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EXHIBIT 1.2
COMMERCIAL NET LEASE REALTY, INC.
___SHARES
COMMON STOCK
($.01 PAR VALUE)
UNDERWRITING AGREEMENT
February 18, 1998
A.G. EDWARDS & SONS, INC.
One North Jefferson Avenue
St. Louis, Missouri 63103
The undersigned, Commercial Net Lease Realty, Inc., a Maryland corporation
(the "Company") hereby confirms its agreement with you (the "Underwriter") as
follows:
1. Description of Shares. The Company proposes to issue and sell to
you ____ shares of its Common Stock, par value $.01 per share (the "Shares").
The Shares are more fully described in the Prospectus hereinafter defined.
2. Purchase, Sale and Delivery of Shares. On the basis of the
representations, warranties and agreements herein contained, but subject to
the terms and conditions herein set forth, the Company agrees to sell to you,
and you agree to purchase from the Company at a purchase price of $________
per share, ______ Shares.
The Company will deliver definitive certificates for the Shares at the
office of A.G. Edwards & Sons, Inc., 77 Water Street, New York, New York
("Edwards' Office"), or such other place as you and the Company may mutually
agree upon (the "Place of Closing"), for your account against payment to the
Company of the purchase price for the Shares sold to you by wire transfer of
immediately available funds, at 10:00 a.m., St. Louis time, on February [23],
1998, or at such other time and date not later than three full business days
thereafter as you and the Company may agree, such time and date of payment and
delivery being herein called the "Closing Date."
The certificates for the Shares so to be delivered will be made available
to you for inspection at Edwards' Office (or such other place as you and the
Company may mutually agree upon) at least one full business day prior to the
Closing Date and will be in such names and denominations as you may request at
least one full business day prior to the Closing Date.
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3. Representations, Warranties and Agreements of the Company. (a)
The Company represents and warrants to and agrees with you that:
(i) The Company meets the requirements for use of Form S-3
under the Securities Act of 1933, as amended (the "Act"); a registration
statement (Registration No. 333-24773) on Form S-3, including a prospectus
relating to the registration of the Shares and such other securities which
may be offered from time to time in accordance with Rule 415 under the
Act, and such amendments to such registration statement as may have been
required to the date of this Agreement, has been carefully prepared by the
Company pursuant to and in conformity with the requirements of the Act,
and the Rules and Regulations (the "Rules and Regulations") of the
Securities and Exchange Commission (the "Commission") thereunder, was
filed with the Commission under the Act, and was declared effective on
April 22, 1997. Copies of such registration statement, including any
amendments thereto, each related preliminary prospectus contained therein,
the exhibits, financial statements and schedules have heretofore been
delivered by the Company to you. A prospectus supplement (the "Prospectus
Supplement") setting forth the terms of the offering, sale and plan of
distribution of the Shares and additional information concerning the
Company and its business has been or will be so prepared and will be filed
pursuant to Rule 424(b) of the Rules and Regulations on or before the
second business day after the date hereof (or such earlier time as may be
required by the Rules and Regulations). The term "Registration Statement"
as used herein means the registration statement, and the basic prospectus
included therein, as amended at the time it or any amendment thereto
became effective under the Act, or at the time any Annual Report on Form
10-K is filed by the Company with the Commission (the "Effective Date"),
including financial statements and all exhibits and all documents
incorporated by reference therein pursuant to Item 12 of Form S-3 under
the Act. Any document filed by the Company under the Securities Exchange
Act of 1934, as amended (the "Exchange Act") after the effective date of
the Registration Statement or the date of the Prospectus Supplement and
incorporated by reference in the Prospectus shall be deemed to be included
in the Registration Statement and the Prospectus as of the date of such
filing. The term "Prospectus" as used herein means (i) the basic
prospectus included in the Registration Statement at the Effective Date,
as supplemented by the Prospectus Supplement as first filed with the
Commission pursuant to Rule 424(b) of the Rules and Regulations, except
that, if such basic prospectus is amended or supplemented subsequent to
the Effective Date, the term "Prospectus" shall refer to the basic
prospectus as so amended or supplemented and as further supplemented by
the Prospectus Supplement, (ii) if no such filing is required, the form of
final prospectus included in the Registration Statement at the Effective
Date or (iii) if a Term Sheet or Abbreviated Term Sheet (as such terms are
defined in Rule 434(b) and 434(c), respectively, of the Rules and
Regulations) is filed with the Commission pursuant to Rule 424(b)(7) of
the Rules and Regulations, the Term Sheet or Abbreviated Term Sheet and
the last Preliminary Prospectus filed with the Commission prior to the
time the Registration Statement became effective, taken together
(including, in each case, the documents incorporated by reference therein
pursuant to Item 12 of Form S-3 under the Act). The term
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"Preliminary Prospectus" as used herein shall mean a preliminary
prospectus included at any time in the Registration Statement.
(ii) The Commission has not issued, and is not to the knowledge
of the Company threatening to issue, an order preventing or suspending the
use of any Preliminary Prospectus or the Prospectus nor instituted
proceedings for that purpose. Each Preliminary Prospectus at its date of
issue, the Registration Statement at the Effective Date, and the
Prospectus at its date of issue and any amendments or supplements thereto
contains or will contain, as the case may be, all statements which are
required to be stated therein by, and in all material respects conform or
will conform, as the case may be, to the requirements of, the Act and the
Rules and Regulations. Neither the Registration Statement nor any
amendment thereto, as of the applicable effective date, and neither the
Prospectus nor any supplement thereto, as of its applicable issue date or
the Closing Date contains or will contain, as the case may be, any untrue
statement of a material fact or omits or will omit to state any material
fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading; provided, however, that the Company makes no representation or
warranty as to information contained in or omitted from the 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 you specifically for use in the preparation thereof.
(iii) The documents incorporated by reference in the Prospectus
pursuant to Item 12 of Form S-3 under the Act, at the time they were filed
with the Commission, complied in all material respects with the
requirements of the Exchange Act, and the rules and regulations adopted by
the Commission thereunder (the "Exchange Act Rules and Regulations"), and,
when read together and with the other information in the Prospectus, at
the time the Registration Statement became effective and at the Closing
Date, did not or will not, as the case may be, contain an untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading.
(iv) The filing of the Registration Statement and the execution
and delivery of this Agreement have been duly authorized by the Board of
Directors of the Company; this Agreement constitutes a valid and legally
binding obligation of the Company enforceable in accordance with its terms
(except to the extent the enforceability of the indemnification and
contribution provisions of Section 6 hereof may be limited by public
policy considerations as expressed in the Act as construed by courts of
competent jurisdiction, and except as enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium and other laws
affecting creditors' rights generally and by general principles of
equity); the issue and sale of the Shares by the Company and the
performance of this Agreement and the consummation of the transactions
herein contemplated will not result in a violation of the Company's
articles of incorporation or bylaws or result in a breach or violation of
any of the terms and provisions of, or constitute a default under, or
result in the creation or
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imposition of any lien, charge or encumbrance upon any properties or
assets of the Company or its subsidiaries under, any statute, or under any
indenture, mortgage, deed of trust, note, loan agreement, sale and
leaseback arrangement or other agreement or instrument to which the
Company or any of its subsidiaries is a party or by which they are bound
or to which any of the properties or assets of the Company or its
subsidiaries is subject, or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over the Company or its
subsidiaries or their properties, except to such extent as does not
materially adversely affect the business of the Company and its
subsidiaries taken as a whole; no consent, approval, authorization, order,
registration or qualification of or with any court or governmental agency
or body is required for the consummation of the transactions herein
contemplated, except such as may be required by the National Association
of Securities Dealers, Inc. (the "NASD") or under the Act or Rules and
Regulations or any state securities laws.
