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COMMERCIAL NET LEASE REALTY, INC.
__% NOTES DUE 2008
UNDERWRITING AGREEMENT
March , 1998
J.P. MORGAN SECURITIES INC.
GOLDMAN, SACHS & CO.
SALOMON BROTHERS INC
c/o J.P. Morgan Securities Inc.
60 Wall Street
New York, New York 10260
Dear Sirs:
Commercial Net Lease Realty, Inc., a Maryland corporation (the
"Company"), proposes to issue and sell to the underwriters named in Schedule II
hereto (collectively, the "Underwriters"), the principal amount of its debt
securities identified in Schedule I hereto (the "Securities"), to be issued
under the indenture specified in Schedule I hereto (the "Indenture") between
the Company and the Trustee identified in such Schedule (the "Trustee").
The Company has prepared and filed with the Securities and Exchange
Commission (the "Commission") in accordance with the provisions of Securities
Act of 1933, as amended, and the rules and regulations of the Commission
thereunder (collectively, the "Securities Act"), a registration statement (the
file number of which is set forth in Schedule I hereto) on Form S-3, relating
to certain securities (the "Shelf Securities") to be issued from time to time
by the Company. The Company also has filed with, or proposes to file with, the
Commission pursuant to Rule 424 under the Securities Act a prospectus
supplement specifically relating to the Securities. The registration statement
as amended to the date of this Agreement is hereinafter referred to as the
"Registration Statement" and the related prospectus covering the Shelf
Securities in the form first used to confirm sales of the Securities is
hereinafter referred to as the "Basic Prospectus." The Basic Prospectus as
supplemented by the prospectus supplement specifically relating to the
Securities in the form first used to confirm sales of the Securities is
hereinafter referred to as the "Prospectus." Any reference in this Agreement to
the Registration Statement, the Basic Prospectus, any preliminary form of
Prospectus (a "preliminary prospectus") previously filed with the Commission
pursuant to Rule 424 or the Prospectus shall be deemed to refer to and include
the documents incorporated by reference therein pursuant to Item 12 of Form S-3
under the Securi-
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ties Act which were filed under the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission thereunder
(collectively, the "Exchange Act") on or before the date of this Agreement or
the date of the Basic Prospectus, any preliminary prospectus or the Prospectus,
as the case may be; and any reference to "amend," "amendment" or "supplement"
with respect the Registration Statement, the Basic Prospectus, any preliminary
prospectus or the Prospectus shall be deemed to refer to and include any
documents filed under the Exchange Act after the date of this Agreement, or the
date of the Basic Prospectus, any preliminary prospectus or the Prospectus, as
the case may be, which are deemed to be incorporated by reference therein.
The Company hereby agrees with the Underwriters as follows:
1. The Company agrees to issue and sell the Securities to the
several Underwriters as hereinafter provided, and each Underwriter, on the
basis of the representations and warranties herein contained, but subject to
the conditions hereinafter stated, agrees to purchase, severally and not
jointly, from the Company the respective principal amount of Securities set
forth opposite such Underwriter's name in Schedule II hereto at the purchase
price set forth in Schedule I hereto plus accrued interest, if any, from the
date specified in Schedule I hereto to the date of payment and delivery.
2. The Company understands that the several Underwriters intend
(i) to make a public offering of their respective portions of the Securities
and (ii) initially to offer the Securities upon the terms set forth in the
Prospectus.
3. Payment for the Securities shall be made to the Company or to
its order in immediately available funds on the date and at the time and place
set forth in Schedule I hereto (or at such other time and place on the same or
such other date, not later than the third Business Day thereafter, as you and
the Company may agree in writing). Such payment will be made upon delivery to,
or to you for the respective accounts of, such Underwriters of the Securities
registered in such names and in such denominations as you shall request not
less than two full Business Days prior to the date of delivery, with any
transfer taxes payable in connection with transfer to the Underwriters duly
paid by the Company. As used herein, the term "Business Day" means any day
other than a day on which banks are permitted or required to be closed in New
York City. The time and date of such payment and delivery with respect to the
Securities are referred to herein as the "Closing Date." The Securities will
be delivered through the book entry facilities of The Depository Trust Company
("DTC") and will be made available for inspection by you by 1:00 P.M. on the
Business Day prior to the Closing Date at such place in New York City as you,
DTC and the Company shall agree.
4. The Company represents and warrants to each Underwriter that:
(a) no order preventing or suspending the use of any preliminary
prospectus has been issued by the Commission, and each preliminary prospectus
filed as part of the Registration Statement as originally filed or as part of
any amendment thereto, or filed pursuant to Rule 424
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under the Securities Act, complied when so filed in all material respects with
the Securities Act, and did 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, in the light of the circumstances under which they
were made, not misleading; provided that this representation and warranty shall
not apply to any statements or omissions made in reliance upon and in
conformity with information relating to any Underwriter furnished to the
Company in writing by such Underwriter through you expressly for use therein;
(b) the Registration Statement has been declared effective by the
Commission under the Securities Act; no stop order suspending the effectiveness
of the Registration Statement has been issued and no proceeding for that
purpose has been instituted or, to the knowledge of the Company, threatened by
the Commission; and the Registration Statement and Prospectus (as amended or
supplemented if the Company shall have furnished any amendments or supplements
thereto) comply, or will comply, as the case may be, in all material respects
with the Securities Act and the Trust Indenture Act of 1939, as amended, and
the rules and regulations of the Commission thereunder (collectively, the
"Trust Indenture Act"), 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
date of the Prospectus and any amendment or supplement thereto, contain any
untrue statement of a material fact or 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, and the
Prospectus, as amended or supplemented at the Closing Date, if applicable, will
not contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; except that the
foregoing representations and warranties shall not apply to (i) that part of
the Registration Statement which constitutes the Statement of Eligibility and
Qualification (Form T-1) under the Trust Indenture Act of the Trustee, and (ii)
statements or omissions in the Registration Statement or the Prospectus made in
reliance upon and in conformity with information relating to any Underwriter
furnished to the Company in writing by such Underwriter through you expressly
for use therein;
(c) the documents incorporated by reference in the Prospectus,
when they were filed with the Commission, conformed in all material respects to
the requirements of the Exchange Act, and none of such documents contained an
untrue statement of a material fact or omitted to state a material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; and any further documents so filed
and incorporated by reference in the Prospectus, when such documents are filed
with the Commission, will conform in all material respects to the requirements
of the Exchange Act, as applicable, and will not contain an untrue statement of
a material fact or omit to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading;
(d) the historical financial statements and the related notes
thereto, included or incorporated by reference in the Registration Statement
and the Prospectus, comply in all mate-
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rial respects with the requirements of the Securities Act and the Exchange Act,
as applicable, and present fairly the financial position of the Company as of
the dates indicated and the results of its operations and the changes in its
cash flows for the periods specified; the financial statements with respect to
the properties acquired or to be acquired by the Company, if any, together with
related notes and schedules, as set forth or incorporated by reference in the
Registration Statement or the Prospectus, present fairly the financial position
and the results of operations of such properties at the indicated dates and for
the indicated periods; the foregoing financial statements have been prepared in
conformity with generally accepted accounting principles applied on a
consistent basis, and the supporting schedules included or incorporated by
reference in the Registration Statement or the Prospectus present fairly the
information required to be stated therein; the summary financial and
statistical data included or incorporated by reference in the Registration
Statement or the Prospectus present fairly the information shown therein and
have been compiled on a basis consistent with the financial statements
presented therein; the pro forma financial information, and the related notes
thereto, included or incorporated by reference in the Registration Statement
and the Prospectus has been prepared in accordance with the applicable
