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COMMERCIAL NET LEASE REALTY, INC.
8 1/2% Notes due 2010
UNDERWRITING AGREEMENT
Charlotte, North Carolina
September 20, 2000
First Union Securities, Inc.
One First Union Center
Charlotte, North Carolina 28288
Ladies and Gentlemen:
Commercial Net Lease Realty, Inc., a Maryland corporation (the
"Company"), proposes to issue and sell to you (the "Underwriter") an aggregate
principal amount of $20,000,000 8 1/2% notes due 2010 (the "Securities"), to be
issued under an indenture (as the same may be amended and supplemented, the
"Indenture") dated as of March 25, 1999, as amended and supplemented by a Third
Supplemental Indenture dated as of September 20, 2000, between the Company and
First Union National Bank, as trustee (the "Trustee").
The Company wishes to confirm as follows its agreement with
you in connection with the purchase of the Securities.
1. Registration Statement and Prospectus. The Company
has prepared and filed with the Securities and Exchange Commission (the
"Commission") in accordance with the provisions of the Securities Act of 1933,
as amended, and the rules and regulations of the Commission thereunder
(collectively, the "Act"), a registration statement on Form S-3 under the Act
(the "registration statement", file number 333-64511), including a prospectus
relating to the Offered Securities (as defined therein), and has filed with, or
transmitted for filing to, or shall promptly hereafter file with or transmit
for filing to, the Commission a supplement to the prospectus included in such
registration statement (the "Prospectus Supplement") specifically relating to
the Securities and the plan of distribution thereof pursuant to Rule 424 under
the Act.
The term "Registration Statement" as used in this Agreement means the
registration statement (including all financial schedules and exhibits), as
amended to the date of this Agreement. If it is contemplated, at the time this
Agreement is executed, that a post-effective amendment to the registration
statement will be filed and must be declared effective before the offering of
the Securities may commence, the term "Registration Statement" as used in this
Agreement means the registration statement as amended by said post-effective
amendment. The term "Basic Prospectus" as used in this Agreement means the
prospectus in the form included in the Registration Statement. The term
"Prospectus" means the Basic Prospectus, as amended or supplemented by the
Prospectus Supplement. The term "Preliminary Prospectus" as used in this
Agreement means a prospectus supplement, subject to completion, that
specifically relates to the
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Securities and which has heretofore been filed with the Commission, together
with the Basic Prospectus, if any. If the Company has filed an abbreviated
registration statement to register Securities pursuant to Rule 462(b) under the
Act (including the exhibits thereto, the "Rule 462(b) Registration Statement"),
then any reference herein to the Registration Statement shall also be deemed to
include such Rule 462(b) Registration Statement. Any reference in this
Agreement to the registration statement, the Registration Statement, the Basic
Prospectus, any Preliminary Prospectus 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 Act, and any reference to any amendment or
supplement to the registration statement, the Registration Statement, the Basic
Prospectus, any Preliminary Prospectus or the Prospectus shall be deemed to
refer to and include any documents filed by the Company with the Commission
after the date of the Basic Prospectus under the Securities Exchange Act of
1934, as amended (the "Exchange Act") which, upon filing, are incorporated by
reference therein, as required by paragraph (b) of Item 12 of Form S-3. As
used herein, the term "Incorporated Documents" means the documents which are
incorporated by reference in the registration statement, the Registration
Statement, the Basic Prospectus, any Preliminary Prospectus, the Prospectus, or
any amendment or supplement thereto.
2. Agreement to Sell and Purchase. The Company hereby
agrees, subject to all the terms and conditions set forth herein, to issue and
sell to the Underwriter and, upon the basis of the representations, warranties
and agreements of the Company herein contained and subject to all the terms and
conditions set forth herein, the Underwriter agrees to purchase from the
Company, at the purchase price set forth in Schedule I hereto the principal
amount of Securities (or such number of Securities as increased in the manner
set forth in Section 10 hereof).
3. Offering by Underwriter. It is understood that the
Underwriter proposes to offer the Securities for sale to the public as set
forth in the Prospectus.
4. Delivery of the Securities and Payment Therefor.
Delivery of and payment for the Securities shall be made at 10:00 AM, New York
City time, on September 20, 2000, or at such time on such later date not more
than three Business Days after the foregoing date as the Underwriter shall
designate, which date and time may be postponed by mutual written agreement of
the Underwriter and the Company or as provided in Section 9 hereof (such date
and time of delivery and payment for the Securities being herein called the
"Closing Date"). Delivery of the Securities shall be made for the account of
the Underwriter, against payment by the Underwriter of the purchase price
thereof, to or upon the order of the Company by wire transfer payable in
same-day funds to an account specified by the Company. Delivery of the
Securities shall be made through the facilities of The Depository Trust Company
unless the Underwriter shall otherwise instruct the Company in writing.
5. Agreements of the Company. The Company agrees with
the Underwriter as follows:
(a) If, at the time this Agreement is executed
and delivered, it is necessary for a post-effective amendment to the
registration statement to be declared effective before the
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offering of the Securities may commence, the Company will use its best efforts
to cause such post-effective amendment to become effective as soon as possible
and will advise the Underwriter promptly and, if requested by the Underwriter,
will confirm such advice in writing, immediately after such post-effective
amendment has become effective.
(b) If, at any time when a prospectus relating to
the Securities is required to be delivered under the Act, any event occurs as a
result of which the Prospectus as then supplemented would include any untrue
statement of a material fact or omit to state any material fact necessary to
make the statements therein in the light of the circumstances under which they
were made not misleading, or if it shall be necessary to amend the Registration
Statement or supplement the Prospectus to comply with the Act or the Exchange
Act or the respective rules thereunder, the Company promptly will: (1) notify
the Underwriter of such event; (2) prepare, and file with the Commission, an
amendment or supplement which will correct such statement or omission or effect
such compliance; and (3) supply any supplemented Prospectus to you in such
quantities as you may reasonably request.
(c) The Company will advise the Underwriter
promptly and, if requested by the Underwriter, will confirm such advice in
writing: (i) of any request by the Commission or its staff for amendment of or
a supplement to the Registration Statement, any Preliminary Prospectus or the
Prospectus or for additional information; (ii) of the issuance by the
Commission of any stop order suspending the effectiveness of the Registration
Statement or of the suspension of qualification of the Securities for offering
or sale in any jurisdiction or the initiation of any proceeding for such
purpose; and (iii) within the period of time referred to in the first sentence
in subsection (f) below, of any change in the Company's condition (financial or
other), business, prospects, properties, net worth or results of operations, or
of the happening of any event, which results in any statement of a material
fact made in the Registration Statement or the Prospectus (as then amended or
supplemented) being untrue or which requires the making of any additions to or
changes in the Registration Statement or the Prospectus (as then amended or
supplemented) in order to state a material fact required by the Act to be
stated therein or necessary in order to make the statements therein not
misleading, or of the necessity to amend or supplement the Prospectus (as then
amended or supplemented) to comply with the Act or any other law. If at any
time the Commission shall issue any stop order suspending the effectiveness of
the Registration Statement, the Company will make every reasonable effort to
obtain the withdrawal of such order at the earliest possible time.
