the Prospectus and any further amendment or
supplement to any such incorporated document made by the Trust
prior to such Delivery Date (other than the financial statements
and related schedules and numerical and statistical data therein,
as to which such counsel need express no opinion), when they
became effective or were filed with the Commission, as the case
may be, complied as to form in all material respects with the
requirements of the Securities Act or the Exchange Act, as
applicable, and the rules and regulations of the Commission
thereunder;
(vii) The statements contained in the Prospectus under the
caption "Federal Income Tax Considerations" and "Risk
Factors--Other Risks--We may fail to qualify as a REIT and you
may incur tax liabilities as a result" insofar as they describe
federal statutes, rules and regulations, constitute a fair
summary thereof and the opinion of such counsel filed as Exhibit
8 to the Registration Statement is confirmed and the Underwriter
may rely upon such opinion as if it were addressed to them;
(viii) The Trust has been organized and has operated in
conformity with the requirements for qualification as a REIT
under the Code for each taxable year beginning with its taxable
year ended 1996 and Trust's proposed method of operation and
capital structure will enable it to continue to meet the
requirements for qualification and taxation as a REIT under the
Code;
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(ix) To the knowledge of such counsel, there are no
contracts or other documents which are required to be described
in the Prospectus or filed as exhibits to the Registration
Statement by the Securities Act or by the Rules and Regulations
which have not been described or filed as exhibits to the
Registration Statement or incorporated therein by reference as
permitted by the Rules and Regulations;
(x) This Agreement has been duly authorized, executed and
delivered by the Trust and the Operating Partnership;
(xi) The issue and sale of the Shares being delivered on
such Delivery Date by the Trust and the compliance by each of the
Trust and the Operating Partnership with all of the provisions of
this Agreement and the consummation of the transactions
contemplated hereby will not conflict with or result in a breach
or violation of any of the terms or provisions of, or constitute
a default under, any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument known to such counsel
to which the Trust, the Operating Partnership or any of their
subsidiaries is a party or by which they are bound or to which
any of the property or assets of the Trust, the Operating
Partnership or any of their subsidiaries is subject, nor will
such actions result in any violation of the provisions of the
trust agreement, charter, bylaws, limited liability company
agreement or partnership agreement of the Trust, the Operating
Partnership or any of their subsidiaries, as the case may be, or
any statute or any order, rule or regulation known to such
counsel of any court or governmental agency or body having
jurisdiction over the Trust, the Operating Partnership or any of
their subsidiaries or any of their properties or assets; and,
except for the registration of the Shares under the Securities
Act and such consents, approvals, authorizations, registrations
or qualifications as may be required and have been obtained under
the Exchange Act and applicable state securities laws in
connection with the purchase and distribution of the Shares by
the Underwriter, no consent, approval, authorization or order of,
or filing or registration with, any such court or governmental
agency or body is required for the execution, delivery and
performance of this Agreement by the Trust and the Operating
Partnership and the consummation of the transactions contemplated
hereby;
(xii) Except as described in the Prospectus, to the
knowledge of such counsel, there are no contracts, agreements or
understandings between the Trust and any person granting such
person the right to require the Trust to file a registration
statement under the Securities Act with respect to any securities
-18-
of the Trust owned or to be owned by such person or to require
the Trust to include such securities in the securities registered
pursuant to the Registration Statement or in any securities being
registered pursuant to any other registration statement filed by
the Trust under the Securities Act; and
(xiii) Neither the Trust, the Operating Partnership nor any
subsidiary is an "investment company" within the meaning of such
term under the Investment Company Act of 1940, as amended, and
the rules and regulations of the Commission thereunder.
