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EXHIBIT 1.1
LIBERTY PROPERTY LIMITED PARTNERSHIP
(a Pennsylvania Limited Partnership)
$200,000,000 8 -1/2% SENIOR NOTES DUE 2010
UNDERWRITING AGREEMENT
July 26, 2000
Lehman Brothers Inc.,
Banc One Capital Markets, Inc.
Donaldson, Lufkin & Jenrette Securities Corporation
Goldman, Sachs & Co.
Salomon Smith Barney Inc.
c/o Lehman Brothers Inc.
Three World Financial Center
New York, New York 10285
Dear Sirs:
Liberty Property Trust, a Maryland real estate investment trust (the "Company"),
and Liberty Property Limited Partnership, a Pennsylvania limited partnership
(the "Operating Partnership" and, together with the Company, the "Transaction
Entities"), each wishes to confirm as follows its agreement with Lehman Brothers
Inc., Banc One Capital Markets, Inc., Donaldson, Lufkin & Jenrette Securities
Corporation, Goldman, Sachs & Co., and Salomon Smith Barney Inc. (the
"Underwriters," which term shall also include any underwriter substituted as
hereinafter provided in Section 9 of this Agreement), with respect to the sale
by the Operating Partnership and the purchase by the Underwriters, acting
severally and not jointly, of $200,000,000 aggregate principal amount of its
8-1/2% Senior Notes due 2010 (the "Notes"), as further described on Schedule II
hereto.
Capitalized terms used but not otherwise defined herein shall
have the meanings given to those terms in the Prospectus (as herein defined).
1. Representations, Warranties and Agreements of the
Transaction Entities. Each of the Transaction Entities, jointly and severally,
represents, warrants and agrees that, as of the date hereof:
(a) Registration statements on Form S-3 (Nos.
333-43267 (the "1998 Registration Statement") and 333-39282
(the "2000 Registration Statement") and any amendments
thereto, with respect to one or more series of debt securities
of the Operating Partnership has (i) been prepared by the
Company and the Operating Partnership in conformity with the
requirements of the United States Securities Act of 1933, as
amended (the "Securities Act") and the rules and
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regulations (the "Rules and Regulations") of the United States
Securities and Exchange Commission (the "Commission")
thereunder, (ii) been filed with the Commission under the
Securities Act and (iii) become effective under the Securities
Act; and the indenture, dated as of October 24, 1997 as
supplemented to the date hereof (the "Indenture"), between the
Operating Partnership and Bank One Trust Company, N.A. (as
successor to The First National Bank of Chicago), as trustee
(the "Trustee") has been qualified, and the Fourth
Supplemental Indenture, to be dated as of July 31, 2000,
between the Operating Partnership and the Trustee (the
"Supplemental Indenture"), pursuant to which the Notes shall
be issued, will be qualified, under the Trust Indenture Act of
1939 (the "Trust Indenture Act"). Copies of such registration
statements and any amendments thereto have been delivered by
the Company to you. As used in this Agreement, "Effective
Time" means, for either registration statement, the date and
the time as of which either registration statement, or the
most recent post-effective amendment thereto, if any, was
declared effective by the Commission; "Effective Date" means,
for either registration statement, the date of the Effective
Time; "Preliminary Prospectus" means any prospectus included
in either registration statement, or amendments thereto,
before it became effective under the Securities Act and any
prospectus filed with the Commission by the Company with the
consent of the Underwriters pursuant to Rule 424(a) of the
Rules and Regulations; "Registration Statement" means both the
1998 Registration Statement and the 2000 Registration
Statement, together, each as amended at the respective
Effective Time, including any documents incorporated by
reference therein at such time and all information contained
in the final prospectus filed with the Commission pursuant to
Rule 424(b) of the Rules and Regulations and deemed to be a
part of such registration statement as of the respective
Effective Time pursuant to paragraph (b) of Rule 430A of the
Rules and Regulations, and shall include any registration
statement filed pursuant to Rule 462(b) of the Rules and
Regulations; and "Prospectus" means such final prospectus, as
first filed with the Commission pursuant to paragraph (1) or
(4) of Rule 424(b) of the Rules and Regulations. Any reference
herein to the Registration Statement, the Prospectus or a
Preliminary Prospectus shall be deemed to include the
documents incorporated or deemed to be incorporated by
reference therein which were filed under the Securities and
Exchange Act of 1934, as amended (the "Exchange Act"). For
purposes of this Agreement, all references to the Registration
Statement, any Preliminary Prospectus or the Prospectus or any
amendment or supplement to any of the foregoing shall be
deemed to include the copy filed with the Commission pursuant
to its Electronic Data Gathering, Analysis and Retrieval
system ("EDGAR").
(b) Each Preliminary Prospectus, if any, 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 Rules and Regulations, complied when so
filed in all material respects with the provisions of the
Securities Act and the rules and regulations thereunder, and
each Preliminary Prospectus, if any, delivered to the
Underwriters for use in connection with this offering was
identical to the electronically transmitted copies thereof
filed with
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the Commission pursuant to EDGAR, except to the extent
permitted by Regulation S-T.
(c) The Registration Statement conforms in all
material respects, and the Prospectus and any further
amendments or supplements to the Registration Statement or the
Prospectus will, when they become effective or are filed with
the Commission, as the case may be, conform in all material
respects to the requirements of the Securities Act, the Rules
and Regulations and the Trust Indenture Act and the rules and
regulations thereunder, and do not and will not, as of the
applicable Effective Date (as to the Registration Statement
and any amendment thereto) and as of the applicable filing
date and at the Delivery Date (as defined below) (as to the
Prospectus and any amendment or supplement thereto) contain an
untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to
make the statements therein not misleading (with respect to
the Prospectus, in light of the circumstances under which they
were made); provided that no representation or warranty is
made as to information contained in or omitted from the
Registration Statement or the Prospectus in reliance upon and
in conformity with written information furnished to the
Company through the Underwriters by or on behalf of any
Underwriter specifically for inclusion therein. The Indenture
conforms, and the Supplemental Indenture will conform, in all
material respects to the requirements of the Trust Indenture
Act and the rules and regulations thereunder; provided,
however, that no representation or warranty is made as to
information contained in or omitted from that part of the
Registration Statement which shall constitute the Statement of
Eligibility and Qualification on Form T-1 under the Trust
Indenture Act of the Trustee under the Indenture. The
Prospectus delivered to the Underwriters for use in connection
with this offering was identical to the electronically
transmitted copies thereof filed with the Commission pursuant
to EDGAR, except to the extent permitted by Regulation S-T.
(d) The documents incorporated or deemed to be
incorporated by reference in the Registration Statement as of
the applicable Effective Date, the Prospectus as of its date
or any Preliminary Prospectus as of its date, complied in all
material respects with the Exchange Act and the rules and
regulations thereunder, and none of such documents, at such
dates, 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, in the light of
the circumstances under which they were made, not misleading.
(e) No stop order suspending the effectiveness of the
Registration Statement or any part thereof has been issued and
no proceeding for that purpose has been instituted or, to the
knowledge of either of the Transaction Entities, threatened by
the Commission or by the state securities authority of any
jurisdiction. No order preventing or suspending the use of any
Preliminary Prospectus or the Prospectus has been issued and
no proceeding for that purpose has been instituted or, to the
knowledge of either of the Transaction Entities, after
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due inquiry of the Commission, threatened by the Commission or
by the state securities authority of any jurisdiction.
(f) The Company has been duly formed and is validly
existing as a real estate investment trust in good standing
under the laws of the State of Maryland, is duly qualified to
do business and is in good standing in each jurisdiction in
which its ownership or lease of property or the conduct of its
business requires such qualification, and has all power and
authority necessary to own or hold its properties, to conduct
the business in which it is engaged and to enter into and
perform its obligations under this Agreement. None of the
subsidiaries of the Company (other than the Operating
Partnership, Liberty Property Development Corp. ("Development
Corp."), Liberty Property Development Corp.-II
("Development-II"), Liberty Property Development Corp.- III
("Development- III") and Liberty Special Purpose Trust ("SP
Trust")) is a "significant subsidiary," as such term is
defined in Rule 405 of the Rules and Regulations. Except as
described in the Prospectus and other than the Property
Affiliates (as defined herein) and the Operating Partnership,
Development Corp. and SP Trust, the Company owns no direct or
indirect equity interest in any entity, except for such
interests as, in the aggregate, are not material to the
condition, financial or otherwise, or the earnings, assets,
business affairs or business prospects of the Company and its
subsidiaries considered as a single enterprise.
(g) All of the issued shares of beneficial interest
of the Company have been duly and validly authorized and
issued, are fully paid and non-assessable and conform to the
description thereof contained in the Prospectus. Except as
disclosed in the Prospectus and with respect to the Trust's
Amended and Restated Share Incentive Plan (the "Share
Incentive Plan"), no shares of beneficial interest of the
Company are reserved for any purpose and except for the equity
interests in the Operating Partnership ("Units"), the
Operating Partnership's Exchangeable Subordinated Debentures
due 2001 and options to purchase shares of beneficial interest
issued pursuant to the Share Incentive Plan, there are no
outstanding securities convertible into or exchangeable for
any shares of beneficial interest of the Company, and no
outstanding options, rights (preemptive or otherwise) or
warrants to purchase or subscribe for shares of beneficial
interest or any other securities of the Company.
(h) The Operating Partnership has been duly formed
and is validly existing as a limited partnership in good
standing under the laws of the Commonwealth of Pennsylvania,
is duly qualified to do business and is in good standing as a
foreign limited partnership in each jurisdiction in which its
ownership or lease of property or the conduct of its business
requires such qualification, and has all partnership power and
authority necessary to own or hold its properties, to conduct
the business in which it is engaged and to enter into and
perform its obligations under this Agreement. The Company is
the sole general partner of the Operating Partnership. The
limited partnership agreement of the Operating Partnership, as
amended (the "Operating Partnership Agreement") is in full
force and effect, and the aggregate percentage interests of
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the Company and the limited partners in the Operating
Partnership are as set forth in the Prospectus. The owner's
equity of the Operating Partnership is as described in the
Prospectus. All of the Units have been duly and validly
authorized and issued, are fully paid and, to the extent that
such interests are owned by the Company, are owned by the
Company free and clear of all liens, encumbrances, equities or
claims.
(i) Development Corp. has been duly organized and is
validly existing as a corporation in good standing under the
laws of the Commonwealth of Pennsylvania, is duly qualified to
do business and is in good standing in each jurisdiction in
which its ownership or lease of property or the conduct of its
business requires such qualification, and has all corporate
power and authority necessary to own or hold its properties
and to conduct the business in which it is engaged. All of the
issued and outstanding capital stock of Development Corp. has
been duly authorized and validly issued and is fully paid and
non-assessable, has been offered and sold in compliance with
all applicable laws (including, without limitation, federal or
state securities laws) and all of the capital stock of
Development Corp. owned by the Operating Partnership, as
described in the Prospectus, is owned free and clear of any
security interest, mortgage, pledge, lien, encumbrance, claim,
restriction or equities. No shares of capital stock of
Development Corp. are reserved for any purpose, and there are
no outstanding securities convertible into or exchangeable for
any capital stock of Development Corp., and no outstanding
options, rights (preemptive or otherwise) or warrants to
purchase or to subscribe for shares of such capital stock or
any other securities of Development Corp.