(d) The Company will furnish to the Underwriter
and counsel to the Underwriter, without charge: (i) ten signed copies of the
registration statement and any Rule 462(b) Registration Statement as originally
filed with the Commission and of each amendment thereto, including financial
statements and all exhibits to the registration statement and Rule 462(b)
Registration Statement; (ii) such number of conformed copies of the
registration statement as originally filed and of each amendment thereto, but
without exhibits, as the Underwriter may request; (iii) such number of copies
of the Incorporated Documents, without exhibits, as the Underwriter may
request; and (iv) ten copies of the exhibits to the Incorporated Documents.
The Company will pay all of the expenses of printing or other production of all
documents relating to the offering.
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(e) The Company will not file any amendment to
the Registration Statement (including any filing under Rule 462(b)) or make any
amendment or supplement to the Prospectus or, prior to the end of the period of
time referred to in the first sentence in subsection (f) below, file any
document which upon filing becomes an Incorporated Document, of which the
Underwriter shall not previously have been advised or to which, after the
Underwriter shall have received a copy of the document proposed to be filed,
the Underwriter shall reasonably object; and no such further document, when it
is filed, will contain an untrue statement of a material fact or will omit to
state a material fact required to be stated therein or necessary in order to
make the statements therein not misleading.
(f) Prior to the execution and delivery of this
Agreement, the Company has delivered to the Underwriter, without charge, in
such quantities as the Underwriter has requested, copies of each form of
Preliminary Prospectus. The Company consents to the use, in accordance with
the provisions of the Act and with the securities or blue sky laws of the
jurisdictions in which the Securities are offered by the Underwriter and by
dealers, prior to the date of the Prospectus, of each Preliminary Prospectus so
furnished by the Company by the Underwriter or persons acting on behalf of the
Underwriter.
(g) As soon after the execution and delivery of
this Agreement as possible and thereafter from time to time for such period as
in the opinion of counsel for the Underwriter a prospectus is required by the
Act to be delivered in connection with sales by the Underwriter or dealer, the
Company will expeditiously deliver to the Underwriter and each dealer, without
charge, as many copies of the Prospectus (and of any amendment or supplement
thereto) as the Underwriter may request. The Company consents to the use of
the Prospectus (and of any amendment or supplement thereto) in accordance with
the provisions of the Act and with the securities or blue sky laws of the
jurisdictions in which the Securities are offered by the several Underwriter
and by all dealers to whom Securities may be sold, both in connection with the
offering and sale of the Securities and for such period of time thereafter as
the Prospectus is required by the Act to be delivered in connection with sales
by any Underwriter or dealer. If during such period of time: (i) any event
shall occur that in the judgment of the Company, or in the opinion of counsel
for the Underwriter, is required to be set forth in the Prospectus (as then
amended or supplemented) or should be set forth therein in order to make the
statements therein, in the light of the circumstances when the Prospectus is
delivered to a purchaser, not misleading; or (ii) if it is necessary to
supplement or amend the Prospectus (or to file under the Exchange Act any
document which, upon filing, becomes an Incorporated Document) in order to
comply with the Act or any other law, the Company will forthwith prepare and,
subject to the provisions of paragraph (d) above, file with the Commission an
appropriate supplement or amendment thereto (or to such document), and will
expeditiously furnish to the Underwriter and dealers a reasonable number of
copies thereof. In the event that the Company and the Underwriter agree that
the Prospectus should be amended or supplemented, the Company, if requested by
the Underwriter, will promptly issue a press release announcing or disclosing
the matters to be covered by the proposed amendment or supplement.
(h) The Company will: (i) cooperate with the
Underwriter and with counsel for the Underwriter in connection with the
registration or qualification of the Securities for
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offering and sale by the Underwriter and by dealers under the securities or
blue sky laws of such jurisdictions as the Underwriter may designate; (ii)
maintain such qualifications in effect so long as required for the distribution
of the Securities; (iii) pay any fee of the National Association of Securities
Dealers, Inc., in connection with its review of the offering; and (iv) file
such consents to service of process or other documents necessary or appropriate
in order to effect such registration or qualification; provided that in no
event shall the Company be obligated to qualify to do business in any
jurisdiction where it is not now so qualified or to take any action which would
subject it to service of process in suits, other than those arising out of the
offering or sale of the Securities, in any jurisdiction where it is not now so
subject.
(i) The Company will make generally available to
its security holders and to the Underwriter a consolidated earnings statement,
which need not be audited, covering a 12-month period commencing after the
effective date of this Agreement and ending not later than 15 months
thereafter, as soon as practicable after the end of such period, which
consolidated earnings statement shall satisfy the provisions of Section 11(a)
of the Act and Rule 158 under the Act.
(j) During the period commencing on the date
hereof and ending on the date occurring three years hereafter, the Company will
furnish to the Underwriter: (i) as soon as available, if requested, a copy of
each report of the Company mailed to stockholders or filed with the Commission;
and (ii) from time to time such other information concerning the Company as the
Underwriter may request.
(k) If this Agreement shall terminate or shall be
terminated after execution pursuant to any provisions hereof, or if this
Agreement shall be terminated by the Underwriter because of any inability,
failure or refusal on the part of the Company to comply with the terms or
fulfill any of the conditions of this Agreement, the Company shall reimburse
the Underwriter for all out-of-pocket expenses (including fees and expenses of
counsel for the Underwriter) incurred by the Underwriter in connection
herewith.
(l) The Company will apply the net proceeds from
the sale of the Securities substantially in accordance with the description set
forth in the Prospectus.
(m) If Rule 430A of the Act is employed, the
Company will timely file the Prospectus pursuant to Rule 424(b) under the Act
and will advise the Underwriter of the time and manner of such filing.
(n) The Company has not taken, nor will it take,
directly or indirectly, any action designed to, or that might reasonably be
expected to cause or result in, stabilization or manipulation of the price of
any security of the Company to facilitate the sale or resale of the Securities.
(o) The Company will comply and will use its best
efforts to cause its tenants to comply in all material respects with all
applicable Environmental Laws (as hereinafter defined).
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(p) The Company will use its best efforts to
continue to qualify as a real estate investment trust (a "REIT") under the
Internal Revenue Code of 1986, as amended (the "Code"), and to continue to have
each of its subsidiaries comply with all applicable laws and regulations
necessary to maintain a status as a "qualified REIT subsidiary" under the Code.
(q) The Company will use all reasonable best
efforts to do or perform all things required to be done or performed by the
Company prior to the Closing Date to satisfy all conditions precedent to the
delivery of the Securities pursuant to this Agreement.
(r) The Company will not, without the prior
written consent of the Underwriter, offer, sell, contract to sell, pledge, or
otherwise dispose of, or enter into any transaction which is designed to, or
might reasonably be expected to, result in the disposition (whether by actual
disposition or effective economic disposition due to cash settlement or
otherwise) by the Company or any affiliate of the Company or any person in
privity with the Company or any affiliate of the Company, directly or
indirectly, including the filing (or participation in the filing) of a
registration statement with the Commission in respect of, or establish or
increase a put equivalent position or liquidate or decrease a call equivalent
position within the meaning of Section 16 of the Exchange Act, any debt
securities issued or guaranteed by the Company (other than the Securities) or
publicly announce an intention to effect any such transaction, until the
Closing Date.
6. Representations and Warranties of the Company. The
Company hereby represents and warrants to the Underwriter:
(a) The Basic Prospectus and each Preliminary
Prospectus included as part of the registration statement as originally filed
or as part of any amendment or supplement thereto, or filed pursuant to Rule
424 under the Act, complied when so filed in all material respects with the
provisions of the Act.