requirements of the Securities Act and the Exchange Act, as applicable; the
assumptions used in preparing such pro forma information are reasonable and the
adjustments used therein are appropriate to give effect to the transactions
referred to therein; and the other financial and statistical information and
data set forth in the Registration Statement and the Prospectus (and any
amendment or supplement thereto) are accurately presented in all material
respects and prepared on a basis consistent with the books and records of the
Company and its Subsidiaries (as defined below);
(e) except as disclosed in the Registration Statement and the
Prospectus (or any amendment or supplement thereto), subsequent to the
respective dates as of which such information is given in the Registration
Statement and the Prospectus (or any amendment or supplement thereto), the
Company and its Subsidiaries have not incurred any liability or obligation,
direct or contingent, or entered into any transaction, not in the ordinary
course of business, that is material to the Company and its Subsidiaries, and
there has not been any change in the capital stock, or material increase in the
short-term debt or long-term debt, of the Company and its Subsidiaries, or any
material adverse change, or any development involving or which may reasonably
be expected to involve, a prospective material adverse change, in the condition
(financial or other), business, net worth or results of operations of the
Company and its Subsidiaries;
(f) the Company has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the state of Maryland, with
power and authority (corporate or other) to own, lease and operate its
properties and conduct its business as described in the Registration Statement
and the Prospectus, and has been duly qualified as a foreign corporation for
the transaction of business and is in good standing under the laws of each
other jurisdiction in which it owns or leases properties, or conducts any
business, so as to require such qualification (which jurisdictions of foreign
qualification are identified in Schedule III hereto), other than where the
failure to be so qualified or in good standing would not (1) have a material
adverse effect on the condition, financial or otherwise, the earnings, business
affairs, prospects, properties, sharehold-
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ers' equity or results of operations of the Company and its consolidated
Subsidiaries, taken as a whole, (2) adversely affect the issuance, validity, or
enforceability of the Securities or the enforceability of the Indenture or (3)
adversely affect the consummation of any of the transactions contemplated by
this Agreement (each of (1), (2) and (3) above, a "Material Adverse Effect");
except for investments in its Subsidiaries or in securities as described in the
Registration Statement or Prospectus, the Company has no equity or other
interest in, or rights to acquire, an equity or other interest in any
corporation, partnership, trust or other entity; each of the Company's
Subsidiaries (within the meaning of Regulation S-X under the Securities Act) is
identified on Schedule IV hereto (the "Subsidiaries") and has been duly
organized and is validly existing as a corporation or limited partnership, as
the case may be, in good standing under the laws of its states of organization
with power and authority (corporate or other) to own its properties and conduct
its business as presently conducted and as described in the Prospectus, and has
been duly qualified as a foreign corporation or limited partnership, as the
case may be, for the transaction of business and in good standing under the
laws of each other jurisdiction in which it owns or leases properties, or
conducts any business, so as to require such qualification (which jurisdictions
of organization and foreign qualification are identified in Schedule IV
hereto), other than where the failure to be so qualified or in good standing
would not have a Material Adverse Effect; all the outstanding shares of capital
stock or partnership interests of each Subsidiary have been duly authorized and
validly issued, are fully-paid and non-assessable, and are owned by the
Company, directly or indirectly, free and clear of all liens, encumbrances,
security interests and claims; and except for investments in securities as
described in the Registration Statement or Prospectus, the Subsidiaries have no
equity or other interest in, or rights to acquire, an equity or other interest
in any corporation, partnership, trust or other entity;
(g) this Agreement has been duly authorized, executed and delivered
by the Company;
(h) the Securities have been duly authorized, and, when issued,
authenticated and delivered pursuant to this Agreement and the Indenture, will
have been duly and validly executed, authenticated, issued and delivered and
will constitute valid and legally binding obligations of the Company,
enforceable against the Company in accordance with their terms and entitled to
the benefits provided by the Indenture; the Indenture has been duly authorized,
executed and delivered by the Company, and has been duly qualified under the
Trust Indenture Act and constitutes a valid and legally binding obligation of
the Company, enforceable against the Company in accordance with its terms; and
the Securities and the Indenture will conform to the statements relating
thereto contained in the Prospectus;
(i) neither the Company nor any of its Subsidiaries is, nor with
the giving of notice or lapse of time or both would be, in violation of or in
default under (A) (i) its Articles of Incorporation, By-Laws, Certificate of
Limited Partnership or Limited Partnership Agreement, as the case may be, or
(ii) to the best of the Company's knowledge, any law, ordinance, administrative
or governmental rule or regulation applicable to the Company or its
Subsidiaries, which violation would have a Material Adverse Effect, or (iii)
any decree of any court or governmental agency or
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body having jurisdiction over the Company or its Subsidiaries, or (B) any
indenture, mortgage, deed of trust, loan agreement, partnership agreement or
other agreement or other instrument or obligation to which the Company or any
of its Subsidiaries is a party or by which they or any of their properties are
bound, except, with respect to this clause (2), for violations and defaults
which individually or in the aggregate would not have a Material Adverse
Effect; the issue and sale of the Securities and the performance by the Company
of all of the provisions of its obligations under the Securities, the Indenture
and this Agreement and the consummation of the transactions herein and therein
contemplated will not conflict with or result in a breach of any of the terms
or provisions of, or constitute a default under, any indenture, mortgage, deed
of trust, loan agreement, partnership agreement or other material agreement or
instrument to which the Company or any of its Subsidiaries is a party or by
which the Company or any of its Subsidiaries is bound or to which any of the
property or assets of the Company or any of its Subsidiaries is subject, nor
will any such action result in any violation of the provisions of the Articles
of Incorporation or the By-Laws of the Company or any applicable law or statute
or any order, rule or regulation of any court or governmental agency or body
having jurisdiction over the Company or any of its properties; and no consent,
approval, authorization, order, registration or qualification of or with any
such court or governmental agency or body is required for the issue and sale of
the Securities or the consummation by the Company of the transactions
contemplated by this Agreement or the Indenture, except such consents,
approvals, authorizations, orders, registrations or qualifications as have been
obtained under the Securities Act, the Trust Indenture Act and as may be
required under state securities or Blue Sky Laws in connection with the
purchase and distribution of the Securities by the Underwriters;
(j) (A) to the best of the Company's knowledge, neither the
Company nor any of its Subsidiaries is in violation of any municipal, state or
federal law, rule or regulation concerning any of the properties described in
the Prospectus as owned by them (the "Properties") which would have a Material
Adverse Effect; (B) to the best of the Company's knowledge, each of the
Properties complies with all applicable zoning laws, ordinances and regulations
in all material respects and, if and to the extent there is a failure to
comply, such failure does not materially impair the value of any such
Properties and will not result in a forfeiture or reversion of title thereof;
(C) neither the Company nor either of its Subsidiaries has received from any
governmental authority any written notice of any condemnation of or zoning
change affecting any of the Properties, and the Company does not know of any
such condemnation or zoning change which is threatened and which if consummated
would have a Material Adverse Effect; (D) the leases under which the Company
leases the Properties as lessor (the "Leases") are in full force and effect and
have been entered into in the ordinary course of business of the Company; (E)
the Company and each of its Subsidiaries have complied with their respective
obligations under the Leases in all material respects and the Company does not
know of any default by any other party to the Leases which, alone or together
with other such defaults, would have a Material Adverse Effect on the Company
and its Subsidiaries or any of the Properties subject to a Lease; and (G) all
liens, charges, encumbrances, claims or restrictions on or affecting the
properties and assets (including the Properties) of the Company and its
Subsidiaries that are required to be disclosed in the Prospectus are disclosed
therein.