In rendering such opinion, such counsel may (i) state that its
opinion is limited to matters governed by the Federal laws of the
United States of America, the laws of the State of Pennsylvania and
the Delaware General Corporation Law and the case law decided
thereunder; (ii) rely (to the extent such counsel deems proper and
specifies in their opinion), as to matters involving the application
of laws of other jurisdictions upon the opinion of other counsel of
good standing, provided that such other counsel is satisfactory to
counsel for the Underwriter and furnishes a copy of its opinion to the
Underwriter. Such counsel shall also have furnished to the Underwriter
a written statement, addressed to the Underwriter and dated such
Delivery Date, in form and substance satisfactory to the Underwriter,
to the effect that (x) such counsel has acted as counsel to the Trust
on a regular basis and has acted as counsel to the Trust in connection
with the preparation of the Registration Statement and the Prospectus,
and (y) based on the foregoing, no facts have come to the attention of
such counsel which lead them to believe that (I) the Registration
Statement, as of the Effective Date or as of the date hereof,
contained any 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, or that the Prospectus, as
of the date hereof or as of such Delivery Date, contained any 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, in light of the circumstances under which they
were made, not misleading or (II) any document incorporated by
reference in the Prospectus or any further amendment or supplement to
any such incorporated document made by the Trust prior to such
Delivery Date, when they became effective or were filed with the
Commission, as the case may be, contained, in the case of a
registration statement which became effective under the Securities
Act, any 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, or, in the case of other
documents which were filed under the Exchange Act with the Commission,
any untrue statement of a material fact or omitted 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. The
foregoing opinion and statement may be qualified by a statement to the
effect that such counsel does not assume any responsibility for the
accuracy, completeness or fairness of the statements contained in the
-19-
Registration Statement or the Prospectus except for the statements
made in the Prospectus under the caption "Description of Shares of
Beneficial Interest" and "Federal Income Tax Considerations," insofar
as such statements relate to the Shares and concern legal matters and
that such counsel expresses no view as to the financial statements and
related schedules included or incorporated by reference in the
Registration Statement or Prospectus.
(e) The Underwriter shall have received from Hogan & Hartson
L.L.P., counsel for the Underwriter, such opinion or opinions, dated
such Delivery Date, with respect to the issuance and sale of the
Shares, the Registration Statement, the Prospectus and other related
matters as the Underwriter may reasonably require, and the Trust shall
have furnished to such counsel such documents as they reasonably
request for the purpose of enabling them to pass upon such matters.
(f) At the time of execution of this Agreement, the Underwriter
shall have received from Arthur Anderson LLP a letter, in form and
substance satisfactory to the Underwriter, addressed to the
Underwriter and dated the date hereof (i) confirming that they are
independent public accountants within the meaning of the Securities
Act and are in compliance with the applicable requirements relating to
the qualification of accountants under Rule 2-01 of Regulation S-X of
the Commission, (ii) stating, as of the date hereof (or, with respect
to matters involving changes or developments since the respective
dates as of which specified financial information is given in the
Prospectus, as of a date not more than five days prior to the date
hereof), the conclusions and findings of such firm with respect to the
financial information and other matters ordinarily covered by
accountants' "comfort letters" to underwriters in connection with
registered public offerings.
(g) With respect to the letter of Arthur Anderson LLP, referred
to in the preceding paragraph and delivered to the Underwriter
concurrently with the execution of this Agreement (the "initial
letter"), the Trust shall have furnished to the Underwriter a letter
(the "bring-down letter") of such accountants, addressed to the
Underwriter and dated such Delivery Date (i) confirming that they are
independent public accountants within the meaning of the Securities
Act and are in compliance with the applicable requirements relating to
the qualification of accountants under Rule 2-01 of Regulation S-X of
the Commission, (ii) stating, as of the date of the bring-down letter
(or, with respect to matters involving changes or developments since
the respective dates as of which specified financial information is
given in the Prospectus, as of a date not more than five days prior to
the date of the bring-down letter), the conclusions and findings of
such firms with respect to the financial information and other matters
covered by the initial letter and (iii) confirming in all material
respects the conclusions and findings set forth in the initial letter.