(b) The Company and the transactions contemplated
by this Agreement meet all of the requirements for using Form S-3 under the
Act. The Registration Statement has become effective for the registration
under the Act of the Securities. No stop order suspending the effectiveness of
the Registration Statement is in effect, and, to the best of the Company's
knowledge, no proceedings for such purpose are pending before or threatened by
the Commission. The Registration Statement meets the requirements set forth in
Rule 415(a)(1)(x) under the Act and complies in all other material respects
with such Rule. The registration statement, in the form in which it became
effective, and also in such form as it may be when any post-effective amendment
thereto shall become effective, and the Prospectus and any supplement or
amendment thereto, each when filed with the Commission under Rule 424(b) under
the Act, complied or will comply in all material respects with the provisions
of the Act, the Exchange Act and the Trust Indenture Act of 1939, as amended,
and the rules and regulations promulgated thereunder (the "Trust Indenture
Act") and did not and will not at any such times contain an untrue statement of
a material fact or omit to state a material fact required to be stated therein
or necessary to make the statements made therein not misleading. On the date
that the registration statement, any post-effective amendment or amendments
thereto and any Rule 462(b)
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Registration became or become effective, the Indenture did or will comply in
all material respects with the applicable requirements of the Trust Indenture
Act and the rules thereunder. The representation and warranty contained in
this Section 6(b) does not apply to (i) that part of the registration statement
which shall constitute the Statement of Eligibility and Qualification (Form
T-1) under the Trust Indenture Act of the Trustee or (ii) statements in or
omissions from the registration statement or the Prospectus made in reliance
upon and in conformity with information relating to the Underwriter furnished
to the Company in writing by or on behalf of the Underwriter expressly for use
therein.
(c) The Incorporated Documents heretofore filed,
when they were filed (or, if any amendment with respect to any such document
was filed, when such amendment was filed), conformed in all material respects
with the requirements of the Exchange Act and the rules and regulations of the
Commission thereunder. No such document when it was filed (or, if an amendment
with respect to any such document was filed, when such amendment was filed),
contained an untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
made therein, in light of the circumstances under which they were made, not
misleading.
(d) Upon the delivery of the Securities pursuant
to Section 4 of this Agreement, the Securities will be validly issued pursuant
to the Indenture and will conform in all material respects to the description
of the Securities contained in the Prospectus.
(e) Each of the Company and each of its
subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of the State of Maryland with full corporate power and
authority to own, lease and operate its properties and to conduct its business
as described in the Registration Statement and the Prospectus, and each is duly
registered and qualified to conduct its business, and is in good standing, in
each jurisdiction or place where the nature of its properties or the conduct of
its business requires such registration or qualification, except where the
failure so to register or qualify does not have a material adverse effect on
the condition (financial or other), business, properties, net worth or results
of operations of the Company and its subsidiaries. Neither the Company nor any
of its subsidiaries does any business in Cuba.
(f) The issued shares of capital stock of each of
the Company's subsidiaries have been duly authorized and validly issued, are
fully paid and non-assessable and are owned legally and beneficially by the
Company free and clear of any security interests, liens, encumbrances, equities
or claims.
(g) There are no legal or governmental actions,
suits or proceedings pending or, to the knowledge of the Company, threatened,
against the Company or any of its subsidiaries, or to which the Company or any
properties of the Company or any of its subsidiaries is subject, that (A) are
required to be described in the Registration Statement or the Prospectus but
are not described as required; (B) could reasonably be expected to have a
material adverse effect on the performance of this Agreement or the
consummation of any of the transactions contemplated hereby; or (C) could
reasonably be expected to have a material adverse effect on the condition
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(financial or other), prospects, earnings, business or properties of the
Company and its subsidiaries, taken as a whole, whether or not arising from
transactions in the ordinary course of business, except as set forth in or
contemplated in the Prospectus (exclusive of any supplement thereto). There
are no statutes, regulations, capital expenditures, contingencies or
agreements, contracts, indentures, leases or other instruments or documents of
a character that are required to be described in the Registration Statement or
the Prospectus or to be filed or incorporated by reference as an exhibit to the
Registration Statement or any Incorporated Document that are not described,
filed or incorporated as required by the Act or the Exchange Act. The
statements in the Prospectus under the heading "Certain Federal Income Tax
Considerations" fairly summarize the matters therein described.
(h) Neither the Company nor any of its
subsidiaries is: (A) in violation of (i) its respective articles of
incorporation or by-laws, (ii) any law, ordinance, administrative or
governmental rule or regulation applicable to the Company or its subsidiaries,
which violation would have a material adverse effect on the Company and its
subsidiaries, or (iii) any decree of any court or governmental agency or body
having jurisdiction over the Company or its subsidiaries; or (B) in default in
any material respect in the performance of any obligation, agreement or
condition contained in any bond, debenture, note or any other evidence of
indebtedness or in any material agreement, indenture, lease or other instrument
to which the Company or any of its subsidiaries is a party or by which the
Company or its subsidiaries or any of their respective properties may be bound.
(i) (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 their
properties ("Properties"), which violation would have a material adverse effect
on the Company and/or its subsidiaries; (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 of such Properties and will not result in a forfeiture or reversion of
title thereof; (C) neither the Company nor any 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 on the Company or any of such
Properties; (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 has complied with its 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 or its subsidiaries or any
of the properties subject to a Lease; and (F) 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.
(j) Neither the issuance and sale of the
Securities, the execution, delivery or performance of this Agreement by the
Company, nor the consummation by the Company of the
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transactions contemplated hereby, nor the fulfillment of the terms hereof or of
the Indenture: (A) requires any consent, approval, authorization or other
order of, or registration or filing with, any court, regulatory body,
administrative agency or other governmental body, agency or official (except
such as may be required for the registration of the Securities under the Act
and compliance with the securities or blue sky laws of various jurisdictions),
or conflicts or will conflict with or constitutes or will constitute a breach
or violation of, or a default under, the articles of incorporation or by-laws
of the Company or any of its subsidiaries; or (B) conflicts or will conflict
with or constitutes or will constitute a breach of, or a default under, 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 may be bound, or violates or will violate
any statute, law, regulation or filing or judgment, injunction, order or decree
applicable to the Company or any of its subsidiaries or any properties of the
Company or any of its subsidiaries, or will result in the creation or
imposition of any lien, charge or encumbrance upon any property or assets of
the Company or any of its subsidiaries pursuant to the terms of any 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 may be bound, or to which any
property or assets of the Company or any of its subsidiaries is subject.
(k) To the Company's knowledge, the accountants,
KPMG LLP, who have certified or shall certify the financial statements and
schedules included or incorporated by reference in the Registration Statement
and the Prospectus (or any amendment or supplement thereto), are independent
public accountants with respect to the Company as required by the Act and the
applicable published rules and regulations thereunder.
The financial statements, together with related
schedules and notes, included or incorporated by reference in the Registration
Statement and the Prospectus (and any amendment or supplement thereto), present
fairly in all material respects the financial position, results of operations
and changes in financial position of the Company and its subsidiaries on the
basis stated in the Registration Statement and the Incorporated Documents at
the respective dates or for the respective periods to which they apply. Such
statements and related schedules and notes have been prepared in accordance
with generally accepted accounting principles consistently applied throughout
the periods involved, except as disclosed therein. The other financial and
statistical information and data included or incorporated by reference in the
Registration Statement and the Prospectus (and any amendment or supplement
thereto) are accurately presented and prepared on a basis consistent with such
financial statements and the books and records of the Company and its
subsidiaries. The pro forma financial statements and other pro forma financial
information included, or incorporated by reference in, the Registration
Statement and the Prospectus include assumptions that provide a reasonable
basis for presenting the significant effects directly attributable to the
transactions and events described therein, the related pro forma adjustments
give appropriate effect to those assumptions, and the pro forma adjustments
reflect the proper application of those adjustments to the historical financial
statement amounts in the pro forma financial statements included in the
Prospectus and the Registration Statement. The pro forma financial statements
included in the Prospectus and the Registration Statement comply as to form in
all material respects with the applicable accounting
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requirements of Regulation S-X under the Act and the pro forma adjustments have
been properly applied to the historical amounts in the compilation of those
statements.