(v) Neither the Company nor any of its subsidiaries has
sustained since the date of the latest audited financial statements
included or incorporated by reference in the Prospectus any material loss
or interference with its business from fire, explosion, flood or other
calamity, whether or not covered by insurance, or from any labor dispute
or court or governmental action, order or decree. Except as contemplated
in the Prospectus, subsequent to the respective dates as of which
information is given in the Registration Statement and the Prospectus, the
Company and its subsidiaries taken as a whole have not incurred any
material liabilities or material obligations, direct or contingent, other
than in the ordinary course of business, or entered into any material
transactions not in the ordinary course of business, and there has not
been any material change in the capital stock or long-term debt of the
Company and its subsidiaries taken as a whole or any material adverse
change in the condition (financial or other), net worth, business,
affairs, management, prospects or results of operations of the Company and
its subsidiaries taken as a whole. The Company and its subsidiaries have
filed all necessary federal, state and foreign income and franchise tax
returns and paid all taxes shown as due thereon; all tax liabilities are
adequately provided for on the books of the Company and its subsidiaries
except to such extent as would not materially adversely affect the
business of the Company and its subsidiaries taken as a whole, the Company
and its subsidiaries have made all necessary payroll tax payments and are
current and up-to-date as of the date of this Agreement; and the Company
and its subsidiaries have no knowledge of any tax proceeding or action
pending or threatened against the Company or its subsidiaries which might
materially adversely affect their business or property.
(vi) Except as described in the Prospectus, there is not now
pending or, to the knowledge of the Company, threatened or contemplated,
any action, suit or proceeding to which the Company or its subsidiaries is
a party before or by any court or public, regulatory or governmental
agency or body which might be expected to result (individually or in the
aggregate) in any material adverse change in the condition (financial or
other), business or prospects of the Company and its subsidiaries taken as
a whole, or might be expected to materially and adversely affect
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(individually or in the aggregate) the properties or assets thereof, and
there are no contracts or documents of the Company or its subsidiaries
which would be required to be filed as exhibits to the Registration
Statement by the Act or by the Rules and Regulations which have not been
filed as exhibits to the Registration Statement or incorporated by
reference therein.
(vii) The Company has duly and validly authorized capital stock
as described in the Prospectus; all outstanding shares of Common Stock of
the Company and the Shares conform, or when issued will conform, to the
description thereof in the Prospectus and have been, or, when issued and
paid for will be, duly authorized, validly issued, fully paid and
nonassessable; and the issuance of the Shares to be purchased from the
Company hereunder is not subject to preemptive rights.
(viii) Each of the Company and its subsidiaries have been duly
incorporated or formed, as the case may be, and is a validly existing
corporation, general or limited partnership, or other legal entity, as the
case may be, in good standing under the laws of the state or other
jurisdiction in which it is incorporated or formed, as the case may be.
The Company and its subsidiaries have full power and authority (corporate
and other) to own, lease and operate their properties and conduct their
businesses as described in the Prospectus; each of the Company and its
subsidiaries is duly qualified or registered to do business and is in good
standing in each state or other jurisdiction in which its ownership or
leasing of property or conduct of business legally requires such
qualification, except where the failure to be so qualified would not have
a material adverse effect on the ability of the Company and its
subsidiaries to conduct its or their business as described in the
Prospectus; and the outstanding shares of capital stock or ownership
interests of the Company's subsidiaries have been duly authorized and
validly issued, are fully paid and nonassessable and are owned by the
Company free and clear of any mortgage, pledge, lien, encumbrance, charge
or adverse claim and are not the subject of any agreement or understanding
with any person; no options, warrants or other rights to purchase,
agreement or other obligations to issue or other rights to convert any
obligations into shares of capital stock or ownership interest in the
subsidiaries are outstanding.
(ix) KPMG Peat Marwick LLP, the accounting firm which has
certified the financial statements filed with or incorporated by reference
in and as a part of the Registration Statement, is an independent public
accounting firm within the meaning of the Act and the Rules and
Regulations.
(x) The consolidated financial statements of the Company
together with the related schedules and notes thereto, set forth or
included or incorporated by reference in the Registration Statement and
Prospectus fairly present the financial condition of the Company and its
consolidated subsidiaries as of the dates indicated and the results of
operations, changes in financial position, shareholders' equity and cash
flows for the periods therein specified, in conformity with generally
accepted accounting principles consistently applied throughout the periods
involved (except as otherwise stated therein). The summary and selected
financial and statistical data included or
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incorporated by reference in the Registration Statement and the Prospectus
present fairly the information shown therein and, to the extent based upon
or derived from the financial statements, have been compiled on a basis
consistent with the financial statements presented therein. Furthermore,
all financial statements required by Rule 3-14 of Regulation S-X ("Rule
3-14") have been included or incorporated by reference in the Registration
Statement and the Prospectus and any such financial statements are in
conformity with the requirements of Rule 3-14. No other financial
statements are required to be set forth or to be incorporated by reference
in the Registration Statement or the Prospectus under the Act or the Rules
and Regulations thereunder.
(xi) Neither the Company nor any subsidiary is in default with
respect to any contract or agreement to which it is a party; provided that
this representation shall not apply to defaults which in the aggregate are
not materially adverse to the condition, financial or other, or the
business or prospects of the Company and its subsidiaries taken as a
whole.
(xii) Neither the Company nor any subsidiary is in violation of
any other laws, ordinances or governmental rules or regulations to which
it is subject, including, without limitation, Section 13 of the Exchange
Act, and neither the Company nor any subsidiary has failed to obtain any
license, permit, franchise, easement, consent, or other governmental
authorization necessary to the ownership, leasing and operation of its
properties or to the conduct of its business, which violation or failure
would materially adversely affect the business, operations, affairs,
properties, prospects, profits or condition (financial or other) of the
Company and its subsidiaries taken as a whole. Neither the Company nor any
subsidiary has, at any time during the past five years, (A) made any
unlawful contributions to any candidate for any political office, or
failed fully to disclose any contribution in violation of law, or (B) made
any payment to any state, federal or foreign government official, or other
person charged with similar public or quasi-public duty (other than
payment required or permitted by applicable law).
(xiii) Except as otherwise communicated to you and your counsel,
there are no holders of securities of the Company having rights to
registration thereof or preemptive rights to purchase Common Stock of the
Company except as disclosed in the Prospectus. Holders of registration
rights have waived such rights with respect to the offering being made by
the Prospectus.
(xiv) Except as described in the Prospectus, the Company and its
subsidiaries own or possess, or can acquire on reasonable terms, adequate
patents, patent licenses, trademarks, service marks and trade names
necessary to conduct the business now operated by them, and neither the
Company nor any subsidiary has received any notice of infringement of or
conflict with asserted rights of others with respect to any patents,
patent licenses, trademarks, service marks or trade names which, singly or
in the aggregate, if the subject of an unfavorable decision, ruling or
finding, would materially adversely affect the business, operations,
affairs, properties, prospects,
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profits or condition (financial or other) of the Company and its
subsidiaries taken as a whole.