-20-
(h) The Trust shall have furnished to the Underwriter a
certificate, dated such Delivery Date, of its Chief Executive Officer,
its President and its Chief Financial Officer stating that:
(i) The representations, warranties and agreements of each
of the Trust and the Operating Partnership in Section 1 are true
and correct as of such Delivery Date; each of the Trust and the
Operating Partnership has complied with all of its agreements
contained herein; and the conditions set forth in Sections 7(a)
and 7(i) have been fulfilled;
(ii) They have carefully examined the Registration Statement
and the Prospectus and (A) the Registration Statement, as of the
Effective Date and as of the date hereof, and the Prospectus, as
of the date hereof and as of such Delivery Date, did not include
any untrue statement of a material fact and did not omit to state
a material fact required to be stated therein or necessary to
make the statements therein not misleading, and (B) since the
date of the most recent financial statements included or
incorporated by reference in the Prospectus, there has been no
material adverse effect on the condition (financial or
otherwise), prospects, earnings, business or properties of the
Trust and its subsidiaries, taken as a whole, whether or not
arising from transactions in the ordinary course of business,
except as set forth in the Prospectus.
(iii) No stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for
that purpose have been instituted or, to the Trust's knowledge,
threatened.
(i) (i) Neither the Trust, the Operating Partnership nor any of
their subsidiaries shall have sustained since the date of the latest
audited financial statements included or incorporated by reference in
the Prospectus any loss or interference with its business from fire,
explosion, flood or other calamity, whether or not covered by
insurance, or from any labor dispute or court or governmental action,
order or decree, otherwise than as set forth or contemplated in the
Prospectus or (ii) since such date there shall not have been any
change in the equity or long-term debt of the Trust, the Operating
Partnership or any of their subsidiaries or any change, or any
development involving a prospective change, in or affecting the
general affairs, management, financial position, shareholders' equity
or results of operations of the Trust, the Operating Partnership and
their subsidiaries, otherwise than as set forth or contemplated in the
Prospectus, the effect of which, in any such case described in clause
(i) or (ii), is, in the judgment of the Underwriter, so material and
adverse as to make it impracticable or inadvisable to proceed with the
public offering or the delivery of the Shares being delivered on such
Delivery Date on the terms and in the manner contemplated in the
Prospectus.
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(j) Subsequent to the execution and delivery of this Agreement
there shall not have occurred any of the following: (i) trading in
securities generally on the New York Stock Exchange or the American
Stock Exchange or in the over-the-counter market, or trading in any
securities of the Trust on any exchange or in the over-the-counter
market, shall have been suspended or minimum prices shall have been
established on any such exchange or such market by the Commission, by
such exchange or by any other regulatory body or governmental
authority having jurisdiction, (ii) a banking moratorium shall have
been declared by Federal or state authorities, (iii) the United States
shall have become engaged in hostilities, there shall have been an
escalation in hostilities involving the United States or there shall
have been a declaration of a national emergency or war by the United
States or (iv) there shall have occurred such a material adverse
change in general economic, political or financial conditions (or the
effect of international conditions on the financial markets in the
United States shall be such) as to make it, in the judgment of the
Underwriter, impracticable or inadvisable to proceed with the public
offering or delivery of the Shares being delivered on such Delivery
Date on the terms and in the manner contemplated in the Prospectus.
(k) The New York Stock Exchange shall have approved the Shares
for listing, subject only to official notice of issuance.
All opinions, letters, evidence and certificates mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance reasonably satisfactory
to counsel for the Underwriter.
