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2,000,000 SHARES
FIRST UNION REAL ESTATE EQUITY AND MORTGAGE INVESTMENTS
SERIES A CUMULATIVE CONVERTIBLE REDEEMABLE
PREFERRED SHARES OF BENEFICIAL INTEREST
(LIQUIDATION PREFERENCE VALUE $25 PER SHARE)
UNDERWRITING AGREEMENT
OCTOBER 23, 1996
SUTRO & CO. INCORPORATED
BT SECURITIES CORPORATION
TUCKER ANTHONY INCORPORATED
As Representatives of Several Underwriters
c/o Sutro & Co. Incorporated
201 California Street
San Francisco, California 94111
Dear Sirs:
1. INTRODUCTION. FIRST UNION REAL ESTATE EQUITY AND MORTGAGE
INVESTMENTS, an Ohio business trust (the "Trust"), proposes to issue and sell
to the several Underwriters named in Schedule I hereto (the "Underwriters"),
for which Sutro & Co. Incorporated, BT Securities Corporation and Tucker
Anthony Incorporated are acting as representatives (the "Representatives"),
2,000,000 Series A Cumulative Convertible Redeemable Preferred Shares of
Beneficial Interest, $25 liquidation preference value per share (the "Preferred
Shares"). The Trust also proposes to issue to the several Underwriters an
aggregate of not more than 300,000 additional Preferred Shares (the "Additional
Preferred Shares"), if requested by the Underwriters in accordance with Section
9 hereof.
The Trust hereby agrees with the Underwriters as follows:
2. REPRESENTATIONS AND WARRANTIES.
(a) The Trust represents, warrants and agrees with
each of the Underwriters that:
(i) A registration statement on Form S-3
(File No. 333-00953) under the Securities Act of 1933, as amended
(the "Act"), with respect to preferred shares of beneficial
interest of the Trust (as well as other securities of the Trust),
including a prospectus, has been prepared by the Trust in
conformity with the requirements of the Act and the rules and
regulations of the Securities and Exchange Commission (the
"Commission") thereunder (the "Rules and Regulations"). Such
registration statement has been filed with the Commission under
the Act, and one amendment to such registration statement has also
been so filed. After the execution of this Agreement, the Trust
shall file with the Commission in accordance with Rule 424 of the
Rules and Regulations, a prospectus in the form most recently
filed with the
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Commission, with such amendments and supplements in relation to
the Preferred Shares. Such prospectus (as amended and
supplemented) shall have been provided to and approved by the
Representatives. As used in this Agreement, the term
"Registration Statement" means such registration statement, as
amended at the time when it was or is declared effective,
including all financial schedules and exhibits thereto and to
documents incorporated therein by reference; the term "Prospectus"
means the prospectus contained in such registration statement as
it may be amended in accordance with Rule 424 of the Rules and
Regulations, but excluding the Prospectus Supplement as defined
below; the term "Prospectus Supplement" means the prospectus
supplement relating to the offer of the Preferred Shares, but
excluding the Prospectus, filed with the Commission pursuant to
Rule 424(b) under the Rules and Regulations; and the term
"Preliminary Prospectus Supplement" means the preliminary
prospectus supplement subject to completion relating to the offer
of the Preferred Shares and filed pursuant to Rule 424 of the
Rules and Regulations. References herein to any document or other
information incorporated by reference in the Registration
Statement shall include documents or other information
incorporated by reference in the Prospectus. Reference made
herein to the Prospectus shall be deemed to include all documents
and information incorporated by reference therein and shall be
deemed to refer to and include any documents and information filed
after the date of such Prospectus and so incorporated by
reference, under the Securities Exchange Act of 1934, as amended
(the "Exchange Act").
(ii) The Commission has not issued any order
preventing or suspending the use of any Prospectus, or Preliminary
Prospectus Supplement or the Registration Statement and has not
instituted or threatened to institute any proceedings with respect
to such an order. When any Preliminary Prospectus Supplement was
filed with the Commission it (A) contained all statements required
to be stated therein in accordance with, and complied in all
material respects with the requirements of, the Act and the Rules
and Regulations and (B) did not include any untrue statement of a
material fact or omit to state any material fact necessary in
order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. When
the Registration Statement was declared effective, it (A) complied
in all material respects with the requirements of the Act and the
Rules and Regulations and (B) did not include any untrue statement
of a material fact or omit to state any material fact necessary to
make the statements therein not misleading. When the Prospectus
and Prospectus Supplement are filed with the Commission pursuant
to Rule 424(b) and at all times subsequent thereto up to and
including the Closing Date (as defined in Section 3 hereof) and
the Option Closing Date (as defined in Section 9 hereof), the
Prospectus and the Prospectus Supplement (A) will comply in all
material respects with the requirements of the Act and the Rules
and Regulations and (B) did not or will not include any untrue
statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading. The
foregoing provisions of this paragraph (ii) shall not apply to
statements or omissions made in any Preliminary Prospectus
Supplement, the Registration Statement or any amendment thereto,
the Prospectus or any amendment thereto or the Prospectus
Supplement or any amendment thereto in reliance upon, and in
conformity with, information furnished in writing to the Trust by
or on behalf of the Underwriters through any Representative
expressly for use therein. The documents which are incorporated
by reference in the Prospectus or from which information is so
incorporated by reference, when they became effective or were
filed with the Commission, as the case may be, complied in all
material respects with the requirements of the Act and the Rules
and Regulations or the Exchange Act and the rules and regulations
thereunder, as applicable, and did
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not, when such documents became effective or were so filed,
contain any untrue statement of a material fact or omit 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 any documents so
filed and incorporated by reference subsequent to the effective
date of the Registration Statement shall, when they are filed with
the Commission, conform in all material respects with the
requirements of the Act and the Rules and Regulations and the
Exchange Act and the rules and regulations thereunder, as
applicable.
(iii) The Trust (A) is a duly organized and
validly existing business trust in good standing under the laws of
Ohio, with full power and authority to own or lease its properties
and to conduct its business as described in the Registration
Statement, the Prospectus and the Prospectus Supplement; and (B)
is duly qualified to do business as a foreign business trust and
is in good standing in each jurisdiction (x) in which the conduct
of its business requires such qualification (except for those
jurisdictions in which the failure so to qualify has not had and
will not have a Material Adverse Effect (as hereinafter defined)).
The Trust has an affiliated Management Company, First Union
Management, Inc. ("Management"), and the shares of Management are
held in trust for the benefit of the holders of shares of
beneficial interest, $1.00 par value per share, of the Trust.
Management (A) is a duly incorporated and validly existing
corporation under the laws of Delaware, with full power and
authority to own or lease its properties or to conduct its
business as described in the Registration Statement and the
Prospectus Supplement, and (B) is duly qualified to do business as
a foreign corporation and is in good standing in each jurisdiction
in which the conduct of its business requires such qualification
(except for those jurisdictions in which the failure so to qualify
has not had and will not have a Material Adverse Effect).
"Material Adverse Effect" means, when used in connection with the
Trust or Management, any development, change or effect that is
materially adverse to the business, properties, assets, net
worth, condition (financial or other), results of operations or
prospects of the Trust and Management taken as a whole.
(iv) The Trust has the duly authorized and
validly outstanding capitalization set forth under the caption
"Capitalization" in the Prospectus Supplement and will have the
adjusted capitalization set forth therein on the Closing Date and
the Option Closing Date (as hereinafter defined), based on the
assumptions set forth therein. The Preferred Shares of the Trust
conform to the descriptions thereof contained in the Prospectus
and the Prospectus Supplement. Except as created hereby pursuant
to Section 9 of this Agreement, or referred to or included in the
Prospectus or Prospectus Supplement, there are no outstanding
options, warrants, rights or other arrangements requiring the
Trust or Management at any time to issue any capital stock. No
holders of outstanding shares of capital stock of the Trust are
entitled as such to any preemptive or other rights to subscribe
for any of the Preferred Shares and neither the filing of the
Registration Statement nor the offering or sale of the Preferred
Shares as contemplated by this Agreement gives rise to any rights,
other than those which have been waived or satisfied, for or
relating to, the registration of any securities of the Trust. On
the Closing Date or the Option Closing Date (as the case may be),
after payment therefor in accordance with the terms of this
Agreement, good and marketable title to the Preferred Shares,
fully paid, and except as set forth under the Caption "Shareholder
Liability" in the Prospectus, non-assessable, will pass to the
Underwriters on the Closing Date or the Option Closing Date (as
the case may be) free and clear of any lien, encumbrance,
security interest, claim or other restriction whatsoever.
