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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): December 18, 1997
CAPSTONE CAPITAL CORPORATION
(Exact Name of Registrant as Specified in Charter)
MARYLAND 1-11345 63-1115479
(State of Incorporation) (Commission File Number) (I.R.S. Employer
Identification No.)
1000 URBAN CENTER DRIVE, SUITE 630
BIRMINGHAM, ALABAMA 35242
(Address of Principal Executive Offices / Zip Code)
(205) 967-2092
(Registrant's telephone number, including area code)
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Item 5. Other Events
In connection with the Company's Registration Statement on Form S-3
(File 333-31639) effective September 26, 1997, and the related Prospectus
Supplement dated December 18, 1997, the Company has entered into an Underwriting
Agreement with Legg Mason Wood Walker, Incorporated (the "Underwriter") for an
offering of 615,385 shares of common stock, par value $.001 per share, at
$24.375 per share for an aggregate offering price of $15,000,009.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(a) Financial Statements of Business Acquired.
None.
(b) Pro Forma Financial Information.
None.
(c) Exhibits.
1.1 Underwriting Agreement
5.1 Opinion of Sirote & Permutt, P.C.
5.2 Opinion of Ballard, Spahr, Andrews & Ingersoll
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SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
CAPSTONE CAPITAL CORPORATION
Date: December 23, 1997 By: /s/ John W. McRoberts
-------------------------------------
John W. McRoberts
President and Chief Executive Officer
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EXHIBIT INDEX
Document Page No.
1.1 Underwriting Agreement...........................
5.1 Opinion of Sirote & Permutt, P.C.................
5.2 Opinion of Ballard, Spahr, Andrews & Ingersoll...
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EXHIBIT 1.1
615,385 Shares
CAPSTONE CAPITAL CORPORATION
Common Stock
UNDERWRITING AGREEMENT
December 18, 1997
Legg Mason Wood Walker, Incorporated
111 South Calvert Street
P.O. Box 1476
Baltimore, Maryland 21203
Ladies and Gentlemen:
Capstone Capital Corporation, a Maryland corporation (the "Company"),
proposes to issue and sell 615,385 shares of common stock of the Company, par
value $.001 per share (the "Shares"), to Legg Mason Wood Walker, Incorporated
(you or the "Underwriter"). The shares of common stock, par value $.001 per
share, of the Company to be outstanding after giving effect to the sale
contemplated hereby are hereinafter referred to as shares of the "Common Stock."
1. Registration Statement and Prospectus. The Company has prepared and filed
with the Securities and Exchange Commission (the "Commission") in accordance
with the provisions of the Securities Act of 1933, as amended, and the rules and
regulations of the Commission thereunder (collectively called the "Act"), a
registration statement on Form S-3 (Registration No. 333-31639) including a
preliminary prospectus relating to the registration of the Shares and such other
securities which may be offered from time to time by the Company in accordance
with Rule 415 under the Act. Such registration statement (as amended, if
applicable) has been declared effective by the Commission on September 26, 1997.
Such registration statement (as amended, if applicable), on the one hand, and
the prospectus constituting a part thereof and the prospectus supplement
relating to the offering of the Shares provided to the Underwriter by the
Company for use (whether or not such prospectus supplement is required to be
filed with the Commission by the Company pursuant to the Act) (the "Prospectus
Supplement"), on the other hand, including all documents incorporated
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therein by reference, as from time to time amended or supplemented pursuant to
the Securities Exchange Act of 1934, as amended, and the rules and regulations
of the Commission thereunder (collectively called the "Exchange Act") and the
Act are referred to herein as the "Registration Statement" and the "Prospectus,"
respectively; provided, however, that a prospectus supplement shall be deemed to
have supplemented the Prospectus only with respect to the offering of the Shares
to which it relates. Any registration statement (including any amendment or
supplement thereto or information which is deemed part thereof) filed by the
Company under Rule 462(b) of the Act (a "Rule 462(b) Registration Statement")
shall be deemed to be part of the "Registration Statement" as defined herein and
any prospectus or any term sheet as contemplated by Rule 434 of the Act (a "Term
Sheet") (including any amendment or supplement thereto or information which is
deemed part thereof) included in such registration statement shall be deemed to
be part of the "Prospectus," as defined herein. All references in this Agreement
to financial statements and schedules and other information which is
"contained," "included," "described" or "stated" in the Registration Statement
or the Prospectus (and all other references of like import) shall be deemed to
mean and include all such financial statements and schedules and other
information which is or is deemed to be incorporated by reference in the
Registration Statement or Prospectus, as the case may be; and all references in
this Agreement to amendments or supplements to the Registration Statement or the
Prospectus shall be deemed to mean and include, without limitation, even though
not specifically stated, any document filed under the Exchange Act which is or
is deemed to be incorporated by reference in the Registration Statement or the
Prospectus, as the case may be. Capitalized terms used but not otherwise defined
herein shall have the meanings given to those terms in the Prospectus.