8. Indemnification and Contribution.
(a) The Trust and the Operating Partnership, jointly and severally,
shall indemnify and hold harmless the Underwriter, its officers and employees
and each person, if any, who controls the Underwriter within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act, from and
against any loss, claim, damage or liability, joint or several, or any action in
respect thereof (including, but not limited to, any loss, claim, damage,
liability or action relating to purchases and sales of Shares), to which that
Underwriter, officer, employee or controlling person may become subject, under
the Securities Act or otherwise, insofar as such loss, claim, damage, liability
or action arises out of, or is based upon, (i) any untrue statement or alleged
untrue statement of a material fact contained (A) in any Preliminary Prospectus,
the Registration Statement or the Prospectus or in any amendment or supplement
thereto or (B) in any blue sky application or other document prepared or
executed by the Trust (or based upon any written information furnished by the
Trust) specifically for the purpose of qualifying any or all of the Shares under
the securities laws of any state or other jurisdiction (any such application,
document or information being hereinafter called a "Blue Sky Application"), (ii)
the omission or alleged omission to state in any Preliminary Prospectus, the
Registration Statement or the Prospectus, or in any amendment or supplement
thereto, or in any Blue Sky Application any material fact required to be stated
therein or necessary to make the statements therein not misleading or (iii) any
act or failure to act or any alleged act or failure to act by the Underwriter in
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connection with, or relating in any manner to, the Shares or the offering
contemplated hereby, and which is included as part of or referred to in any
loss, claim, damage, liability or action arising out of or based upon matters
covered by clause (i) or (ii) above (provided that the Trust and the Operating
Partnership shall not be liable under this clause (iii) to the extent that it is
determined in a final judgment by a court of competent jurisdiction that such
loss, claim, damage, liability or action resulted directly from any such acts or
failures to act undertaken or omitted to be taken by such Underwriter through
its gross negligence or willful misconduct), and shall reimburse the Underwriter
and each such officer, employee or controlling person promptly upon demand for
any legal or other expenses reasonably incurred by that Underwriter, officer,
employee or controlling person in connection with investigating or defending or
preparing to defend against any such loss, claim, damage, liability or action as
such expenses are incurred; provided, however, that the Trust and the Operating
Partnership shall not be liable in any such case to the extent that any such
loss, claim, damage, liability or action arises out of, or is based upon, (i)
any untrue statement or alleged untrue statement or omission or alleged omission
to state a material fact in any Preliminary Prospectus to the extent that a copy
of the Prospectus was not sent or given by or on behalf of the Underwriter if
required by law so to have been delivered, at or prior to the written
confirmation of the sale of the Shares; provided, that the Trust has satisfied
its obligation hereunder to deliver to the Underwriter the number of
Prospectuses requested by such Underwriter, or (ii) any untrue statement or
alleged untrue statement or omission or alleged omission to state a material
fact in any Preliminary Prospectus, the Registration Statement or the
Prospectus, or in any such amendment or supplement, or in any Blue Sky
Application, in reliance upon and in conformity with written information
concerning such Underwriter furnished to the Trust by or on behalf of the
Underwriter specifically for inclusion therein, which information shall consist
solely of the information specified in Section 8(e) herein. The foregoing
indemnity agreement is in addition to any liability which the Trust or the
Operating Partnership may otherwise have to the Underwriter or to any officer,
employee or controlling person of that Underwriter.
(b) The Underwriter shall indemnify and hold harmless the Trust, the
Operating Partnership, their officers and employees, each of their trustees
(including any person who, with his or her consent, is named in the Registration
Statement as about to become a trustee of the Trust), and each person, if any,
who controls the Trust within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act, from and against any loss, claim, damage or
liability, joint or several, or any action in respect thereof, to which the
Trust or any such trustee, officer or controlling person may become subject,
under the Securities Act or otherwise, insofar as such loss, claim, damage,
liability or action arises out of, or is based upon, (i) any untrue statement or
alleged untrue statement of a material fact contained (A) in any Preliminary
Prospectus, the Registration Statement or the Prospectus or in any amendment or
supplement thereto, or (B) in any Blue Sky Application or (ii) the omission or
alleged omission to state in any Preliminary Prospectus, the Registration
Statement or the Prospectus, or in any amendment or supplement thereto, or in
any Blue Sky Application any material fact required to be stated therein or
necessary to make the statements therein not misleading, but in each case only
to the extent that the untrue statement or alleged untrue statement or omission
or alleged omission was made in reliance upon and in conformity with written
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information concerning the Underwriter furnished to the Trust by or on behalf of
the Underwriter specifically for inclusion therein, and shall reimburse the
Trust and any such trustee, officer or controlling person for any legal or other
expenses reasonably incurred by the Trust or any such trustee, officer or
controlling person in connection with investigating or defending or preparing to
defend against any such loss, claim, damage, liability or action as such
expenses are incurred. The foregoing indemnity agreement is in addition to any
liability which the Underwriter may otherwise have to the Trust or any such
trustee, officer, employee or controlling person.