All outstanding shares of capital stock of Management
have been duly authorized and validly issued, are fully paid and
nonassessable and are free and clear of any lien,
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encumbrance, security interest, claim or other restriction
whatsoever. The Trust has received, subject to notice of
issuance, approval to have the Preferred Shares listed on The New
York Stock Exchange and the Trust knows of no reason or set of
facts which is likely to adversely affect such approval.
(v) The combined financial statements and the
related notes and schedules thereto included in the Registration
Statement or incorporated therein by reference and the Prospectus
fairly present the combined financial condition, results of
operations, shareholders' equity and cash flows of the Trust and
Management at the dates and for the periods specified therein.
Such financial statements and the related notes and schedules
thereto have been prepared in accordance with generally accepted
accounting principles consistently applied throughout the periods
involved (except as otherwise noted therein) and such financial
statements as are audited have been examined by Arthur Andersen
LLP, who are independent public accountants within the meaning of
the Act and the Rules and Regulations, as indicated in their
reports filed therewith. The selected financial information and
statistical data set forth under the caption "Selected Financial
Data" in the Prospectus Supplement have been prepared on a basis
consistent with the combined financial statements of the Trust and
Management.
(vi) The Trust and Management each has filed
all necessary federal, state and local income, franchise and other
material tax returns and each has paid or, if not due on the date
hereof, intends to pay all taxes shown as due thereunder. The
Trust and Management each has no knowledge of any tax deficiency
which might be assessed against the Trust or Management which, if
so assessed, may have a Material Adverse Effect.
(vii) The Trust and Management each maintains
insurance of the types and in amounts which each reasonably
believes to be adequate for its business in such amounts and with
such deductibles as is customary for companies in the same or
similar business, all of which insurance is in full force and
effect.
(viii) Except as disclosed in the Prospectus and
the Prospectus Supplement, there is no pending action, suit,
proceeding or investigation or threatened action, suit, proceeding
or investigation before or by any court, regulatory body or
administrative agency or any other governmental agency or body,
domestic or foreign, which (A) questions the validity of the
capital stock of the Trust or this Agreement or of any action
taken or to be taken by the Trust pursuant to or in connection
with this Agreement, (B) is required to be disclosed in the
Registration Statement which is not so disclosed (and such
proceedings, if any, as are summarized in the Registration
Statement or incorporated therein by reference are accurately
summarized in all material respects), or (C) will have a Material
Adverse Effect.
(ix) The Trust has full legal right, power and
authority to enter into this Agreement and to consummate the
transactions provided for herein. This Agreement has been duly
authorized, executed and delivered by the Trust and, assuming it
is a binding agreement of yours, constitutes a legal, valid and
binding agreement of the Trust enforceable against the Trust in
accordance with its terms (except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other laws of general application relating to or
affecting the enforcement of creditors' rights and the application
of equitable principles relating to the availability of remedies
and except as rights to indemnity or contribution may be limited
by federal or state securities laws and the public policy
underlying such
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laws), and none of the Trust's execution or delivery of this
Agreement, its performance hereunder, its consummation of the
transactions contemplated herein, its application of the net
proceeds of the offering in the manner set forth under the caption
"Use of Proceeds" in the Prospectus Supplement or the conduct of
its business as described in the Prospectus and the Prospectus
Supplement, conflicts or will conflict with or results or will
result in any breach or violation of any of the terms or
provisions of, or constitutes or will constitute a default under,
causes or will cause (or permits or will permit) the maturation or
acceleration of any liability or obligation or the termination of
any right under, or result in the creation or imposition of any
lien, charge, or encumbrance upon, any property or assets of the
Trust or Management pursuant to the terms of (A) the Declaration
of Trust or By-Laws, each as amended, of the Trust or Articles of
Incorporation or By-Laws of Management, (B) any indenture,
mortgage, deed of trust, voting trust agreement, shareholders'
agreement, note agreement or other agreement or instrument to
which the Trust or Management is a party or by which their
respective properties may be bound or to which any of their
respective properties are or may be subject or (C) any statute,
judgment, decree, order, rule or regulation applicable to the
Trust or Management of any government, arbitrator, court,
regulatory body or administrative agency or other governmental
agency or body, domestic or foreign, having jurisdiction over the
Trust or Management or any of their respective activities or
properties.
(x) All executed agreements or copies of
executed agreements filed or incorporated by reference as exhibits
to the Registration Statement to which the Trust or Management is
a party or by which the Trust is or Management may be bound or to
which any of their respective assets, properties or businesses are
or may be subject have been duly and validly authorized, executed
and delivered by the Trust or Management and constitute the legal,
valid and binding agreements of the Trust or Management, as the
case may be, enforceable against each in accordance with their
respective terms (except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization or other similar
laws relating to enforcement of creditors' rights generally, and
general equitable principles relating to the availability of
remedies, and except as rights to indemnity or contribution may be
limited by federal or state securities laws and the public policy
underlying such laws). The descriptions in the Registration
Statement or incorporated therein by reference of contracts and
other documents are accurate and fairly present the information
required to be shown with respect thereto by the Act and the Rules
and Regulations, and there are no contracts or other documents
which are required by the Act or the Rules and Regulations to be
described in the Registration Statement or filed as exhibits to
the Registration Statement which are not described or filed as
required or incorporated therein by reference, and the exhibits
which have been filed are complete and correct copies of the
documents of which they purport to be copies.
(xi) Subsequent to the most recent date as of
which information is given in the Prospectus Supplement up to and
including the Closing Date, and except as included or contemplated
therein, neither the Trust nor Management has, other than in the
ordinary course of its business, (i) incurred any material
liabilities or obligations, direct or contingent, (ii) purchased
any material amount of its outstanding capital stock, (iii) paid
or declared any dividends or other distributions on its capital
stock other than the Trust's regular quarterly dividend or (iv)
entered into any material transactions. Subsequent to the most
recent date as of which information is given in the Prospectus
Supplement and except as contemplated therein, there has been no
material change in capital stock or debt or any material adverse
change in the business, properties, assets, net worth, condition
(financial or other), or results of operations or
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prospects of the Trust and Management taken as a whole. Neither
the Trust nor Management is in breach or violation of, or in
default under, any term or provision of (A) the Trust's
Declaration of Trust or By-Laws, each as amended, (B) Management's
Articles of Incorporation or By-Laws, (C) any material indenture,
evidence of indebtedness, mortgage, deed of trust, voting trust
agreement, shareholders' agreement, note agreement or other
agreement or instrument to which either the Trust or Management is
a party or by which either the Trust or Management is or may be
bound or to which any of the respective properties of either the
Trust or Management are or may be subject, or (D) any statute,
judgment, decree, order, rule or regulation applicable to the
Trust or Management or of any arbitrator, court, regulatory body,
administrative agency or any other governmental agency or body,
domestic or foreign, having jurisdiction over the Trust or
Management or any of their respective activities or properties,
the effect of which breach or violation of, or default under, as
applicable, singly or in the aggregate, will have a Material
Adverse Effect.
(xii) No labor disturbance by the employees of
the Trust or Management exists or, to the best of Trust's and
Management's knowledge, is imminent which will have a Material
Adverse Effect.
(xiii) Since its inception, the Trust has not
incurred any material liability arising under or as a result of
the application of the provisions of the Act, which would
adversely affect the consummation of the transactions contemplated
hereby.
(xiv) No consent, approval, authorization or
order of or filing with any court, regulatory body, administrative
agency or any other governmental agency or body, domestic or
foreign, is required for the performance of this Agreement or the
consummation of the transactions contemplated hereby, except such
as have been obtained under the Act, the Rules and Regulations,
the Exchange Act or the rules and regulations thereunder or may be
required under state securities or Blue Sky laws in connection
with the Underwriters' purchase and distribution of the Preferred
Shares.
(xv) There are no contracts, agreements or
understandings between the Trust and any person granting such
person the right to require the Trust to file a registration
statement under the Act with respect to any securities of the
Trust owned or to be owned by such person or to require the Trust
to include such securities under the Registration Statement (other
than those disclosed in the Prospectus Supplement or Prospectus)
that have not been waived with respect to the Registration
Statement.
(xvi) Neither the Trust nor any of its
officers, directors or affiliates (within the meaning of the Rules
and Regulations) has taken, directly or indirectly, any action
designed to stabilize or manipulate the price of any security of
the Trust, or which has constituted or which would reasonably be
expected to cause or result in stabilization or manipulation of
the price of any security of the Trust, to facilitate, in each
case, the sale or resale of the Preferred Shares.