(l) The execution and delivery of, and the
performance by the Company of its obligations under, this Agreement and the
Indenture have been duly and validly authorized by the Company, and this
Agreement and Indenture have been duly executed and delivered by the Company
and constitutes the valid and legally binding agreement of the Company,
enforceable against the Company in accordance with its terms, except only to
the extent that rights to indemnity and contribution hereunder may be limited
by federal or state securities laws.
(m) 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), neither the Company nor any of its subsidiaries has incurred any
liability or obligation, direct or contingent, or entered into any transaction,
not in the ordinary course of business, that is material to the Company and 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 either the
Company or 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,
prospects, net worth or results of operations of either the Company or its
subsidiaries.
(n) The Company and each of its subsidiaries has
good and marketable title to all property (real and personal) described in the
Prospectus as being owned by each of them (including the Properties), free and
clear of all liens, claims, security interests or other encumbrances except
such as are described in the Registration Statement and the Prospectus, or in
any document filed as an exhibit to the Registration Statement, and each
property described in the Prospectus as being held under lease by the Company
or any of its subsidiaries is held by it under a valid, subsisting and
enforceable lease.
(o) [Intentionally omitted]
(p) The Company has not distributed and, prior to
the later to occur of (x) the Closing Date and (y) 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
materials, if any, 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 pay to any person any compensation for soliciting another to purchase any
other securities of the Company.
(q) The Company and each of its subsidiaries
possess all certificates, permits, licenses, franchises and authorizations of
governmental or regulatory authorities ("permits") as
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are necessary to own their respective properties and to conduct their
respective businesses in the manner described in the Prospectus, subject to
such qualifications as may be set forth in the Prospectus. The Company and
each of its subsidiaries has fulfilled and performed all of their respective
material obligations with respect to such permits, and no event has occurred
which allows, or after notice or lapse of time would allow, revocation or
termination thereof or which would result in any other material impairment of
the rights of the holder of any such permit, subject in each case to such
qualification as may be set forth in the Prospectus. Except as described in
the Prospectus, none of the permits contains any restriction that is materially
burdensome to the Company and/or its subsidiaries. Except as described in the
Prospectus, exclusive of any supplement thereto, neither the revocation or
modification of any permit singly or in the aggregate, nor the announcement of
an unfavorable decision, ruling or finding with respect to any permit, would
have a material adverse effect on the condition (financial or otherwise),
prospects, earnings, business or properties of the Company and its
subsidiaries, taken as a whole.
(r) The Company and each of its subsidiaries
maintain 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.
(s) To the Company's knowledge, neither the
Company, its subsidiaries nor any employee or agent of the Company or 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.
(t) No labor problem or dispute with the
employees of the Company and/or any of its subsidiaries or any of the Company's
or its subsidiaries' principal suppliers, contractors or customers, exists, is
threatened or imminent that could result in a material adverse change in the
condition (financial or other), business, net worth or results of operations of
the Company and/or its subsidiaries.
(u) The Company has filed all foreign, federal,
state and local tax returns that are required to be filed, which returns are
complete and correct, or has requested extensions thereof (except in any case
in which the failure so to file would not have a material adverse effect on the
condition (financial or otherwise), prospects, earnings, business or properties
of the Company and its subsidiaries, taken as a whole, whether or not arising
from transactions in the ordinary course of business, except as set forth in
the Prospectus (exclusive of any supplement thereto)) and has paid all taxes
required to be paid by it and any other assessment, fine or penalty levied
against it, to the extent that any of the foregoing is due and payable, except
for any such
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<PAGE> 12
assessment, fine or penalty that is currently being contested in good faith or
as would not have a material adverse effect on the condition (financial or
otherwise), prospects, earnings, business or properties of the Company and its
subsidiaries, taken as a whole, whether or not arising from transactions in the
ordinary course of business, except as set forth in the Prospectus (exclusive
of any supplement thereto).
(v) No holder of any security of the Company has
any right to require registration of the Securities or any other security of
the Company because of the filing of the registration statement or consummation
of the transactions contemplated by this Agreement, which right has not been
waived in connection with the transactions contemplated by this Agreement.
(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. 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 is not now, and after sale of the
Securities to be sold by the Company hereunder and the application of the net
proceeds from such sale as described in the Prospectus under the caption "Use
of Proceeds," will not be, an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
(y) (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 all applicable
Environmental Laws, except as is disclosed in the Environmental Reports
(defined below) and except for circumstances not likely to have a material
adverse effect on the relevant Property.
(ii) Neither the Company nor any of its
subsidiaries has 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 is 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 Underwriter or its counsel
(collectively, the "Environmental Reports") and
except for those circumstances not likely to have a
material adverse effect on the relevant Property.
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,
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<PAGE> 13
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 is disclosed
in the Environmental Reports and except for those
circumstances not likely to have a material adverse
effect on the relevant Property.
(iv) Neither the Company nor any of its
subsidiaries has received notice from any
Governmental Authority or other person of, or has
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
existing Properties or arising out of the conduct of
any party with respect to the existing Properties,
except as disclosed in the Environmental Reports.
(v) To the best of the Company's
knowledge, none of the Properties is 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 explosives, radioactive materials, hazardous
materials, hazardous wastes, hazardous or toxic substances, or related
materials, asbestos, polychlorinated biphenyls ("PCBs"), petroleum products and
by-products and substances defined or listed as "hazardous substances," "toxic
substances," "hazardous waste," or "hazardous materials" in any Federal, state
or local Environmental Law.
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 the public health and
the environment or to regulate the handling of Hazardous Materials, including,
without limitation, the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended (42 U.S.C. Section 9601 et seq.) ("CERCLA"),
the Hazardous Material Transportation Act, as amended (49 U.S.C. Section 1801
et seq.), the Resource Conservation and Recovery Act, as amended (42 U.S.C.
Section 6901 et seq.), the Federal Water Pollution Control Act, as amended (33
U.S.C. Section 1251 et seq.), and the Clean Air Act, as amended (42 U.S.C.
Section 7401 et seq.), and any and all analogous future federal or present or
future state or local laws.
(z) 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 every taxable year during the Company's
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<PAGE> 14
existence, the Company has had no earnings and profits accumulated in a
non-REIT year within the meaning of Section 857(a)(3)(B) of the Code. 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.
(aa) 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.
(bb) The Company and each of its subsidiaries is
insured by insurers of recognized financial responsibility against such losses
and risks and in such amounts as are prudent and customary in the businesses in
which they are engaged and the value of their properties. All policies of
insurance and fidelity or surety bonds insuring the Company or any of its
subsidiaries or their respective businesses, assets, employees, officers and
directors are in full force and effect. The Company and its 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 any of its subsidiaries
under any such policy or instrument as to which any insurance company is
denying liability or defending under a reservation of rights clause. Neither
the Company nor any of its subsidiaries has 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
their respective businesses at a cost that would not materially and adversely
affect the condition (financial or otherwise), business, prospects, net worth
or results of operations of the Company and its subsidiaries taken as a whole,
whether or not arising from transactions in the ordinary course of business,
except as set forth in the Prospectus.