(j) Development-II has been duly organized and is
validly existing as a corporation in good standing under the
laws of the Commonwealth of Pennsylvania, is duly qualified to
do business and is in good standing in each jurisdiction in
which its ownership or lease of property or the conduct of its
business requires such qualification, and has all corporate
power and authority necessary to own or hold its properties
and to conduct the business in which it is engaged. All of the
issued and outstanding capital stock of Development-II has
been duly authorized and validly issued and is fully paid and
non-assessable, has been offered and sold in compliance with
all applicable laws (including, without limitation, federal or
state securities laws) and all of the capital stock of
Development-II owned by the Operating Partnership, as
described in the Prospectus, is owned free and clear of any
security interest, mortgage, pledge, lien, encumbrance, claim,
restriction or equities. No shares of capital stock of
Development-II are reserved for any purpose, and there are no
outstanding securities convertible into or exchangeable for
any capital stock of Development-II, and no outstanding
options, rights (preemptive or otherwise) or warrants to
purchase or to subscribe for shares of such capital stock or
any other securities of Development-II.
(k) Development-III has been duly organized and is
validly existing as a corporation in good standing under the
laws of the Commonwealth of
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Pennsylvania, is duly qualified to do business and is in good
standing in each jurisdiction in which its ownership or lease
of property or the conduct of its business requires such
qualification, and has all corporate power and authority
necessary to own or hold its properties and to conduct the
business in which it is engaged. All of the issued and
outstanding capital stock of Development-III has been duly
authorized and validly issued and is fully paid and
non-assessable, has been offered and sold in compliance with
all applicable laws (including, without limitation, federal or
state securities laws) and all of the capital stock of
Development-III owned by the Operating Partnership, as
described in the Prospectus, is owned free and clear of any
security interest, mortgage, pledge, lien, encumbrance, claim,
restriction or equities. No shares of capital stock of
Development-III are reserved for any purpose, and there are no
outstanding securities convertible into or exchangeable for
any capital stock of Development-III, and no outstanding
options, rights (preemptive or otherwise) or warrants to
purchase or to subscribe for shares of such capital stock or
any other securities of Development-III.
(l) SP Trust has been duly organized and is validly
existing as a business trust in good standing under the laws
of the Commonwealth of Pennsylvania, is duly qualified to do
business and is in good standing as a foreign corporation in
each jurisdiction in which its ownership or lease of property
or the conduct of its business requires such qualification,
and has all corporate power and authority necessary to own or
hold its properties and to conduct the business in which it is
engaged. All of the issued and outstanding equity interests of
SP Trust have been duly authorized and validly issued and are
fully paid and non-assessable, has been offered and sold in
compliance with all applicable laws (including, without
limitation, federal or state securities laws) and all of the
equity interests of SP Trust is owned by the Company free and
clear of any security interest, mortgage, pledge, lien,
encumbrance, claim, restriction or equities. No shares of
equity interests of SP Trust are reserved for any purpose, and
there are no outstanding securities convertible into or
exchangeable for any equity interests of SP Trust and no
outstanding options, rights (preemptive or otherwise) or
warrants to purchase or to subscribe for shares of such equity
interests or any other securities of SP Trust
(m) Each of those certain partnerships, limited
liability companies or other entities holding title to one or
more of the Properties (the "Property Affiliates") are the
only entities other than the Operating Partnership, SP Trust,
Liberty Property Philadelphia Corp., a Pennsylvania
corporation and Liberty Property Philadelphia Trust, a
Pennsylvania trust, through which the Company and the
Operating Partnership own interests in the Properties. Each of
the Property Affiliates has been duly organized and is validly
existing as a limited partnership, limited liability company
or other entity, as the case may be, is duly qualified to do
business and is in good standing under the laws of the
jurisdiction in which it was organized, and as the case may
be, is duly qualified to do business and is in good standing
as a foreign entity in each jurisdiction in which its
ownership or lease of property or the conduct of its business
requires such
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qualification, and has all power and authority necessary to
own or hold its properties and to conduct the business in
which it is engaged. Except as set forth in the Prospectus,
all of the ownership interests of each Property Affiliate have
been duly and validly authorized and issued, are fully paid
and non-assessable and all of the ownership interests owned
directly or indirectly by the Company and the Operating
Partnership, as described in the Prospectus, are owned free
and clear of any security interest, mortgage, pledge, lien,
encumbrance, claim, restriction or equities.
(n) The Notes have been duly and validly authorized
and, when duly executed, authenticated, issued and delivered
against payment therefor as provided herein and in the
Indenture, will be duly and validly issued and outstanding,
and shall constitute valid and binding obligations on the part
of the Operating Partnership, entitled to the benefits of the
Indenture, and enforceable against the Operating Partnership
in accordance with their terms. Upon payment of the purchase
price and delivery of the Notes in accordance herewith, each
of the Underwriters will receive good, valid and marketable
title to the Notes, free and clear of all security interests,
mortgages, pledges, liens, encumbrances, claims, restrictions
and equities.
(o) The Indenture has been, and the Supplemental
Indenture will be, duly authorized, and when duly executed and
delivered by the Operating Partnership (assuming due execution
and delivery by the Trustee), shall constitute a valid and
binding agreement on the part of the Operating Partnership,
enforceable against the Operating Partnership in accordance
with its terms; the Notes, the Indenture and the Supplemental
Indenture conform in all material respects to the descriptions
thereof contained in the Prospectus.
(p) (A) This Agreement has been duly and validly
authorized, executed and delivered by each of the Transaction
Entities, and assuming due authorization, execution and
delivery by the Underwriters, is a valid and binding agreement
of each of the Transaction Entities, enforceable against the
Transaction Entities in accordance with its terms; and (B) the
Operating Partnership Agreement and the partnership agreement
of each Property Affiliate, has been duly and validly
authorized, executed and delivered by the parties thereto and
is a valid and binding agreement of the parties thereto,
enforceable against such parties in accordance with its terms.
(q) The execution, delivery and performance of this
Agreement by each of the Transaction Entities, the execution,
delivery and performance of the Indenture by the Operating
Partnership and the consummation of the transactions
contemplated hereby and thereby will not conflict with or
result in a breach or violation of any of the terms or
provisions of, or constitute a default under, any indenture,
mortgage, deed of trust, loan agreement or other agreement or
instrument to which either of the Transaction Entities is a
party or by which either of the Transaction Entities is bound
or to which any of the Properties or other assets of either of
the Transaction Entities is subject, nor will such actions
result
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in any violation of the provisions of the charter, by-laws,
certificate of limited partnership or agreement of limited
partnership of either of the Transaction Entities, or any
statute or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over either of
the Transaction Entities or any of their properties or assets;
and except for the registration of the Notes under the
Securities Act and the qualification of the Indenture under
the Trust Indenture Act and such consents, approvals,
authorizations, registrations or qualifications as may be
required under the Exchange Act and applicable state
securities laws in connection with the purchase and
distribution of the Notes by the Underwriters, no consent,
approval, authorization or order of, or filing or registration
with, any such court or governmental agency or body is
required for the execution, delivery and performance of this
Agreement by the Transaction Entities or the Indenture by the
Operating Partnership, the consummation of the transactions
contemplated hereby and thereby, and the issuance and delivery
of the Notes.
(r) No event has occurred and is continuing that, had
the Notes been issued, would (whether or not with the giving
of notice and/or the passage of time and/or the fulfillment of
any other requirement) constitute an Event of Default (as
defined in the Indenture) under the Indenture.
(s) Other than as described in the Prospectus, as
disclosed to Lehman Brothers Inc. and other than rights of
certain persons who have contributed Properties to the
Partnership in exchange for Units and persons whose securities
are already registered under the Securities Act, there are no
contracts, agreements or understandings between the
Transaction Entities and any person granting such person the
right to require the Company to file a registration statement
under the Securities Act with respect to any securities of
either of the Transaction Entities owned or to be owned by
such person or to require either of the Transaction Entities
to include such securities in the securities registered
pursuant to the Registration Statement or in any securities
being registered pursuant to any other registration statement
filed by the Transaction Entities under the Securities Act.
(t) Except as described or contemplated in the
Prospectus or pursuant to the Share Incentive Plan, neither
Transaction Entity has sold or issued any securities during
the six-month period preceding the date of the Prospectus,
including any sales pursuant to Rule 144A or Regulations D or
S under, the Securities Act.
(u) Neither of the Transaction Entities nor any of
the Properties has sustained, since the date of the latest
audited financial statements included in the Prospectus, any
material loss or interference with its business from fire,
explosion, flood or other calamity, whether or not covered by
insurance, or from any labor dispute or court or governmental
action, order or decree, other than as set forth or
contemplated in the Prospectus; and, since such date, there
has not been any material change in the capital stock or
long-term debt of either of the Transaction Entities or any
material adverse change, or any development
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involving a prospective material adverse change, in or
affecting the Properties or the general affairs, management,
financial position, shareholders' equity or results of
operations of either of the Transaction Entities, other than
as set forth or contemplated in the Prospectus.
(v) The financial statements (including the related
notes and supporting schedules thereto) filed as part of, or
incorporated by reference in, the Registration Statement and
the Prospectus present fairly the financial condition and
results of operations of the entities purported to be shown
thereby, at the dates and for the periods indicated, and have
been prepared in conformity with generally accepted accounting
principles applied on a consistent basis throughout the
periods involved. The Company's ratios of earnings to fixed
charges (actual and, if any, pro forma) included in the
Prospectus under the captions "Certain Ratios" and in Exhibit
12.1 to the Registration Statement have been calculated in
compliance with Item 503(d) of Regulation S-K of the
Commission. Pro forma financial information included in or
incorporated by reference in the Registration Statement and
the Prospectus has been prepared in accordance with the
applicable requirements of the Securities Act, the Rules and
Regulations and AICPA guidelines with respect to pro forma
financial information and includes all adjustments necessary
to present fairly the pro forma financial position of the
respective entity or entities presented therein at the
respective dates indicated and the results of operations for
the respective periods specified.
(w) Ernst & Young LLP, who have certified certain
financial statements of the Operating Partnership, whose
reports appear in the Prospectus or are incorporated by
reference therein and who have delivered the initial letter
referred to in Section 7(f) hereof, are independent public
accountants as required by the Securities Act and the Rules
and Regulations.
(x) (A) The Operating Partnership and the Property
Affiliates have good and marketable title to each of the
Properties, free and clear of all liens, encumbrances, claims,
security interests and defects, other than those referred to
in the Prospectus, those relating to certain intra-company
debt with respect to Development, Development-II and
Development III or those which are not material in amount or
those which would not have a material adverse effect on the
business, operations, use or value of any of the Properties;
(B) all liens, charges, encumbrances, claims or restrictions
on or affecting any of the Properties and the assets of any
Transaction Entity which are required to be disclosed in the
Prospectus are disclosed therein; (C) except as otherwise
described in the Prospectus, neither Transaction Entity and,
to the knowledge of the Transaction Entities, no tenant of any
of the Properties is in default under (i) any space leases (as
lessor or lessee, as the case may be) relating to the
Properties, or (ii) any of the mortgages or other security
documents or other agreements encumbering or otherwise
recorded against the Properties, in each case which default
would have a material adverse effect on the applicable
Property, and neither Transaction Entity knows of any event
which, but for the passage of time or the giving of notice, or
both, would constitute such a default under any of such
documents or
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agreements; (D) each of the Properties complies with all
applicable codes, laws and regulations (including, without
limitation, building and zoning codes, laws and regulations
and laws relating to access to the Properties), except for
such failures to comply that would not have a material adverse
effect on the business operations, use or value of such
Property; and (E) neither Transaction Entity has knowledge of
any pending or threatened condemnation proceedings, zoning
change or other proceeding or action that will in any material
manner adversely affect the size of, use of, improvements on,
construction on or access to the Properties.