(xvii) The Trust and Management each has good
and marketable title to, or valid and enforceable leasehold
interests in, all properties and assets owned or leased by it,
free and clear of all liens, encumbrances, security interests,
claims, restrictions, equities, claims and defects, except (A)
such as are described in the Registration Statement, Prospectus
and Prospectus Supplement or such as do not materially adversely
affect the value of any of such properties or assets taken as a
whole and do not materially interfere with the use made and
proposed to be made of
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any of such properties or assets, and (B) liens for taxes not yet
due and payable as to which appropriate reserves have been
established and reflected in the financial statements included or
incorporated by reference in the Registration Statement. The
Trust owns or leases all such properties as are necessary to its
operations as now conducted, and as proposed to be conducted as
set forth in the Registration Statement, Prospectus and Prospectus
Supplement; and the properties and business of the Trust and
Management conform in all material respects to the descriptions
thereof contained in the Registration Statement, the Prospectus
and the Prospectus Supplement. All the material leases and
subleases of the Trust and Management, and under which the Trust
or Management holds properties or assets as lessee or sublessee,
constitute valid leasehold interests of the Trust or Management
free and clear of any lien, encumbrance, security interest,
restriction, equity, claim or defect, are in full force and
effect, and neither the Trust nor Management is in default in
respect of any of the material terms or provisions of any such
material leases or subleases, and neither the Trust nor Management
has notice of any claim which has been asserted by anyone adverse
to the Trust's or Management's rights as lessee or sublessee under
either the material lease or sublease, or affecting or questioning
the Trust's or Management's right to the continued possession of
the leased or subleased premises under any such material lease or
sublease, which may have a Material Adverse Effect.
(xviii) Neither the Trust nor Management has
violated any applicable environmental, safety, health or similar
law applicable to the business of the Trust, nor any federal or
state law relating to discrimination in the hiring, promotion, or
pay of employees, nor any applicable federal or state wages and
hours law, nor any provisions of ERISA or the rules and
regulations promulgated thereunder, the consequences of which
violation will have a Material Adverse Effect.
(xix) The Trust and Management each holds all
franchises, licenses, permits, approvals, certificates and other
authorizations from federal, state and other governmental or
regulatory authorities necessary to the ownership, leasing and
operation of their respective properties or required for the
present conduct of the business, and such franchises, licenses,
permits, approvals, certificates and governmental authorizations
are in full force and effect and the Trust and Management each is
in compliance therewith in all material respects except where the
failure so to hold, obtain, maintain or comply with would not have
a Material Adverse Effect.
(xx) Management is not currently prohibited,
directly or indirectly from repaying to the Trust any loans or
advances to Management from the Trust, except as described in or
contemplated by the Prospectus Supplement or Prospectus.
(xxi) The Trust meets the requirements for use
of Form S-3 under the Rules and Regulations.
(xxii) The Trust is qualified as a "real estate
investment trust" under the Internal Revenue Code of 1986, as
amended, and will be so qualified immediately after consummation
of the transactions contemplated by the Registration Statement.
3. PURCHASE, SALE AND DELIVERY OF THE PREFERRED SHARES. On the
basis of the representations, warranties, covenants and agreements herein
contained, but subject to the terms and conditions herein set forth, the Trust
agrees to sell to each Underwriter and each Underwriter, severally and not
jointly, agrees to purchase from the Trust at a purchase price of $23.875 per
share, the number of Preferred Shares set forth opposite the name of such
Underwriter in Column (1) of Schedule I hereto.
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Delivery of certificates, and payment of the purchase price, for
the Preferred Shares shall be made at the offices of Squire, Sanders & Dempsey
L.L.P., or such other location as shall be agreed upon by the Trust and the
Representatives. Such delivery and payment shall be made at 10:00 a.m., New
York City time, on October 29, 1996 or at such other time and date not more
than ten business days thereafter as shall be agreed upon by the
Representatives and the Trust. The time and date of such delivery and payment
are herein called the "Closing Date." Delivery of the certificates for the
Preferred Shares shall be made to the Representatives for the respective
accounts of the several Underwriters against payment by the several
Underwriters through the Representatives of the purchase price for the
Preferred Shares by wire transfer of same day funds. The certificates for the
Preferred Shares to be so delivered will be in definitive, fully registered
form, will bear no restrictive legends, other than those relating to
restrictions described in the Prospectus and Prospectus Supplement, and will be
in such denominations and registered in such names as the Representatives shall
request, not less than one full business day prior to the Closing Date. The
certificates for the Preferred Shares will be made available to the
Representatives at such office or such other place as the Representatives may
designate for inspection, checking and packaging not later than 11:00 a.m., New
York time on the business day prior to the Closing Date.
4. PUBLIC OFFERING OF THE PREFERRED SHARES. It is understood
that the Underwriters propose to make a public offering of the Preferred Shares
at the price and upon the other terms set forth in the Prospectus Supplement.
5. COVENANTS OF THE TRUST.
(a) The Trust covenants and agrees with each of the
Underwriters that:
(i) If required, the Trust will file the
Prospectus and Prospectus Supplement and any amendment or
supplement thereto with the Commission in the manner and within
the time period required by Rule 424(b) under the Rules and
Regulations. During any time when a prospectus relating to the
Preferred Shares is required to be delivered under the Act, the
Trust (A) will comply with all requirements imposed upon it by the
Act and the Rules and Regulations to the extent necessary to
permit the continuance of sales of or dealings in the Preferred
Shares in accordance with the provisions hereof and of the
Prospectus and Prospectus Supplement, as then amended or
supplemented, and (B) will not file with the Commission the
Prospectus or the Prospectus Supplement, any amendment or
supplement to the Prospectus or Prospectus Supplement or any
amendment to the Registration Statement of which the
Representatives shall not previously have been advised and
furnished with a copy a reasonable period of time prior to the
proposed filing and as to which filing the Representative shall
not have given its consent, which may be given by counsel to the
Underwriters.
(ii) As soon as the Trust is advised or
obtains knowledge thereof, on or subsequent to the date hereof,
the Trust will advise the Representatives (A) of any request made
by the Commission for amending the Registration Statement, for
supplementing any Preliminary Prospectus Supplement, the
Prospectus or Prospectus Supplement or for additional information,
or (B) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or any
post-effective amendment thereto or any order preventing or
suspending the use of any Preliminary Prospectus Supplement, the
Prospectus or Prospectus Supplement or any amendment or supplement
thereto or the institution or threat of any investigation or
proceeding for that purpose, and will use its best efforts to
prevent the issuance of any such order and, if issued, to obtain
the lifting thereof as soon as reasonably possible.
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(iii) The Trust will (A) use its best efforts
to arrange for the qualification (whether through exemptions,
notice, filings, registrations or otherwise) of the Preferred
Shares for offer and sale under the state securities or Blue Sky
laws of such jurisdictions as the Underwriters may designate with
such notice as to reasonably enable the Trust to make such
arrangements, (B) continue such qualifications in effect for as
long as may be necessary to complete the distribution of the
Preferred Shares, and (C) make such applications, file such
documents and furnish such information as may be required for the
purposes set forth in clauses (A) and (B); provided, however, that
the Trust shall not be required to qualify as a foreign business
trust or file a general or unlimited consent to service of process
in any such jurisdiction.
(iv) The Trust consents to the use of the
Prospectus and Prospectus Supplement (and any amendment or
supplement thereto) by the Underwriters and all dealers to whom
the Preferred Shares may be sold, in connection with the offering
or sale of the Preferred Shares and for such period of time
thereafter as the Prospectus and Prospectus Supplement are
required by law to be delivered in connection therewith. If, at
any time when a Prospectus and Prospectus Supplement relating to
the Preferred Shares are required to be delivered under the Act,
any event occurs as a result of which the Prospectus or Prospectus
Supplement, as then amended or supplemented, would include any
untrue statement of a material fact or omit to state a material
fact necessary to make the statements therein not misleading, or
if it becomes necessary at any time to amend or supplement the
Prospectus or Prospectus Supplement to comply with the Act or the
Rules and Regulations, the Trust promptly will so notify the
Representatives and, subject to Section 5(a)(i) hereof, will
prepare and file with the Commission an amendment to the
Registration Statement or an amendment or supplement to the
Prospectus or Prospectus Supplement which will correct such
statement or omission or effect such compliance, each such
amendment or supplement to be reasonably satisfactory to counsel
to the Underwriters.