(cc) 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; or (b) the replacement cost
of the improvements located on such property.
(dd) No subsidiary of the Company 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 or from transferring and of such subsidiary's assets or property to the
Company or any other subsidiary of the Company, except as described in the
Prospectus.
(ee) [Intentionally omitted]
(ff) There are no transfer taxes or other similar
fees or charges under Federal law or the laws of any state, or any political
subdivision thereof, required to be paid in connection with the execution and
delivery of this Agreement or the issuance by the Company or sale by the
Company of the Securities.
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<PAGE> 15
(gg) Each of the Company and its subsidiaries has
fulfilled its obligations, if any, under the minimum funding standards of
Section 302 of the United States Employee Retirement Income Security Act of
1974 ("ERISA") and the regulations and published interpretations thereunder
with respect to each "plan" (as defined in Section 3(3) of ERISA and such
regulations and published interpretations) in which employees of the Company
and its subsidiaries are eligible to participate. Each such plan is in
compliance in all material respects with the presently applicable provisions of
ERISA and such regulations and published interpretations. Neither the Company
nor any of its subsidiaries has incurred any unpaid liability to the Pension
Benefit Guaranty Corporation (other than for the payment of premiums in the
ordinary course) or to any such plan under Title IV of ERISA.
7. Indemnification and Contribution. (a) The Company
agrees to indemnify and hold harmless the Underwriter, the directors, officers,
employees and agents of each Underwriter and each person who controls the
Underwriter, within the meaning of either the Act or the Exchange Act, against
any and all losses, claims, damages or liabilities, joint or several, to which
they or any of them may become subject under the Act, the Exchange Act or other
Federal or state statutory law or regulation, at common law or otherwise,
insofar as: (i) such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of a material fact contained in the registration statement for
the registration of the Securities as originally filed or in any amendment
thereof, or in the Basic Prospectus, any Preliminary Prospectus or the
Prospectus, or in any amendment thereof or supplement thereto; or (ii) 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. The Company agrees to reimburse each such indemnified
party, as incurred, for any legal or other expenses reasonably incurred by them
in connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the Company will not be liable in
any such case arising in connection with this Section 7 to the extent that any
such loss, claim, damage or liability arises out of or is based upon any such
untrue statement or alleged untrue statement or omission or alleged omission
made therein in reliance upon and in conformity with written information
furnished to the Company by or on behalf of the Underwriter specifically for
inclusion therein. This indemnity agreement will be in addition to any
liability which the Company may otherwise have.
(b) The Underwriter agrees to indemnify and hold
harmless the Company, each of its directors, each of its officers who signs the
Registration Statement, and each person who controls the Company within the
meaning of either the Act or the Exchange Act, to the same extent as the
foregoing indemnity from the Company to the Underwriter, but only with
reference to written information relating to the Underwriter furnished to the
Company by or on behalf of the Underwriter in writing specifically for
inclusion in the documents referred to in the foregoing indemnity. This
indemnity agreement will be in addition to any liability which the Underwriter
may otherwise have. The Company acknowledges that the only information
furnished in writing by or on behalf of the Underwriter for inclusion in any
Preliminary Prospectus or Prospectus is the third full paragraph and the fifth
full paragraph under the heading "Underwriting".
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<PAGE> 16
(c) Promptly after receipt by an indemnified
party under this Section 7 of notice of the commencement of any action, such
indemnified party will, if a claim in respect thereof is to be made against the
indemnifying party under this Section 7, notify the indemnifying party in
writing of the commencement thereof; but the failure so to notify the
indemnifying party: (i) will not relieve it from liability under paragraph (a)
or (b) above unless and to the extent it did not otherwise learn of such action
and such failure results in the forfeiture by the indemnifying party of
substantial rights and defenses; and (ii) will not, in any event, relieve the
indemnifying party from any obligations to any indemnified party other than the
indemnification obligation provided in paragraph (a) or (b) above. The
indemnifying party shall be entitled to appoint counsel of the indemnifying
party's choice at the indemnifying party's expense to represent the indemnified
party in any action for which indemnification is sought (in which case the
indemnifying party shall not thereafter be responsible for the fees and
expenses of any separate counsel retained by the indemnified party or parties
except as set forth below); provided, however, that such counsel shall be
satisfactory to the indemnified party. Notwithstanding the indemnifying
party's election to appoint counsel to represent the indemnified party in an
action, the indemnified party shall have the right to employ separate counsel
(including local counsel), and the indemnifying party shall bear the reasonable
fees, costs and expenses of such separate counsel if: (i) the use of counsel
chosen by the indemnifying party to represent the indemnified party would
present such counsel with a conflict of interest; (ii) the actual or potential
defendants in, or targets of, any such action include both the indemnified
party and the indemnifying party and the indemnified party shall have
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; (iii) the indemnifying party shall not
have employed counsel satisfactory to the indemnified party to represent the
indemnified party within a reasonable time after notice of the institution of
such action; or (iv) the indemnifying party shall authorize the indemnified
party to employ separate counsel at the expense of the indemnifying party. An
indemnifying party will not, without the prior written consent of the
indemnified parties, settle or compromise, or consent to the entry of any
judgment with respect to any pending or threatened claim, action, suit or
proceeding in respect of which indemnification or contribution may be sought
hereunder (whether or not the indemnified parties are actual or potential
parties to such claim or action), unless such settlement, compromise or consent
includes an unconditional release of each indemnified party from all liability
arising out of such claim, action, suit or proceeding.
(d) In the event that the indemnity provided in
paragraph (a) or (b) of this Section 7 is unavailable to, or insufficient to
hold harmless, an indemnified party for any reason, the Company and the
Underwriter agree to contribute to the aggregate losses, claims, damages and
liabilities (including legal or other expenses reasonably incurred in
connection with investigating or defending same) (collectively "Losses") to
which the Company and the Underwriter may be subject in such proportion as is
appropriate to reflect the relative benefits received by the Company, on the
one hand, and by the Underwriter, on the other, from the offering of the
Securities; provided, however, that in no case shall the Underwriter be
responsible for any amount in excess of the underwriting discount or commission
applicable to the Securities purchased by the Underwriter hereunder. If the
allocation provided by the immediately preceding sentence is unavailable for
any reason, the Company and the Underwriter shall
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<PAGE> 17
contribute in such proportion as is appropriate to reflect not only such
relative benefits but also the relative fault of the Company, on the one hand,
and of the Underwriter, on the other, in connection with the statements or
omissions which resulted in such Losses as well as any other relevant equitable
considerations. Benefits received by the Company shall be deemed to be equal
to the total net proceeds from the offering (before deducting expenses)
received by it, and benefits received by the Underwriter shall be deemed to be
equal to the total underwriting discounts and commissions, in each case as set
forth on the cover page of the Prospectus. Relative fault shall be determined
by reference to, among other things: (i) whether any untrue or any alleged
untrue statement of a material fact or the omission or alleged omission to
state a material fact relates to information provided by the Company, on the
one hand, or the Underwriter, on the other; (ii) the intent of the parties and
their relative knowledge; (iii) access to information; and (iv) the opportunity
to correct or prevent such untrue statement or omission. The Company and the
Underwriter agree that it would not be just and equitable if contribution were
determined by pro rata allocation or any other method of allocation which does
not take account of the equitable considerations referred to above.