(y) The mortgages and deeds of trust which encumber
the Properties are not convertible into equity securities of
the entity owning such Property and said mortgages and deeds
of trust are not cross-defaulted or cross-collateralized with
any property other than other Properties.
(z) The Operating Partnership and the Property
Affiliates have obtained title insurance on the fee or
leasehold interests in each of the Properties, in an amount at
least equal to the greater of (A) the mortgage indebtedness of
each such Property or (B) the purchase price (exclusive of
improvements) of each such Property.
(aa) Except as disclosed in the Prospectus and except
such as in each case would not have a material adverse effect
on any Property, Property Affiliate, or Transaction Entity or
any of their subsidiaries, taken together as a whole; (A) to
the knowledge of the Transaction Entities, after due inquiry,
the operations of the Company, the Operating Partnership,
Development Corp., Development II, Development III, SP Trust,
and the Properties are in compliance with all Environmental
Laws (as defined below) and all requirements of applicable
permits, licenses, approvals and other authorizations issued
pursuant to Environmental Laws; (B) to the knowledge of the
Transaction Entities, after due inquiry, none of the
Transaction Entities, the Property Affiliates or any Property
has caused or suffered to occur any Release (as defined below)
of any Hazardous Substance (as defined below) into the
Environment (as defined below) on, in, under or from any
Property, and no condition exists on, in, under or adjacent to
any Property that could result in the incurrence of
liabilities under, or any violations of, any Environmental Law
or give rise to the imposition of any Lien (as defined below),
under any Environmental Law; (C) none of the Transaction
Entities or Property Affiliates has received any written
notice of a claim under or pursuant to any Environmental Law
or under common law pertaining to Hazardous Substances on, in,
under or originating from any Property; (D) neither of the
Transaction Entities has actual knowledge of, or received any
written notice from any Governmental Authority (as defined
below) claiming, any violation of any Environmental Law or a
determination to undertake and/or request the investigation,
remediation, clean-up or removal of any Hazardous Substance
released into the Environment on, in, under or from any
Property; and (E) no Property is included or, to the knowledge
of the Transaction Entities, after due inquiry, proposed for
inclusion on the National Priorities List issued pursuant to
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CERCLA (as defined below) by the United States Environmental
Protection Agency (the "EPA") or on the Comprehensive
Environmental Response, Compensation, and Liability
Information System database maintained by the EPA, and neither
of the Transaction Entities has actual knowledge that any
Property has otherwise been identified in a published writing
by the EPA as a potential CERCLA removal, remedial or response
site or, to the knowledge of the Transaction Entities, is
included on any similar list of potentially contaminated sites
pursuant to any other Environmental Law.
As used herein, "Hazardous Substance" shall include any
hazardous substance, hazardous waste, toxic substance,
pollutant or hazardous material, including, without
limitation, oil, petroleum or any petroleum-derived substance
or waste, asbestos or asbestos-containing materials, PCBs,
pesticides, explosives, radioactive materials, dioxins, urea
formaldehyde insulation or any constituent of any such
substance, pollutant or waste which is subject to regulation
under any Environmental Law (including, without limitation,
materials listed in the United States Department of
Transportation Optional Hazardous Material Table, 49 C.F.R.
Section 172.101, or in the EPA's List of Hazardous Substances
and Reportable Quantities, 40 C.F.R. Part 302); "Environment"
shall mean any surface water, drinking water, ground water,
land surface, subsurface strata, river sediment, buildings,
structures, and ambient, workplace and indoor and outdoor air;
"Environmental Law" shall mean the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended
(42 U.S.C. Section 9601 et seq.) ("CERCLA"), the Resource
Conservation and Recovery Act of 1976, as amended (42 U.S.C.
Section 6901, et seq.), the Clean Air Act, as amended (42
U.S.C. Section 7401, et seq.), the Clean Water Act, as amended
(33 U.S.C. Section 1251, et seq.), the Toxic Substances
Control Act, as amended (15 U.S.C. Section 2601, et seq.), the
Occupational Safety and Health Act of 1970, as amended (29
U.S.C. Section 651, et seq.), the Hazardous Materials
Transportation Act, as amended (49 U.S.C. Section 1801, et
seq.), and all other federal, state and local laws,
ordinances, regulations, rules and orders relating to the
protection of the Environment or of human health from
environmental effects; "Governmental Authority" shall mean any
federal, state or local governmental office, agency or
authority having the duty or authority to promulgate,
implement or enforce any Environmental Law; "Lien" shall mean,
with respect to any Property, any lien, encumbrance, penalty,
fine, charge, assessment, judgment or other liability in, on
or affecting such Property; and "Release" shall mean any
spilling, leaking, pumping, pouring, emitting, emptying,
discharging, injecting, escaping, leaching, dumping, emanating
or disposing of any Hazardous Substance into the Environment,
including, without limitation, the abandonment or discard of
barrels, containers, tanks (including, without limitation,
underground storage tanks) or other receptacles containing or
previously containing any Hazardous Substance.
(bb) Each Transaction Entity and their subsidiaries,
and each Property carries, or is covered by, insurance in such
amounts and covering such risks as is adequate for the conduct
of its business and the value of such Property and as is
customary for companies engaged in similar businesses in
similar industries.
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<PAGE> 12
(cc) Each Transaction Entity owns or possesses
adequate rights to use all material patents, patent
applications, trademarks, service marks, trade names,
trademark registrations, service mark registrations,
copyrights and licenses necessary for the conduct of its
business and has no reason to believe that the conduct of its
business will conflict with, and has not received any notice
of any claim of conflict with, any such rights of others.
(dd) Except as described in the Prospectus, there are
no legal or governmental proceedings pending to which either
Transaction Entity or their subsidiaries is a party or of
which any property or assets of either Transaction Entity or
their subsidiaries is the subject which, if determined
adversely to such Transaction Entity or subsidiary, could
reasonably be expected to have a material adverse effect on
the consolidated financial position, shareholders' equity,
results of operations, business or prospects of the Company;
and to the knowledge of the Transaction Entities, no such
proceedings are threatened or contemplated by governmental
authorities or threatened by others.
(ee) There are no contracts or other documents which
are required to be described in the Prospectus or filed as
exhibits to the Registration Statement by the Securities Act
or by the Rules and Regulations which have not been described
in the Prospectus or filed as exhibits to the Registration
Statement or incorporated therein by reference as permitted by
the Rules and Regulations.
(ff) No relationship, direct or indirect, exists
between or among either of the Transaction Entities on the one
hand, and the trustees, officers, shareholders, customers or
suppliers of the Transaction Entities on the other hand, that
is required to be described in the Prospectus that is not so
described.
(gg) No labor disturbance by the employees of either
Transaction Entity exists or, to the knowledge of the
Transaction Entities, is imminent which might be expected to
have a material adverse effect on the consolidated financial
position, shareholders' equity, results of operations,
business or prospects of such Transaction Entity.
(hh) Each Transaction Entity is in compliance in all
material respects with all presently applicable provisions of
the Employee Retirement Income Security Act of 1974, as
amended, including the regulations and published
interpretations thereunder ("ERISA"); no "reportable event"
(as defined in ERISA) has occurred with respect to any
"pension plan" (as defined in ERISA) for which either
Transaction Entity would have any liability; neither
Transaction Entity has incurred or expects to incur liability
under (i) Title IV of ERISA with respect to termination of, or
withdrawal from, any "pension plan" or (ii) sections 412 or
4971 of the Internal Revenue Code of 1986, as amended,
including the regulations and published interpretations
thereunder (the "Code"); and each "pension plan" for which
either Transaction Entity would have any liability that is
intended to be qualified under section 401(a) of the Code is
so qualified in all
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<PAGE> 13
material respects and nothing has occurred, whether by action
or by failure to act, which would cause the loss of such
qualification.
(ii) Each Transaction Entity and their subsidiaries
has filed all federal, state and local income and franchise
tax returns required to be filed through the date hereof and
has paid all taxes due thereon, and no material tax deficiency
has been determined adversely to either Transaction Entity or
their subsidiaries which has had (nor does either Transaction
Entity have any knowledge of any tax deficiency which, if
determined adversely to it might have) a material adverse
effect on the financial position, shareholders' equity,
results of operations, business or prospects of such
Transaction Entity or subsidiary.
(jj) At all times since June 16, 1994, the Company,
the Operating Partnership, Development Corp., Development II,
Development III and SP Trust have been, and upon the sale of
the Notes will continue to be, organized and operated in
conformity with the requirements for qualification of the
Company as a real estate investment trust under the Code and
the proposed method of operation of the Company, the Operating
Partnership, Development Corp., Development II, Development
III and SP Trust will enable the Company to continue to meet
the requirements for qualification and taxation as a real
estate investment trust under the Code.
(kk) Since the date as of which information is given
in the Prospectus through the date hereof, and except as may
otherwise be disclosed or contemplated in the Prospectus,
neither Transaction Entity has (i) issued or granted any
securities, (ii) incurred any liability or obligation, direct
or contingent, other than liabilities and obligations which
were incurred in the ordinary course of business, (iii)
entered into any transaction not in the ordinary course of
business nor (iv) declared or paid any dividend on its capital
stock (other than regular quarterly dividends).
(ll) Each Transaction Entity and their subsidiaries
(i) makes and keeps accurate books and records and (ii)
maintains internal accounting controls which provide
reasonable assurance that (A) transactions are executed in
accordance with management's authorization, (B) transactions
are recorded as necessary to permit preparation of its
financial statements and to maintain accountability for its
assets, (C) access to its assets is permitted only in
accordance with management's authorization and (D) the
reported accountability for its assets is compared with
existing assets at reasonable intervals.
(mm) No Transaction Entity or any of their
subsidiaries (i) is in violation of its charter, by-laws,
certificate of limited partnership, agreement of limited
partnership or other similar organizational document, (ii) is
in default in any material respect, and no event has occurred
which, with notice or lapse of time or both, would constitute
such a default, in the due performance or observance of any
term, covenant or condition contained in any material
indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which it is a
17
<PAGE> 14
party or by which it is bound or to which any of the
Properties or any of its other properties or assets is subject
or (iii) is in violation in any material respect of any law,
ordinance, governmental rule, regulation or court decree to
which it or the Properties or any of its other properties or
assets may be subject or has failed to obtain any material
license, permit, certificate, franchise or other governmental
authorization or permit necessary to the ownership of the
Properties or any of its other properties or assets or to the
conduct of its business.
(nn) Neither Transaction Entity, nor any trustee,
officer, agent, employee or other person associated with or
acting on behalf of either Transaction Entity, has used any
corporate funds for any unlawful contribution, gift,
entertainment or other unlawful expense relating to political
activity; made any direct or indirect unlawful payment to any
foreign or domestic government official or employee from
corporate funds; violated or is in violation of any provision
of the Foreign Corrupt Practices Act of 1977; or made any
bribe, rebate, payoff, influence payment, kickback or other
unlawful payment.
(oo) Neither Transaction Entity or any of their
subsidiaries is an "investment company" within the meaning of
such term under the Investment Company Act of 1940 and the
rules and regulations of the Commission thereunder.
(pp) Other than this Agreement and as set forth in
the Prospectus under the heading "Underwriting," there are no
contracts, agreements or understandings between either
Transaction Entity and any person that would give rise to a
valid claim against either Transaction Entity or any
Underwriter for a brokerage commission, finder's fee or other
like payment with respect to the consummation of the
transactions contemplated by this Agreement.
(qq) Each Transaction Entity has complied with all
applicable provisions of Florida Statutes Section 517.075,
relating to issuers doing business with Cuba.