(v) As soon as practicable, but in any event
not later than 45 days after the end of the 12-month period
beginning on the day after the end of the fiscal quarter of the
Trust during which the effective date of the Registration
Statement occurs (90 days in the event that the end of such fiscal
quarter is the end of the Trust's fiscal year), the Trust will
make generally available to its security holders, in the manner
specified in Rule 158(b) of the Rules and Regulations, and to the
Representatives, an earnings statement which will be in the detail
required by, and will otherwise comply with, the provisions of
Section 11(a) of the Act and Rule 158(a) of the Rules and
Regulations, which statement need not be audited unless required
by the Act or the Rules and Regulations, covering a period of at
least 12 consecutive months after the effective date of the
Registration Statement.
(vi) The Trust will maintain a transfer agent
and, if necessary under the jurisdiction of formation of the
Trust, a registrar (which may be the same entity as the transfer
agent) for its Preferred Shares.
(vii) Except as provided in the foregoing
sentence, the Trust will furnish, without charge, to the
Representatives or on the order of the Representatives at such
place as the Representatives may designate, copies of the
Preliminary Prospectus Supplement, the Registration Statement and
any pre-effective or post-effective amendments thereto (two copies
of which will be signed (or conformed) and will include all
financial statements and exhibits), the Prospectus and Prospectus
Supplement, and all amendments and supplements thereto, in each
case as soon as
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available and in such quantities as the Representatives may
reasonably request. Notwithstanding the foregoing, the Trust will
not be required to send any of the foregoing documents to any
purchasers of the Preferred Shares (other than the Underwriters or
their affiliates) and the Underwriters will be solely responsible
for any prospectus delivery requirements contained in the Act and
the Rules and Regulations.
(viii) The Trust will not, directly or
indirectly, without the prior written consent of any of the
Representatives, issue, offer, sell, grant any option to purchase
or otherwise dispose (or announce any issuance, offer, sale, grant
of any option to purchase or other disposition) of any Preferred
Shares or any securities convertible into, or exchangeable or
exercisable for, Preferred Shares for a period of 180 days after
the date hereof, except pursuant to this Agreement, except for
issuances pursuant to the exercise of stock options outstanding on
or granted subsequent to the date hereof, pursuant to a stock
option or other employee benefit plan in existence on the date
hereof and except as contemplated by the Prospectus or the
Prospectus Supplement.
(ix) The Preferred Shares have been duly
authorized for listing, subject to official notice of issuance, on
The New York Stock Exchange.
(x) Neither the Trust nor any of its
officers, directors or affiliates (within the meaning of the Rules
and Regulations) will take, directly or indirectly, any action
designed to, or which would in the future reasonably be expected
to cause or result in, stabilization or manipulation of the price
of any securities of the Trust.
(xi) The Trust will apply the net proceeds of
the offering received by it in the manner set forth under the
caption "Use of Proceeds" in the Prospectus Supplement.
(xii) For a period of three years from the date
hereof, the Trust will timely file all such reports, forms or
other documents as may be required from time to time, under the
Act, the Rules and Regulations, the Exchange Act, and the rules
and regulations thereunder, and all such reports, forms and
documents filed will comply as to form and substance in all
material respects with the applicable requirements under the Act,
the Rules and Regulations, the Exchange Act and the rules and
regulations thereunder.
6. EXPENSES. Regardless of whether the transactions
contemplated in this Agreement are consummated, and regardless of whether for
any reason this Agreement is terminated, the Trust will pay, and hereby agrees
to indemnify each Underwriter against, all fees and expenses incident to the
performance of the obligations of the Trust under this Agreement, including,
but not limited to, (i) fees and expenses of accountants and counsel for the
Trust, (ii) all costs and expenses incurred in connection with the preparation,
duplication, printing, filing, delivery and shipping of copies of the
Registration Statement and any pre-effective or post-effective amendments
thereto, any Preliminary Prospectus Supplement, the Prospectus and the
Prospectus Supplement and any amendments or supplements thereto, this
Agreement, the Agreement Among Underwriters, any Selected Dealer Agreement,
Underwriters' Questionnaire, Underwriters' Power of Attorney, and all other
documents in connection with the transactions contemplated herein, including
the cost of all copies thereof, subject to the last sentence of Section
5(a)(vii), (iii) fees and expenses relating to qualification of the Preferred
Shares under state securities or Blue Sky laws, including the cost of preparing
and mailing the preliminary and final Blue Sky memoranda and filing fees and
disbursements and reasonable fees of counsel and other related expenses, if
any, in connection therewith, (iv) filing fees of the Commission relating to
the Preferred Shares,
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11
(v) any fees and expenses in connection with the listing of the Preferred
Shares on The New York Stock Exchange, and (vi) costs and expenses incident to
the preparation, issuance and delivery to the Underwriters of any certificates
evidencing the Preferred Shares, including transfer agent's and registrar's
fees and any applicable transfer taxes incurred in connection with the delivery
to the Underwriters of the Preferred Shares to be sold by the Trust pursuant
to this Agreement.
7. CONDITIONS OF THE UNDERWRITERS' OBLIGATIONS. The obligation
of each Underwriter to purchase and pay for the Preferred Shares set forth
opposite the name of such Underwriter in Schedule I is subject to the
continuing accuracy of the representations and warranties of the Trust herein
as of the date hereof and as of the Closing Date as if they had been made on
and as of the Closing Date; the accuracy on and as of the Closing Date of the
statements of officers of the Trust made pursuant to the provisions hereof; the
performance by the Trust on and as of the Closing Date of its covenants and
agreements hereunder; and the following additional conditions:
(a) The Registration Statement shall have been
declared effective not later than 11:00 A.M., New York time, on the date
hereof; if required, in the case of any changes in or amendments or supplements
to the Prospectus in addition to those contemplated above, the Trust shall have
filed such Prospectus as amended or supplemented with the Commission in the
manner and within the time period required by Rule 424(b) under the Act; no
stop order suspending the effectiveness of the Registration Statement or any
amendment thereto shall have been issued, and no proceedings for that purpose
shall have been instituted or threatened or, to the knowledge of the Trust or
the Representatives, shall be contemplated by the Commission; and the Trust
shall have complied with any request of the Commission for additional
information (to be included in the Registration Statement or the Prospectus or
otherwise).
(b) The Representatives shall not have advised the
Trust that the Registration Statement, or any amendment thereto, contains an
untrue statement of fact which, in the Representatives' opinion, is material,
or omits to state a fact which, in such Underwriter's opinion, is material and
is required to be stated therein or is necessary to make the statements therein
not misleading, or that the Prospectus, or any supplement thereto, contains an
untrue statement of fact which, in the Representatives' opinion, is material,
or omits to state a fact which, in the Representatives' opinion, 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 or prior to the Closing Date, the
Representatives shall have received from counsel to the Underwriters, such
opinion or opinions with respect to the issuance and sale of the Preferred
Shares, the Registration Statement and the Prospectus and such other related
matters as the Representatives reasonably may request and such counsel shall
have received such documents and other information as they reasonably request
to enable them to pass upon such matters.
(d) On or prior to the Closing Date, the
Representatives shall have received a certificate executed and delivered by the
Chairman and the principal financial officer of the Trust and any vice
president, dated the Closing Date, to the effect set forth below:
(i) The representations and warranties of the
Trust contained in Section 2 hereof are true and correct as of the
date of such certificate, and the Trust has complied with all the
agreements and satisfied all conditions contained herein to be
performed or satisfied at or prior to the Closing Date;
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12
(ii) 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, to the knowledge of such officers, are contemplated under the
Act.
(e) On the Closing Date the Underwriters shall have
received the opinion, dated the Closing Date, of Mayer, Brown & Platt, counsel
to the Trust ("Trust Counsel"), to the effect set forth below (for all matters
of Ohio law, Mayer, Brown & Platt will rely for those matters on the opinion
of Paul F. Levin, Senior Vice President-General Counsel and Secretary of the
Trust).