(xv) The Company and each of its subsidiaries has good and
marketable title to all properties and assets described in the Prospectus
as owned by it, free and clear of all liens, charges, encumbrances or
restrictions, except such as (i) are described in the Prospectus or (ii)
are not material to the business of the Company or its subsidiaries, taken
as a whole. The Company and each of its subsidiaries has valid, subsisting
and enforceable leases for the properties described in the Prospectus as
leased by it, with such exceptions as are not material and do not
materially interfere with the use made and proposed to be made of such
properties by the Company and such subsidiaries; no tenant under any of
the leases pursuant to which the Company leases its properties has an
option or right of first refusal to purchase the premises demised under
such lease; the use and occupancy of each of the properties of the Company
complies in all material respects with all applicable codes and zoning
laws and regulations; the Company has no knowledge of any pending or
threatened condemnation or zoning change that will in any material respect
affect the size of, use of, improvements of, construction on, or access to
any of the properties of the Company; and the Company has no knowledge of
any pending or threatened proceeding or action that will in any manner
affect the size of, use of, improvements on, construction on, or access to
any of the properties of the Company.
(xvi) Title insurance in favor of the Company (or the subsidiary
which holds title to such property) is maintained with respect to each of
the properties owned by the Company in an amount at least equal to the
greater of (i) the cost of acquisition of such property of (ii) the cost
of construction by the Company of the improvements located on such
property (measured at the time of such construction), except, in each
case, where the failure to maintain such title insurance would not
materially adversely affect the business, operations, affairs, properties,
prospects, profits or conditions (financial or other) of the Company and
its subsidiaries taken as a whole. Title insurance in favor of the
mortgagee is maintained in an amount equal to the maximum commitment of
the related loan.
(xvii) (a) Except as disclosed in the Prospectus, the Company has
no knowledge of (a) the presence of any hazardous substances, hazardous
materials, toxic substances, pollutants or waste materials (collectively,
"Hazardous Materials") on any of its properties, except that which is in
compliance with all Environmental Laws or (b) any spills, releases,
discharges or disposals of Hazardous Materials that have occurred or are
presently occurring on or from its properties, which presence or
occurrence would individually or in the aggregate materially adversely
affect the business, operations, affairs, properties, prospects, profits
or conditions (financial or other) of the Company and its subsidiaries
taken as a whole.
(b) Except as disclosed in the Prospectus, the Company, its
subsidiaries and its properties (i) are in compliance with any and all
Environmental Laws, (ii) have received all permits, licenses or other
approvals required under applicable
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Environmental Laws to conduct its business and (iii) are in compliance
with all terms and conditions of any such permit, license or approval,
except 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 would
not individually or in the aggregate materially adversely affect the
business, operations, affairs, properties, prospects, profits or
conditions (financial or other) of the Company and its subsidiaries taken
as a whole.
(c) The Company engages environmental consultants to perform
phase I environmental site assessments in accordance with the ASTM
Standard to identify any environmental conditions prior to the purchase of
its properties. On the basis of such phase I environmental site
assessments, or such additional investigations as may have been performed
based on the findings of a phase I assessment, and, except as described in
the Prospectus, the Company and its subsidiaries have reasonably concluded
that no such environmental conditions exist which would, individually or
in the aggregate, materially adversely affect the business, operations,
affairs, properties, prospects, profits or conditions (financial or other)
of the Company and its subsidiaries taken as a whole.
(d) As used herein, "Hazardous Material" shall include, without
limitation any flammable explosives, radioactive materials, hazardous
materials, hazardous wastes, hazardous or toxic substances, or related
materials, asbestos, polychlorinated biphenyls ("PCBs"), petroleum
products and by-products and substances defined or listed as "hazardous
substances," "toxic substances," "hazardous waste," or "hazardous
materials" in any Federal, state or local Environmental Law.
(e) As used herein, "Environmental Law" shall mean all laws,
regulations or ordinances of any Federal, state or local governmental
authority having or claiming jurisdiction over any of its properties (a
"Governmental Authority") that are designed to protect public health and
the environment or regulate the handling of Hazardous Materials,
including, without limitation, the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended (42 U.S.C. Section
9601 et seq.) ("CERCLA"), the Hazardous Material Transportation Act, as
amended (49 U.S.C. Section 1801 et seq.), the Resource Conservation and
Recovery Act, as amended (42 U.S.C. Section 6901 et seq.), the Federal
Water Pollution Control Act, as amended (33 U.S.C. Section 1251 et seq.),
and the Clean Air Act, as amended (42 U.S.C. Section 7401 et seq.), and
any and all analogous future federal or present or future state or local
laws.
(xviii) No labor disturbance exists with the employees of the
Company or its subsidiaries or is imminent which would materially
adversely affect the business, operations, affairs, properties, prospects,
profits or conditions (financial or other) of the Company and its
subsidiaries taken as a whole.
(xix) The Company has not taken and will not take, directly or
indirectly, any action designed to or which might reasonably be expected
to cause or result in
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stabilization or manipulation of the price of the Common Stock, and the
Company is not aware of any such action taken or to be taken by affiliates
of the Company.
(xx) The Company is not an "investment company" or a company
"controlled" by an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
(xxi) The mortgages and deeds of trust encumbering the properties
and assets described in the Prospectus are not convertible nor does the
Company hold a participating interest therein.
(xxii) Property and casualty insurance in favor of the Company is
maintained with respect to each of the properties owned by it in an amount
and on such terms as is reasonable and customary for businesses of this
type.
(xxiii) The Company has continuously been organized and operated in
conformity with the requirements for qualification as a real estate
investment trust under the Internal Revenue Code of 1986, as amended (the
"Code") for all taxable years commencing with its taxable year ended
December 31, 1984. The Company has filed an election to be taxed as a real
estate investment trust for all subsequent taxable years, and no such
election has been terminated. The Company's method of operation will
permit it to continue to meet the requirements for taxation as a real
estate investment trust under the Code. The Company intends to continue to
operate in a manner which would permit it to qualify as a real estate
investment trust under the Code.
(xxiv) Except as disclosed in the Prospectus, each entity
identified in the Prospectus as a tenant of any property, or a subtenant
thereof, has entered into a lease or a sublease, if applicable, for the
possession of such property; except as disclosed in the Prospectus, each
such lease is in full force and effect and neither the Company nor any of
its subsidiaries has notice of any defense to the obligations of the
tenant thereunder or any claim asserted or threatened by any person or
entity, which claim, if sustained, would materially adversely affect the
business, operations, affairs, properties, prospects, profits or
conditions (financial or other) of the Company and its subsidiaries taken
as a whole; and except as disclosed in the Prospectus, the lessor under
each lease has complied with its obligations under such lease in all
material respects and neither the Company nor any of its subsidiaries has
notice of any default by the tenant under such lease which, individually
or in the aggregate with other such defaults, would materially adversely
affect the business, operations, affairs, properties, prospects, profits
or conditions (financial or other) of the Company and its subsidiaries
taken as a whole.
(xxv) Any certificate signed by any officer of the Company and
delivered to you or to your counsel shall be deemed a representation and
warranty by the Company to you as to the matters covered thereby.
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(xxvi) A registration statement relating to the Common Stock of
the Company has been declared effective by the Commission pursuant to the
Exchange Act and the Common Stock of the Company is duly registered
thereunder. The Shares have been listed on the New York Stock Exchange,
subject to notice of issuance or sale of the Shares, as the case may be.
(xxvii) The Agreement and Plan of Merger by and among the Company,
Net Lease Realty II, Inc., a wholly owned subsidiary of the Company, CNL
Realty Advisors, Inc. (the "Advisor") and the stockholders of the Advisor
has been consummated.