2. Purchase of the Notes by the Underwriters. On the basis of
the representations and warranties contained in, and subject to the terms and
conditions of, this Agreement, the Operating Partnership agrees to sell to the
several Underwriters, and each of the Underwriters, severally and not jointly,
agrees to purchase from the Operating Partnership, the respective principal
amount of Notes set forth opposite that Underwriter's name in Schedule I hereto
at the purchase price set forth in Schedule II hereto plus accrued interest, if
any, from the date specified in Schedule II hereto to the date of payment and
delivery.
3. Offering of Notes by the Underwriters. The several
Underwriters propose to offer the Notes for sale upon the terms and conditions
set forth in the Prospectus.
4. Delivery of and Payment for the Notes. Delivery of and
payment for the Notes shall be made at the office of Clifford Chance Rogers &
Wells LLP, 200 Park Avenue, New York, New York 10166, at 10:00 A.M., New York
City time, on the third full business day
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<PAGE> 15
following the date of this Agreement or on the fourth full business day if this
Agreement is executed after the daily closing time of the New York Stock
Exchange (unless postponed in accordance with the provisions of Section 9
hereof), or at such other date or place as shall be determined by agreement
between the Underwriters and the Operating Partnership. This date and time are
sometimes referred to as the "Delivery Date." On the Delivery Date, the
Operating Partnership shall deliver or cause to be delivered the Notes to the
Underwriters for the account of each Underwriter against payment to or upon the
order of the Operating Partnership of the purchase price by certified or
official bank check or checks payable in same day funds or, at the discretion of
the Operating Partnership, by wire transfer in same day funds. Time shall be of
the essence, and delivery at the time and place specified pursuant to this
Agreement is a further condition of the obligation of each Underwriter
hereunder. Upon delivery, the Notes shall be registered in such names and in
such denominations as the Underwriters shall request in writing not less than
two full business days prior to the Delivery Date. For the purpose of expediting
the checking and packaging of the Notes, the Operating Partnership shall make
the Notes available for inspection by the Underwriters in New York, New York,
not later than 2:00 P.M., New York City time, on the business day prior to the
Delivery Date.
5. Further Agreements of the Transaction Entities. Each of the
Transaction Entities jointly and severally agrees:
(a) To prepare the Prospectus in a form approved by
the Underwriters and to file such Prospectus pursuant to Rule
424(b) under the Securities Act not later than the
Commission's close of business on the second business day
following the execution and delivery of this Agreement or, if
applicable, such earlier time as may be required by Rule
430A(a)(3) under the Securities Act; to make no further
amendment or any supplement to the Registration Statement or
to the Prospectus except in accordance with Section 5(e)
hereof and except for the Form 8-K; to advise the
Underwriters, promptly after it receives notice thereof, of
the time when any amendment to the Registration Statement has
been filed or becomes effective or any supplement to the
Prospectus or any amended Prospectus has been filed and to
furnish the Underwriters with copies thereof; to advise the
Underwriters, promptly after it receives notice thereof, of
the issuance by the Commission of any stop order or of any
order preventing or suspending the use of any Preliminary
Prospectus or the Prospectus, of the suspension of the
qualification of the Notes for offering or sale in any
jurisdiction, of the initiation or threatening of any
proceeding for any such purpose, or of any request by the
Commission for the amending or supplementing of the
Registration Statement or the Prospectus or for additional
information; and, in the event of the issuance of any stop
order or of any order preventing or suspending the use of any
Preliminary Prospectus or the Prospectus or suspending any
such qualification, to use promptly its best efforts to obtain
its withdrawal;
(b) To furnish promptly to the Underwriters and to
counsel for the Underwriters such number of conformed copies
as the Underwriters shall reasonably request of the
Registration Statement as originally filed with the
Commission, and each amendment thereto filed with the
Commission, including
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<PAGE> 16
all consents and exhibits filed therewith or incorporated by
reference therein and all documents incorporated by reference
therein;
(c) To deliver promptly to the Underwriters such
number of the following documents as the Underwriters shall
reasonably request: (i) conformed copies of the Registration
Statement as originally filed with the Commission and each
amendment thereto (in each case excluding exhibits other than
this Agreement) and (ii) each Preliminary Prospectus, the
Prospectus and any amended or supplemented Prospectus; and, if
the delivery of a prospectus is required at any time after the
applicable Effective Time in connection with the offering or
sale of the Notes or any other securities relating thereto and
if at such time any events shall have occurred as a result of
which the Prospectus as then amended or supplemented would
include an untrue statement of a material fact or omit to
state any material fact necessary in order to make the
statements therein, in the light of the circumstances under
which they were made when such Prospectus is delivered, not
misleading, or, if for any other reason it shall be necessary
to amend or supplement the Prospectus in order to comply with
the Securities Act or the Exchange Act, to notify the
Underwriters and, upon their request, to file such document
and to prepare and furnish without charge to each Underwriter
and to any dealer in securities as many copies as the
Underwriters may from time to time reasonably request of an
amended or supplemented Prospectus which will correct such
statement or omission or effect such compliance. The
aforementioned documents furnished to the Underwriters will be
identical to the electronically transmitted copies thereof
filed with the Commission pursuant to EDGAR, except to the
extent permitted by Regulation S-T.
(d) To file promptly with the Commission any
amendment to the Registration Statement or the Prospectus or
any supplement to the Prospectus that may, in the judgment of
the Company or counsel for the Underwriters, be required by
the Securities Act or requested by the Commission;
(e) Prior to filing with the Commission any amendment
to the Registration Statement or supplement to the Prospectus
or any Prospectus pursuant to Rule 424 of the Rules and
Regulations, to furnish a copy thereof to the Underwriters and
counsel for the Underwriters within a reasonable period of
time prior to the filing thereof, and that filing thereof
shall not occur if the Underwriters shall have objected in
good faith thereto;
(f) The Operating Partnership will make generally
available to its security holders as soon as practicable but
no later than 60 days after the close of the period covered
thereby an earnings statement (in form complying with the
provisions of Section 11(a) of the Securities Act and Rule 158
of the Rules and Regulations), which need not be certified by
independent certified public accountants unless required by
the Securities Act or the Rules and Regulations, covering a
twelve-month period commencing after the "effective date" (as
defined in said Rule 158) of the Registration Statement;
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<PAGE> 17
(g) For a period of five years following the
applicable Effective Date, to furnish to the Underwriters
copies of all materials furnished by the Operating Partnership
to its shareholders and all public reports and all reports and
financial statements furnished by the Operating Partnership to
the Commission pursuant to the Exchange Act or any rule or
regulation of the Commission thereunder;
(h) Promptly from time to time to take such action as
the Underwriters may reasonably request to qualify the Notes
for offering and sale under the securities, real estate
syndication or Blue Sky laws of such jurisdictions as the
Underwriters may request and to comply with such laws so as to
permit the continuance of sales and dealings therein in such
jurisdictions for as long as may be necessary to complete the
distribution of the Notes, except that the Operating
Partnership shall not be required in connection therewith to
qualify as a foreign corporation or to execute a consent to
service of process in any jurisdiction;
(i) Until the Delivery Date, neither the Operating
Partnership nor the Company will, directly or indirectly,
offer for sale, contract to sell, sell or otherwise dispose
of, or register for sale under the Securities Act, any debt
securities, or sell or grant options, rights or warrants with
respect to any debt securities, without the prior written
consent of Lehman Brothers Inc.;
(j) To apply the net proceeds from the sale of the
Notes in accordance with the description set forth in the
Prospectus under the caption "Use of Proceeds";
(k) To take such steps as shall be necessary to
ensure that neither the Company, the Operating Partnership nor
any of their subsidiaries shall become an "investment company"
within the meaning of such term under the Investment Company
Act of 1940 and the rules and regulations of the Commission
thereunder;
(l) Except as stated in this Agreement and in the
Preliminary Prospectus, if any, and Prospectus, neither
Transaction Entity has taken, nor will 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 the Notes to facilitate the sale or resale of
the Notes;
(m) The Company will use its best efforts to continue
to meet the requirements to qualify as a "real estate
investment trust" under the Code; and
(n) If this Agreement shall be terminated by the
Underwriters because of any failure or refusal on the part of
the Transaction Entities to comply with the terms or fulfill
any of the conditions of this Agreement, the Transaction
Entities jointly and severally agree to reimburse the
Underwriters for all reasonable out-of-pocket expenses
(including fees and expenses of counsel for the Underwriters)
incurred by the Underwriters in connection herewith.
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<PAGE> 18
6. Expenses. The Transaction Entities jointly and severally
agree to pay (a) the costs incident to the authorization, issuance, sale and
delivery of the Notes and any taxes payable in connection therewith; (b) the
costs incident to the preparation, printing and filing under the Securities Act
of the Registration Statement and any amendments and exhibits thereto; (c) the
costs of distributing the Registration Statement as originally filed and each
amendment thereto and any post-effective amendments thereof (including, in each
case, exhibits), any Preliminary Prospectus, the Prospectus and any amendment or
supplement to the Prospectus, all as provided in this Agreement; (d) the costs
of producing and distributing this Agreement and any other related documents in
connection with the offering, purchase, sale and delivery of the Notes; (e) the
filing fees incident to securing any required review by the National Association
of Securities Dealers, Inc. of the terms of sale of the Notes; (f) any
applicable listing or other fees; (g) the fees and expenses of qualifying the
Notes under the securities laws of the several jurisdictions as provided in
Section 5(h) and of preparing, printing and distributing a Blue Sky Memorandum
(including related fees and expenses of counsel to the Underwriters); (h) the
fees paid to rating agencies in connection with the rating of the Notes; and (i)
all other costs and expenses incident to the performance of the obligations of
the Transaction Entities under this Agreement; provided that, except as provided
in this Section 6 and in Section 12, the Underwriters shall pay their own costs
and expenses, including the costs and expenses of their counsel, any transfer
taxes on the Notes which they may sell and the expenses of advertising any
offering of the Notes made by the Underwriters.
7. Conditions of Underwriters' Obligations. The respective
obligations of the Underwriters hereunder are subject to the accuracy, when made
and on the Delivery Date, of the representations and warranties of the
Transaction Entities contained herein, to the performance by each Transaction
Entity of its obligations hereunder, and to each of the following additional
terms and conditions:
(a) If, at the time this Agreement is executed and
delivered, it is necessary for the Registration Statement or a
post-effective amendment thereto to be declared effective
before the offering of the Notes may commence, the
Registration Statement or 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 you, and all filings, if
any, required to have been made by such time by Rules 424 and
430A under the Rules and Regulations shall have been timely
made; 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 Transaction Entities or any Underwriter,
threatened by the Commission, and any request of the
Commission for additional information (to be included in the
Registration Statement or the Prospectus or otherwise) shall
have been complied with to the satisfaction of the
Underwriters.
(b) Subsequent to the effective date of this
Agreement, there shall not have occurred (i) any change, or
any development involving a prospective change, in or
affecting the condition, financial or otherwise, business,
properties, net worth, or results of operations of either
Transaction Entity or any of their subsidiaries or any
Property not contemplated by the Prospectus, which in the
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<PAGE> 19
reasonable opinion of the Underwriters, would materially
adversely affect the market for the Notes, or (ii) any event
or development relating to or involving either Transaction
Entity, or any partner, officer, director or trustee of either
Transaction Entity, which makes any statement of a material
fact made in the Prospectus untrue or which, in the reasonable
opinion of the Company and its counsel or the Underwriters and
their counsel, requires the making of any addition to or
change in the Prospectus in order to state a material fact
required by the Securities 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 reasonable
opinion of the Underwriters or their counsel, materially
adversely affect the market for the Notes.