2. Agreements to Sell and Purchase. On the basis of the representations and
warranties contained in this Agreement, and subject to its terms and conditions,
the Company agrees to issue and sell the Shares and the Underwriter agrees to
purchase from the Company at a price per share of $ 24.375 (the "Purchase
Price"), the Shares.
3. Terms of the Offering. The Company is advised by the Underwriter that it
proposes (i) to deposit the Shares directly with the Trustee of Legg Mason REIT
Trust, December 1997 Series (the "Trust"), a registered unit investment trust
under the Investment Company Act of 1940, as amended (the "Offering"), as soon
after the execution and delivery hereof as in its judgment is advisable and (ii)
initially to offer the Shares upon the terms set forth in the Prospectus. The
Company further acknowledges that the Underwriter is the sponsor of the Trust
and therefore is considered an affiliate of the Trust.
4. Delivery and Payment. Delivery to the Underwriter of certificates for, and
payment of the Purchase Price for the Shares shall be made, subject to Section
9, at 10:00 A.M., New York City time, on December 23, 1997, or such other time
not later than ten business days after such date as shall be agreed upon by the
Underwriter and the Company (such time and date of payment and delivery being
herein called the "Closing Date") at such place as you shall designate. The
Closing Date and the location of, delivery of and the form of payment for the
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Shares may be varied by agreement between you and the Company.
Certificates for the Shares shall be registered in such names and
issued in such denominations as you shall request in writing not later than two
full business days prior to the Closing Date. Such certificates shall be made
available to you for inspection not later than 9:30 A.M., New York City time, on
the business day next preceding the Closing Date. Certificates in definitive
form evidencing the Shares shall be delivered to you on the Closing Date, with
any transfer taxes thereon duly paid by the Company, for the account of the
Underwriter, against payment of the Purchase Price therefor by intra-bank
transfer or wire transfer of same day funds to such account as may be designated
by the Company at least two business days prior to the Closing Date.
5. Agreements of the Company. The Company agrees with you as follows:
(a) In respect of the offering of Shares, the Company will (i) prepare a
Prospectus Supplement setting forth the number of Shares covered thereby and
their terms not otherwise specified in the Prospectus pursuant to which the
Shares are being issued, the name of the Underwriter and the number of Shares
which the Underwriter has agreed to purchase, the price at which the Shares are
to be purchased by the Underwriter from the Company, the initial offering price,
and such other information as the Underwriter and the Company deem appropriate
in connection with the offering of the Shares, and (ii) file the Prospectus in a
form approved by you pursuant to Rule 424(b) under the Act no later than the
Commission's close of business on the second business day following the date of
the determination of the offering price of the Shares. The Company will furnish
to the Underwriter and to such dealers as you shall specify as many copies of
the Prospectus as the Underwriter shall reasonably request for the purposes
contemplated by the Act or the Exchange Act.
(b) At any time when the Prospectus is required to be delivered under the
Act or the Exchange Act in connection with sales of Shares, the Company will
advise you promptly and, if requested by you, confirm such advice in writing, of
(i) the effectiveness of any amendment to the Registration Statement, (ii) the
transmittal to the Commission for filing of any Prospectus or other supplement
or amendment to the Prospectus to be filed pursuant to the Act, (iii) the
receipt of any comments from the Commission relating to the Registration
Statement, any preliminary prospectus, the Prospectus or any of the transactions
contemplated by this Agreement, (iv) any request by the Commission for
post-effective amendments to the Registration Statement or amendments or
supplements to the Prospectus or for additional information, (v) the issuance by
the Commission of any stop order suspending the effectiveness of the
Registration Statement or of the suspension of qualification of the Shares for
offering or sale in any jurisdiction, or the initiation of any proceeding for
such purposes, and (vi) the happening of any event as a result of which the
Prospectus as then amended or supplemented would include an untrue statement of
a material fact or omit to state any material fact necessary in order to make
the statements therein, in the light of the circumstances when the Prospectus is
delivered to a purchaser, not misleading. The
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Company will make every reasonable effort to prevent the issuance of any stop
order, and if at any time the Commission shall issue any stop order suspending
the effectiveness of the Registration Statement, the Company will make every
reasonable effort to obtain the withdrawal or lifting of such order at the
earliest possible time.