4. Additional Covenants. The Company covenants and agrees with you
that:
(a) The Company will (i) prepare a Prospectus Supplement
setting forth the number of Shares covered thereby and their terms not
otherwise specified in the Prospectus pursuant to which the Shares are
being issued, the name of the Underwriter and the number of Shares which
the Underwriter has agreed to purchase, the price at which the Shares are
to be purchased by the Underwriter from the Company and such other
information as the Underwriter and the Company deem appropriate in
connection with the offering of the Shares, and file the Prospectus in a
form approved by you pursuant to Rule 424(b) under the Act no later than
the Commission's close of business on the second business day following
the date of the determination of the offering price of the Shares; (ii)
not file any amendment to the Registration Statement or supplement to the
Prospectus of which you shall not previously have been advised and
furnished with a copy or to which you shall have reasonably objected in
writing or which is not in compliance with the Rules and Regulations; and
(iii) promptly notify you after it shall have received notice thereof of
the time when any amendment to the Registration Statement becomes
effective or when any supplement to the Prospectus has been filed.
(b) The Company will advise you promptly, after it shall
receive notice or obtain knowledge thereof, of any request of the
Commission for amendment of the Registration Statement or for supplement
to the Prospectus or for any additional information, or of the issuance by
the Commission of any stop order suspending the effectiveness of the
Registration Statement or the use of the Prospectus or of the institution
or threatening of any proceedings for that purpose, and the Company will
use its best efforts to prevent the issuance of any such stop order
preventing or suspending the use of the Prospectus and to obtain as soon
as possible the lifting thereof, if issued.
(c) The Company will cooperate with you and your counsel in
endeavoring to qualify the Shares for sale under the securities laws of
such jurisdictions as they may have designated and will make such
applications, file such documents, and furnish such information as may be
necessary for that purpose, provided the Company shall not be required to
qualify as a foreign corporation or to file a general consent to service
of process in any jurisdiction where it is not now so qualified or
required to
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file such a consent or to subject itself to taxation as doing business in
any jurisdiction where it is not now so taxed. The Company will, from time
to time, file such statements, reports, and other documents, as are or may
be required to continue such qualifications in effect for so long a period
as you may reasonably request.
(d) The Company will deliver to you, without charge as many
copies of the Prospectus (including all documents incorporated by
reference therein), or as it thereafter may be amended or supplemented, as
you may from time to time reasonably request. The Company consents to the
use of such Prospectus by you, both in connection with the offering or
sale of the Shares and for such other purposes and for such period of time
thereafter as the Prospectus is required by law to be delivered in
connection with the offering or sale of the Shares. The Company will
deliver to you at or before the Closing Date two conformed copies of the
Registration Statement and all amendments thereto including all exhibits
filed therewith or incorporated by reference therein and all documents
incorporated by reference in the Prospectus and will deliver to you such
number of copies of the Registration Statement, without exhibits, and of
all amendments thereto, as you may reasonably request.
(e) If, during the period in which a prospectus is required by
law to be delivered by an underwriter or dealer, any event shall occur as
a result of which, in the judgment of the Company or in your judgment or
in the opinion of your counsel, it becomes necessary to amend or
supplement the Prospectus in order to make the statements therein, in
light of the circumstances existing at the time the Prospectus is
delivered to a purchaser, not misleading, or, if it is necessary at any
time to amend or supplement the Prospectus to comply with any law, the
Company promptly will prepare and file with the Commission an appropriate
amendment to the Registration Statement or supplement to the Prospectus so
that the Prospectus as so amended or supplemented will not, in the light
of the circumstances when it is so delivered, be misleading, or so that
the Prospectus will comply with law.
(f) The Company will make generally available to its
shareholders and will file as an exhibit in a report pursuant to the
Exchange Act, as soon as it is practicable to do so, but in any event not
later than 15 months after the effective date of the Registration
Statement, an earnings statement in reasonable detail, covering a period
of at least 12 consecutive months beginning after the effective date of
the Registration Statement, which earnings statement shall satisfy the
requirements of Section 11(a) of the Act and Rule 158 of the Rules and
Regulations and will advise you in writing when such statement has been so
made available.
(g) The Company will, for a period of five years from the
Closing Date, deliver to you at your principal executive offices a
reasonable number of copies of annual reports, quarterly reports, current
reports and copies of all other documents, reports and information
furnished by the Company to its shareholders or filed with any securities
exchange pursuant to the requirements of such exchange or with the
Commission pursuant to the Act or the Exchange Act. The Company will
deliver to you similar reports with respect to any significant
subsidiaries, as that term is defined
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12
in the Rules and Regulations, which are not consolidated in the Company
financial statements. Any report, document or other information required
to be furnished under this paragraph (g) shall be furnished as soon as
practicable after such report, document or information becomes available.
(h) The Company will apply the proceeds from the sale of the
Shares as set forth in the description under "Use of Proceeds" in the
Prospectus, which description complies in all respects with the
requirements of Item 504 of Regulation S-K.
(i) The Company will supply you with copies of all
correspondence to and from, and all documents issued to and by, the
Commission in connection with the registration of the Shares under the
Act.
(j) Prior to the Closing Date, the Company will furnish to you,
as soon as they have been prepared, copies of any unaudited interim
consolidated financial statements of the Company and its subsidiaries for
any periods subsequent to the periods covered by the financial statements
appearing in the Registration Statement and the Prospectus.
(k) Prior to the Closing Date, the Company will not issue any
press releases or other communications directly or indirectly and will
hold no press conference, with respect to the Company or any of its
subsidiaries, the financial condition, results of operations, business,
properties, assets or liabilities of the Company or any of its
subsidiaries, or the offering of the Shares, without your prior written
consent.
(l) The Company will use its best efforts to obtain approval
for, and maintain the listing of the Shares on, the New York Stock
Exchange.
(m) The Company and its subsidiaries will maintain and keep
accurate books and records reflecting their assets and maintain internal
accounting controls which provide reasonable assurance that (1)
transactions are executed in accordance with management's authorization,
(2) transactions are recorded as necessary to permit the preparation of
the Company's consolidated financial statements and to maintain
accountability for the assets of the Company and its subsidiaries, (3)
access to the assets of the Company and its subsidiaries is permitted only
in accordance with management's authorization, and (4) the recorded
accounts of the assets of the Company and its subsidiaries are compared
with existing assets at reasonable intervals.
(n) During any period in which a prospectus is required by law
to be delivered by an Underwriter or dealer, the Company will promptly
file all documents required to be filed with the Commission pursuant to
Sections 13, 14 or 15(d) of the Exchange Act.
(o) The Company will continue to elect to qualify as a "real
estate investment trust" under the Code, and will use its best efforts to
continue to meet the requirements to qualify as a "real estate investment
trust."
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5. Conditions of Underwriter's Obligation. Your obligations, as
Underwriter to purchase and pay for the Shares, as provided herein, shall be
subject to the accuracy in all material respects, as of the dare hereof and
as of the Closing Date, of the representations and warranties of the Company
contained herein, to the performance in all material respects by the Company
of its covenants and obligations hereunder, and to the following additional
conditions:
(a) All filings required by Rule 424 of the Rules and
Regulations shall have been made. No stop order suspending the
effectiveness of the Registration Statement, as amended from time to time,
shall have been issued and no proceeding for that purpose shall have been
initiated or, to your knowledge or the knowledge of the Company,
threatened or contemplated by the Commission, and any request of the
Commission for additional information (to be included in the Registration
Statement or the Prospectus or otherwise) shall have been complied with to
your reasonable satisfaction.