(c) All corporate and partnership proceedings and
other legal matters incident to the authorization, form and
validity of this Agreement, the Indenture, the Notes, the
Registration Statement and the Prospectus, and all other legal
matters relating to this Agreement, the Indenture, the Notes,
the Registration Statement and the Prospectus and the
transactions contemplated hereby and thereby shall be
reasonably satisfactory in all material respects to counsel
for the Underwriters, and the Transaction Entities shall have
furnished to such counsel all documents and information that
they may reasonably request to enable them to pass upon such
matters.
(d) (A) Morgan Lewis & Bockius LLP shall have
furnished to the Underwriters its written opinion, as counsel
to the Transaction Entities, addressed to the Underwriters and
dated the Delivery Date, in form and substance reasonably
satisfactory to the Underwriters, to the effect that:
(i) The Company is in good standing as a
foreign trust or corporation in those jurisdictions
listed in such opinion.
(ii) The Operating Partnership is validly
existing as a limited partnership under the laws of
the Commonwealth of Pennsylvania, is duly qualified
to do business as a foreign limited partnership in
Delaware, Florida, Kansas, Maryland, Michigan,
Minnesota, New Jersey, North Carolina, South
Carolina, Tennessee, Texas, Virginia and Wisconsin,
and has all partnership power and authority necessary
to own or hold its properties, to conduct the
business in which it is engaged as described in the
Registration Statement and the Prospectus, and to
enter into and perform its obligations under this
Agreement. The Company is the sole general partner of
the Operating Partnership. The Operating Partnership
Agreement is in full force and effect, and the
aggregate percentage interests of the Company and the
limited partners in the Operating Partnership are as
set forth in the Prospectus. All of the partnership
interests of the Operating Partnership have been duly
and validly authorized and issued, are fully paid
and, to the extent that such interests
23
<PAGE> 20
are owned by the Company, are owned by the Company
free and clear of all liens, encumbrances, equities
or claims.
(iii) Development Corp. is validly existing
as a corporation in good standing under the laws of
the Commonwealth of Pennsylvania, is duly qualified
to do business and is in good standing as a foreign
corporation in Delaware, Florida, Maryland, Michigan,
Minnesota, New Jersey, North Carolina, Virginia and
Wisconsin, and has all corporate power and authority
necessary to own or hold its properties and to
conduct the business in which it is engaged as
described in the Registration Statement and the
Prospectus. All of the issued and outstanding capital
stock of Development Corp. has been duly authorized
and validly issued and is fully paid and
non-assessable, has been offered and sold in
compliance with all applicable laws (including,
without limitation, federal or state securities laws)
and all of the capital stock of Development Corp.
owned by the Operating Partnership, as described in
the Prospectus, is owned free and clear of any
security interest, mortgage, pledge, lien,
encumbrance, claim, restriction or equities.
(iv) Development-II is validly existing as a
corporation in good standing under the laws of the
Commonwealth of Pennsylvania, is duly qualified to do
business and is in good standing as a foreign
corporation in Florida and Texas, and has all
corporate power and authority necessary to own or
hold its properties and to conduct the business in
which it is engaged as described in the Registration
Statement and the Prospectus. All of the issued and
outstanding capital stock of Development-II has been
duly authorized and validly issued and is fully paid
and non-assessable, has been offered and sold in
compliance with all applicable laws (including,
without limitation, federal or state securities laws)
and all of the capital stock of Development-II owned
by the Operating Partnership, as described in the
Prospectus, is owned free and clear of any security
interest, mortgage, pledge, lien, encumbrance, claim,
restriction or equities.
(v) Development-III is validly existing as a
corporation in good standing under the laws of the
Commonwealth of Pennsylvania and has all corporate
power and authority necessary to own or hold its
properties and to conduct the business in which it is
engaged as described in the Registration Statement
and the Prospectus. All of the issued and outstanding
capital stock of Development-III has been duly
authorized and validly issued and is fully paid and
non-assessable, has been offered and sold in
compliance with all applicable laws (including,
without limitation, federal or state securities laws)
and all of the capital stock of Development-III owned
by the Operating Partnership, as described in the
Prospectus, is owned free and clear of any security
interest, mortgage, pledge, lien, encumbrance, claim,
restriction or equities.
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<PAGE> 21
(vi) SP Trust is validly existing as a
business trust in good standing under the laws of the
Commonwealth of Pennsylvania and has all trust power
and authority necessary to own or hold its properties
and to conduct the business in which it is engaged as
described in the Registration Statement and the
Prospectus. All of the issued and outstanding equity
interests of SP Trust have been duly authorized and
validly issued and are fully paid and non-assessable,
are owned by the Company free and clear of any
security interest, mortgage, pledge, lien,
encumbrance, claim, restriction or equities and have
been offered and sold in compliance with all
applicable laws (including, without limitation,
federal or state securities laws).
(vii) Each of the Property Affiliates is
validly existing as a limited partnership, limited
liability company or other entity in good standing
under the laws of the jurisdiction in which it was
organized, and has all power and authority necessary
to own or hold its properties and to conduct the
business in which it is engaged. Except as set forth
in the Prospectus, all of the partnership interests,
membership interests or other equity interests, as
the case may be, of each Property Affiliate have been
duly and validly authorized and issued, are fully
paid and non-assessable and all such interests owned
directly or indirectly by the Company and the
Operating Partnership, as described in the
Prospectus, are owned free and clear of any security
interest, mortgage, pledge, lien, encumbrance, claim,
restriction or equities.
(viii)(A) This Agreement has been duly and
validly authorized, executed and delivered by the
Operating Partnership, and has been duly and validly
executed and delivered by the Company, and assuming
due authorization, execution and delivery by the
Underwriters and due authorization by the Company, is
a valid and binding agreement of the Operating
Partnership; and (B) the Operating Partnership
Agreement and the partnership agreement, limited
liability company agreement or similar such document
of each Property Affiliate, have been duly and
validly authorized, executed and delivered by each
Transaction Entity party thereto and are valid and
binding agreements of the parties thereto,
enforceable against such parties in accordance with
their terms.
(ix) The Indenture has been duly authorized,
executed and delivered by the Operating Partnership
and (assuming due execution and delivery by the
Trustee) constitutes a valid and binding agreement on
the part of the Operating Partnership, enforceable
against the Operating Partnership in accordance with
its terms; the Indenture conforms in all material
respects to the descriptions thereof contained in the
Prospectus.
(x) The Notes have been duly authorized,
executed, issued and delivered by the Operating
Partnership, and constitute valid and binding
obligations of the Operating Partnership entitled to
the benefits of the
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<PAGE> 22
Indenture and enforceable against the Operating
Partnership in accordance with their terms. Upon
payment of the purchase price and delivery of the
Notes in accordance herewith, each of the
Underwriters will receive good, valid and marketable
title to the Notes, which to such counsel's
knowledge, after due inquiry, are free and clear of
all security interests, mortgages, pledges, liens,
encumbrances, claims, restrictions and equities. The
terms of the Notes conform to all statements and
descriptions related thereto contained in the
Prospectus. The Notes rank and will rank on a parity
with all unsecured indebtedness (other than
subordinated indebtedness of the Operating
Partnership that is outstanding on the date thereof
or that may be incurred thereafter), and senior to
all subordinated indebtedness of the Operating
Partnership that is outstanding on the date thereof
or that may be incurred thereafter, except that the
Notes will be effectively subordinated to the prior
claims of each secured mortgage lender to any
specific Property which secures such lender's
mortgage.
(xi) To the knowledge of such counsel, the
execution, delivery and performance of this Agreement
by each of the Transaction Entities and the
consummation of the transactions contemplated hereby
will not (i) conflict with or result in a breach or
violation of any of the terms or provisions of, or
constitute a default under, any indenture, mortgage,
deed of trust, loan agreement or other agreement or
instrument to which either of the Transaction
Entities or their subsidiaries is a party or by which
either of the Transaction Entities or their
subsidiaries is bound or to which any of the
Properties or other assets of either of the
Transaction Entities or their subsidiaries is
subject, or (ii) conflict with or result in any
violation of the provisions of any statute or any
order, rule or regulation of any court or
governmental agency or body having jurisdiction over
either of the Transaction Entities or their
subsidiaries or any of their properties or assets;
and except for the registration of the Notes under
the Securities Act and the qualification of the
Indenture under the Trust Indenture Act and such
consents, approvals, authorizations, registrations or
qualifications as may be required under the Exchange
Act and applicable state securities laws in
connection with the purchase and distribution of the
Notes by the Underwriters, no consent, approval,
authorization or order of, or filing or registration
with, any such court or governmental agency or body
is required for the execution, delivery and
performance of this Agreement or the Indenture by the
Transaction Entities and the consummation of the
transactions contemplated hereby and thereby, and the
issuance and delivery of the Notes.
(xii) The issuance and delivery of the Notes
by the Operating Partnership and the compliance by
the Operating Partnership with all of the provisions
of this Agreement, and the consummation of the
transactions contemplated hereby, have been duly
authorized by all necessary partnership action. The
execution, delivery and performance of this Agreement
by each of the Transaction Entities and the
consummation
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<PAGE> 23
of the transactions contemplated hereby will not
conflict with or result in any violation of the
provisions of the charter, by-laws, certificate of
limited partnership or agreement of limited
partnership of either of the Transaction Entities or
their subsidiaries.
(xiii) Except as set forth in the
Prospectus, to the knowledge of such counsel, there
are no preemptive or other rights to subscribe for or
to purchase, nor any restriction upon the transfer of
the Notes pursuant to the Operating Partnership's
certificate of limited partnership, its agreement of
limited partnership, as amended to the date hereof,
or any agreement or other instrument to which the
Operating Partnership is a party.
(xiv) To the knowledge of such counsel,
other than as set forth in the Prospectus and other
than certain persons who have contributed Properties
to the Partnership in exchange for Units and rights
of persons whose securities are already registered
under the Securities Act, there are no contracts,
agreements or understandings between the Company
and/or the Operating Partnership, on the one hand,
and any person, on the other, granting such person
the right to require the Company or the Operating
Partnership to file a registration statement under
the Securities Act with respect to any securities of
the Company or the Operating Partnership owned or to
be owned by such person or to require the Company or
the Operating Partnership to include such securities
in the securities registered pursuant to the
Registration Statement or in any securities being
registered pursuant to any other registration
statement filed by the Company or the Operating
Partnership under the Securities Act.
(xv) To the knowledge of such counsel, there
are no legal or governmental proceedings pending to
which either Transaction Entity or their subsidiaries
is a party or of which any property or assets of
either Transaction Entity or their subsidiaries is
the subject which are not disclosed in the Prospectus
and which, if determined adversely to such
Transaction Entity or subsidiary, might reasonably be
expected to have a material adverse effect on the
consolidated financial position, shareholders'
equity, results of operations, business or prospects
of the Company; and to the knowledge of such counsel
no such proceedings are threatened or contemplated by
governmental authorities or threatened by others.
(xvi) To the knowledge of such counsel,
there are no contracts or other documents which are
required to be described in the Prospectus or filed
as exhibits to the Registration Statement by the
Securities Act or by the Rules and Regulations which
have not been described in the Prospectus or filed as
exhibits to the Registration Statement or
incorporated therein by reference as permitted by the
Rules and Regulations.
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<PAGE> 24
(xvii) To the knowledge of such counsel, no
relationship, direct or indirect, exists between or
among either of the Transaction Entities on the one
hand, and the trustees, officers, shareholders,
customers or suppliers of the Transaction Entities on
the other hand, which is required to be described in
the Prospectus which is not so described.