(i) The Trust has authorized capital stock as
set forth in the Prospectus and Prospectus Supplement; the common
shares of the Trust conform in all material respects to the
description thereof contained in the Prospectus and Prospectus
Supplement; the Preferred Shares, when issued by the Trust and
paid for in accordance with the terms hereof, will be validly
issued, fully paid and, except as set forth in the Prospectus
under the heading "Description of Shares of Beneficial Interest -
Shareholder Liability," nonassessable and will conform in all
material respects to the description thereof contained in the
Prospectus and Prospectus Supplement and will not be subject to
any preemptive, subscription or other similar rights; and the
Preferred Shares have been duly authorized for listing, subject to
official notice of issuance, on The New York Stock Exchange;
(ii) The Registration Statement is effective
under the Act; any required filing of the Prospectus pursuant to
Rule 424(b) has been made in the manner and within the time period
required by Rule 424(b); and, to the best knowledge of such
counsel, no stop order suspending the effectiveness of the
Registration Statement or any amendment thereto has been issued,
and no proceedings for that purpose have been instituted or are
pending or are threatened or contemplated under the Act; the
Registration Statement and each amendment thereto and the
Prospectus and, if any, each amendment and supplement thereto
(except for the financial statements, schedules and other
financial data included therein, as to which such counsel need not
express any opinion), complied as to form in all material respects
with the requirements of the Act and the Rules and Regulations;
(iii) No consent, approval, authorization or
order of any court, regulatory body or administrative agency or
other governmental agency or body, domestic or foreign, has been
or is required for the Trust's performance of this Agreement or
the consummation of the transactions contemplated hereby, except
such as have been obtained under the Act and the Rules and
Regulations, the Exchange Act and the rules and regulations
thereunder or may be required under state securities or Blue Sky
laws in connection with the purchase and distribution by the
Underwriters of the Preferred Shares; and
(iv) The Trust's existing legal organization
and its method of operation, as described in the Prospectus and
the Prospectus Supplement and as represented by the Trust, will
enable the Trust to satisfy the requirements for qualification as
a real estate investment trust (a "REIT") under the Internal
Revenue Code of 1986, as amended (the "Code").
In rendering any such opinion, such counsel may rely, as to
matters of fact, to the extent such counsel deems proper, on certificates of
responsible officers of the Trust and public officials.
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13
References to the Registration Statement and the Prospectus in
this paragraph (c) and (e) shall include any amendment or supplement thereto at
the date of such opinion.
The opinion described in paragraph 7(e)(iv) may be based upon
assumptions relating to the organization and operation of Management and of any
partnerships in which the Trust will hold an interest, and may be conditioned
upon representations made by the Trust as to factual matters relating to the
Trust's and Management's organization and manner of operation. Such opinion
may also be based upon the assumption that for all of its taxable years (or a
portion thereof) prior to the date of the Prospectus Supplement, the Trust
satisfied all the requirements necessary for qualification as a REIT under the
Code, and the assumption that all organizational documents for the Trust and
Management are complied with.
(f) On the Closing Date the Underwriters shall have
received the opinion, dated as of the Closing Date, of Paul F. Levin, Senior
Vice President-General Counsel and Secretary of the Trust, to the effect set
forth below:
(i) The Trust (A) is a duly organized and
validly existing business trust in good standing under the laws of
Ohio with full power and authority to own or lease its properties
and to conduct its business as described in the Registration
Statement and the Prospectus, and (B) is duly qualified to do
business as a foreign business trust and is in good standing in
each jurisdiction in which the conduct of its business requires
such qualification (except for those jurisdictions in which the
failure so to qualify has not and will not have a Material Adverse
Effect);
(ii) Management (A) is a duly incorporated and
validly existing corporation under the laws of Delaware, with full
power and authority to own or lease its property and to conduct
its business as described in the Registration Statement and the
Prospectus, and (B) is duly qualified to do business as a foreign
corporation and is in good standing in Delaware and in each
jurisdiction in which the conduct of its business requires such
qualification (except for those jurisdictions in which the failure
so to qualify has not and will not have a Material Adverse
Effect);
(iii) The Trust has duly authorized the
issuance and sale of the Preferred Shares to be sold by it
hereunder, and when issued, the Preferred Shares shall be fully
paid and, except as set forth under the caption "Shareholder
Liability" in the Prospectus, non-assessable;
(iv) The descriptions contained and summarized
in the Registration Statement and the Prospectus of contracts and
other documents, are accurate and fairly represent in all material
respects the information required to be shown by the Act and the
Rules and Regulations; to the best knowledge of such counsel,
there are no contracts or documents which are required by the Act
to be described in the Registration Statement or the Prospectus or
to be filed as exhibits to the Registration Statement which are
not described or filed as required by the Act and the Rules and
Regulations; to the best knowledge of such counsel, there is not
pending or threatened against the Trust any action, suit,
proceeding or investigation before or by any court, regulatory
body, or administrative agency or any other governmental agency or
body, domestic or foreign, of a character required to be disclosed
in the Registration Statement or the Prospectus which is not so
disclosed therein;
(v) The Trust has full legal right, power,
and authority to enter into this Agreement and to consummate the
transactions provided for herein; this
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14
Agreement has been duly authorized, executed and delivered by the
Trust; and this Agreement, assuming due authorization, execution
and delivery by each other party hereto, is a valid and binding
agreement of the Trust, enforceable in accordance with its terms,
except as limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws now or hereafter in
effect relating to or affecting creditors' rights generally or by
general principles of equity relating to the availability of
remedies and except as rights to indemnity and contribution may be
limited by federal or state securities laws or the public policy
underlying such laws. None of the Trust's execution or delivery
of this Agreement, its performance hereof, its consummation of the
transactions contemplated herein or its application of the net
proceeds of the offering in the manner set forth under the caption
"Use of Proceeds" in the Prospectus Supplement, conflicts or will
conflict with or results or will result in any breach or violation
of any of the terms or provisions of, or constitute a default
under, or result in the creation or imposition of any material
lien, charge or encumbrance upon, any material property or assets
of the Trust or Management (A) with respect to the Trust pursuant
to the terms of the Declaration of Trust or By-Laws, each as
amended, of the Trust and with respect to Management pursuant to
the terms of the Articles of Incorporation or By-Laws of
Management; (B) the terms of any material indenture, mortgage,
deed or trust, voting trust agreement, shareholder's agreement,
note agreement or other agreement or instrument known to such
counsel after reasonable investigation to which the Trust or
Management is a party or by which it or Management is or may be
bound or to which any of their respective properties may be
subject; (C) any statute, rule or regulation of any regulatory
body or administrative agency or other governmental agency or
body, domestic or foreign, having jurisdiction over the Trust or
any of its activities or properties; (D) or any judgment, decree
or order, known to such counsel, of any government, arbitrator,
court, regulatory body or administrative agency or other
governmental agency or body, domestic or foreign, having such
jurisdiction;
(vi) To the best of such counsel's knowledge,
the conduct of the businesses of the Trust and Management is not
in violation of any federal, state or local statute,
administrative regulation or other law, which violation is likely
to have a Material Adverse Effect; and the Trust and Management
each has obtained all material licenses, permits, franchises,
certificates and other authorizations from state, federal and
other regulatory authorities as are necessary or required for the
ownership, leasing and operation of properties and the conduct of
their respective businesses as presently conducted and as
contemplated in the Prospectus and the Prospectus Supplement; and
(vii) The issued shares of capital stock of
Management have been duly authorized and validly issued, are fully
paid and nonassessable and are owned by a trust created pursuant
to an amended and restated declaration of trust dated as of
October 1, 1996 free and clear of any perfected security interest
or, to the best knowledge of such counsel, any other liens,
encumbrances, claims or security interests.
In rendering any such opinion, such counsel may rely, as to
matters of fact, to the extent such counsel deems proper, on certificates of
responsible officers of the Trust and public officials.
References to the Registration Statement and the Prospectus in
this paragraph (f) shall include any amendment or supplement thereto at the
date of such opinion.
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15
In addition, such counsel shall state that in the course of the
preparation of the Registration Statement and the Prospectus, such counsel has
participated in conferences with officers and representatives of the Trust and
with the Trust's independent public accountants, at which conferences such
counsel made inquiries of such officers, representatives and accountants and
discussed the contents of the Registration Statement and the Prospectus and
(without taking any further action to verify independently the statements made
in the Registration Statement and the Prospectus and, except as stated in the
foregoing opinion, without assuming responsibility for the accuracy,
completeness or fairness of such statements) nothing has come to such counsel's
attention that causes such counsel to believe that either the Registration
Statement as of the date it was declared effective and as of the Closing Date
or the Prospectus as of the date thereof and as of the Closing Date contained
or contains any untrue statement of a material fact or omitted or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading (it being understood that such counsel need
not express any opinion with respect to the financial statements, schedules and
other financial data included in the Registration Statement or the Prospectus).