(b) You shall not have disclosed in writing to the Company on
or prior to the Closing Date, that the Registration Statement or
Prospectus or any amendment or supplement thereto contains an untrue
statement of fact which, in the opinion of your counsel, 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, in light of the circumstances under which they were
made, not misleading.
(c) On the Closing Date, you shall have received the opinion of
Shaw Pittman Potts & Trowbridge, counsel for the Company, addressed to you
and dated the Closing Date, as to the matters set forth in Schedule I
attached hereto.
(d) You shall have received on the Closing Date, from Chapman
and Cutler, your counsel, such opinion or opinions, dated the Closing Date
with respect to the incorporation of the Company, the validity of the
Shares, the Registration Statement, the Prospectus and other related
matters as you may reasonably require; the Company shall have furnished to
such counsel such documents as they reasonably request for the purpose of
enabling them to pass on such matters.
(e) You shall have received at or prior to the Closing Date
from Chapman and Cutler a memorandum or memoranda, in form and substance
satisfactory to you, with respect to the qualification for offering and
sale by you of the Shares under state securities or Blue Sky laws of such
jurisdictions as you may have designated to the Company.
(f) On the date of this Agreement and on the Closing Date, you
shall have received from KPMG Peat Marwick LLP, a letter or letters, dated
the date of this Agreement and the Closing Date, respectively, in form and
substance satisfactory to you, confirming that they are independent public
accountants with respect to the Company within the meaning of the Act and
the published Rules and Regulations, and stating to the effect set forth
in Schedule II hereto.
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(g) Except as contemplated in the Prospectus, (i) neither the
Company nor any of its 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; and (ii) subsequent to the respective dates as of which
information is given in the Registration Statement and the Prospectus,
neither the Company nor any of its subsidiaries shall have incurred any
liability or obligation, direct or contingent, or entered into
transactions, and there shall not have been any change in the capital
stock or long-term debt of the Company and its subsidiaries or any change
in the condition (financial or other), net worth, business, affairs,
management, prospects or results of operations of the Company or its
subsidiaries, the effect of which, in any such case described in clause
(i) or (ii), is in your judgment so material or adverse as to make it
impracticable or inadvisable to proceed with the public offering or the
delivery of the Shares being delivered on the Closing Date on the terms
and in the manner contemplated in the Prospectus.
(h) There shall not have occurred any of the following: (i) a
suspension or material limitation in trading in securities generally on
the New York Stock Exchange or the American Stock Exchange or the
establishing on such exchanges by the Commission or by such exchanges of
minimum or maximum prices which are not in force and effect on the date
hereof; (ii) a general moratorium on commercial banking activities
declared by either federal or state authorities; (iii) the outbreak or
escalation of hostilities involving the United States or the declaration
by the United States of a national emergency or war, if the effect of any
such event specified in this clause (iii) in your judgment makes it
impracticable or inadvisable to proceed with the public offering or the
delivery of the Shares in the manner contemplated in the Prospectus; (iv)
any calamity or crisis, change in national, international or world
affairs, act of God, change in the international or domestic markets, or
change in the existing financial, political or economic conditions in the
United States or elsewhere, if the effect of any such event specified in
this clause (iv) makes it impracticable or inadvisable to proceed with the
public offering or the delivery of the Shares in the manner contemplated
in the Prospectus; or (v) the enactment, publication, decree, or other
promulgation of any federal or state statute, regulation, rule, or order
of any court or other governmental authority, or the taking of any action
by any federal, state or local government or agency in respect of fiscal
or monetary affairs, if the effect of any such event specified in this
clause (v) in your judgment makes it impracticable or inadvisable to
proceed with the public offering or the delivery of the Shares in the
manner contemplated in the Prospectus.
(i) You shall have received certificates, dated the Closing
Date and signed by the President and the Chief Financial Officer of the
Company stating that (i) they have carefully examined the Registration
Statement and the Prospectus as amended or supplemented and all documents
incorporated by reference therein and nothing has come to their attention
that would lead them to believe that either the Registration Statement or
the Prospectus, or any amendment or supplement thereto or any
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documents incorporated by reference therein as of their respective
effective, issue or filing dates, contained, and the Prospectus as amended
or supplemented and all documents incorporated by reference therein and
when read together with the documents incorporated by reference therein,
at the Closing Date, contains any untrue statement of a material fact, or
omits 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, and, that (ii) all
representations and warranties made herein by the Company are true and
correct in all material respects at the Closing Date, with the same effect
as if made on and as of the Closing Date, and all agreements herein to be
performed by the Company on or prior to the Closing Date have been duly
performed in all material respects.
(j) The Company shall not have failed, refused, or been unable,
at or prior to the Closing Date to have performed in all material respects
any agreement on their part to be performed or any of the conditions
herein contained and required to be performed or satisfied by them at or
prior to the Closing Date.
(k) The Company shall have furnished to you at the Closing Date
such other certificates as you may have reasonably requested as to the
accuracy, on and as of the Closing Date, of the representations and
warranties of the Company herein and as to the performance by the Company
of their obligations hereunder.
(l) The Shares shall have been approved for trading upon
official notice of issuance on the New York Stock Exchange.
All such opinions, certificates, letters and documents will be in
compliance with the provisions hereof only if they are reasonably satisfactory
to you and to Chapman and Cutler, your counsel. The Company will furnish you
with such conformed copies of such opinions, certificates, letters and documents
as you may request.
If any of the conditions specified above in this Section 5 shall not have
been satisfied at or prior to the Closing Date or waived by you in writing,
this Agreement may be terminated by you on notice to the Company.
6. Indemnification. (a) The Company will indemnify and hold you
harmless and each person, if any, who controls you within the meaning of the
Act, against any losses, claims, damages or liabilities, joint or several, to
which you or such controlling person 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 or
alleged untrue statement of a material fact contained in the Registration
Statement, any Preliminary Prospectus, the Prospectus, or any amendment or
supplement thereto, or in any blue sky application or other document executed
by the Company or based on any information furnished in writing by the
Company, filed in any jurisdiction in order to qualify any or all of the
Shares under the securities laws thereof ("Blue Sky Application"), or arise
out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein, in light of the
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circumstances under which they were made, not misleading; and will reimburse you
and each such controlling person for any legal or other expenses reasonably
incurred by you or such controlling person in connection with investigating or
defending any such loss, claim, damage, liability or action; 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 alleged untrue statement or omission or alleged omission made in
the Registration Statement, such Preliminary Prospectus or the Prospectus, or
such amendment or supplement, or any Blue Sky Application in reliance upon and
in conformity with written information furnished to the Company by you,
specifically for use in the preparation thereof; and provided, further, that if
any Preliminary Prospectus or the Prospectus contained any alleged untrue
statement or allegedly omitted to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading and
such statement or omission shall have been corrected in a revised Preliminary
Prospectus or in the Prospectus or in an amended or supplemented Prospectus, the
Company shall not be liable to you or controlling persons under this subsection
(a) with respect to such alleged untrue statement or alleged omission to the
extent that any such loss, claim, damage or liability of such person results
from the fact that you sold Shares to a person to whom there was not sent or
given, at or prior to the written confirmation of such sale, such revised
Preliminary Prospectus or Prospectus or amended or supplemented Prospectus. In
addition to its other obligations under this Section 6(a), the Company agrees
that, as an interim measure during the pendency of any claim, action,
investigation, inquiry or other proceeding arising out of or based upon any
statement or omission, or any alleged statement or omission, described in this
Section 6(a), it will reimburse you on a monthly basis for all reasonable legal
and other expenses incurred in connection with investigating or defending any
such claim, action, investigation, inquiry or other proceeding, notwithstanding
the absence of a judicial determination as to the propriety and enforceability
of the Company's obligation to reimburse you for such expenses and the
possibility that such payments might later be held to have been improper by a
court of competent jurisdiction. This indemnity agreement shall be in addition
to any liabilities which the Company may otherwise have.