(xviii) To the knowledge of such counsel,
each Transaction Entity is in compliance in all
material respects with all presently applicable
provisions of ERISA; to the knowledge of such
counsel, no "reportable event" (as defined in ERISA)
has occurred with respect to any "pension plan" (as
defined in ERISA) for which either Transaction Entity
would have any liability; to the knowledge of such
counsel, neither Transaction Entity has incurred or
expects to incur, liability under (i) Title IV of
ERISA with respect to termination of, or withdrawal
from, any "pension plan" or (ii) section 412 or 4971
of the Code; and, to the knowledge of such counsel,
each "pension plan" for which either Transaction
Entity would have any liability that is intended to
be qualified under section 401(a) of the Code is so
qualified in all material respects and nothing has
occurred, whether by action or by failure to act,
which would cause the loss of such qualification.
(xix) To the knowledge of such counsel, no
Transaction Entity or Property Affiliate is in
violation of its charter, by-laws, certificate of
limited partnership, agreement of limited
partnership, or other similar organizational
document, nor, to the knowledge of such counsel, has
a default been asserted in any respect, and it has
not been asserted that any event has occurred which,
with notice or lapse of time or both, would
constitute such a default, in the due performance or
observance of any term, covenant or condition
contained in any material indenture, mortgage, deed
of trust, loan agreement or other material agreement
or instrument to which it is a party or by which it
is bound or to which any of the Properties or any of
its other properties or assets is subject.
(xx) 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 Securities Act and the
Exchange Act or such as may be required under state
securities, real estate syndication or Blue Sky laws
governing the purchase and distribution of the Notes)
for the valid issuance and sale of the Notes to the
Underwriters as contemplated by this Agreement.
(xxi) Neither Transaction Entity or their
subsidiaries is an "investment company" within the
meaning of such term under the Investment Company Act
of 1940 and the rules and regulations of the
Commission thereunder.
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<PAGE> 25
(xxii) The documents incorporated or deemed
to be incorporated by reference in the Prospectus
pursuant to Item 12 of Form S-3 under the Securities
Act (other than the financial statements and related
schedules and financial information and data included
therein, as to which no opinion need be rendered), at
the time they were filed with the Commission,
complied and will comply as to form in all material
respects with the requirements of the Exchange Act
and the rules and regulations thereunder.
(xxiii) The Registration Statement was
declared effective under the Securities Act and the
Indenture was duly qualified under the Trust
Indenture Act as of the date and time specified in
such opinion, the Prospectus was filed with the
Commission pursuant to the subparagraph of Rule
424(b) of the Rules and Regulations specified in such
opinion on the date specified therein and, to the
knowledge of such counsel, no stop order suspending
the effectiveness of the Registration Statement has
been issued and, to the knowledge of such counsel, no
proceeding for that purpose is pending or threatened
by the Commission.
(xxiv) The Registration Statement and the
Prospectus and any further amendments or supplements
thereto made by the Company prior to the Delivery
Date (other than the financial statements and related
schedules and other financial information and data
included therein, as to which such counsel need
express no opinion) comply as to form in all material
respects with the requirements of the Securities Act,
the Rules and Regulations and the Trust Indenture Act
and the rules and regulations thereunder, and the
Indenture conforms in all material respects to the
requirements of the Trust Indenture Act and the rules
and regulations thereunder.
(xxv) The Operating Partnership is
classified as a partnership (and is not taxed as a
corporation) for federal income tax purposes.
(xxvi) The statements contained in the
Prospectus under the captions "Risk Factors,"
"Description of Debt Securities," "Description of
Preferred Shares," "Description of Warrants,"
"Description of Notes," and "Federal Income Tax
Considerations with Respect to the Trust and the
Operating Partnership" together with "Certain Federal
Income Tax Considerations," insofar as those
statements are descriptions of contracts, agreements
or other legal documents, or they describe federal
statutes, rules and regulations, and except to the
extent such statements are statistics or calculations
constitute a fair summary thereof.
In rendering such opinion, such counsel may (i) state that its
opinion is limited to matters governed by the Federal laws of
the United States of America, the laws of the Commonwealth of
Pennsylvania and the laws of the State of Maryland; (ii) as to
matters of Maryland law, state that its opinion is given
solely in reliance upon
29
<PAGE> 26
the opinion of Saul, Ewing, Remick & Saul LLP; (iii) state
that its opinion does not address (A) Federal Reserve Board
margin regulations; (B) Federal or state antitrust and unfair
competition laws and regulations; (C) Local Laws (as defined
in The Legal Opinion Accord of the ABA Section of Business Law
(1991); (D) compliance with fiduciary duty requirements; (E)
Federal and state racketeering laws and regulations; (F)
Federal and state health and safety laws and regulations; and
(G) Federal and state laws, regulations and policies
concerning (x) national and local emergency, (y) possible
judicial deference to acts of foreign states, and (z) criminal
and civil forfeiture laws; and (iv) in giving the opinion
referred to in subclause (B) in Section 7(d)(A)(vii)(A), state
that such opinion with respect to the enforceability of such
documents 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. Such counsel shall also have
furnished to the Underwriters a written statement, addressed
to the Underwriters and dated the Delivery Date, in form and
substance satisfactory to the Underwriters, to the effect that
(x) such counsel has acted as counsel to the Company in
connection with the preparation of the Registration Statement
and the Prospectus, and (y) based on the foregoing, no facts
have come to the attention of such counsel which lead it to
believe that the Registration Statement, as of the Effective
Date, contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein not
misleading, or that the Prospectus contains any untrue
statement of a material fact or omits to state a material fact
required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under
which they were made, not misleading. The foregoing opinion
and statement may be qualified by a statement to the effect
that such counsel does not assume any responsibility for the
accuracy, completeness or fairness of the statements contained
in the Registration Statement or the Prospectus except to the
extent of the opinion contained in Section 7(d)(A)(xxii), and
may state that such counsel expresses no belief with respect
to the financial statements and notes thereto and other
financial information and data included or incorporated by
reference in, or omitted from, the Registration Statement or
the Prospectus or the Statement of Eligibility on Form T-1 of
the Trustee.
(B) Saul, Ewing, Remick & Saul LLP shall
have furnished to the Underwriters its written opinion, as
Maryland counsel to the Company, addressed to the Underwriters
and dated the Delivery Date, in form and substance reasonably
satisfactory to the Underwriters, to the effect that:
(i) The Company has been duly formed and is
validly existing as a real estate investment trust in
good standing under and by virtue of the laws of the
State of Maryland, is in good standing with the State
Department of Assessments and Taxation of Maryland
and as a foreign trust or corporation in those
jurisdictions listed in such opinion, and has all
trust power and authority necessary to own or hold
its properties and to conduct the business in which
it is engaged as described in the
30
<PAGE> 27
Registration Statement and the Prospectus, and to
enter into and perform its obligations under this
Agreement.
(ii) All of the issued shares of beneficial
interest of the Company have been duly and validly
authorized and issued, are fully paid and
non-assessable and conform in all material respects
to the description thereof contained in the
Prospectus.
(iii) This Agreement has been duly and
validly authorized, executed and delivered by the
Company, and assuming due authorization, execution
and delivery by the Underwriters and the Operating
Partnership, is a valid and binding agreement of the
Company.
(iv) To the knowledge of such counsel, the
execution, delivery and performance of this Agreement
by the Company and the consummation of the
transactions contemplated hereby will not conflict
with or result in any violation of the provisions of
any statute or any order, rule or regulation of any
court or governmental agency or body of the State of
Maryland that has jurisdiction over the Company or
any of its properties or assets.
(v) The execution, delivery and performance
of this Agreement by the Company and the consummation
of the transactions contemplated hereby will not
conflict with or result in any violation of the
provisions of the Declaration of Trust or by-laws of
the Company.
(vi) To the knowledge of such counsel, there
are no legal or governmental proceedings pending to
which the Company is a party or of which any property
or assets of the Company is the subject which are not
disclosed in the Prospectus and which, if determined
adversely to the Company, might reasonably be
expected to have a material adverse effect on the
consolidated financial position, shareholders'
equity, results of operations, business or prospects
of the Company; and to the best knowledge of such
counsel no such proceedings are threatened or
contemplated by governmental authorities or
threatened by others.
Such counsel shall state that Clifford Chance Rogers & Wells
LLP, counsel for the Underwriters, may rely on its opinion.
(e) The Underwriters shall have received from
Clifford Chance Rogers & Wells LLP, counsel for the
Underwriters, such opinion or opinions, dated the Delivery
Date, with respect to the issuance and sale of the Notes, the
Registration Statement, the Prospectus and other related
matters as the Underwriters may reasonably require, and the
Company shall have furnished to such counsel such documents as
they reasonably request for the purpose of enabling them to
pass upon such matters.
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<PAGE> 28
(f) At the time of execution of this Agreement, the
Underwriters shall have received from Ernst & Young LLP a
letter, in form and substance satisfactory to the
Underwriters, addressed to the Underwriters and dated the date
hereof (i) confirming that they are independent public
accountants within the meaning of the Securities Act and are
in compliance with the applicable requirements relating to the
qualification of accountants under Rule 2-01 of Regulation S-X
of the Commission, and (ii) stating, as of the date hereof
(or, with respect to matters involving changes or developments
since the respective dates as of which specified financial
information is given in, or incorporated by reference in, the
Prospectus, as of a date not more than five days prior to the
date hereof), the conclusions and findings of such firm with
respect to the financial information and other matters
ordinarily covered by accountants' "comfort letters" to
underwriters in connection with registered public offerings.
(g) With respect to the letter of Ernst & Young LLP
referred to in the preceding paragraph and delivered to the
Underwriters concurrently with the execution of this Agreement
(the "initial letter"), the Operating Partnership shall have
furnished to the Underwriters a letter (the "bring-down
letter") of such accountants, addressed to the Underwriters
and dated the Delivery Date (i) confirming that they are
independent public accountants within the meaning of the
Securities Act and are in compliance with the applicable
requirements relating to the qualification of accountants
under Rule 2-01 of Regulation S-X of the Commission, (ii)
stating, as of the date of the bring-down letter (or, with
respect to matters involving changes or developments since the
respective dates as of which specified financial information
is given in the Prospectus, as of a date not more than five
days prior to the date of the bring-down letter), the
conclusions and findings of such firm with respect to the
financial information and other matters covered by the initial
letter and (iii) confirming in all material respects the
conclusions and findings set forth in the initial letter.
(h) The Transaction Entities shall have furnished to
the Underwriters a certificate, dated the Delivery Date, of
the Chairman of the Board, Chief Executive Officer, President
or a Vice President of the Company and the chief financial
officer of the Company (in each case, for the Company and for
the Company as general partner of the Operating Partnership)
stating that:
(i) The representations, warranties and
agreements of the Transaction Entities in Section 1
are true and correct as of the Delivery Date; the
Transaction Entities complied with all of their
agreements contained herein; and the conditions set
forth in Sections 7(a) and 7(i) have been fulfilled;
and
(ii) They have carefully examined the
Registration Statement and the Prospectus and, in
their opinion (A) as of the applicable Effective
Date, the Registration Statement and Prospectus did
not include any untrue statement of a material fact
and did not omit to state a material fact required to
be stated therein or necessary to make the statements
therein
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<PAGE> 29
not misleading (with respect to the Prospectus, in
light of the circumstances in which they were made),
and (B) since the applicable Effective Date no event
has occurred which should have been set forth in a
supplement or amendment to the Registration Statement
or the Prospectus.