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(k) other than as set forth or contemplated in the Registration
Statement and the Prospectus, there are no legal or governmental proceedings
pending or, to the knowledge of the Company, threatened to which the Company or
any of its Subsidiaries is or may be a party or to which any property of the
Company or any of its Subsidiaries is or may be the subject which, if
determined adversely to the Company, could individually or in the aggregate
reasonably be expected to have a Material Adverse Effect and, to the best of
the Company's knowledge, no such proceedings are threatened or contemplated by
governmental authorities or threatened by others; and there are no statutes,
regulations, contracts or other documents of a character required to be filed
as an exhibit to the Registration Statement or required to be described in the
Registration Statement or the Prospectus which are not filed or described as
required; and the descriptions of the terms of all such statutes, regulations,
contracts and documents contained or incorporated by reference in the
Registration Statement or Prospectus are complete and correct in all material
respects;
(l) the Company's authorized, issued and outstanding
capitalization is as set forth in the Prospectus; and all of the issued shares
of beneficial interest of the Company have been duly and validly authorized and
issued, are fully paid and non-assessable and are free of any preemptive or
similar rights;
(m) the Company and the Subsidiaries have good and marketable
title in fee simple to all of the properties and assets reflected in the
financial statements or as described in the Registration Statement and the
Prospectus as owned by them (including the Properties) and good and marketable
title to all personal property owned by them, in each case free of any lien,
mortgage, pledge, charge or encumbrance of any kind except those reflected in
such financial statements or as described in the Registration Statement and the
Prospectus or which do not materially affect or detract from the value of such
property or interfere with the use made and proposed to be made of such
property by the Company and the Subsidiaries; the Company and the Subsidiaries
occupy their leased properties under valid and binding leases conforming to the
description thereof set forth in the Registration Statement and the Prospectus;
(n) the mortgages and deeds of trust encumbering the Properties
are not (i) cross-defaulted to any indebtedness other than indebtedness of the
Company or any of the Subsidiaries or (ii) cross-collateralized to any property
not owned by the Company or any of the Subsidiaries;
(o) the Company and the Subsidiaries are insured by insurers of
recognized financial responsibility against such losses and risks and in such
amounts as are customary in the business in which they are engaged and is
adequate for the value of their properties; all policies of insurance insuring
the Company or the Subsidiaries or their respective business, assets,
employees, officers and trustees or directors, as the case may be, are in full
force and effect; the Company and the Subsidiaries are in compliance with the
terms of such policies and instruments in all material respects and there are
no claims by the Company or by the Subsidiaries under any such policy or
instrument as to which any insurance company is denying liability or defending
under a
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reservation of rights clause, other than claims which individually or in the
aggregate would not have a Material Adverse Effect; neither the Company nor any
of its Subsidiaries had been refused any insurance coverage sought or applied
for, and the Company does not have any reason to believe that the Company and
each of its Subsidiaries will not be able to renew its respective existing
insurance coverage as and when such coverage expires or to obtain similar
coverage from similar insurers as may be necessary to continue its respective
businesses at a cost that would not have a Material Adverse Effect;
(p) the Company and its Subsidiaries have title insurance on each
of the Properties in an amount at least equal to the greater of (a) the cost of
acquisition of such Property and (b) the replacement cost of the improvements
located on such Property;
(q) the Company has filed all Federal, State and foreign income
tax returns which have been required to be filed and have paid all taxes
indicated by said returns and all assessments received by it to the extent that
such taxes have become due and are not being contested in good faith;
(r) each of the Company and the Subsidiaries owns, possesses or
has obtained all material licenses, permits, certificates, consents, orders,
approvals and other authorizations from, and has made all material declarations
and filings with, all federal, state, local and other governmental authorities
(including foreign regulatory agencies), all self-regulatory organizations and
all courts and other tribunals, domestic or foreign, necessary to own or lease,
as the case may be, and to operate its properties and to carry on its business
as conducted as of the date hereof, except in each case where the failure to
obtain licenses, permits, certificates, consents, orders, approvals and other
authorizations, or to make all declarations and filings, would not have a
Material Adverse Effect, and none of the Company or any of the Subsidiaries has
received any notice of any proceeding relating to revocation or modification of
any such license, permit, certificate, consent, order, approval or other
authorization, except as described in the Registration Statement and the
Prospectus and except, in each case, where such revocation or modification
would not have a Material Adverse Effect; and the Company and each of the
Subsidiaries are in compliance with all laws, rules and regulations relating to
the conduct of their respective businesses as conducted as of the date hereof,
except where noncompliance with such laws, rules or regulations would not have
a Material Adverse Effect; and, except as described in the Prospectus, none of
such permits contains any restriction that is materially burdensome to the
Company and its Subsidiaries.
(s) to the Company's knowledge, the accountants, KPMG Peat
Marwick, LLP, who have certified or shall certify the financial statements
included or incorporated by reference in the Registration Statement and the
Prospectus (or any amendment or supplement thereto) are independent public
accountants as required by the Securities Act;
(t) no relationship, direct or indirect, exists between or among
the Company or the Subsidiaries on the one hand, and the directors, officers,
stockholders, customers or suppliers of
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the Company or the Subsidiaries on the other hand, which is required by the
Securities Act to be described in the Registration Statement and the Prospectus
which is not so described;
(u) to the Company's knowledge, neither the Company and its
Subsidiaries nor any employee or agent of the Company and its Subsidiaries has
made any payment of funds of the Company or its Subsidiaries or received or
retained any funds in violation of any law, rule or regulation, which payment,
receipt or retention of funds is of a character required to be disclosed in the
Prospectus;
(v) no labor dispute with the employees of the Company and its
Subsidiaries exists or is threatened or imminent that could result in a
Material Adverse Effect;
(w) the Company and its Subsidiaries own or possess all patents,
trademarks, trademark registrations, service marks, service mark registrations,
trade names, copyrights, licenses, inventions, trade secrets and rights
described in the Prospectus as being owned by them or necessary for the conduct
of their respective businesses, and the Company is not aware of any claim to
the contrary or any challenge by any other person to the rights of the Company
and its Subsidiaries with respect to the foregoing;
(x) the Company has never been, is not now, and immediately after
giving effect to the offering and sale of the Securities under this Agreement
will not be, an "investment company" or entity "controlled" by an "investment
company", within the meaning of the Investment Company Act of 1940, as amended
(the "Investment Company Act");
(y) the Company is organized in conformity with the requirements
for qualification as a real estate investment trust under Sections 856 through
860 of the Code and the rules and regulations thereunder; as of the close of
any taxable year, the Company has had no earnings and profits accumulated in a
non-REIT year within the meaning of Section 857(a)(2)(B) of the Code, and the
Company's past and proposed method of operation have enabled it, and will
enable it, to meet the requirements for taxation as a REIT under the Code for
all years of its taxable operations ending on or before December 31, 1997;
(z) each of the Company's Subsidiaries is in compliance with all
requirements applicable to a "qualified REIT subsidiary" within the meaning of
Section 856(i) of the Code and all applicable regulations under the Code, and
the Company is not aware of any fact that would negatively impact such
qualifications;
(aa) the conditions for the use of a registration statement on Form
S-3 set forth in the General Instructions on Form S-3 have been satisfied and
the Company is entitled to use such form for the transactions contemplated
herein;
(ab) (i) to the best of the Company's knowledge, the Company,
its Subsidiaries, the Properties, and the operations conducted thereon comply
and heretofore have complied with
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all applicable Environmental Laws, except as disclosed in the Environmental
Reports (defined below) and not likely to have a Material Adverse Effect;
(ii) the Company and its Subsidiaries have not at any time
and, to the best of the Company's knowledge, no other party has at any time
handled, buried, stored, retained, refined, transported, processed,
manufactured, generated, produced, spilled, allowed to seep, leak, escape or
leach, or be pumped, poured, emitted, emptied, discharged, injected, dumped,
transferred or otherwise disposed of or dealt with, Hazardous Materials (as
defined below) on, to, under or from the Properties, except as disclosed in the
environmental site assessment reports obtained by the Company on or before the
date hereof in connection with the purchase of any of the Properties and
provided to the Underwriters or their counsel (collectively, the "Environmental
Reports") and not likely to have a Material Adverse Effect. Neither the
Company nor any of its Subsidiaries intends to use the Properties or any
subsequently acquired properties for the purpose of handling, burying, storing,
retaining, refining, transporting, processing, manufacturing, generating,
producing, spilling, seeping, leaking, escaping, leaching, pumping, pouring,
emitting, emptying, discharging, injecting, dumping, transferring or otherwise
disposing of or dealing with Hazardous Materials;
(iii) to the best of the Company's knowledge, no seepage,
leak, escape, leach, discharge, injection, release, emission, spill, pumping,
pouring, emptying or dumping of Hazardous Materials into waters on or adjacent
to the Properties has occurred, is occurring or is reasonably expected to
occur, except as disclosed in the Environmental Reports and not likely to have
a Material Adverse Effect;
(iv) neither the Company nor any of its Subsidiaries has
received notice from any Governmental Authority or other person of, and does
not have knowledge of, any occurrence or circumstance which, with notice,
passage of time, or failure to act, would give rise to, any claim under or
pursuant to any Environmental Law or under common law pertaining to Hazardous
Materials on or originating from the Properties or arising out of the conduct
of any party with respect to the Properties, except as disclosed in the
Environmental Reports;
(v) to the best of the Company's knowledge, the
Properties are not included or proposed for inclusion on any federal, state, or
local lists of sites which require or might require environmental cleanup,