(b) You will indemnify and hold harmless the Company, each of its
directors, each of its officers who have signed the Registration Statement
and each person, if any, who controls the Company within the meaning of the
Act, against any losses, claims, damages or liabilities, joint or several, to
which the Company or any such director, officer or controlling person 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 any untrue statement or alleged untrue statement of any material
fact contained in the Registration Statement, any Preliminary Prospectus, the
Prospectus, any amendment or supplement thereto, or any Blue Sky Application
or arise out of or are based upon the omission or the alleged omission to
state therein a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they
were made, not misleading, in each case to the extent, but only to the
extent, that such untrue statement or alleged untrue statement or omission or
alleged omission was made in the Registration Statement, such Preliminary
Prospectus or the Prospectus, such amendment or supplement, or any Blue Sky
Application in reliance upon and in conformity with written
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information furnished to the Company by you specifically for use in the
preparation thereof; and will reimburse any legal or other expenses reasonably
incurred by the Company or any such director, officer or controlling person in
connection with investigating or defending any such loss, claim, damage,
liability or action. In addition to your other obligations under this Section
6(b), you agree that, as an interim measure during the pendency of any claim,
action, investigation, inquiry or other proceeding arising out of or based upon
any statement or omission, or any alleged statement or omission, described in
this Section 6(b), you will reimburse the Company on a monthly basis for all
reasonable legal and other expenses incurred in connection with investigating or
defending any such claim, action, investigation, inquiry or other proceeding,
notwithstanding the absence of a judicial determination as to the propriety and
enforceability of your obligation to reimburse the Company for such expenses and
the possibility that such payments might later be held to have been improper by
a court of competent jurisdiction. This indemnity agreement shall be in addition
to any liabilities which you may otherwise have.
(c) Any party which proposes to assert the right to be indemnified
under this Section 6 shall, within ten days after receipt of notice of
commencement of any action, suit or proceeding against such party in respect
of which a claim is to be made against an indemnifying party under this
Section 6, notify each such indemnifying party of the commencement of such
action, suit or proceeding, enclosing a copy of all papers served, but the
omission so to notify such indemnifying party of any such action, suit or
proceeding shall not relieve such indemnifying party from any liability which
it may have to any indemnified party otherwise than under this Section 6. In
case any such action, suit or proceeding 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
in, and, to the extent that it shall wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with
counsel reasonably satisfactory to such indemnified 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 for any legal or other expenses, other than reasonable
costs of investigation, subsequently incurred by such indemnified party in
connection with the defense thereof. The indemnified party shall have the
right to employ its own counsel in any such action, but the fees and expenses
of such counsel shall be at the expense of such indemnified party unless (i)
the employment of counsel by such indemnified party at the expense of the
indemnifying party has been authorized by the indemnifying party, (ii) the
indemnified party shall have been advised by such counsel in a written
opinion that there may be a conflict of interest between the indemnifying
party and the indemnified party in the conduct of the defense, or certain
aspects of the defense, of such action (in which case the indemnifying party
shall not have the right to direct the defense of such action with respect to
those matters or aspects of the defense on which a conflict exists or may
exist on behalf of the indemnified party) or (iii) the indemnifying party
shall not in fact have employed counsel to assume the defense of such action,
in any of which events such fees and expenses to the extent applicable shall
be borne by the indemnifying party. An indemnifying party shall not be
liable for any settlement of any action or claim effected without its
consent. Each indemnified party, as a condition of such indemnity, shall
cooperate in good faith with the indemnifying party in the defense of any
such action or claim.
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(d) If the indemnification provided for in this Section 6 is for any
reason, other than pursuant to the terms thereof, judicially determined (by
the entry of a final judgment or decree by a court of competent jurisdiction
and the expiration of time to appeal or the denial of the last right to
appeal) to be unavailable to an indemnified party under subsections (a) or
(b) above in respect of any losses, claims, damages or liabilities (or
actions 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 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 and you from the offering of the Shares. If, however, the allocation
provided by the immediately preceding sentence is not permitted by applicable
law, then each indemnifying party shall contribute to such amount paid or
payable by such indemnified party in such proportion as is appropriate to
reflect not only such relative benefits but also the relative fault, as
applicable, of the Company and you in connection with the statements or
omissions which resulted in such losses, claims, damages or liabilities (or
actions in respect thereof), as well as other relevant equitable
considerations. The relative benefits received by, as applicable, the
Company and you shall be deemed to be in the same proportion as the total net
proceeds from the offering (before deducting expenses) received by the
Company bear to the total underwriting discounts and commissions received by
you, 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, among
other things, whether the untrue statement of a material fact or the omission
or alleged omission to state a material fact relates to information supplied
by the Company or you and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or
omission. The Company and you agree that it would not be just and equitable
if contributions pursuant to this subsection (d) were determined by pro rata
allocation or by any other method of allocation which does not take account
of the equitable considerations referred to above in this subsection (d).
The amount paid or payable by an indemnified party as a result of the losses,
claims, damages or liabilities (or actions in respect thereof) referred to
above in this subsection (d) shall be deemed to include 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 subsection (d), you shall not be required to contribute
any amount in excess of the underwriting discounts and commissions applicable
to the Shares purchased by you. 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.
7. Representations and Agreements to Survive Delivery. All
representations, warranties, and agreements of the Company contained herein
or in certificates delivered pursuant hereto, and your agreements contained
in Section 6 hereof, shall remain operative and in full force and effect
regardless of any termination or cancellation of this Agreement or any
investigation made by or on behalf of you or any controlling person, the
Company or any of its officers, directors or any controlling persons, and
shall survive delivery of the Shares to you hereunder.
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8. Effective Date and Termination. (a) This Agreement shall become
effective upon execution.
(b) This Agreement may be terminated by you at any time at or prior
to the Closing Date by notice to the Company if any condition specified in
Section 5 hereof shall not have been satisfied on or prior to the Closing
Date. Any such termination shall be without liability of any party to any
other party except as provided in Sections 6 and 9 hereof.
If you terminate this Agreement as provided in Sections 8(b), you shall
notify the Company by telephone or telegram, confirmed by letter.
9. Cost and Expenses. The Company will bear and pay the costs and
expenses incident to the registration of the Shares and public offering
thereof, including, without limitation, (a) the fees and expenses of the
Company's accountants and the fees and expenses of counsel for the Company,
(b) the preparation, printing, filing, delivery and shipping of the
Registration Statement, each Preliminary Prospectus, the Prospectus, and any
amendments or supplements thereto (c) the furnishing of copies of such
documents to you, (d) the registration or qualification of the Shares for
offering and sale under the securities laws of the various states, including
the reasonable fees and disbursements of your counsel relating to such
registration or qualification, (e) the fees payable to the NASD (if any) and
the Commission in connection with their review of the proposed offering of
the Shares, (f) all printing and engraving costs related to preparation of
the certificates for the Shares, including transfer agent and registrar fees,
(g) all initial transfer taxes, if any, (h) all fees and expenses relating to
the authorization of the Shares for trading on the New York Stock Exchange,
(i) all travel expenses, including air fare and accommodation expenses, of
representatives of the Company in connection with the offering of the Shares
and (j) all of the other costs and expenses incident to the performance by
the Company of the registration and offering of the Shares; provided,
however, that you will bear and pay the fees and expenses of your counsel
(other than fees and disbursements relating to the registration or
qualification of the Shares for offering and sale under the securities laws
of the various states), your out-of-pocket expenses, and any advertising
costs and expenses incurred by you incident to the public offering of the
Shares.