(g) On or prior to the Closing Date, counsel to the
Underwriters shall have been furnished such documents, certificates and
opinions as they may reasonably require in order to evidence the accuracy,
completeness or satisfaction of any of the representations or warranties of the
Trust, or conditions herein contained.
(h) At the time that this Agreement is executed by
the Trust, the Underwriters shall have received from Arthur Andersen LLP a
letter as of the date this Agreement in form and substance which is customary
for a transaction of this nature and which is reasonably satisfactory to the
Representatives (the "Original Letter"), and on the Closing Date the
Underwriters shall have received from such accounting firm a letter dated the
Closing Date stating that, as of a specified date not earlier than five (5)
days prior to the Closing Date, nothing has come to the attention of such firm
to suggest that the statements made in the Original Letter are not true and
correct.
(i) On the Closing Date, the Underwriters shall have
received a certificate, dated the Closing Date, of the principal executive
officer and the principal financial or accounting officer of the Trust to the
effect that each of such persons has carefully examined the Registration
Statement and the Prospectus and any amendments or supplements thereto and this
Agreement, and that:
(i) The representations and
warranties of the Trust in this Agreement are true and correct, as
if made on and as of the Closing Date, and the Trust has
complied with all agreements and covenants and satisfied all
conditions contained in this Agreement on its part to be performed
or satisfied at or prior to the Closing Date;
(ii) 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, to the best knowledge of each of such persons are
contemplated or threatened under the Act and any and all filings
required by Rule 424 have been timely made;
(iii) The Registration Statement and Prospectus
and, if any, each amendment and each supplement thereto, contain
all statements and information required to be included therein,
and neither the Registration Statement nor any amendment thereto
includes any untrue statement of a material fact or omits to state
any material fact required to be stated therein or necessary to
make the statements
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16
therein not misleading and neither the Prospectus (or any
amendment thereto) or the Prospectus Supplement (or any amendment
thereto) includes or included any untrue statement of a material
fact or omits or omitted to state any 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; and
(iv) Subsequent to the most recent respective
dates as of which information is given in the Registration
Statement and the Prospectus Supplement up to and including the
Closing Date, the Trust has not, other than in the ordinary course
of its business or as included in or contemplated by the
Prospectus Supplement or the Prospectus, (i) incurred any material
liabilities or obligations, direct or contingent; (ii) paid or
declared any dividends or other distributions on its capital stock
other than its regular quarterly dividend; (iii) entered into any
material transactions not in the ordinary course of business.
Subsequent to the most recent respective dates as of which
information is given in the Registration Statement and the
Prospectus Supplement up to and including the Closing Date, other
than in the ordinary course of business or as included in or
contemplated by the Prospectus Supplement or the Prospectus, there
has not been any material change in the capital stock or long-term
debt or any increase in the short-term borrowings (other than any
increase in short-term borrowings in the ordinary course of
business) of the Trust or any material adverse change to the
business properties, assets, net worth, condition (financial or
other), results of operations or prospects of the Trust; the Trust
has not sustained any material loss or damage to its property or
assets, whether or not insured; there is no litigation which is
pending or threatened against the Trust which is required under
the Act or the Rules and Regulations to be set forth in an amended
or supplemented Prospectus which has not been set forth, and there
has not occurred any event required to be set forth in an amended
or supplemented Prospectus which has not been set forth, and there
has been no document required to be filed under the Exchange Act
and the rules and regulations thereunder that upon such filing
would be deemed incorporated by reference into the Prospectus that
has not been filed.
References to the Registration Statement, the
Prospectus and Prospectus Supplement in this paragraph (i) are to
such documents as amended and supplemented at the date of the
certificate.
(j) Subsequent to the most recent respective dates as
of which information is given in the Registration Statement, the Prospectus and
the Prospectus Supplement up to and including the Closing Date, there has not
been (i) any change or decrease specified in the letter or letters referred to
in paragraph (h) of this Section 7 or (ii) any change, or any development
involving a prospective change, in the business or properties of the Trust
which change or decrease in the case of clause (i) or change or development in
the case of clause (ii) makes it impractical or inadvisable in the
Representatives' judgment to proceed with the public offering or the delivery
of the Preferred Shares as contemplated by the Prospectus Supplement.
(k) No order suspending the sale of the Preferred
Shares in any jurisdiction designated by the Representatives pursuant to
Section 5(a)(iii)(A) hereof has been issued on or prior to the Closing Date and
no proceedings for that purpose have been instituted or, to the
Representatives' knowledge or that of the Trust, have been or are contemplated.
(l) The Trust shall have furnished the Underwriters
with such further opinions, letters, certificates or documents as either the
Representative or counsel for the Underwriters may reasonably request. All
opinions, certificates, letters and documents to be furnished by the Trust will
comply with the provisions hereof only if they are reasonably
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17
satisfactory in all material respects to the Underwriters and to counsel for
the Underwriters. The Trust shall furnish the Underwriters with conformed
copies of such opinions, certificates, letters and documents in such quantities
as the Representatives may reasonably request. The certificates delivered
under this Section 7 shall constitute representations, warranties and
agreements of the Trust, as the case may be, as to all matters set forth
therein as fully and effectively as if such matters had been set forth in
Section 2 of this Agreement.
(m) The Preferred Shares shall have been duly
authorized for listing, subject to official notice of issuance, on The New York
Stock Exchange.
8. INDEMNIFICATION.
(a) The Trust agrees to indemnify and hold harmless
each Underwriter and each person, if any, who controls such Underwriter within
the meaning of Section 15 of the Act or Section 20 of the Exchange Act, against
any and all losses, claims, damages or liabilities, joint or several (and
actions in respect thereof), to which such Underwriter or such controlling
person may become subject, under the Act or other federal or state statutory
law or regulation, at common law or otherwise, insofar as such losses, claims,
damages, liabilities or actions arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained in the
Registration Statement or the Prospectus or any Preliminary Prospectus
Supplement or the Prospectus Supplement, or any amendment or supplement
thereto, or any Blue Sky application or other document executed by the Trust
specifically for the purpose of qualifying, or based upon written information
furnished by the Trust filed in any state or other jurisdiction in order to
qualify, any or all of the Preferred Shares under the securities or Blue Sky
laws thereof (any such application, document or information being hereinafter
called a "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 not misleading and
will reimburse, as incurred, such Underwriter or such controlling persons for
any legal or other expenses reasonably incurred by such Underwriter or such
controlling persons in connection with investigating, defending or appearing as
a third party witness in connection with any such loss, claim, damage,
liability or action; provided, however, that the Trust will not be liable in
any such case to the extent that any such loss, claim, damage, liability or
action arises out of or is based upon any untrue statement or alleged untrue
statement or omission or alleged omission made in any of such documents in
reliance upon and in conformity with information furnished in writing to the
Trust by such Underwriter expressly for use therein, and provided, further,
that such indemnity with respect to any Preliminary Prospectus Supplement shall
not inure to the benefit of any Underwriter (or to the benefit of any person
controlling such Underwriter) from whom the person asserting any such loss,
claim, damage, liability or action purchased Preferred Shares which are the
subject thereof to the extent that any such loss, claim, damage, liability or
action (i) results from the fact that such Underwriter failed to send or give a
copy of the Prospectus and Prospectus Supplement (as amended or supplemented)
to such person at or prior to the confirmation of the sale of such Preferred
Shares to such person in any case where such delivery is required by the Act or
the Rules and Regulations or (ii) arises out of or is based upon an untrue
statement or omission of a material fact contained in such Preliminary
Prospectus Supplement that was corrected in the Prospectus or Prospectus
Supplement (as amended and supplemented), unless such failure resulted from
non-compliance by the Trust with Section 5(a)(vii) hereof.
The indemnity agreement in this paragraph (a) shall be in
addition to any liability which the Trust may otherwise have.