including, but not limited to, the National Priorities List or CERCLIS List
issued pursuant to CERCLA (as defined below) by the United States Environmental
Protection Agency;
as used herein, "Hazardous Material" shall include, without
limitation, any flammable explosive, 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;
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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 the 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 Clear 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;
(ac) in the ordinary course of its business, the Company conducts a
periodic review of the effect of Environmental Laws on the business, operations
and properties of the Company and the Subsidiaries, in the course of which it
identifies and evaluates associated costs and liabilities (including, without
limitation, any capital or operating expenditures required for clean-up,
closure of properties or compliance with Environmental Laws or any permit,
license or approval, any related constraints on operating activities and any
potential liabilities to third parties). On the basis of such review, the
Company has reasonably concluded that such associated costs and liabilities
would not, singly or in the aggregate, have a Material Adverse Effect;
(ad) subsequent to the respective dates as of which information is
given in the Prospectus, (i) the Company has not purchased any of its
outstanding shares of beneficial interest (other than repurchases of fractional
shares), nor declared, paid or otherwise made any dividend or distribution of
any kind on its shares of beneficial interest other than regular periodic
dividends on its shares of beneficial interest (preferred and common); and (ii)
there has not been any material change in the shares of beneficial interest,
short-term debt or long-term debt of the Company, except as described in or
contemplated by the Prospectus;
(ae) no Subsidiary is currently prohibited directly or indirectly
from paying any dividends to the Company, from making any other distribution on
such Subsidiary's capital stock, from repaying to the Company any loans or
advances to such Subsidiary from the Company of from transferring any of such
Subsidiary's assets or property to the Company or any other Subsidiary of the
Company, except as described in or contemplated by the Prospectus;
(af) the Company has not distributed and, prior to the later to
occur of (i) the Closing Date and (ii) completion of the distribution of the
Securities, will not distribute any offering material in connection with the
offering and sale of the Securities other than the Registration Statement, the
preliminary prospectus, the Prospectus or other material permitted by the Act;
the Company has not, directly or indirectly, (i) taken any action designed to
cause or to result in, or that has constituted or which might reasonably be
expected to constitute, the stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of the Securities or
(ii) since the filing of the Registration Statement (A) sold, bid for,
purchased, or paid anyone any compensation for soliciting purchases of, the
Securities or (B) paid or agreed to
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pay to any person any compensation for soliciting another to purchase any other
securities of the Company;
(ag) the Company maintains a system of internal accounting controls
sufficient to provide reasonable assurances that (i) transactions are executed
in accordance with management's general or specific authorization; (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain accountability for assets; (iii) access to the financial and corporate
books and records and assets is permitted only in accordance with management's
general or specific authorization; and (iv) the recorded accountability for
assets is compared with existing assets at reasonable intervals and appropriate
action is taken with respect to any differences; and
(ah) to the best of the Company's knowledge, the Company does no
business with any person or affiliate located in Cuba within the meaning of
Florida Rule 3E-900.001.
5. The Company covenants and agrees with the several Underwriters
as follows:
(a) to file the Prospectus in a form approved by you pursuant to
Rule 424 under the Securities Act not later than the Commission's close of
business on the second Business Day following the date of determination of the
offering price of the Securities; and to furnish copies of the Prospectus to
the Underwriters in New York City prior to 10:00 a.m., New York City time, on
the Business Day next succeeding the date of this Agreement in such quantities
as you may reasonably request;
(b) to deliver to each Underwriter and counsel for the
Underwriters, at the expense of the Company, a signed copy of the Registration
Statement (as originally filed) and each amendment thereto, in each case
including exhibits and documents incorporated by reference therein and, during
the period mentioned in paragraph (e) below, to each of the Underwriters as
many copies of the Prospectus (including all amendments and supplements
thereto) and documents incorporated by reference therein as you may reasonably
request, when filed with Commission.
(c) before filing any amendment or supplement to the Registration
Statement or the Prospectus, to furnish to you a copy of any proposed amendment
or supplement to the Registration Statement or the Prospectus, for your review,
and not to file any such proposed amendment or supplement to which you
reasonably object;
(d) to file promptly all reports and any definitive proxy or
information statements required to be filed by the Company with the Commission
pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act for so long
as the delivery of a prospectus is required in connection with the offering or
sale of the Securities, and during such same period, to advise the Underwriters
and counsel for the Underwriters promptly, and to confirm such advice in
writing, (i) when any amendment to the Registration Statement shall have become
effective, (ii) of any request by the Commission for any amendment to the
Registration Statement or any amendment or supple-
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ment to the Prospectus or for any additional information, (iii) of the issuance
by the Commission of any stop order suspending the effectiveness of the
Registration Statement or the initiation or threatening of any proceeding for
that purpose, (iv) of the occurrence of any event, within the period referenced
in paragraph (e) below, 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 when the Prospectus is delivered to a purchaser,
not misleading, and (v) of the receipt by the Company of any notification with
respect to any suspension of the qualification of the Securities for offer and
sale in any jurisdiction or the initiation or threatening of any proceeding for
such purpose; and to use its best efforts to prevent the issuance of any such
stop order or notification and, if issued, to obtain as soon as possible the
withdrawal thereof;
(e) if, during such period after the first date of the public
offering of the Securities as in the opinion of counsel for the Underwriters a
prospectus relating to the Securities is required by law to be delivered in
connection with sales by an Underwriter or dealer, any event shall occur as a
result of which it is necessary to amend or supplement the Prospectus in order
to make the statements therein, in the light of the circumstances when the
Prospectus is delivered to a purchaser, not misleading, or if it is necessary
to amend or supplement the Prospectus to comply with law, forthwith to prepare
and furnish, at the expense of the Company, to the Underwriters and to the
dealers (whose names and addresses you will furnish to the Company) to which
Securities may have been sold by you on behalf of the Underwriters and to any
other dealers upon request, such amendments or supplements to the Prospectus as
may be necessary so that the statements in the Prospectus as so amended or
supplemented will not, in the light of the circumstances when the Prospectus is
delivered to a purchaser, be misleading or so that the Prospectus will comply
with law;
(f) to endeavor to qualify the Securities for offer and sale under
the securities or Blue Sky laws of such jurisdictions as you shall reasonably
request and to continue such qualification in effect so long as reasonably
required for distribution of the Securities and to pay all fees and expenses
(including fees and disbursements of counsel to the Underwriters) reasonably
incurred in connection with such qualification and in connection with the
determination of the eligibility of the Securities for investment under the
laws of such jurisdictions as you may designate; provided that the Company
shall not be required to file a general consent to service of process in any
jurisdiction;
(g) to make generally available to its security holders and to you
as soon as practicable but not later than 15 months after the effective date of
the Registration Statement (as defined in Rule 158(c) of the Commission
promulgated under the Securities Act) an earnings statement covering a period
of at least twelve months beginning with the first fiscal quarter of the
Company occurring after the effective date of the Registration Statement, which
shall satisfy the provisions of Section 11(a) of the Securities Act and Rule
158 of the Commission promulgated thereunder;
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(h) so long as the Securities are outstanding, to furnish to you
copies of all reports or other communications (financial or other) furnished to
holders of Securities, and copies of any reports and financial statements
furnished to or filed with the Commission or any national securities exchange;
(i) during the period beginning on the date hereof and continuing
to and including the Business Day following the Closing Date, not to offer,
sell, contract to sell or otherwise dispose of any debt securities of or
guaranteed by the Company which are substantially similar to the Securities
without your prior written consent;
(j) to use the net proceeds of the offering of the Securities in
the manner specified in the Prospectus under "Use of Proceeds;"
(k) whether or not the transactions contemplated in this
Agreement are consummated or this Agreement is terminated, to pay all costs and
expenses incident to the performance of its obligations hereunder, including
without limiting the generality of the foregoing, all costs and expenses (i)
incident to the preparation, issuance, execution, authentication and delivery
of the Securities, including any expenses of the Trustee, (ii) incident to the
preparation, printing and filing under the Securities Act of the Registration
Statement, the Prospectus and any preliminary prospectus (including in each
case all exhibits, amendments and supplements thereto), (iii) incurred in
connection with the registration or qualification and determination of
eligibility for investment of the Securities under the laws of such
jurisdictions as the Underwriters may designate (including fees of counsel for
the Underwriters and their disbursements), (iv) in connection with the listing
of the Securities on any stock exchange, (v) related to any filing with
National Association of Securities Dealers, Inc., (vi) in connection with the
printing (including word processing and duplication costs) and delivery of this
Agreement, the Indenture, the Preliminary and Supplemental Blue Sky Memoranda
and any Legal Investment Survey and the furnishing to Underwriters and dealers
of copies of the Registration Statement and the Prospectus, including mailing
and shipping, as herein provided, (vii) payable to rating agencies in
connection with the rating of the Securities, (viii) any expenses incurred by
the Company in connection with a "road show" presentation to potential
investors and (ix) the cost and charges of any transfer agent; and
(l) to the best of its knowledge, the Company has complied and
will endeavor to comply with all provisions of Florida H.B. 1771, Section 1,
paragraph 17,130 of Florida Securities and Investor Act, and all regulations
thereunder relating to issuers doing business with Cuba.