If this Agreement is terminated by you in accordance with the provisions
of Section 8(c), the Company shall reimburse you for all of your out-of-pocket
expenses, including the reasonable fees and disbursements of your counsel.
10. Notices. All notices or communications hereunder, except as
herein otherwise specifically provided, shall be in writing and if sent to
you shall be mailed, delivered, sent by facsimile transmission, or
telegraphed and confirmed c/o A.G. Edwards & Sons, Inc. at One North
Jefferson Avenue, St. Louis, Missouri 63103, Attention: Syndicate, facsimile
number (314) 289-7387, or if sent to the Company shall be mailed, delivered,
sent by facsimile transmission, or telegraphed and confirmed to the Company
at _____________, facsimile number (___) ____-_______.
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11. Parties. This Agreement shall inure to the benefit of and be
binding upon you and the Company and their respective successors and
assigns. Nothing expressed or mentioned in this Agreement is intended or
shall be construed to give any person, corporation or other entity, other
than the parties hereto and their respective successors and assigns and the
controlling persons, officers and directors referred to in Section 6, any
legal or equitable right, remedy or claim under or in respect of this
Agreement or any provision herein contained; this Agreement and all
conditions and provisions hereof being intended to be and being for the sole
and exclusive benefit of the parties hereto and their respective successors
and assigns and said controlling persons and said officers and directors, and
for the benefit of no other person, corporation or other entity. No
purchaser of any of the Shares from you shall be construed a successor or
assign by reason merely of such purchase.
12. Counterparts. This Agreement may be executed by any one or more
of the parties hereto in any number of counterparts, each of which shall be
deemed to be an original, but all such counterparts shall together constitute
one and the same instrument.
13. Pronouns. Whenever a pronoun of any gender or number is used
herein, it shall, where appropriate, be deemed to include any other gender
and number.
14. Applicable Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Missouri.
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If the foregoing is in accordance with your understanding, please so
indicate in the space provided below for that purpose, whereupon this letter
shall constitute a binding agreement between the Company and you.
COMMERCIAL NET LEASE REALTY, INC.
By:
------------------------------------
Title:
---------------------------------
Accepted in St. Louis,
Missouri as of the date
first above written.
A.G. Edwards & Sons, Inc.
By:
------------------------
Title:
---------------------
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SCHEDULE I
(i) The Company has been duly organized and formed, as the case may
be, and, in the case of an entity that is not a general partnership, is
validly existing and in good standing under the laws of the states or other
jurisdictions in which it is incorporated, with full power and authority
(corporate and other) to own, lease and operate its properties and conduct
their business as described in the Prospectus; the Company is duly qualified
to do business as foreign corporations in good standing in each state or
other jurisdiction in which its ownership or leasing of property or conduct
of business legally requires such qualification, except where the failure to
be so qualified would not have a material adverse effect on the ability of
the Company to conduct its business as described in the Prospectus.
(ii) Each of the subsidiaries that is organized in the United States
is a corporation duly organized and validly existing in good standing under
the laws of the jurisdiction of its organization, with 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.
(iii) The Company has duly and validly authorized capital stock as set
forth in the Prospectus; all outstanding shares of Common Stock of the
Company and the Shares conform to the description thereof in the Prospectus
under the heading "Description of Common Stock," and the outstanding shares
of Common Stock have been duly authorized and are validly issued, fully paid
and nonassessable; the Shares to be sold by the Company have been duly
authorized and, when delivered and paid for in accordance with this
Agreement, will be validly issued, fully paid and nonassessable, and the
shareholders of the Company have no preemptive rights with respect to the
Shares.
(iv) Such counsel has been advised by the staff of the Commission that
the Registration Statement has become effective under the Act and, to the
knowledge of such counsel after due inquiry, no stop order suspending the
effectiveness of the Registration Statement has been issued and no
proceedings for that purpose have been instituted or are pending or
contemplated under the Act.
(v) The Registration Statement and the Prospectus, and each amendment
or supplement thereto, as of their respective effective or issue date, comply
as to form and appear on their face to be appropriately responsive in all
material respects to the requirements of Form S-3 under the Act and the
applicable Rules and Regulations (except that such counsel need express no
opinion as to the financial statements or other financial data) and, as of
the date they were filed with the Commission, the documents incorporated by
reference in the Prospectus appear on their face to be appropriately
responsive in all material respects with the requirements of the 1934 Act and
the applicable 1934 Act Rules and Regulations (except that such counsel need
express no opinion as to the financial statements or other financial data).
(vi) The descriptions in the Registration Statement and Prospectus of
contracts and other documents filed as exhibits to the Registration Statement
are accurate in all material
23
respects; all other material agreements between the Company and third parties
expressly referenced in the Prospectus are legal, valid and binding obligations
of the Company.
(vii) No authorization, approval, consent, order, registration or
qualification of or with of any court or governmental body, authority or
agency is required with respect to the Company in connection with the
transactions contemplated by this Agreement, except such as may be required
under the Act or the Rules and Regulations or as may be required by the NASD
or under state securities laws in connection with the purchase and
distribution of the Shares by you.
(viii) The filing of the Registration Statement has been duly authorized
by the Board of Directors of the Company. This Agreement has been duly
authorized, executed and delivered by the Company. The performance of this
Agreement and the consummation of the transactions herein contemplated will
not result in a violation of the Company's articles of incorporation or
bylaws or result in a breach or violation of any of the terms and provisions
of, or constitute a default under, or result in the creation or imposition of
any lien, charge or encumbrance upon any properties or assets of the Company
and its subsidiaries under, any statute, or under any indenture, mortgage,
deed of trust, note, loan agreement, sale and leaseback arrangement, or any
other agreement or instrument known to such counsel after due inquiry to
which the Company or any of its subsidiaries is a party or by which they are
bound or to which any of the properties or assets of the Company or its
subsidiaries are subject, or any order, rule or regulation known to such
counsel after due inquiry of any court or governmental agency or body having
jurisdiction over the Company or its subsidiaries or their properties,
except, in the case of any such violation, breach, default, creation or
imposition, to such extent as does not materially adversely affect the
business of the Company and its subsidiaries taken as a whole.
(ix) To the knowledge of such counsel after due inquiry, (A) there are
no material (individually, or in the aggregate) legal, governmental or
regulatory proceedings pending or threatened to which the Company or any
subsidiary is a party or of which the business or properties of the Company
or any subsidiary is the subject which are not disclosed in the Registration
Statement and Prospectus; (B) there are no contracts or documents of a
character required to be described in the Registration Statement or the
Prospectus or to be filed as an exhibit to the Registration Statement which
are not described or filed as required; and (C) there are no statutes or
regulations required to be described in the Registration Statement or
Prospectus which are not described as required.
(x) To the knowledge of such counsel after due inquiry, the Company
and each of its subsidiaries hold all licenses, certificates, permits and
approvals from all state, federal and other regulatory authorities, and have
satisfied in all material respects the requirements imposed by regulatory
bodies, administrative agencies or other governmental bodies, agencies or
officials, that are required for the Company and its subsidiaries lawfully to
own, lease and operate its properties and conduct its business as described
in the Prospectus, and, to the knowledge of such counsel after due inquiry,
each of the Company and its subsidiaries is conducting its business in
compliance in all material respects with all of the laws, rules and
regulations of each jurisdiction in which it conducts its business.