Notwithstanding the provisions of this paragraph (d), 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 Section 7, each person who
controls the Underwriter within the meaning of either the Act or the Exchange
Act and each director, officer, employee and agent of an Underwriter shall have
the same rights to contribution as the Underwriter, and each person who
controls the Company within the meaning of either the Act or the Exchange Act,
each officer of the Company who shall have signed the Registration Statement
and each director of the Company shall have the same rights to contribution as
the Company, subject in each case to the applicable terms and conditions of
this paragraph (d).
8. Conditions of Underwriter's Obligations. The
obligations of the Underwriters to purchase the Securities hereunder are
subject to the following conditions:
(a) (i) If, at the time this Agreement is
executed and delivered, it is necessary for a post-effective amendment to the
registration statement to be declared effective before the offering of the
Securities may commence, such post-effective amendment shall have become
effective not later than 5:30 P.M., New York City time, on the date hereof, or
at such later date and time as shall be consented to in writing by the
Underwriter; (ii) no stop order suspending the effectiveness of the
registration statement shall have been issued and no proceeding for that
purpose shall have been instituted or, to the knowledge of the Company or the
Underwriter, threatened by the Commission; and (iii) any request of the
Commission for additional information (to be included in the registration
statement or the Prospectus or otherwise) shall have been complied with to the
satisfaction of the Underwriter.
(b) Subsequent to the effective date of this
Agreement, or, if earlier, the dates as of which information is given in the
Registration Statement (exclusive of any amendment thereto) and the Prospectus
(exclusive of any amendment thereof), there shall not have occurred: (i) any
change, or any development involving a prospective change, in or affecting the
condition (financial or otherwise), earnings, business, properties, net worth,
or results of operations of the Company and its subsidiaries, whether or not
arising from transactions in the ordinary course of
17
<PAGE> 18
business, except as set forth in the Prospectus (exclusive of any amendments or
supplements thereto subsequent to the date of this Agreement), the effect of
which, in the sole judgment of the Underwriter, is so material and adverse as
to make it impractical or inadvisable to proceed with the offering or delivery
of the Securities as contemplated by the Registration Statement (exclusive of
any amendments thereto) and the Prospectus (exclusive of any supplement
thereto); or (ii) any event or development relating to or involving the Company
and its subsidiaries or any officer or director of the Company and its
subsidiaries which makes any statement made in the Prospectus untrue or which,
in the opinion of the Company and its counsel or the Underwriter and its
counsel, requires the making of any addition to or change in the Prospectus in
order to state a material fact required by the Act or any other law to be
stated therein, or necessary in order to make the statements therein not
misleading, if amending or supplementing the Prospectus to reflect such event
or development would, in the opinion of the Underwriter, adversely affect the
market for the Securities.
(c) The Underwriter shall have received on the
Closing Date, an opinion of Shaw Pittman, counsel for the Company, dated the
Closing Date and addressed to the Underwriter, to the effect that:
(i) The Company: (x) is a corporation
duly incorporated and validly existing in good
standing under the laws of the State of Maryland,
with full corporate power and authority to own, lease
and operate its properties and to conduct its
business as described in the Registration Statement
and the Prospectus (and any amendment or supplement
thereto); and, (y) based solely on certificates of
public officials and officers of the Company, is duly
registered and qualified to conduct its business; and
(z) is in good standing in each jurisdiction or place
where the nature of its properties or the conduct of
its business requires such registration or
qualification, except where the failure so to
register or qualify does not have a material adverse
effect on the condition (financial or other),
business, properties, net worth or results of
operations of the Company;
(ii) The issued shares of capital stock
of each of the Company's subsidiaries have been duly
authorized and validly issued, are fully paid and
non-assessable and are owned legally and beneficially
by the Company and, to the knowledge of such counsel,
after due inquiry, free and clear of any security
interests, liens, encumbrances, equities or claims;
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(iii) 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 captions "Description of Debt
Securities," "Description of Preferred Stock,"
"Description of Depositary Shares", "Description of
Common Stock" and "Description of Common Stock
Warrants" in the Base Prospectus and under the
caption "Description of Notes" in the Prospectus
Supplement; and, except as set forth in the
Prospectus, no options, warrants or other rights to
purchase, agreements or other obligations to issue,
or rights to convert any obligations into or exchange
any securities for, shares of capital stock of or
ownership interests in the Company are outstanding;
(iv) All the shares of capital stock of
the Company outstanding prior to the issuance of the
Securities have been duly authorized and validly
issued, and are fully paid and nonassessable;
(v) The Indenture has been duly
authorized, executed and delivered, has been duly
qualified under the Trust Indenture Act, and
constitutes a legal, valid and binding instrument
enforceable against the Company in accordance with
its terms (subject, as to enforcement of remedies, to
applicable bankruptcy, reorganization, insolvency,
moratorium or other laws affecting creditors' rights
generally from time to time in effect and to general
principles of equity, including, without limitation,
concepts of materiality, reasonableness, good faith
and fair dealing, regardless of whether considered in
a proceeding in equity or at law);
(vi) The Securities have been duly
authorized and, when executed and authenticated in
accordance with the provisions of the Indenture and
delivered to and paid for by the Underwriter pursuant
to this Agreement, will constitute legal, valid and
binding obligations of the Company entitled to the
benefits of the Indenture;
(vii) Upon the delivery of the Securities
to the Underwriter pursuant to the terms of the
Indenture, the Securities will conform in all
material respects to the description of the
Securities contained in the Indenture;
(viii) To the knowledge of such counsel,
based upon such inquiry as such counsel deems
appropriate, no holder of securities of the Company
is entitled to have such securities registered under
the Registration Statement which right has not been
waived in connection with the transactions
contemplated by this Agreement;
(ix) The forms of certificates for the
Securities conform to the requirements of the
Maryland General Corporation Law, if any;
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<PAGE> 20
(x) The Registration Statement has
become effective under the Act; any required filing
of the Basic Prospectus, any Preliminary Prospectus
or the Prospectus, and any supplements thereto,
pursuant to Rule 424(b) has been made in the manner
and within the time period required by Rule 424(b);
to the knowledge of such counsel, no stop order
suspending the effectiveness of the Registration
Statement has been issued, no proceedings for that
purpose have been instituted or threatened and the
Registration Statement and the Prospectus (other than
the financial statements and other financial
information contained therein, as to which such
counsel need express no opinion) comply as to form in
all material respects with the applicable
requirements of the Act, the Exchange Act and the
Trust Indenture Act and the respective rules
thereunder; and such counsel has no reason to
believe: (A) that on the effective date of the
registration statement, or as of the date hereof, the
Registration Statement contained any untrue statement
of a material fact or omitted to state any material
fact required to be stated therein or necessary to
make the statements therein not misleading; or (B)
that the Prospectus as of its date and on the Closing
Date included or includes any untrue statement of a
material fact or omitted or omits to state a material
fact necessary to make the statements therein, in the
light of the circumstances under which they were
made, not misleading (in each case, other than the
financial statements and other financial information,
contained therein, as to which such counsel need
express no opinion);
(xi) The Company has the corporate power
and authority to enter into this Agreement, and the
Indenture and to issue, sell and deliver the
Securities to the Underwriter as provided herein.