6. The several obligations of the Underwriters hereunder shall be
subject to the performance by the Company of its obligations hereunder and to
the following conditions:
(a) the Prospectus shall have been filed with the Commission
pursuant to Rule 424 within the applicable time period prescribed for such
filing by the rules and regulations under the Securities Act; no stop order
suspending the effectiveness of the Registration Statement shall be in effect,
and no proceedings for such purpose shall be pending before or threatened by
the
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Commission; and all requests for additional information on the part of the
Commission shall have been complied with to your satisfaction;
(b) the representations and warranties of the Company contained
herein are true and correct on and as of the Closing Date as if made on and as
of the Closing Date and the Company shall have complied with all agreements and
all conditions on its part to be performed or satisfied hereunder at or prior
to the Closing Date;
(c) subsequent to the execution and delivery of this Agreement and
prior to the Closing Date, there shall not have occurred any downgrading, nor
shall any notice have been given of (i) any intended or potential downgrading
or (ii) any review or possible change that does not indicate an improvement, in
the rating accorded any securities of or guaranteed by the Company by any
"nationally recognized statistical rating organization," as such term is
defined for purposes of Rule 436(g)(2) under the Securities Act;
(d) since the respective dates as of which information is given in
the Prospectus there shall not have been any change in the capital stock or
long-term debt of the Company or any of its Subsidiaries or any material
adverse change or any development involving a material adverse change, in or
affecting the general affairs, business, prospects, management, properties,
financial position, stockholders' equity or results of operations of the
Company and its Subsidiaries, taken as a whole, otherwise than as set forth or
contemplated in the Prospectus, the effect of which in your judgment makes it
impracticable or inadvisable to proceed with the public offering or the
delivery of the Securities on the terms and in the manner contemplated in the
Prospectus;
(e) you shall have received on and as of the Closing Date a
certificate of the Chairman of the Board of Directors or President or Chief
Executive Officer of the Company and the Chief Financial or Accounting Officer
of the Company satisfactory to you to the effect set forth in subsections (a)
through (c) of this Section and to the further effect that there has not
occurred any material adverse change, or any development involving a
prospective material adverse change, in or affecting the general affairs,
business, prospects, management, properties, financial position, stockholders'
equity or results of operations of the Company and its Subsidiaries taken as a
whole from that set forth or contemplated in the Registration Statement.
(f) Shaw Pittman Potts & Trowbridge, counsel for the Company,
shall have furnished to you its written opinion, dated the Closing Date, in
form and substance satisfactory to you, to the effect that:
(i) the Company has been duly organized and is
validly existing as a corporation in good standing under the laws of
Maryland, with power and authority (corporate or other) to own its
properties and conduct its business as described in the Prospectus as
then amended or supplemented;
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(ii) the Company has been duly qualified as a foreign
corporation for the transaction of business and is in good standing
under the laws of each other jurisdiction in which it owns or leases
properties, or conducts any business, so as to require such
qualification, other than where the failure to be so qualified or in
good standing would not have a Material Adverse Effect;
(iii) each of the Subsidiaries has been duly organized
and is validly existing as a corporation or limited partnership, as
the case may be, in good standing under the laws of their
jurisdictions of organization, with power and authority (corporate or
other) to own its properties and conduct its business as described in
the Prospectus as amended or supplemented;
(iv) each of the Subsidiaries has been duly qualified
as a foreign corporation or limited partnership, as the case may be,
for the transaction of business and is in good standing under the laws
of each other jurisdiction in which it owns or leases properties, or
conducts any business, so as to require such qualification, other than
where the failure to be so qualified or in good standing would not
have a Material Adverse Effect;
(v) all of the outstanding shares of capital stock or
partnership interests of each Subsidiary have been duly and validly
authorized and issued, are fully paid and non-assessable, and are
owned by the Company, directly or indirectly, free and clear of any
security interests, liens, encumbrances, and claims;
(vi) (a) 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) comply as to form in all
material respects with the requirements of the Act; and (b) 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;
(vii) to the knowledge of such counsel, based upon such
inquiry as such counsel deems appropriate, other than as described or
contemplated in the Prospectus (or any supplement thereto), there are
no legal or governmental proceedings pending or threatened against the
Company or any of its Subsidiaries, or to which the Company or any of
its Subsidiaries or any properties of the Company and any of its
Subsidiaries is subject, which are required to be described in the
Registration Statement or Prospectus (or any amendment or supplement
thereto) and there are no agreements, contracts, indentures, leases or
other instruments that are required to be described in the
Registration Statement or the Prospectus (or any amendment or
supplement thereto) or to be filed or incorporated
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by reference as an exhibit to the Registration Statement or any
Incorporated Document that are not described, filed or incorporated as
required, as the case may be;
(viii) to the knowledge of such counsel, neither the
Company nor any of its Subsidiaries is in violation of any law,
ordinance, administrative or governmental rule or regulation
applicable to the Company or any of its Subsidiaries or of any decree
of any court or governmental agency or body having jurisdiction over
the Company or any of its Subsidiaries;
(ix) such counsel is not aware of any certificates,
authorizations, licenses or permits required by any federal regulatory
authority which are necessary for the Company and its Subsidiaries to
conduct their respective businesses other than any such certificates,
authorization, licenses or permits which have been obtained; to the
knowledge of such counsel, neither the Company nor any of its
Subsidiaries has received any notice of proceedings relating to the
revocation or modification of nay certificate, authorization license
or permit issued by any federal, state, municipal or foreign
regulatory authority which, singly or in the aggregate, if the subject
of an unfavorable decision, ruling or funding, would result in a
material adverse change in the condition (financial or otherwise),
business prospects, net worth or results of operations of the Company
or its Subsidiaries;
(x) this Agreement has been duly authorized, executed
and delivered by the Company;
(xi) the Securities have been duly authorized and
executed by the Company and when authenticated in accordance with the
terms of the Indenture and delivered to and paid for by the
Underwriters in accordance with the terms of this Agreement, will
constitute valid and legally binding obligations of the Company
entitled to the benefits provided by the Indenture, enforceable in
accordance with their terms, except that the enforceability thereof
may be limited by or subject to (a) bankruptcy, insolvency,
reorganization, fraudulent conveyance or transfer, moratorium or
similar laws now or hereafter in effect relating to creditors' rights
generally and (b) general principles of equity (regardless of whether
enforceability is considered in a proceeding at law or equity);
(xii) the Indenture has been duly authorized, executed
and delivered by the Company and constitutes a valid and legally
binding instrument of the Company enforceable against the Company in
accordance with its terms, except that the enforceability thereof may
be limited by or subject to (a) bankruptcy, insolvency,
reorganization, fraudulent conveyance or transfer, moratorium or
similar laws now or hereafter in effect relating to creditors' rights
generally and (b) general principles of equity (regardless of whether
enforceability is considered in a proceeding at law or equity); and
the Indenture has been duly qualified under the Trust Indenture Act;
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(xiii) the Indenture and the Securities conform in all
material respects to the descriptions thereof in the Registration
Statement and the Prospectus;
(xiv) to the knowledge of such counsel, neither the
Company nor any of its Subsidiaries is (a) in violation of its
respective articles of incorporation or by-laws or (b) in default in
the performance of any material obligation, agreement or condition
contained in any bond, debenture, note or other evidence of
indebtedness set forth on Schedule A attached to such opinion, except
as may be disclosed in the Prospectus;
(xv) neither the offer, sale or delivery of the
Securities, the execution, delivery or performance by the Company of
its obligations under the Securities, the Indenture and this
Agreement, compliance by the Company with the provisions hereof nor
consummation by the Company of the transactions contemplated hereby
and thereby (a) conflicts or will conflict with or constitutes or will