(b) Each of the Underwriters agrees severally, but
not jointly, to indemnify and hold harmless the Trust, each of its trustees,
each of its officers who has signed the
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Registration Statement, each person, if any, who controls the Trust within the
meaning of Section 15 of the Act or Section 20 or the Exchange Act against any
and all losses, claims, damages or liabilities (and actions in respect thereof)
to which the Trust or any such director, officer, or controlling person may
become subject, under the Act or other federal or state statutory law or
regulation, at common law or otherwise, insofar as such losses, claims,
damages, liabilities or actions arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained in the
Registration Statement or the Prospectus or any Preliminary Prospectus
Supplement, or any amendment or supplement thereto or in 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 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 reliance upon and in conformity
with information furnished in writing by that Underwriter through any
Representative to the Trust expressly for use therein; and will reimburse, as
incurred, all legal or other expenses reasonably incurred by the Trust or any
trustee, officer, controlling person in connection with investigating or
defending any such loss, claim, damage, liability or action. The Trust
acknowledges that the statements with respect to the public offering of the
Preferred Shares set forth in paragraphs two and three under the heading
"Underwriting" and the stabilization legend in the Prospectus Supplement have
been furnished by the Underwriters to the Trust expressly for use therein and
constitute the only information furnished in writing by or on behalf of the
Underwriters for inclusion in the Prospectus. The indemnity agreement
contained in this subsection (b) shall be in addition to any liability which
the Underwriters may otherwise have.
(c) Promptly after receipt by an indemnified party
under this Section 8 of notice of the commencement of any action, such
indemnified party will, if a claim in respect thereof is to be made against one
or more indemnifying parties under this Section 8, notify such indemnifying
party or parties of the commencement thereof; but the omission so to notify the
indemnifying party shall not relieve it from any liability which it may have to
any indemnified party otherwise than under subsection (a) or (b) of this
Section 8 or to the extent that the indemnifying party was not adversely
affected by such omission. In case any such action is brought against an
indemnified party and it notifies an indemnifying party or parties of the
commencement thereof, the indemnifying party or parties against which a claim
is to be made will be entitled to participate therein and, to the extent that
it or they may wish, to assume the defense thereof, with counsel reasonably
satisfactory to such indemnified party; provided however, that if the
defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party has reasonably concluded that
there may be legal defenses available to it and/or other indemnified parties
which are different from or additional to those available to the indemnifying
party, the indemnified party or parties shall have the right to select separate
counsel to assume such legal defenses and otherwise to participate in the
defense of such action on behalf of such indemnified party or parties. Upon
receipt of notice from the indemnifying party to such indemnified party of its
election so to assume the defense of such action and approval by the
indemnified party of counsel, the indemnifying party will not be liable to such
indemnified party under this Section 8 for any legal or other expenses (other
than the reasonable costs of investigation) subsequently incurred by such
indemnified party in connection with the defense thereof unless (i) the
indemnified party has employed such counsel in connection with the assumption
of such different or additional legal defenses in accordance with the proviso
to the immediately preceding sentence, (ii) the indemnifying party has not
employed counsel reasonably satisfactory to the indemnified party to represent
the indemnified party within a reasonable time after notice of commencement of
the action, or (iii) the indemnifying party has authorized in writing the
employment of counsel for the indemnified party at the expense of the
indemnifying party.
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(d) If the indemnification provided for in this
Section 8 is unavailable or insufficient to hold harmless an indemnified party
under paragraph (a) or (b) above in respect of any losses, claims, damages,
expenses or liabilities (or actions in respect thereof) referred to therein,
then each indemnifying party shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities (or actions in respect thereof) (i) in such proportion as is
appropriate to reflect the relative benefits received by each of the
contributing parties, on the one hand, and the party to be indemnified, on the
other hand, from the offering of the Preferred Shares or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of each of the contributing
parties, on the one hand, and the party to be indemnified, on the other hand in
connection with the statements or omissions that resulted in such losses,
claims, damages or liabilities, as well as any other relevant equitable
considerations. In any case where the Trust is a contributing party and an
Underwriter is the indemnified party, the relative benefits received by the
Trust on the one hand, and the Underwriter, on the other, shall be deemed to be
in the same proportion as the total net proceeds from the offering of the
Preferred Shares (before deducting expenses) bear to the total underwriting
discounts received by the Underwriter hereunder, in each case as set forth in
the table on the cover page of the Prospectus Supplement. Relative fault 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 Trust or by the
Underwriter, and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such untrue statement or omission. 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 paragraph (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 paragraph (d), no Underwriter shall be required to
contribute any amount in excess of the underwriting discount applicable to the
Preferred Shares purchased by such Underwriter hereunder. The Underwriters'
obligations to contribute pursuant to this paragraph (d) are several in
proportion to their respective underwriting obligations, and not joint. 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. For purposes of this paragraph
(d), (i) each person, if any, who controls an Underwriter within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act shall have the same
rights to contribution as such Underwriter and (ii) each trustee of the Trust,
each officer of the Trust who has signed the Registration Statement, and each
person, if any, who controls the Trust within the meaning of Section 15 of the
Act or Section 20 of the Exchange Act shall have the same rights to
contribution as the Trust, subject in each case to this paragraph (d). Any
party entitled to contribution will, promptly after receipt of notice of
commencement of any action, suit or proceeding against such party in respect to
which a claim for contribution may be made against another party or parties
under this paragraph (d), notify such party or parties from whom contribution
may be sought, but the omission so to notify such party or parties shall not
relieve the party or parties from whom contribution may be sought from any
other obligation (x) it or they may have hereunder or otherwise than this
paragraph (d) or (y) to the extent that such party or parties were not
adversely affected by such omission. The contribution agreement set forth
above shall be in addition to any liabilities which any indemnifying party may
otherwise have.
9. RIGHT TO INCREASE OFFERING. At any time during a period of
30 days from the date of the Prospectus Supplement, the Underwriters, by no
less than two business days' prior written notice may designate a closing
(which may be concurrent with, and part of, the closing on the Closing Date
with respect to the Preferred Shares or may be a second closing held on a date
subsequent to the Closing Date, in either case such date shall be referred to
herein as the "Option Closing Date") at which the Underwriters may purchase
Additional Preferred Shares in accordance
- 19 -
20
with the provisions of this Section 9 at the purchase price per share to be
paid for the Preferred Shares. In no event shall the Option Closing Date be
later than 10 business days or less than three business days after written
notice of election to purchase Preferred Shares is given.
The Trust agrees to sell to the several Underwriters on the
Option Closing Date the number of Additional Preferred Shares specified in such
written notice and the Underwriters agree severally and not jointly, to
purchase such Additional Preferred Shares on the Option Closing Date. Such
Additional Preferred Shares shall be purchased for the account of each
Underwriter in the same proportion as the number of Preferred Shares set forth
opposite the name of such Underwriter in Column (1) of Schedule I and bears to
the total number of Preferred Shares (subject to adjustment by the
Representative to eliminate fractions) and may be purchased by the Underwriters
only for the purpose of covering over-allotments made in connection with the
sale of the Preferred Shares.
No Additional Preferred Shares shall be sold or delivered
unless the Preferred Shares previously have been, or simultaneously are, sold
and delivered. The right to purchase Additional Preferred Shares or any
portion thereof may be surrendered and terminated at any time upon written
notice by the Representative to the Trust but not subsequent to the time
written notice was given to purchase Additional Preferred Shares.
Except to the extent modified by this Section 9, all
provisions of this Agreement relating to the transactions contemplated to occur
on the Closing Date for the sale of the Preferred Shares, including but not
limited to the representations and warranties of the Trust, shall apply,
MUTATIS MUTANDIS, to the Option Closing Date for the sale of the Preferred
Shares.
10. REPRESENTATIONS, ETC. TO SURVIVE DELIVERY. The respective
representations, warranties, agreements, covenants, indemnities and statements
of, and on behalf of, the Trust and its officers and the Underwriters,
respectively, set forth in or made pursuant to this Agreement will remain in
full force and effect, regardless of any investigation made by or on behalf of
the Underwriters, and will survive delivery of and payment for the Preferred
Shares for a period of three years after such delivery and payment. Any
successors to the Underwriters shall be entitled to the indemnity, contribution
and reimbursement agreements contained in this Agreement.
11. EFFECTIVE DATE AND TERMINATION.
(a) This Agreement shall become effective when
executed by the Trust and the Representatives.