(c) Promptly after receipt by an indemnified party under this Section 8
of notice of any claim or the commencement of any action, the indemnified party
shall, if a claim in respect thereof is to be made against the indemnifying
party under this Section 8, notify the indemnifying party in writing of the
claim or the commencement of that action; provided, however, that the failure to
notify the indemnifying party shall not relieve it from any liability which it
may have under this Section 8 except to the extent it has been materially
prejudiced by such failure and, provided further, that the failure to notify the
indemnifying party shall not relieve it from any liability which it may have to
an indemnified party otherwise than under this Section 11. If any such claim or
action shall be brought against an indemnified party, and it shall notify the
indemnifying party thereof, 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 under this Section 8 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, however, that
the Underwriter shall have the right to employ counsel to represent the
Underwriter and its officers, employees and controlling persons who may be
subject to liability arising out of any claim in respect of which indemnity may
be sought by the Underwriter against the Trust or the Operating Partnership
under this Section 8 if, in the reasonable judgment of the Underwriter, it is
advisable for the Underwriter and those officers, employees and controlling
persons to be jointly represented by separate counsel, and in that event the
fees and expenses of such separate counsel shall be paid by the Trust or the
Operating Partnership. No indemnifying party shall (i) without the prior written
consent of the indemnified parties (which consent shall not be unreasonably
withheld), settle or compromise or consent to the entry of any judgment with
respect to any pending or threatened claim, action, suit or proceeding in
respect of which indemnification or contribution may be sought hereunder
(whether or not the indemnified parties are actual or potential parties to such
claim or action) unless such settlement, compromise or consent includes an
unconditional release of each indemnified party from all liability arising out
of such claim, action, suit or proceeding, or (ii) be liable for any settlement
of any such action effected without its written consent (which consent shall not
be unreasonably withheld), but if settled with the consent of the indemnifying
party or if there be a final judgment of the plaintiff in any such action, the
indemnifying party agrees to indemnify and hold harmless any indemnified party
from and against any loss or liability by reason of such settlement or judgment.
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(d) If the indemnification provided for in this Section 8
shall for any reason be unavailable to or insufficient to hold harmless an
indemnified party under Section 8(a) or 8(b) in respect of any loss, claim,
damage or liability, or any action in respect thereof, referred to therein, then
each indemnifying party shall, in lieu of indemnifying such indemnified party,
contribute to the amount paid or payable by such indemnified party as a result
of such loss, claim, damage or liability, or action in respect thereof, (i) in
such proportion as shall be appropriate to reflect the relative benefits
received by the Trust or the Operating Partnership on the one hand and the
Underwriter on the other from the offering of the Shares or (ii) if the
allocation provided by clause (i) above is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Trust and the
Operating Partnership on the one hand and the Underwriter on the other with
respect to the statements or omissions which resulted in such loss, claim,
damage or liability, or action in respect thereof, as well as any other relevant
equitable considerations. The relative benefits received by the Trust and the
Operating Partnership on the one hand and the Underwriter on the other with
respect to such offering shall be deemed to be in the same proportion as the
total net proceeds from the offering of the Shares purchased under this
Agreement (before deducting expenses) received by the Trust and the Operating
Partnership on the one hand, and the total underwriting discounts and
commissions received by the Underwriter with respect to the Shares purchased
under this Agreement, on the other hand, bear to the total gross proceeds from
the offering of the Shares under this Agreement, in each case as set forth in
the table on the cover page of the Prospectus. The relative fault shall be
determined by reference to whether the untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact relates
to information supplied by the Trust, the Operating Partnership, or the
Underwriter, the intent of the parties and their relative knowledge, access to
information and opportunity to correct or prevent such statement or omission.