constitute a breach of, or a default under, (1) the articles of
incorporation or by-laws of the Company or any of its Subsidiaries or
(2) any agreement, indenture, lease or other instrument to which the
Company or any of its Subsidiaries is a party or by which the Company
or any properties of the Company or any of its Subsidiaries is bound
(A) that is an exhibit to the Registration Statement or (B) which is
known to such counsel, all of which have been waived in connection
with the transactions contemplated by this Agreement); or (b) results
or will result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Company or its
Subsidiaries, pursuant to any agreement, indenture, lease or other
instrument to which the Company or any of its Subsidiaries is a party
or by which the Company or any properties of the Company or any of its
Subsidiaries is bound (1) that is incorporated by reference or an
exhibit to the Registration Statement or (2) which is known to such
counsel; or (c) violates or will violate (1) any existing federal or
Maryland law, regulation or ruling (assuming compliance with all
applicable state securities and Blue Sky laws, regulations, rulings
and orders) or (2) to the knowledge of such counsel, any judgment,
injunction, order or decree applicable to the Company or its
Subsidiaries or any properties of the Company or any of its
Subsidiaries;
(xvi) the Company's authorized, issued and outstanding
shares of capital stock is as set forth under the caption
"Capitalization" in the Prospectus; the authorized capital stock of
the Company conforms in all material respects as to legal matters to
the description thereof contained in the Prospectus under the caption
"Description of Capital Stock"; and all of the shares of capital stock
of the Company outstanding prior to the issuance of the Securities
have been duly authorized, validly issued, fully paid and
nonassessable;
(xvii) no consent, approval, authorization, order,
registration or qualification of or with any court or governmental
agency or body is required for the issue and sale of the Securities or
the consummation of the other transactions contemplated by this
Agreement or the Indenture, except such consents, approvals,
authorizations, orders, registrations or qualifications as have been
obtained under the Securities Act and the Trust Indenture Act
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and as may be required under state securities or Blue Sky laws in
connection with the purchase and distribution of the Securities by the
Underwriter;
(xviii) to the knowledge of such counsel, (a) neither the
Company nor any of its Subsidiaries is in violation of any federal law
or regulation relating to occupational safety and health or to the
environment, including, without limitation, the storage, handling,
transportation or disposal of hazardous or toxic materials, (b) the
Company and its Subsidiaries have received all permits, registrations,
licenses and other approvals required of them under applicable federal
occupational and safety and health and environmental laws and
regulations to conduct their respective businesses and (c) the Company
and its Subsidiaries are in compliance with all terms and conditions
of any such permit, registration, license or approval, except any such
violation of law or regulation, failure to receive required permits,
registrations, licenses or other approvals or failure to comply with
the terms and conditions of such permits, registrations, licenses or
approvals which would not, singly or in the aggregate result in a
Material Adverse Effect;
(xix) the statements in the Prospectus, insofar as they
are descriptions of contracts or agreements or constitute statements
of law or legal conclusions, are accurate and present fairly the
information required to be shown in all material respects;
(xx) commencing with the Company's initial taxable
year, the Company has qualified as a REIT under the Code for all
taxable years ending on or before December 31, 1997, and its past and
proposed method of operation will enable it to qualify as a REIT under
the Code for its taxable year ending on December 31, 1998; and each of
the Company's Subsidiaries is a "qualified REIT subsidiary" within the
meaning of Section 856(i) of the Code; and the Company is not an
open-end investment company, unit investment trust, closed-end
investment company or face-amount certificate company that is or is
required to be registered under the Investment Company Act;
(xxi) the investments of the Company described in the
Prospectus are permitted investments under the Declaration of Trust of
the Company;
(xxii) the Registration Statement was declared effective
under the Securities Act and the Indenture was qualified under the
Trust Indenture Act as of the date and time specified in such opinion,
the Prospectus was filed with the Commission pursuant to subparagraph
of Rule 424 specified in such opinion on the date specified therein
and no stop order suspending the effectiveness of the Registration
Statement has been issued and, to the knowledge of such counsel, no
proceeding for that purpose is pending or threatened by the
Commission;
(xxiii) such counsel (A) is of the opinion that each
document incorporated by reference in the Registration Statement and
the Prospectus (except for the historical and pro forma financial
statements included therein as to which such counsel need express no
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opinion) complied as to form in all material respects with the
Exchange Act when filed with Commission, (B) believes that (except for
the historical and pro forma financial statements included therein as
to which such counsel need express no belief) each part of the
Registration Statement (including the documents incorporated by
reference therein) filed with the Commission pursuant to the
Securities Act relating to the Securities, when such part became
effective, did 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, (C) is of the
opinion that the Registration Statement and the Prospectus and any
amendments and supplements thereto (except for the historical and
pro forma financial statement included 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 Trust
Indenture Act and (D) believes that (except for the financial
statements included therein as to which such counsel need express no
belief) the Registration Statement and the Prospectus, on the date of
this Agreement, did not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, and that the
Prospectus as amended or supplemented, if applicable, on the Closing
Date does not contain any untrue statement of a material fact or omit
to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made,
not misleading; and
(xxiv) the Company is not, and will not become as a
result of the consummation of the transactions contemplated by this
Agreement, an "investment company" or entity "controlled" by an
"investment company" within the meaning of the Investment Company Act,
and has not been an "investment company" at any time.
In rendering such opinions, such counsel may rely (A) as to matters
involving the application of laws other than the laws of the United States and
the States of New York and Maryland, to the extent such counsel deems proper
and to the extent specified in such opinion, if at all, upon an opinion or
opinions (in form and substance reasonably satisfactory to Underwriters'
counsel) of other counsel reasonably acceptable to the Underwriters' counsel,
familiar with the applicable laws; (B) as to matters of fact, to the extent
such counsel deems proper, on certificates of responsible officers of the
Company and certificates or other written statements of officials of
jurisdictions having custody of documents respecting the corporate existence or
good standing of the Company. The opinion of such counsel for the Company
shall state that the opinion of any such other counsel is in form satisfactory
to such counsel and, in such counsel's opinion, the Underwriters and they are
justified in relying thereon. With respect to the matters to be covered in
subparagraph (xix) above counsel may state its opinion and belief is based upon
their participation in the preparation of the Registration Statement and the
Prospectus and any amendment or supplement thereto (other than the documents
incorporated by reference therein) and review and discussion of the contents
thereof (including the documents incorporated by reference therein) but is
without independent check or verification except as specified.
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(g) on the date of this Agreement and on the Closing Date, KPMG
Peat Marwick LLP shall have furnished to you letters, dated such date, in form
and substance satisfactory to you, containing statements and information of the
type customarily included in accountants "comfort letters" to underwriters with
respect to the financial statements and certain financial information contained
in the Registration Statement and the Prospectus, including, without
limitation, a statements incorporated by reference in the Registration
Statement, in accordance with the standards established by the American
Institute of Certified Public Accountants;
(h) you shall have received on and as of the Closing Date an
opinion of Skadden, Arps, Slate, Meagher & Flom LLP, counsel to the
Underwriters, with respect to the validity of the Indenture and the Securities,
the Registration Statement, the Prospectus and other related matters as the
Underwriters may reasonably request, and such counsel shall have received such
papers and information as they may reasonably request to enable them to pass
upon such matters;
(i) on or prior to the Closing Date, the Company shall have
furnished to the Underwriters such further certificates and documents
confirming the representations and warranties contained herein and related
matters as you shall reasonably request.