(b) This Agreement (except for the provisions of
Sections 6 and 8 hereof) may be terminated by the Representatives by written
notice to the Trust in the event that the Trust has failed to comply in any
respect with any of the provisions of this Agreement required on the part of
the Trust to be performed at or prior to the Closing Date, or if any of the
representations or warranties of the Trust is not accurate in any respect or if
the covenants, agreements or conditions of, or applicable to the Trust herein
contained have not been complied with in any respect or satisfied within the
time specified on the Closing Date, respectively, or if after the execution of
this Agreement but prior to the Closing Date:
(i) the Trust or Management shall have
sustained a loss by strike, fire, flood, accident or other
calamity of such a character as to interfere materially with the
conduct of the business and operations of the Trust or Management
taken as a whole regardless of whether or not such loss was
insured;
- 20 -
21
(ii) trading in the common shares of the Trust
shall have been suspended by the Commission or The New York Stock
Exchange or trading in securities generally on the New York Stock
Exchange or a material limitation on such trading shall have been
imposed or minimum or maximum prices shall have been established
on any such exchange;
(iii) a banking moratorium shall have been
declared by New York or United States authorities;
(iv) there shall have been any material
adverse change in the financial markets in the United States or an
outbreak or escalation of hostilities between the United States
and any foreign power or an outbreak or escalation of any other
insurrection or armed conflict involving the United States; or
(v) there shall have been a material adverse
change in (A) general economic, political or financial conditions
or (B) the present or prospective business or condition (financial
or other) of the Trust or Management that, in each case, in the
Representatives' judgment makes it impracticable or inadvisable to
make or consummate the public offering, sale or delivery of the
Trust's Preferred Shares on the terms and in the manner
contemplated in the Prospectus, Prospectus Supplement and the
Registration Statement.
(c) Termination of this Agreement under this Section
11 or Section 12 after the Preferred Shares have been purchased by the
Underwriters hereunder shall be applicable only to the Additional Preferred
Shares. Termination of this Agreement shall be without liability of any party
to any other party other than as provided in Sections 6 and 8 hereof.
12. SUBSTITUTION OF UNDERWRITERS. If one or more of the
Underwriters shall fail or refuse (otherwise than for a reason sufficient to
justify the termination of this Agreement under the provisions of Section 7 or
11 hereof) to purchase and pay for (a) in the case of the Closing Date, the
number of Preferred Shares agreed to be purchased by such Underwriter in
accordance with the terms hereof or (b) in the case of the Option Closing Date,
the number of Preferred Shares agreed to be purchased by such Underwriter in
accordance with the terms hereof, and the number of such Preferred Shares shall
not exceed 10% of the Preferred Shares required to be purchased on the Closing
Date, as the case may be, then, the non-defaulting Underwriters shall severally
purchase and pay for (in addition to the number of such Preferred Shares which
it has severally agreed to purchase hereunder) that proportion of the number of
Preferred Shares which the defaulting Underwriter shall have so failed or
refused to purchase on such Closing Date or Option Closing Date, as the case
may be, which the number of Preferred Shares agreed to be purchased by such
non-defaulting Underwriters bears to the aggregate number of Preferred Shares
so agreed to be purchased by such non-defaulting Underwriter on such Closing
Date or Option Closing Date, as the case may be. In such case, the
non-defaulting Underwriter shall have the right to postpone the Closing Date,
as the case may be, to a date not exceeding seven full business days after the
date originally fixed as such Closing Date, as the case may be, pursuant to the
terms hereof in order that any necessary changes in the Prospectus and
Prospectus Supplement or any other documents or arrangements may be made.
- 21 -
22
13. NOTICES. All communications hereunder shall be in writing
and if mailed or delivered or telegraphed and confirmed by letter or telecopied
and confirmed by letter:
If to: Sutro & Co. Incorporated
201 California Street
San Francisco, California 94111
Attention: Syndicate Department
If to: Tucker Anthony Incorporated
1 Beacon Street
Boston, Massachusetts 02108
Attention: Marc Menchel, General Counsel
If to: BT Securities Corporation
130 Liberty Street
New York, New York 10006
Attention: High Yield Administration
If to the Trust: 55 Public Square
Suite 1900
Cleveland, Ohio 44113-1937
Attention: Paul F. Levin, Esq.
14. SUCCESSORS. This Agreement shall inure to the benefit of and
be binding upon the Trust and each Underwriter and the Trust's and each
Underwriter's respective successors and legal representatives, and nothing
expressed or mentioned in this Agreement is intended or shall be construed to
give any other person any legal or equitable right, remedy or claim under or in
respect of this Agreement, or any provisions herein contained, this Agreement
and all conditions and provisions hereof being intended to be and being for the
sole and exclusive benefit of such persons and for the benefit of no other
person, except that the representations, warranties, indemnities and
contribution agreements of the Trust contained in this Agreement shall also be
for the benefit of any person or persons, if any, who control any Underwriter
within the meaning of Section 15 of the Act or Section 20 of the Exchange Act,
and except that the Underwriters' indemnity and contribution agreements shall
also be for the benefit of the trustees of the Trust, the officers of the Trust
who have signed the Registration Statement, and any person or persons, if any,
who control the Trust within the meaning of Section 15 of the Act or Section 20
of the Exchange Act. No purchaser of Preferred Shares from the Underwriters
will be deemed a successor because of such purchase.
15. LIABILITY OF BENEFICIARIES OF TRUST. Notwithstanding anything
contained herein to the contrary, this Agreement is made and executed on behalf
of First Union Real Equity and Mortgage Investments ("First Union"), a business
trust organized under the laws of the State of Ohio, by its officer(s) on
behalf of the trustees thereof, and none of the trustees or any additional or
successor trustee hereafter appointed, or any beneficiary, officer, employee or
agent of First Union shall have any liability in his personal or individual
capacity, but instead, all parties shall look solely to the property and assets
of First Union for satisfaction of claims of any nature arising under or in
connection with this Agreement.
16. APPLICABLE LAW; JURISDICTION. This Agreement shall be
governed by and construed in accordance with the laws of the State of Ohio,
without giving effect to the choices of law or conflict of law principles
thereof. Each party hereto consents to the jurisdiction of each court in which
any action is commenced seeking indemnity or contribution pursuant to Section 8
- 22 -
23
above and agrees to accept, either directly or through an agent, service of
process of each such court.
17. COUNTERPARTS. This Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an original, and all of
which together shall be deemed to be one and the same instrument.
- 23 -
24
If the foregoing correctly sets forth our understanding, please
indicate the Representatives' acceptance thereof in the space provided below
for that purpose, whereupon this letter shall constitute a binding agreement
between the Underwriters and the Trust.
Very truly yours,
FIRST UNION REAL ESTATE EQUITY
AND MORTGAGE INVESTMENTS
By: /s/ James C. Mastandrea
------------------------------
James C. Mastandrea, Chairman
President and Chief Executive
Officer
Accepted as of the date first above written:
SUTRO & CO. INCORPORATED
By: /s/ Scott Wendelin
---------------------------------
Title: Managing Director
------------------------------
TUCKER ANTHONY INCORPORATED
By: /s/ Kevin J. Dresner
---------------------------------
Title: Executive Vice President
------------------------------
BT SECURITIES CORPORATION
By: /s/ Authorized Officer
---------------------------------
Title: Authorized Officer
------------------------------
For themselves and as Representatives of the
other Underwriters named in Schedule I hereto.
- 24 -
25
SCHEDULE I
UNDERWRITERS
Underwriting Agreement dated October 23, 1996
(1) (2)
Number of Preferred Number of Additional
Shares to be Preferred Shares to
Purchased be Purchased
--------- ------------
Name and Address
- ----------------
SUTRO & Co.
Incorporated . . . . . . . . . . . . . . . . . . 568,000
Tucker Anthony Incorporated . . . . . . . . . . . 566,000
BT Securities Corporation . . . . . . . . . . . . 566,000
Robert W. Baird & Co. Incorporated . . . . . . . 20,000
J.C. Bradford & Co. . . . . . . . . . . . . . . . 20,000
Crowell, Weedon & Co. . . . . . . . . . . . . . . 20,000
EVEREN Securities, Inc. . . . . . . . . . . . . . 20,000
Friedman, Billings, Ramsey
& Co., Inc. . . . . . . . . . . . . . . . . . . 20,000
First of Michigan Corporation . . . . . . . . . . 20,000
Morgan Keegan & Company, Inc. . . . . . . . . . . 20,000
Parker/Hunter Incorporated . . . . . . . . . . . 20,000
Piper Jaffray Inc. . . . . . . . . . . . . . . . 20,000
Principal Financial Services, Inc. . . . . . . . 20,000
Rauscher Pierce Refsnes, Inc. . . . . . . . . . . 20,000
Roney & Co., LLC . . . . . . . . . . . . . . . . 20,000
Starr Securities, Inc. . . . . . . . . . . . . . 20,000
The Ohio Company . . . . . . . . . . . . . . . . 20,000
Vector Securities International, Inc. . . . . . . 20,000
Total . . . . . . . . . . . . . . . . . . . . . . 2,000,000
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