This Agreement and the Indenture have been duly
authorized, executed and delivered by the Company and
are valid, legal and binding agreements of the
Company, enforceable against the Company in
accordance with their respective terms, except as
enforcement of rights to indemnity and contribution
hereunder may be limited by Federal or state
securities laws or principles of public policy and
subject to the qualification that the enforceability
of the Company's obligations hereunder and thereunder
may be limited by bankruptcy, fraudulent conveyance,
insolvency, reorganization, moratorium, and other
laws relating to or affecting creditors' rights
generally, and by general equitable principles when
applied by a court of law or equity;
(xii) 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 disclosed in
the Prospectus;
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<PAGE> 21
(xiii) Neither the issue, offer, sale or
delivery of the Securities, the execution, delivery
or performance by the Company of this Agreement or
the Indenture, compliance by the Company with the
provisions hereof nor consummation by the Company of
the transactions contemplated hereby: (A) conflicts
or will conflict with or constitutes or will
constitute or result in 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 (x)
that is an exhibit to the Registration Statement or
(y) which is known to such counsel; 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, mortgage, deed of
trust or other instrument, agreement, obligation,
condition or covenant to which the Company or any of
its subsidiaries is bound or a party or to which any
properties of the Company or any of its subsidiaries
is subject; or (C) violates or will violate any
statute, law, rule, regulation, judgment, order or
decree applicable to the Company or any of its
subsidiaries of any court, regulatory body,
administrative agency, governmental body, arbitrator
or other authority having jurisdiction over the
Company or any of its subsidiaries or any of its or
their properties;
(xiv) No consent, approval, authorization
or other order of, or registration or filing with,
any court, regulatory body, administrative agency or
other governmental body, agency, or official is
required on the part of the Company (except as have
been obtained under the Act or such as may be
required under state securities or blue sky laws
governing the purchase and distribution of the
Securities) for the valid issuance and sale of the
Securities to the Underwriters as contemplated by
this Agreement;
(xv) (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;
(xvi) To the knowledge of such counsel,
after due inquiry, there is no action, suit or
proceeding pending or threatened by or before any
court or governmental agency, authority or body or
any arbitrator involving the Company or any of its
subsidiaries or any of its or their property of a
character required to be described in the
Registration Statement or Prospectus (or any
amendment or
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<PAGE> 22
supplement thereto), and there are no agreements,
contracts, indentures, leases or other instruments or
documents 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 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;
(xvii) 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 its subsidiaries or of any decree of any
court or governmental agency or body having
jurisdiction over the Company or its subsidiaries;
(xviii) 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/or its subsidiaries
to conduct their respective businesses other than any
such certificates, authorizations, 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 any
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 finding, 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;
(xix) The Company is not subject to
registration as an investment company under the
Investment Company Act of 1940, as amended, and the
transactions contemplated by this Agreement will not
cause the Company to become an investment company
subject to registration under the Investment Company
Act of 1940, as amended;
(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, 1999, 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, 2000; and each of the
Company's subsidiaries is a "qualified REIT
subsidiary" within the meaning of Section 856(i) of
the Code;
(xxi) 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
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<PAGE> 23
federal occupational safety and health and
environmental laws and regulations to conduct their
respective businesses; and (C) the Company and each
of its subsidiaries is 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 change in the condition (financial
or otherwise), business prospects, net worth or
results of operations of the Company or its
subsidiaries;
(xxii) 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; and
(xxiii) Although counsel has not undertaken,
except as otherwise indicated in its opinion, to
determine independently, and does not assume any
responsibility for, the accuracy or completeness of
the statements in the Registration Statement, such
counsel has participated in the preparation of the
Registration Statement and the Prospectus, including
review and discussion of the contents thereof
(including review and discussion of the contents of
all Incorporated Documents), and nothing has come to
the attention of such counsel that has caused it to
believe that the Registration Statement (including
the Incorporated Documents), at the time the
Registration Statement became effective, or the
Prospectus, as of its date and as of the Closing Date
contained an untrue statement of a material fact or
omitted to state a material fact required to be
stated therein or necessary to make the statements
therein not misleading or that any amendment or
supplement to the Prospectus, as of its respective
date, and as of the Closing Date contained any untrue
statement of a material fact or omitted to state a
material fact necessary in order to make the
statements therein, in the light of the circumstances
under which they were made, not misleading (it being
understood that such counsel need express no opinion
with respect to the financial statements and the
notes thereto and the schedules and other financial
data included in the Registration Statement or the
Prospectus or any Incorporated Document).
(d) The Underwriter shall have received on the
Closing Date an opinion of Hunton & Williams, counsel for the Underwriters,
dated the Closing Date and addressed to the Underwriter, with respect to such
matters as the Underwriter may request.
(e) The Underwriter shall have received a letter
addressed to the Underwriter and dated the date hereof from KPMG LLP,
independent certified public accountants, substantially in the forms heretofore
approved by the Underwriter.
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<PAGE> 24
(f) (A) No stop order suspending the
effectiveness of the Registration Statement shall have been issued and no
proceedings for that purpose shall have been taken or, to the knowledge of the
Company, shall be contemplated by the Commission at or prior to the Closing
Date; (B) there shall not have been any change in the capital stock of the
Company nor any material increase in the short-term or long-term debt of the
Company and its subsidiaries (other than in the ordinary course of business)
from that set forth or contemplated in the Registration Statement or the
Prospectus (or any amendment or supplement thereto); (C) there shall not have
been, since the respective dates as of which information is given in the
Registration Statement and the Prospectus (or any amendment or supplement
thereto), except as may otherwise be stated in the Registration Statement and
Prospectus (or any amendment or supplement thereto), any material adverse
change in the condition (financial or other), business, prospects, properties,
net worth or results of operations of the Company or its subsidiaries; (D)
neither the Company nor any of its subsidiaries shall have any liabilities or
obligations, direct or contingent (whether or not in the ordinary course of
business), that are material to the Company or its subsidiaries, other than
those reflected in the Registration Statement or the Prospectus (or any
amendment or supplement thereto); and (E) all the representations and
warranties of the Company contained in this Agreement shall be true and correct
on and as of the date hereof and on and as of the Closing Date as if made on
and as of the Closing Date, and the Underwriter shall have received a
certificate, dated the Closing Date and signed by the chief executive officer
and the chief financial officer of the Company (or such other officers as are
acceptable to the Underwriter), to the effect set forth in this Section 8(f)
and in Section 8(g) hereof.
(g) The Company shall not have failed at or prior
to the Closing Date to have performed or complied with any of its agreements
herein contained and required to be performed or complied with by it hereunder
or under the Indenture, at or prior to the Closing Date.
(h) The Company shall have furnished or caused to
be furnished to the Underwriter such further certificates and documents as the
Underwriter shall have requested.
All such opinions, certificates, letters and other
documents will be in compliance with the provisions hereof only if they are
satisfactory in form and substance to the Underwriter and its counsel.
Any certificate or document signed by any officer of
the Company and delivered to the Underwriter, or to counsel for the
Underwriter, shall be deemed a representation and warranty by the Company to
the Underwriter as to the statements made therein.
(i) Subsequent to the effective date of this
Agreement, there shall not have been any decrease in the rating of any of the
Company's debt securities by any "nationally recognized statistical rating
organization" (as defined for purposes of Rule 436(g) under the Act) or any
notice given of any intended or potential decrease in any such rating or of a
possible change in any such rating that does not indicate the direction of the
possible change.