For purposes of the preceding two sentences, the net proceeds deemed to be
received by the Trust shall be deemed to be also for the benefit of the
Operating Partnership and information supplied by the Trust shall also be deemed
to have been supplied by the Operating Partnership. The Trust, the Operating
Partnership, and the Underwriter agree that it would not be just and equitable
if contributions pursuant to this Section were to be determined by pro rata
allocation or by any other method of allocation which does not take into account
the equitable considerations referred to herein. The amount paid or payable by
an indemnified party as a result of the loss, claim, damage or liability, or
action in respect thereof, referred to above in this Section shall be deemed to
include, for purposes of this Section 8(d), any 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 8(d), the Underwriter 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 was offered to the public exceeds the amount
of any damages which the Underwriter has otherwise paid or become liable to pay
by reason of any untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 8(e) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation.
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(e) The Underwriter confirms and the Trust and the Operating
Partnership acknowledge that the statements with respect to the public offering
of the Shares by the Underwriter set forth on the cover page of, the legend
concerning over-allotments on the inside front cover page of and the concession
and reallowance figures appearing under the caption "Underwriting" in, the
Prospectus are correct and constitute the only information concerning the
Underwriter furnished in writing to the Trust and the Operating Partnership by
or on behalf of the Underwriter specifically for inclusion in the Registration
Statement and the Prospectus.
9. Reserved.
10. Termination. The obligations of the Underwriter hereunder may be
terminated by the Underwriter by notice given to and received by the Trust prior
to delivery of and payment for the Firm Shares if, prior to that time, any of
the events described in Sections 7(i) or 7(j), shall have occurred or if the
Underwriter shall decline to purchase the Firm Shares for any reason permitted
under this Agreement.
11. Reimbursement of Underwriter's Expenses. If (a) the Trust shall
fail to tender the Shares for delivery to the Underwriter by reason of any
failure, refusal or inability on the part of the Trust or the Operating
Partnership to perform any agreement on its part to be performed, or because any
other condition of the Underwriter's obligations hereunder required to be
fulfilled by the Trust or the Operating Partnership is not fulfilled, the Trust
and the Operating Partnership will reimburse the Underwriter for all reasonable
out-of-pocket expenses (including fees and disbursements of counsel) incurred by
the Underwriter in connection with this Agreement and the proposed purchase of
the Shares, and upon demand the Trust and the Operating Partnership shall pay
the full amount thereof to the Underwriter.
12. Notices, etc. All statements, requests, notices and agreements
hereunder shall be in writing, and:
(a) if to the Underwriter, shall be delivered or sent by mail,
telex or facsimile transmission to Lehman Brothers Inc., Three World
Financial Center, New York, New York 10285, Attention: Syndicate
Department (Fax: 212-526-6588), with a copy, in the case of any notice
pursuant to Section 11(d), to the Director of Litigation, Office of
the General Counsel, Lehman Brothers Inc., 3 World Financial Center,
10th Floor, New York, NY 10285;
(b) if to the Trust or the Operating Partnership, shall be
delivered or sent by mail, telex or facsimile transmission to the
address of the Trust set forth in the Registration Statement,
Attention: Jonathan B. Weller, President and Chief Operating Officer
(Fax: (215) 542-9179);
provided, however, that any such statements, requests, notices or agreements
shall take effect at the time of receipt thereof.