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(xi) The statements made in the Prospectus under the captions
"Description of Debt Securities," "Description of Common Stock," "Description
of Common Stock Warrants," "ERISA Considerations" and "Federal Income Tax
Considerations" to the extent that they constitute summaries of documents
referred to therein or matters of law or legal conclusions, have been
reviewed by such counsel and are accurate summaries and fairly present the
information disclosed therein.
(xii) The Company is not an "investment company" or a company
"controlled" by an "investment company" within the meaning of the Investment
Company Act of 1940, as amended.
(xiii) CNL Realty was a "real estate investment trust" as defined by
section 856(a) for its taxable years ended December 31, 1984 through December
31, 1997, and its proposed method of operation will enable it to meet the
requirements for qualification and taxation as a REIT for its taxable year
ending December 31, 1998 and for all future taxable years.
(xiv) The Registration Statement and the Prospectus and any supplements
or amendments thereto (except for the financial statements and the notes
thereto and the schedules and other financial and statistical data included
therein, as to which such counsel need not express any opinion) company as to
form in all material respects with the requirements of the Act; and each of
the incorporated documents (except for the financial statements and the notes
thereto and the schedules and other financial and statistical data included
therein, as to which counsel need not express any opinion) complies as to
form in all material respects with the Exchange Act and the rules and
regulations of the Commission thereunder;
(xv) Although such counsel has not undertaken to determine
independently, and does not assume any responsibility for, the accuracy or
completeness of the statements in the Registration Statement, such counsel
has participated in the preparation of the Registration Statement and the
Prospectus, including review and discussion of the contents thereof
(including review and discussion of the contents of all incorporated
documents), and nothing has come to the attention of such counsel that has
caused them to believe that the Registration Statement (including the
incorporated documents) at the time the Registration Statement became
effective, or the Prospectus, as of its date and as of the Closing Date,
contained an untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the
statements therein no misleading or that any amendment or supplement to
Prospectus, as of its respective date, and as of the Closing Date, contained
any untrue statement of a material fact or omitted to state a material fact
necessary in order to make the statements therein, in the light of
circumstances under which they were made, not misleading (it being understood
that such counsel need express no opinion with respect to the financial
statements and the notes thereto and the schedules and other financial and
statistical data included in the Registration Statement or the Prospectus or
any incorporated document).
(xvi) To such counsel's knowledge, except as described in the
Prospectus, there are no outstanding options, warrants or other rights
calling for the issuance of any shares of
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capital stock of the Company or any security convertible into or exchangeable or
exercisable for capital stock of the Company.
(xvii) To such counsel's knowledge, no holder of any security of the
Company has any right to require registration of shares of Common Stock or
any other security of the Company because of the filing of the Registration
Statement or consummation of the transactions by this Agreement.
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SCHEDULE II
Pursuant to Section 5(f) of the Underwriting Agreement, KPMG Peat Marwick
LLP shall furnish letters to you to the effect that:
(i) They are independent certified public accountants with
respect to the Company and its subsidiaries within the meaning of the Act
and the applicable Rules and Regulations thereunder.
(ii) In their opinion, the financial statements and any
supplementary financial information and schedules audited (and, if
applicable, prospective financial statements and/or pro forma financial
information examined) by them and included or incorporated by reference in
the Prospectus or the Registration Statement comply as to form in all
material respects with the applicable accounting requirements of the Act
and the applicable Rules and Regulations with respect to registration
statements on Form S-3; and, if applicable, they have made a review in
accordance with standards established by the American Institute of
Certified Public Accountants of the unaudited consolidated interim
financial statements, selected financial data, pro forma financial
information, prospective financial statements and/or condensed financial
statements derived from audited financial statements of the Company for
the periods specified in such letter, as indicated in their reports
thereon, copies of which have been furnished to you.
(iii) On the basis of limited procedures, not constituting an
audit in accordance with generally accepted auditing standards, consisting
of a reading of the unaudited financial statements and other information
referred to below, performing the procedures specified by the AICPA for a
review of interim financial information as discussed in SAS No. 71,
Interim Financial Information, on the latest available interim financial
statements of the Company and its subsidiaries, inspection of the minute
books of the Company and its subsidiaries since the date of the latest
audited financial statements included in the Prospectus, inquiries of
officials of the Company and its subsidiaries responsible for financial
and accounting matters and such other inquiries and procedures as may be
specified in such letter, nothing came to their attention that caused them
to believe that:
(A) any material modifications should be made to the
unaudited statements of consolidated income, statements of
consolidated financial position and statements of consolidated cash
flows included in the Prospectus for them to be in conformity with
generally accepted accounting principles, or the unaudited statements
of consolidated income, statements of consolidated financial position
and statements of consolidated cash flows included in the Prospectus
do not comply as to form in all material respects with the applicable
accounting requirements of the Act and the related published Rules and
Regulations thereunder.
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(B) any other unaudited income statement data and balance
sheet items included in the Prospectus do not agree with the
corresponding items in the unaudited consolidated financial statements
from which such data and items were derived, and any such unaudited
data and items were not determined on a basis substantially consistent
with the basis for the corresponding amounts in the audited
consolidated financial statements included in the Prospectus.
(C) the unaudited financial statements which were not
included in the Prospectus but from which were derived any unaudited
condensed financial statements referred to in Clause (A) and any
unaudited income statement data and balance sheet items included in
the Prospectus and referred to in Clause (B) were not determined on a
basis substantially consistent with the basis for the audited
consolidated financial statements included in the Prospectus.
(D) any unaudited pro forma consolidated condensed
financial statements included in the Prospectus do not comply as to
form in all material respects with the applicable accounting
requirements of the Act and the published rules and regulations
thereunder or the pro forma adjustments have not been properly applied
to the historical amounts in the compilation of those statements.
(E) as of a specified date not more than five days prior
to the date of such letter, there have been any changes in the
consolidated capital stock or any increase in the consolidated
long-term debt of the Company and its subsidiaries, or any decreases
in consolidated working capital, net current assets or net assets, or
any changes in any other items specified by you, in each case as
compared with amounts shown in the latest balance sheet included in
the Prospectus, except in each case for changes, increases or
decreases which the Prospectus discloses have occurred or may occur or
which are described in such letter.
(F) for the period from the date of the latest financial
statements included in the Prospectus to the specified date referred
to in Clause (E) there were any decreases in consolidated net revenues
or operating profit or the total or per share amounts of consolidated
net income or any changes in any other items specified by you, in each
case as compared with the comparable period of the preceding year and
with any other period of corresponding length specified by you, except
in each case for changes, decreases or increases which the Prospectus
discloses have occurred or may occur or which are described in such
letter.
(iv) In addition to the audit referred to in their report(s)
included or incorporated by reference in the Prospectus and the limited
procedures, inspection of minute books, inquiries and other procedures
referred to in paragraph (iii) above, they have carried out certain specified
procedures, not constituting an audit in accordance with generally accepted
auditing standards, with respect to certain amounts, percentages and
financial information specified by you, which are derived
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from the general accounting records of the Company and its subsidiaries for the
periods covered by their reports and any interim or other periods since the
latest period covered by their reports, which appear in the Prospectus, or in
Part II of, or in exhibits and schedules to, the Registration Statement
specified by you, and have compared certain of such amounts, percentages and
financial information with the accounting records of the Company and its
subsidiaries and have found them to be in agreement.
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