(i) (i) None of the Transaction Entities or their
subsidiaries or any Property shall have sustained since the
date of the latest audited financial statements included in
the Prospectus any loss or interference with its business from
fire, explosion, flood or other calamity, whether or not
covered by insurance, or from any labor dispute or court or
governmental action, order or decree, otherwise than as set
forth or contemplated in the Prospectus or (ii) since such
date there shall not have been any change in the capital stock
or long-term debt of either Transaction Entity or any change,
or any development involving a prospective change, in or
affecting any Property Affiliate or Property or the general
affairs, management, financial position, shareholders' equity
or results of operations of either Transaction Entity,
otherwise than as set forth or contemplated in the Prospectus,
the effect of which, in any such case described in clause (i)
or (ii), is, in the judgment of the Underwriters, so material
and adverse as to make it impracticable or inadvisable to
proceed with the public offering or the delivery of the Notes
being delivered on the Delivery Date on the terms and in the
manner contemplated in the Prospectus.
(j) Subsequent to the execution and delivery of this
Agreement there shall not have occurred any of the following:
(i) trading in securities generally on the New York Stock
Exchange or the American Stock Exchange or in the
over-the-counter market, or trading in any securities of the
Company on any exchange or in the over-the-counter market,
shall have been suspended or minimum prices shall have been
established on any such exchange or such market by the
Commission, by such exchange or by any other regulatory body
or governmental authority having jurisdiction, (ii) a banking
moratorium shall have been declared by Federal or state
authorities, (iii) the United States shall have become engaged
in hostilities, there shall have been an escalation in
hostilities involving the United States or there shall have
been a declaration of a national emergency or war by the
United States or (iv) there shall have occurred such a
material adverse change in general economic, political or
financial conditions (or the effect of international
conditions on the financial markets in the United States shall
be such) as to make it, in the judgment of a majority in
interest of the several Underwriters, impracticable or
inadvisable to proceed with the public offering or delivery of
the Notes being delivered on the Delivery Date on the terms
and in the manner contemplated in the Prospectus.
(k) Subsequent to the execution and delivery of this
Agreement (i) no downgrading shall have occurred in the rating
accorded the Operating Partnership's debt securities by any
"nationally recognized statistical rating organization," as
that term is defined by the Commission for purposes of Rule
436(g)(2) of the Rules and Regulations and (ii) no such
organization shall have publicly announced that it has under
surveillance or review, with possible
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<PAGE> 30
negative implications, its rating of any of the Operating
Partnership's debt securities.
(l) The Transaction Entities shall not have failed at
or prior to the Delivery Date to have performed or complied
with any of their agreements herein contained and required to
be performed or complied with by them hereunder at or prior to
the Delivery Date.
(m) On the Delivery Date, counsel for the
Underwriters shall have been furnished with such documents and
opinions as they may require for the purpose of enabling them
to pass upon the issuance and sale of the Notes as herein
contemplated and related proceedings, or in order to evidence
the accuracy of any of the representations or warranties, or
the fulfillment of any of the conditions, herein contained;
and all proceedings taken by the Transaction Entities in
connection with the issuance and sale of the Notes as herein
contemplated shall be satisfactory in form and substance to
the Underwriters and counsel for the Underwriters.
(n) The Operating Partnership shall have furnished or
caused to be furnished to the Underwriters such further
certificates and documents as the Underwriters shall have
reasonably requested.
All opinions, letters, evidence and certificates mentioned
above or elsewhere in this Agreement shall be deemed to be in compliance with
the provisions hereof only if they are in form and substance reasonably
satisfactory to counsel for the Underwriters.
Any certificate or document signed by any officer of the
Transaction Entities and delivered to the Underwriters, or to counsel for the
Underwriters, shall be deemed a representation and warranty by the Transaction
Entities to each Underwriter as to the statements made therein.
8. Effective Date of Agreement. This Agreement shall become
effective: (i) upon the execution hereof by the parties hereto; or (ii) if, at
the time this Agreement is executed and delivered, it is necessary for the
Registration Statement or a post-effective amendment thereto to be declared
effective before the offering of the Notes may commence, when notification of
the effectiveness of the Registration Statement or such post-effective amendment
has been released by the Commission.
9. Default by One or More of the Underwriters. If, on the
Delivery Date, any Underwriter defaults in the performance of its obligations
under this Agreement, the remaining non-defaulting Underwriters shall be
obligated to purchase the Notes which the defaulting Underwriter agreed but
failed to purchase on the Delivery Date in the respective proportions which the
principal amount of Notes set forth opposite the name of each remaining
non-defaulting Underwriter in Schedule I hereto bears to the total aggregate
principal amount of Notes set forth opposite the names of all the remaining
non-defaulting Underwriters in Schedule I hereto; provided, however, that the
remaining non-defaulting Underwriters shall not be obligated to purchase any of
the Notes on the Delivery Date if the total aggregate principal
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<PAGE> 31
amount of Notes which the defaulting Underwriter or Underwriters agreed but
failed to purchase on such date exceeds 9.09% of the total aggregate principal
amount of Notes to be purchased on the Delivery Date, and any remaining
non-defaulting Underwriter shall not be obligated to purchase more than 110% of
the aggregate principal amount of Notes which it agreed to purchase on the
Delivery Date pursuant to the terms of Section 2. If the foregoing maximums are
exceeded, the remaining non-defaulting Underwriters, or those other underwriters
satisfactory to the Underwriters who so agree, shall have the right, but shall
not be obligated, to purchase, in such proportion as may be agreed upon among
them, all the Notes to be purchased on the Delivery Date. If the remaining
Underwriters or other underwriters satisfactory to the Underwriters do not elect
to purchase the Notes which the defaulting Underwriter or Underwriters agreed
but failed to purchase on the Delivery Date, this Agreement shall terminate
without liability on the part of any non-defaulting Underwriter or the
Transaction Entities, except that the Transaction Entities will continue to be
liable for the payment of expenses to the extent set forth in Sections 6 and 12.
As used in this Agreement, the term "Underwriter" includes, for all purposes of
this Agreement unless the context requires otherwise, any party not listed in
Schedule I hereto who, pursuant to this Section 9, purchases Notes which a
defaulting Underwriter agreed but failed to purchase.
Nothing contained herein shall relieve a defaulting
Underwriter of any liability it may have to the Transaction Entities for damages
caused by its default. If other underwriters are obligated or agree to purchase
the Notes of a defaulting or withdrawing Underwriter, either the Underwriters or
the Company may postpone the Delivery Date for up to seven full business days in
order to effect any changes that in the opinion of counsel for the Operating
Partnership or counsel for the Underwriters may be necessary in the Registration
Statement, the Prospectus or in any other document or arrangement.
10. Indemnification and Contribution.
(a) The Transaction Entities jointly and severally, shall
indemnify and hold harmless each Underwriter, its officers and employees and
each person, if any, who controls any Underwriter within the meaning of the
Securities Act, from and against any loss, claim, damage or liability, joint or
several, or any action in respect thereof (including, but not limited to, any
loss, claim, damage, liability or action relating to purchases and sales of
Notes), to which that Underwriter, officer, employee or controlling person may
become subject, under the Securities Act or otherwise, insofar as such loss,
claim, damage, liability or action arises out of, or is based upon, (i) any
untrue statement or alleged untrue statement of a material fact contained (A) in
any Preliminary Prospectus, the Registration Statement or the Prospectus or in
any amendment or supplement thereto or (B) in any blue sky application or other
document prepared or executed by the Operating Partnership (or based upon any
written information furnished by the Operating Partnership) specifically for the
purpose of qualifying any or all of the Notes under the securities laws of any
state or other jurisdiction (any such application, document or information being
hereinafter called a "Blue Sky Application"), (ii) the omission or alleged
omission to state in any Preliminary Prospectus, the Registration Statement or
the Prospectus, or in any amendment or supplement thereto, or in any Blue Sky
Application any material fact required to be stated therein or necessary to make
the statements therein not misleading (with respect to the Prospectus, in light
of the circumstances under which they were made), or (iii) any act or failure to
act or any alleged act or failure to act by any Underwriter in connection with,
or relating in any manner to,
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<PAGE> 32
the Notes or the offering contemplated hereby, and which is included as part of
or referred to in any loss, claim, damage, liability or action arising out of or
based upon matters covered by clause (i) or (ii) above (provided that the
Transaction Entities shall not be liable under this clause (iii) to the extent
that it is determined in a final judgment by a court of competent jurisdiction
that such loss, claim, damage, liability or action resulted directly from any
such acts or failures to act undertaken or omitted to be taken by such
Underwriter through its gross negligence or willful misconduct), and shall
reimburse each Underwriter and each such officer, employee or controlling person
for any legal or other expenses reasonably incurred by that Underwriter,
officer, employee or controlling person in connection with investigating or
defending or preparing to defend against any such loss, claim, damage, liability
or action as such expenses are incurred; provided, however, that the Transaction
Entities shall not be liable in any such case to the extent that any such loss,
claim, damage, liability or action arises out of, or is based upon, any untrue
statement or alleged untrue statement or omission or alleged omission made in
any Preliminary Prospectus, the Registration Statement or the Prospectus, or in
any such amendment or supplement, or in any Blue Sky Application, in reliance
upon and in conformity with written information concerning such Underwriter
furnished to the Transaction Entities through the Underwriters by or on behalf
of any Underwriter specifically for inclusion therein; provided further, that
the Transaction Entities shall not be liable in any such case to the extent that
any such loss, claim, damage, liability or action to or by any person arises out
of, or is based upon, any untrue statement or omission of material fact made in
any prospectus, to the extent that any such loss, claim, damage or liability or
action to or by such person results from the fact that (i) the Company had
previously furnished copies of the Prospectus to the Underwriters, (ii) delivery
of the Prospectus was required by the Securities Act to be made to such person,
(iii) the untrue statement or omission of a material fact contained in the
prospectus was corrected in the Prospectus, (iv) there was not sent or given to
such person, at or prior to the written confirmation of the sale of such
securities to such person, a copy of the Prospectus and (v) such correction
would have cured the defect giving rise to such loss, damage or liability. The
foregoing indemnity agreement is in addition to any liability which the
Transaction Entities may otherwise have to any Underwriter or to any officer,
employee or controlling person of that Underwriter.
(b) Each Underwriter, severally and not jointly, shall
indemnify and hold harmless each Transaction Entity, its officers and employees,
each of its trustees, and each person, if any, who controls each Transaction
Entity within the meaning of the Securities Act, from and against any loss,
claim, damage or liability, joint or several, or any action in respect thereof,
to which each Transaction Entity or any such trustee, officer or controlling
person may become subject, under the Securities Act or otherwise, insofar as
such loss, claim, damage, liability or action arises out of, or is based upon,
(i) any untrue statement or alleged untrue statement of a material fact
contained (A) in any Preliminary Prospectus, the Registration Statement or the
Prospectus or in any amendment or supplement thereto, or (B) in any Blue Sky
Application or (ii) the omission or alleged omission to state in any Preliminary
Prospectus, the Registration Statement or the Prospectus, or in any amendment or
supplement thereto, or in any Blue Sky Application any material fact required to
be stated therein or necessary to make the statements therein not misleading,
but in each case only to the extent that the untrue statement or alleged untrue
statement or omission or alleged omission was made in reliance upon and in
conformity with written information concerning such Underwriter furnished to the
Transaction Entities through the Underwriters by or on behalf of that
Underwriter specifically for inclusion therein, and shall reimburse each
Transaction Entity and any such trustee, officer or controlling person for any
legal or other expenses reasonably incurred by each Transaction Entity or any
such trustee, officer or controlling
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<PAGE> 33
person in connection with investigating or defending or preparing to defend
against any such loss, claim, damage, liability or action as such expenses are
incurred. The foregoing indemnity agreement is in addition to any liability
which any Underwriter may otherwise have to each Transaction Entity or any such
trustee, officer, employee or controlling person.