If any of the conditions specified in this Section 8
shall not have been fulfilled in all material respects when and as provided in
this Agreement, or if any of the opinions and
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<PAGE> 25
certificates mentioned above or elsewhere in this Agreement shall not be in all
material respects reasonably satisfactory in form and substance to the
Underwriter and counsel for the Underwriter, this Agreement and all obligations
of the Underwriter hereunder may be canceled by the Underwriter at, or at any
time prior to, the Closing Date. Notice of such cancellation shall be given to
the Company in writing or by telephone or facsimile confirmed in writing.
The documents required to be delivered by this
Section 8 shall be delivered at the offices of Hunton & Williams, counsel for
the Underwriter, at 951 E. Byrd Street, Richmond, Virginia 23219 on the
Closing Date.
9. Expenses. The Company agrees to pay the following
costs and expenses and all other costs and expenses incident to the performance
by the Company of its obligations hereunder: (i) the preparation, printing or
reproduction, and filing with the Commission of the registration statement
(including financial statements and exhibits thereto), each Preliminary
Prospectus, the Prospectus, and each amendment or supplement to any of them;
(ii) the printing (or reproduction) and delivery (including postage, air
freight charges and charges for counting and packaging) of such copies of the
registration statement, each Preliminary Prospectus, the Prospectus, the
Incorporated Documents, and all amendments or supplements to any of them, as
may be reasonably requested for use in connection with the offering and sale of
the Securities; (iii) the preparation, printing, authentication, issuance and
delivery of certificates for the Securities, including any stamp taxes in
connection with the original issuance and sale of the Securities; (iv) the
printing (or reproduction) and delivery of this Agreement, the preliminary and
supplemental blue sky memoranda and all other agreements or documents printed
(or reproduced) and delivered in connection with the offering of the
Securities; (v) the registration or qualification of the Securities for offer
and sale under the securities or blue sky laws of the several states as
provided in Section 5(h) hereof (including the reasonable fees, expenses and
disbursements of counsel for the Underwriters relating to the preparation,
printing or reproduction, and delivery of the preliminary and supplemental blue
sky memoranda and such registration and qualification); (vi) the filing fees
and the fees and expenses of counsel for the Underwriter in connection with any
filings required to be made with the National Association of Securities
Dealers, Inc.; (vii) the transportation and other expenses incurred by or on
behalf of Company representatives in connection with presentations to
prospective purchasers of the Securities; and (viii) the fees and expenses of
the Company's accountants and the fees and expenses of counsel (including local
and special counsel) for the Company.
10. Effective Date of Agreement. This Agreement shall
become effective: (i) upon the execution and delivery hereof by the parties
hereto; or (ii) if, at the time this Agreement is executed and delivered, it is
necessary for a post-effective amendment to the registration statement to be
declared effective before the offering of the Securities may commence, when
notification of the effectiveness of such post-effective amendment has been
released by the Commission. Until such time as this Agreement shall have
become effective, it may be terminated by the Company, by notifying the
Underwriter, or by the Underwriter, by notifying the Company.
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<PAGE> 26
Any notice under this Section 10 may be given by telegram,
telecopy or telephone but shall be subsequently confirmed by letter.
11. Termination of Agreement. This Agreement shall be
subject to termination in the absolute discretion of the Underwriter, without
liability on the part of the Underwriter to the Company, by notice to the
Company, if, prior to the Closing Date (if different from the Closing Date and
then only as to the Securities): (i) trading in securities generally on the
New York Stock Exchange, the American Stock Exchange or the Nasdaq National
Market shall have been suspended or materially limited; (ii) a general
moratorium on commercial banking activities in New York or Florida shall have
been declared by either federal or state authorities; or (iii) there shall have
occurred any outbreak or escalation of hostilities or other international or
domestic calamity, crisis or change in political, financial or economic
conditions, the effect of which on the financial markets of the United States
is such as to make it, in the judgment of the Underwriter, impracticable or
inadvisable to commence or continue the offering of the Securities at the
offering price to the public set forth on the cover page of the Prospectus.
Notice of such termination may be given to the Company by telegram, telecopy or
telephone and shall be subsequently confirmed by letter.
12. Information Furnished by the Underwriter. The
statements in the third and fifth paragraphs under the caption "Underwriting"
in any Preliminary Prospectus and in the Prospectus Supplement, constitute the
only information furnished by or on behalf of the Underwriters as such
information is referred to in Sections 6(b) and 7 hereof.
13. Representations and Indemnities to Survive. The
respective agreements, representations, warranties, indemnities and other
statements of the Company or its officers and of the Underwriter 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 Underwriter or the
Company or any of the officers, directors, employees, agents or controlling
persons referred to in Section 7 hereof, and will survive delivery of and
payment for the Securities. The provisions of Sections 7 and 9 hereof shall
survive the termination or cancellation of this Agreement.
14. Notices. All communications hereunder will be in
writing and effective only on receipt, and, if sent to the Underwriter, will be
mailed, delivered or telefaxed to First Union Securities, Inc., (fax no.:
704-383-9519), Attention: Debt Syndicate Desk; or, if sent to the Company, will
be mailed, delivered or telefaxed to the office of the Company at 400 East
South Street, Suite 500, Orlando, Florida 32801, (fax no.: 407-423-2894),
Attention: James M. Seneff, Jr., Chairman and Chief Executive Officer.
15. Successors. This Agreement has been made solely for
the benefit of the Underwriters, the Company, its directors and officers, and
the other controlling persons referred to in Section 7 hereof and their
respective successors and assigns, to the extent provided herein. This
Agreement will inure to the benefit of and be binding upon the parties hereto
and their respective successors and the officers and directors and controlling
persons referred to in Section 7 hereof, and no other person shall acquire or
have any right under or by virtue of this Agreement. Neither the term
"successor" nor the term "successors and assigns" as used in this
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<PAGE> 27
Agreement shall include a purchaser from the Underwriter of any of the
Securities in his status as such purchaser.
16. Applicable Law. This Agreement will 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 without
giving effect to the conflict or choice of laws principles thereof.
17. Counterparts. This Agreement may be signed in one or
more counterparts, each of which shall constitute an original, and all of which
together shall constitute one and the same agreement.
18. Headings. The section headings used herein are for
convenience only and shall not affect the construction hereof.
19. Definitions. The terms which follow, when used in
this Agreement, shall have the meanings indicated.
"Business Day" shall mean any day other than a Saturday, a
Sunday or a legal holiday or a day on which banking institutions or trust
companies are authorized or obligated by law to close in New York City.
If the foregoing is in accordance with your understanding of
our agreement, please sign and return to us the enclosed duplicate hereof,
whereupon this letter and your acceptance shall represent a binding agreement
among the Company and the Underwriter.
Very truly yours,
COMMERCIAL NET LEASE REALTY, INC.
By
----------------------------------------------
Name:
-------------------------------------------
Title:
------------------------------------------
The foregoing Agreement is hereby confirmed and accepted as of the date on the
first page hereof.
FIRST UNION SECURITIES, INC.
By
----------------------------------------------
Name:
-------------------------------------------
Title:
------------------------------------------
27
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SCHEDULE I
COMMERCIAL NET LEASE REALTY, INC.
<TABLE>
<CAPTION>
Principal Amount of
Underwriter Securities to be Purchased Purchase Price
----------- -------------------------- --------------
<S> <C> <C>
First Union Securities, Inc. $20,000,000 $19,749,200
</TABLE>