The opinions and certificates mentioned in this Agreement shall be
deemed to be in compliance with the provisions hereof only if they are in all
material respects satisfactory to the Underwriters and to Skadden, Arps, Slate,
Meagher & Flom LLP, counsel for the Underwriters.
7. The Company agrees to indemnify and hold harmless each
Underwriter and each person, if any, who controls any Underwriter within the
meaning of either Section 15 of the Securities Act or Section 20 of the
Exchange Act, from and against any and all losses, claims, damages and
liabilities (including without limitation the legal fees and other expenses
incurred in connection with any suit, action or proceeding or any claim
asserted) caused by any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement or the Prospectus (as
amended or supplemented if the Company shall have furnished any amendments or
supplements thereto) or any preliminary prospectus, or caused by any omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, except
insofar as such losses, claims, damages or liabilities are caused by any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with information relating to any Underwriter furnished
to the Company in writing by such Underwriter through you expressly for use
therein.
Each Underwriter agrees, severally and not jointly, to indemnify and
hold harmless the Company, its directors, its officers who sign the
Registration Statement and each person who controls the Company within the
meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act,
to the same extent as the foregoing indemnity from the Company to each
Underwriter, but only with reference to information relating to such
Underwriter furnished to the Company in writing by such Underwriter through you
expressly for use in the Registration Statement, the Prospectus, any amendment
or supplement thereto, or any preliminary prospectus.
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For purposes of this Section 7 and Sections 4(a) and 4(b), the only written
information furnished by the Underwriters to the Company expressly for use in
the Registration Statement and the Prospectus is (a) the information in the
last paragraph on the cover page of the Prospectus specifically relating to the
Securities, (b) the information regarding stabilization in the first paragraph
on the inside front cover page of the Prospectus specifically relating to the
Securities and (c) the information in the third and sixth paragraphs, under the
caption "Underwriting" in the Prospectus.
If any suit, action, proceeding (including any governmental or
regulatory investigation), claim or demand shall be brought or asserted against
any person in respect of which indemnity may be sought pursuant to either of
the two preceding paragraphs, such person (the "Indemnified Person") shall
promptly notify the person against whom such indemnity may be sought (the
"Indemnifying Person") in writing, and the Indemnifying Person, upon request of
the Indemnified Person, shall retain counsel reasonably satisfactory to the
Indemnified Person to represent the Indemnified Person and any others the
Indemnifying Person may designate in such proceeding and shall pay the fees and
expenses of such counsel related to such proceeding. In any such proceeding,
any Indemnified Person shall have the right to retain its own counsel, but the
fees and expenses of such counsel shall be at the expense of such Indemnified
Person unless (i) the Indemnifying Person and the Indemnified Person shall have
mutually agreed to the contrary, (ii) the Indemnifying Person has failed within
a reasonable time to retain counsel reasonably satisfactory to the Indemnified
Person or (iii) the named parties in any such proceeding (including any
impleaded parties) include both the Indemnifying Person and the Indemnified
Person and representation of both parties by the same counsel would be
inappropriate due to actual or potential differing interests between them. It
is understood that the Indemnifying Person shall not, in connection with any
proceeding or related proceeding in the same jurisdiction, be liable for the
fees and expenses of more than one separate firm (in addition to any local
counsel) for all Indemnified Persons, and that all such fees and expenses shall
be reimbursed as they are incurred. Any such separate firm for the
Underwriters and such control persons of Underwriters shall be designated in
writing by J.P. Morgan Securities Inc. and any such separate firm for the
Company, its directors, its officers who sign the Registration Statement and
such control persons of the Company or authorized representatives shall be
designated in writing by the Company. The Indemnifying Person shall not be
liable for any settlement of any proceeding effected without its written
consent, but if settled with such consent or if there be a final judgment for
the plaintiff, the Indemnifying Person agrees to indemnify any Indemnified
Person from and against any loss or liability by reason of such settlement or
judgment. Notwithstanding the foregoing sentence, if at any time an
Indemnified Person shall have requested an Indemnifying Person to reimburse the
Indemnified Person for fees and expenses of counsel as contemplated by the
third sentence of this paragraph, the Indemnifying Person agrees that it shall
be liable for any settlement of any proceeding effected without its written
consent if (i) such settlement is entered into more than 30 days after receipt
by such Indemnifying Person of the aforesaid request and (ii) such Indemnifying
Person shall not have reimbursed the Indemnified Person in accordance with such
request prior to the date of such settlement. No Indemnifying Person shall,
without the prior written consent of the Indemnified Person, effect any
settlement of any pending or threatened proceeding
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in respect of which any Indemnified Person is or could have been a party and
indemnity could have been sought hereunder by such Indemnified Person, unless
such settlement includes an unconditional release of such Indemnified Person
from all liability on claims that are the subject matter of such proceeding.
If the indemnification provided for in the first and second paragraphs
of this Section 7 is unavailable to an Indemnified Person in respect of any
losses, claims, damages or liabilities referred to therein, then each
Indemnifying Person under such paragraph, in lieu of indemnifying such
Indemnified Person thereunder, shall contribute to the amount paid or payable
by such Indemnified Person as a result of such losses, claims, damages or
liabilities (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company on the one hand and the Underwriters on the
other hand from the offering of the Securities 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 Company on the one
hand and the Underwriters on the other in connection with the statements or
omissions that resulted in such losses, claims, damages or liabilities, as well
as any other relevant equitable considerations. The relative benefits received
by the Company on the one hand and the Underwriters on the other shall be
deemed to be in the same respective proportions as the net proceeds from the
offering of such Securities (before deducting expenses) received by the Company
and the total underwriting discounts and the commissions received by the
Underwriters bear to the aggregate public offering price of the Securities.
The relative fault of the Company on the one hand and the Underwriters on the
other shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by
the Company or by the Underwriters and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission.
The Company and the Underwriters agree that it would not be just and
equitable if contribution pursuant to this Section 7 were determined by pro
rata allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation that does not take account of the
equitable considerations referred to in the immediately preceding paragraph.
The amount paid or payable by an Indemnified Person as a result of the losses,
claims, damages and liabilities referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses incurred by such Indemnified Person in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 7, in no event shall an
Underwriter be required to contribute any amount in excess of the amount by
which the total price at which the Securities underwritten by it and
distributed to the public were offered to the public exceeds the amount of any
damages that such Underwriter has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. The Underwriters'
obligations to contribute pursuant to this Section 7 are several in proportion
to the
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respective principal amounts of Securities set forth opposite their names in
Schedule II hereto, and not joint.
The remedies provided for in this Section 7 are not exclusive and
shall not limit any rights or remedies which may otherwise be available to any
indemnified party at law or in equity.
The indemnity and contribution agreements contained in this Section 7
and the representations, warranties and covenants of the Company set forth in
this Agreement shall remain operative and in full force and effect regardless
of (i) any termination of this Agreement, (ii) any investigation made by or on
behalf of any Underwriter or any person controlling any Underwriter or by or on
behalf of the Company, its officers or directors or any other person
controlling the Company and (iii) acceptance of and payment for any of the
Securities.
8. Notwithstanding anything herein contained, this Agreement may
be terminated in your absolute discretion by notice given to the Company, if
after the execution and delivery of this Agreement and prior to the Closing
Date (i) trading generally shall have been suspended or materially limited on
or by, as the case may be, any of the New York Stock Exchange, the American
Stock Exchange, the National Association of Securities Dealers, Inc., the
Chicago Board Options Exchange, the Chicago Mercantile Exchange or the Chicago
Board of Trade, (ii) trading of any securities of or guaranteed by the Company
shall have been suspended on any exchange or in any over-the-counter market,
(iii) a general moratorium on commercial banking activities in New York or
Florida shall have been declared by either Federal, New York State or Florida
State authorities; or (iv) there shall have occurred any outbreak or escalation
of hostilities or any change in financial markets or any calamity or crisis
that, in your judgment is material and adverse and which, in your judgment,
makes it impracticable to market the Securities on the terms and in the manner
contemplated in the Prospectus.