(c) Promptly after receipt by an indemnified party under this
Section 10 of notice of any claim or the commencement of any action, the
indemnified party shall, if a claim in respect thereof is to be made against the
indemnifying party under this Section 10, notify the indemnifying party in
writing of the claim or the commencement of that action; provided, however, that
the failure to notify the indemnifying party shall not relieve it from any
liability which it may have under this Section 10 except to the extent it has
been materially prejudiced by such failure and, provided further, that the
failure to notify the indemnifying party shall not relieve it from any liability
which it may have to an indemnified party otherwise than under this Section 10.
If any such claim or action shall be brought against an indemnified party, and
it shall notify the indemnifying party thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it wishes, jointly with
any other similarly notified indemnifying party, to assume the defense thereof
with counsel reasonably satisfactory to the indemnified party. After notice from
the indemnifying party to the indemnified party of its election to assume the
defense of such claim or action, the indemnifying party shall not be liable to
the indemnified party under this Section 10 for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof other than reasonable costs of investigation; provided, however, that
the indemnified party shall have the right to employ its own counsel, with such
counsel, in the case of the Underwriters, to represent jointly the Underwriters
and their respective officers, employees and controlling persons who may be
subject to liability arising out of any claim in respect of which indemnity may
be sought by the Underwriters against the Transaction Entities under this
Section 10 if, in the reasonable judgment of the Underwriters, it is advisable
for the Underwriters and those officers, employees and controlling persons to be
jointly represented by separate counsel, and in that event the fees and expenses
of such separate counsel shall be paid by the Transaction Entities. No
indemnifying party shall (i) without the prior written consent of the
indemnified parties (which consent shall not be unreasonably withheld), settle
or compromise or consent to the entry of any judgment with respect to any
pending or threatened claim, action, suit or proceeding in respect of which
indemnification or contribution may be sought hereunder (whether or not the
indemnified parties are actual or potential parties to such claim or action)
unless such settlement, compromise or consent includes an unconditional release
of each indemnified party from all liability arising out of such claim, action,
suit or proceeding, or (ii) be liable for any settlement of any such action
effected without its written consent (which consent shall not be unreasonably
withheld), but if settled with the consent of the indemnifying party or if there
be a final judgment of the plaintiff in any such action, the indemnifying party
agrees to indemnify and hold harmless any indemnified party from and against any
loss or liability by reason of such settlement or judgment.
(d) If the indemnification provided for in this Section 10
shall for any reason be unavailable to or insufficient to hold harmless an
indemnified party under Section 10(a) or 10(c) in respect of any loss, claim,
damage or liability, or any action in respect thereof, referred
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<PAGE> 34
to therein, then each indemnifying party shall, in lieu of indemnifying such
indemnified party, contribute to the amount paid or payable by such indemnified
party as a result of such loss, claim, damage or liability, or action in respect
thereof, (i) in such proportion as shall be appropriate to reflect the relative
benefits received by the Transaction Entities on the one hand and the
Underwriters on the other from the offering of the Notes or (ii) if the
allocation provided by clause (i) above is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Transaction
Entities on the one hand and the Underwriters on the other with respect to the
statements or omissions which resulted in such loss, claim, damage or liability,
or action in respect thereof, as well as any other relevant equitable
considerations. The relative benefits received by the Transaction Entities on
the one hand and the Underwriters on the other with respect to such offering
shall be deemed to be in the same proportion as the total net proceeds from the
offering of the Notes purchased under this Agreement (before deducting expenses)
received by the Transaction Entities, on the one hand, and the total
underwriting discounts and commissions received by the Underwriters with respect
to the Notes purchased under this Agreement, on the other hand, bear to the
total gross proceeds from the offering of the Notes under this Agreement, in
each case as set forth in the table on the cover page of the Prospectus. The
relative fault shall be determined by reference to whether the untrue or alleged
untrue statement of a material fact or omission or alleged omission to state a
material fact relates to information supplied by the Transaction Entities or the
Underwriters, the intent of the parties and their relative knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Transaction Entities and the Underwriters agree that it would not be just
and equitable if contributions pursuant to this Section were to be determined by
pro rata allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation which does not take into
account the equitable considerations referred to herein. The amount paid or
payable by an indemnified party as a result of the loss, claim, damage or
liability, or action in respect thereof, referred to above in this Section shall
be deemed to include, for purposes of this Section 10(d), any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 10(d), no Underwriter shall be required to contribute
any amount in excess of the amount by which the total price at which the Notes
underwritten by it and distributed to the public was offered to the public
exceeds the amount of any damages which such Underwriter has otherwise paid or
become liable to pay by reason of any untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations to contribute as provided in
this Section 10(d) are several in proportion to their respective underwriting
obligations and not joint.
(e) The Underwriters severally confirm and each Transaction
Entity acknowledges that the statements with respect to the public offering of
the Notes by the Underwriters set forth on the cover page of, the concession and
reallowance figures appearing under the caption "Underwriting" and, pursuant to
Item 508 of Regulation S-K of the Securities Act, paragraph 3 and the last six
paragraphs of the section captioned "Plan of Distribution" in, the Preliminary
Prospectus, if any, and the comparable material in the Prospectus are correct
and constitute the only information concerning such Underwriters furnished in
writing to the
38
<PAGE> 35
Transaction Entities by or on behalf of the Underwriters specifically for
inclusion in the Registration Statement, the Preliminary Prospectus, if any, and
the Prospectus.
11. Termination. The obligations of the Underwriters hereunder
may be terminated by the Underwriters by notice given to and received by the
Operating Partnership prior to delivery of and payment for the Notes if, prior
to that time, any of the events described in Sections 7(i), 7(j) or 7(l), shall
have occurred or if the Underwriters shall decline to purchase the Notes for any
reason permitted under this Agreement.
12. Reimbursement of Underwriters' Expenses. If the Operating
Partnership shall fail to tender the Notes for delivery to the Underwriters by
reason of any failure, refusal or inability on the part of the Transaction
Entities to perform any agreement on their part to be performed, or because any
other condition of the Underwriters' obligations hereunder required to be
fulfilled by the Transaction Entities is not fulfilled, the Transaction Entities
will reimburse the Underwriters for all reasonable out-of-pocket expenses
(including fees and disbursements of counsel) incurred by the Underwriters in
connection with this Agreement and the proposed purchase of the Notes, and upon
demand the Transaction Entities shall pay the full amount thereof to the
Underwriters. If this Agreement is terminated pursuant to Section 9 by reason of
the default of one or more Underwriters, the Transaction Entities shall not be
obligated to reimburse any defaulting Underwriter on account of those expenses.
13. Notices, etc. All statements, requests, notices and
agreements hereunder shall be in writing, and:
(a) if to the Underwriters, shall be delivered or
sent by mail, telex or facsimile transmission to Lehman
Brothers Inc., Three World Financial Center, New York, New
York 10285, Attention: Syndicate Department (Fax:
212-526-6588), with a copy, in the case of any notice pursuant
to Section 10(c), to the Director of Litigation, Office of the
General Counsel, Lehman Brothers Inc., 3 World Financial
Center, 10th Floor, New York, NY 10285;
(b) if to the Transaction Entities shall be delivered
or sent by mail, telex or facsimile transmission to the
Company, 65 Valley Stream Parkway, Malvern, PA 19355,
Attention: General Counsel (Fax: 610-644-2175);
provided, however, that any notice to an Underwriter pursuant to Section 10(c)
shall be delivered or sent by mail, telex or facsimile transmission to such
Underwriter at its address set forth in its acceptance telex to the
Underwriters, which address will be supplied to any other party hereto by the
Underwriters upon request. Any such statements, requests, notices or agreements
shall take effect at the time of receipt thereof. The Transaction Entities shall
be entitled to act and rely upon any request, consent, notice or agreement given
or made on behalf of the Underwriters by Lehman Brothers Inc.
14. Persons Entitled to Benefit of Agreement. This Agreement
shall inure to the benefit of and be binding upon the Underwriters, the
Transaction Entities and their respective personal representatives and
successors. This Agreement and the terms and provisions hereof are for the sole
benefit of only those persons, except that (A) the representations, warranties,
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<PAGE> 36
indemnities and agreements of the Transaction Entities contained in this
Agreement shall also be deemed to be for the benefit of the person or persons,
if any, who control any Underwriter within the meaning of Section 15 of the
Securities Act and (B) the indemnity agreement of the Underwriters contained in
Section 10(b) of this Agreement shall be deemed to be for the benefit of
trustees of the Company, officers of the Company who have signed the
Registration Statement and any person controlling the Transaction Entities
within the meaning of section 15 of the Securities Act. Nothing in this
Agreement is intended or shall be construed to give any person, other than the
persons referred to in this Section 14, any legal or equitable right, remedy or
claim under or in respect of this Agreement or any provision contained herein.
15. Survival. The respective indemnities, representations,
warranties and agreements of the Transaction Entities and the Underwriters
contained in this Agreement or made by or on behalf on them, respectively,
pursuant to this Agreement, shall survive the delivery of and payment for the
Notes and shall remain in full force and effect, regardless of any investigation
made by or on behalf of any of them or any person controlling any of them.
16. Definition of the Terms "Business Day" and "Subsidiary".
For purposes of this Agreement, (a) "business day" means any day on which the
New York Stock Exchange, Inc. is open for trading and (b) "subsidiary" has the
meaning set forth in Rule 405 of the Rules and Regulations.
17. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of New York.
18. Counterparts. This Agreement may be executed in one or
more counterparts and, if executed in more than one counterpart, the executed
counterparts shall each be deemed to be an original but all such counterparts
shall together constitute one and the same instrument.
19. Headings. The headings herein are inserted for convenience
of reference only and are not intended to be part of, or to affect the meaning
or interpretation of, this Agreement.
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<PAGE> 37
If the foregoing correctly sets forth the agreement between
the Company and the Underwriters, please indicate your acceptance in the space
provided for that purpose below.
Very truly yours,
LIBERTY PROPERTY TRUST
By /s/ Willard G. Rouse III
---------------------------------
Name: Willard G. Rouse III
Title: Chairman of the Board,
President and Chief
Executive Officer
LIBERTY PROPERTY LIMITED PARTNERSHIP
By: Liberty Property Trust, its
general partner
By: /s/ Willard G. Rouse III
--------------------------------
Name: Willard G. Rouse III
Title: Chairman of the Board,
President and Chief
Executive Officer
Accepted:
LEHMAN BROTHERS INC.
By: /s/ Allen Cutler
--------------------------
Authorized Representative
For itself and on behalf of
the Underwriters
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<PAGE> 38
SCHEDULE I
<TABLE>
<CAPTION>
UNDERWRITERS PRINCIPAL AMOUNT OF NOTES
------------ -------------------------
<S> <C>
Lehman Brothers Inc. $140,000,000
Banc One Capital Markets, Inc. 15,000,000
Donaldson, Lufkin & Jenrette Securities Corporation 15,000,000
Goldman, Sachs & Co. 15,000,000
Salomon Smith Barney Inc. 15,000,000
------------
$200,000,000
============
</TABLE>
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<PAGE> 39
SCHEDULE II
Senior Notes Due 2010
Principal Amount $200,000,000.00
Coupon: 8-1/2%
Settlement Date: July 31, 2000
Price to Public: 99.344%
Price to Public: $198,688,000
Underwriting Discount: 0.650%
Underwriting Discount: $1,300,000
Price to Company: 98.694%
Proceeds to the Company (before expenses) $197,388,000
Maturity Date: August 1, 2010
43