13. Persons Entitled to Benefit of Agreement. This Agreement shall
inure to the benefit of and be binding upon the Underwriter, the Trust, the
Operating Partnership and their respective successors. This Agreement and the
terms and provisions hereof are for the sole benefit of only those persons,
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except that (A) the representations, warranties, indemnities and agreements of
the Trust and the Operating Partnership contained in this Agreement shall also
be deemed to be for the benefit of the person or persons, if any, who control
any Underwriter within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act and (B) the indemnity agreement of the
Underwriter contained in Section 8(b) of this Agreement shall be deemed to be
for the benefit of trustees of the Trust, the Operating Partnership, officers of
the Trust who have signed the Registration Statement and any person controlling
the Trust within the meaning of Section 15 of the Securities Act or Section 20
of the Exchange Act. Nothing in this Agreement is intended or shall be construed
to give any person, other than the persons referred to in this Section 13, any
legal or equitable right, remedy or claim under or in respect of this Agreement
or any provision contained herein.
14. Survival. The respective indemnities, representations, warranties
and agreements of the Trust, the Operating Partnership and the Underwriter
contained in this Agreement or made by or on behalf on them, respectively,
pursuant to this Agreement, shall survive the delivery of and payment for the
Shares and shall remain in full force and effect, regardless of any
investigation made by or on behalf of any of them or any person controlling any
of them.
15. Definition of the Terms "Business Day" and "Subsidiary." For
purposes of this Agreement, (a) "business day" means any day on which the New
York Share Exchange is open for trading and (b) "subsidiary" has the meaning set
forth in Rule 405 of the Rules and Regulations, and for purposes hereof
"subsidiary" shall include the Operating Partnership, PREIT-Rubin, Inc. and
PREIT Services LLC.
16. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of New York.
Each party irrevocably agrees that any legal suit, action or proceeding
arising out of or based upon this Agreement or the transactions contemplated
hereby ("Related Proceedings") may be instituted in the federal courts of the
United States of America located in the City of New York or the courts of the
State of New York in each case located in the Borough of Manhattan in the City
of New York (collectively, the "Specified Courts"), and irrevocably submits to
the exclusive jurisdiction (except for proceedings instituted in regard to the
enforcement of a judgment of any such court (a "Related Judgment"), as to which
such jurisdiction is non-exclusive) of such courts in any such suit, action or
proceeding. The parties further agree that service of any process, summons,
notice or document by mail to such party's address set forth above shall be
effective service of process for any lawsuit, action or other proceeding brought
in any such court. The parties hereby irrevocably and unconditionally waive any
objection to the laying of venue of any lawsuit, action or other proceeding in
the Specified Courts, and hereby further irrevocably and unconditionally waive
and agree not to plead or claim in any such court that any such lawsuit, action
or other proceeding brought in any such court has been brought in an
inconvenient forum.
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17. Counterparts. This Agreement may be executed in one or more
counterparts and, if executed in more than one counterpart, the executed
counterparts shall each be deemed to be an original but all such counterparts
shall together constitute one and the same instrument.
18. Headings. The headings herein are inserted for convenience of
reference only and are not intended to be part of, or to affect the meaning or
interpretation of, this Agreement.
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If the foregoing correctly sets forth the agreement between the Trust,
the Operating Partnership and the Underwriter, please indicate your acceptance
in the space provided for that purpose below.
Very truly yours,
PENNSYLVANIA REAL ESTATE INVESTMENT TRUST
By: /s/ Jonathan B. Weller
------------------------------------------
Name: Jonathan B. Weller
Title: President and Chief Operating Officer
PREIT ASSOCIATES, L.P., a Delaware limited
partnership
By: Pennsylvania Real Estate Investment Trust,
its General Partner
By: /s/ Jonathan B. Weller
--------------------------------------------
Name: Jonathan B. Weller
Title: President and Chief Operating Officer
Accepted:
LEHMAN BROTHERS INC.
By: /s/ Timothy B. Gould
------------------------
Name: Timothy B. Gould
Title: Managing Director