9. If, on the Closing Date, any one or more of the Underwriters
shall fail or refuse to purchase Securities which it or they have agreed to
purchase under this Agreement, and the aggregate principal amount of
Securities, which such defaulting Underwriter or Underwriters agreed but failed
or refused to purchase is not more than one-tenth of the aggregate principal
amount of the Securities, the other Underwriter or Underwriters shall be
obligated severally in the proportions that the principal amount of Securities
set forth opposite their respective names in Schedule II hereto bears to the
aggregate principal amount of Securities set forth opposite the names of all
such non-defaulting Underwriters, or in such other proportions as the
non-defaulting Underwriters may specify, to purchase the Securities which such
defaulting Underwriter or Underwriters agreed but failed or refused to purchase
on such date; provided that in no event shall the principal amount of
Securities that any Underwriter has agreed to purchase pursuant to Section 1 be
increased pursuant to this Section 9 by an amount in excess of one-ninth of
such principal amount of Securities without the written consent of such
Underwriter. If, on the Closing Date, any Underwriter or Underwriters shall
fail or refuse to purchase Securities and the aggregate principal amount of
Securities with respect to which such default occurs is more than one-tenth of
the aggregate principal amount of Securities to be purchased, and arrangements
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satisfactory to the Underwriters and the Company for the purchase of such
Securities are not made within 36 hours after such default, this Agreement
shall terminate without liability on the part of any non-defaulting Underwriter
or the Company. In any such case either you or the Company shall have the
right to postpone the Closing Date, but in no event for longer than seven days,
in order that the required changes, if any, in the Registration Statement and
in the Prospectus or in any other documents or arrangements may be effected.
Any action taken under this paragraph shall not relieve any defaulting
Underwriter from liability in respect of any default of such Underwriter under
this Agreement.
10. If this Agreement shall be terminated by the Underwriters, or
any of them, because of any failure or refusal on the part of the Company to
comply with the terms or to fulfill any of the conditions of this Agreement, or
if for any reason the Company shall be unable to perform its obligations under
this Agreement or any condition of the Underwriters' obligations cannot be
fulfilled, the Company agrees to reimburse the Underwriters or such
Underwriters as have so terminated this Agreement with respect to themselves,
severally, for all out-of-pocket expenses (including the fees and expenses of
their counsel) reasonably incurred by the Underwriters in connection with this
Agreement or the offering of Securities.
11. This Agreement shall inure to the benefit of and be legally
binding upon the Company, the Underwriters, any controlling persons referred to
herein and their respective successors and assigns. Nothing expressed or
mentioned in this Agreement is intended or shall be construed to give any other
person, firm or corporation any legal or equitable right, remedy or claim under
or in respect of this Agreement or any provision herein contained. No
purchaser of Securities from any Underwriter shall be deemed to be a successor
by reason merely of such purchase.
12. Any action by the Underwriters hereunder may be taken by you
jointly or by J.P. Morgan Securities Inc. alone on behalf of the Underwriters,
and any such action taken by you jointly or by J.P. Morgan Securities Inc.
alone shall be binding upon the Underwriters. All notices and other
communications hereunder shall be in writing and shall be deemed to have been
duly given if mailed or transmitted by any standard form of telecommunication.
Notices to the Underwriters shall be given to the Underwriters, c/o J.P. Morgan
Securities Inc., 60 Wall Street, New York, New York 10260, Attention:
Syndicate Department, with a copy to Skadden, Arps, Slate, Meagher & Flom LLP,
919 Third Avenue, New York, New York 10022, Attention: Stacy J. Kanter, Esq.
Notices to the Company shall be given to it at Commercial Net Lease Realty,
Inc., 400 East South Street, Suite 50, Orlando, Florida 32801, Attention:
James M. Seneff, Jr., Chairman and Chief Executive Officer, with a copy to Shaw
Pittman Potts & Trowbridge, 2300 N Street, N.W., Washington, D.C. 20037-1128,
Attention: John M. McDonald.
13. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York applicable to contracts made
and to be performed within the State of New York.
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14. This Agreement may be signed in counterparts, each of which
shall be an original and all of which together shall constitute one and the
same instrument.
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Please confirm that the foregoing correctly sets forth the agreement
between the Company and the several Underwriters.
Very truly yours,
COMMERCIAL NET LEASE REALTY, INC.
By:
---------------------------------------
Name:
Title:
Accepted: March 12, 1998
J.P. MORGAN SECURITIES INC.
GOLDMAN, SACHS & CO.
SALOMON BROTHERS INC
By: J.P. MORGAN SECURITIES INC.,
By:
------------------------------
Name:
Title:
For themselves and as Representatives of the
several Underwriters listed in Schedule II hereto
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SCHEDULE I
Representatives: J.P. Morgan Securities Inc.
Goldman, Sachs & Co.
Salomon Brothers Inc
Underwriting Agreement dated: March , 1998
----
Registration Statement No.: 333-24773
Title of Securities: % Notes due 2008 (the "2008 Notes")
----
Aggregate principal amount: $100,000,000 of 2008 Notes
Price to Public: % of the principal amount of the 2008 Notes,
plus accrued interest, if any, from , 1998 to the
Closing Date
Underwriting Discount:
Indenture: Indenture dated as of March , 1998 and the
Supplemental Indenture dated as of March , 1998, both
between Commercial Net Lease Realty, Inc. and
First Union National Bank (the "Trustee")
Maturity: ___________, 2008
Interest Rate: % with respect to the 2008 Notes
Interest Payment Dates:
Optional Redemption Provisions: The Securities are redeemable at any time at the
option of the Company, in whole or in part, at a
redemption price equal to the sum of (i) the principal
amount of the notes being redeemed plus accrued
interest thereon to the redemption date and
(ii) the Make-Whole Amount (as defined in the
Prospectus Supplement relating to the Securities
dated March , 1998), if any
Sinking Fund Provisions: None
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Other Significant Provisions: None
Closing Date and Time of Delivery: The Closing will be held at 10:00 a.m. (E.S.T.) On
March , 1998, with the Securities being delivered
through the book-entry facilities of The Depository
Trust Company ("DTC") and made available for
checking by DTC and the Trustee at lease 24 hours
prior to the Closing Date.
Closing Location: Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, NY 10022
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SCHEDULE II
Principal Amount
of 2008 Notes
Underwriter To Be Purchased
- ----------- ---------------
J.P. Morgan Securities Inc. $
Goldman, Sachs & Co.
Salomon Brothers Inc
Total......................... $
============================
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SCHEDULE III
STATES OF FOREIGN QUALIFICATION OF
COMMERCIAL NET LEASE REALTY, INC.
Arkansas
Alabama
Arizona
California
Colorado
Delaware
Florida
Georgia
Illinois
Kansas
Kentucky
Louisiana
Maine
Maryland
Michigan
Minnesota
Mississippi
Missouri
North Carolina
North Dakota
Nevada
New Hampshire
New Jersey
New Mexico
New York
Ohio
Oklahoma
Oregon
Pennsylvania
Rhode Island
South Carolina
Tennessee
Texas
Virginia
Washington
Wisconsin
West Virginia
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SCHEDULE IV
JURISDICTION PERCENTAGE OF
NAME OF OF STATES OF FOREIGN EQUITY INTEREST
SUBSIDIARY ORGANIZATION QUALIFICATION OWNED BY COMPANY
- -------------------------------------------------------------------------------------------------------------------
Net Lease Realty I, Inc. Maryland Florida, Georgia 100%
Net Lease Realty II, Inc. Maryland Florida 100%
Net Lease Realty III, Inc. Maryland Florida 100%
Net Lease Realty IV, Inc. Maryland Florida 100%
Net Lease Institutional Realty, L.P. Delaware(1) Georgia, Florida, 20%(2)
New York,
Tennessee, Texas
____________________
(1) Organized as a limited partnership under Delaware law.
(2) The Company holds a 20% general partnership interest in Net Lease
Institutional Realty, L.P.