(c) The Company will furnish to you without charge, such number of
conformed copies of the Registration Statement as first filed with the
Commission and of each amendment to it, including all exhibits, as you may
reasonably request. If applicable, the copies of the Registration Statement and
each amendment thereto furnished to the Underwriter 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) At any time when the Prospectus is required to be delivered under the
Act or the Exchange Act in connection with sales of Shares, the Company will not
file any amendment to the Registration Statement or any Rule 462(b) Registration
Statement or make any amendment or supplement to the Prospectus or any Term
Sheet, if applicable, of which you shall not previously have been advised or to
which you or your counsel shall reasonably object; and the Company will prepare
and file with the Commission, promptly upon your reasonable request, any
amendment to the Registration Statement, Rule 462(b) Registration Statement,
Term Sheet, or amendment or supplement to the Prospectus which, in the opinion
of your counsel, may be necessary in connection with the distribution of the
Shares by you, and will use its best efforts to cause the same to become
promptly effective. If applicable, the Prospectus and any amendments or
supplements thereto furnished to the Underwriter 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.
(e) If, at any time when the Prospectus is required to be delivered under
the Act or the Exchange Act in connection with sales of Shares, any event shall
occur as a result of which, in the opinion of counsel for the Underwriter, it
becomes necessary to amend or supplement the Prospectus in order to make the
statements therein, in the light of the circumstances existing when the
Prospectus is delivered to a purchaser, not misleading, or if it is necessary to
amend or supplement the Prospectus to comply with any law, the Company will
forthwith prepare and file with the Commission an appropriate amendment or
supplement to the Prospectus (in form and substance reasonably satisfactory to
counsel for the Underwriter) so that the statements in the Prospectus, as so
amended or supplemented, will not contain an untrue statement of a material fact
or omit to state a material fact necessary in order to make the statements
therein, in the light of the circumstances existing when it is so delivered, not
misleading, or so that the Prospectus will comply with any law, and to furnish
to the Underwriter and to such dealers as you shall specify, such number of
copies thereof as the Underwriter or dealers may reasonably request.
(f) The Company will use its best efforts, in cooperation with the
Underwriter, to qualify, register or perfect exemptions for the Shares for offer
and sale by the Underwriter
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under the applicable state securities or Blue Sky laws and real estate
syndication laws of such jurisdictions as you may reasonably request; provided,
however, the Company will not be required to qualify as a foreign corporation,
file a general consent to service of process in any such jurisdiction, subject
itself to taxation in respect of doing business in any jurisdiction in which it
is not otherwise so subject, or provide any undertaking or make any change in
its charter or by-laws that the Board of Directors of the Company reasonably
determines to be contrary to the best interests of the Company and its
stockholders. In each jurisdiction in which the Shares have been so qualified or
registered, the Company will use all reasonable efforts to file such statements,
reports and other documents as may be required by the laws of such jurisdiction,
to continue such qualification or registration in effect for so long a period as
the Underwriter may reasonably request for the distribution of the Shares.
(g) To make generally available to the Company's stockholders as soon as
reasonably practicable but not later than sixty (60) days after the close of the
period covered thereby (ninety (90) days in the event the close of such period
is the close of the Company's fiscal year), an earnings statement (in form
complying with the provisions of Rule 158 of the Act) covering a period of at
least twelve months after the effective date of the Registration Statement (but
in no event commencing later than ninety (90) days after such date) which shall
satisfy the provisions of Section 11(a) of the Act, and, if required by Rule 158
of the Act, to file such statement as an exhibit to the next periodic report
required to be filed by the Company under the Exchange Act covering the period
when such earnings statement is released.
(h) During the period of five years after the date of this Agreement, to
furnish to you as soon as available a copy of each regular and periodic report,
financial statement or other publicly available information of the Company and
any of its subsidiaries mailed to the holders of the Shares or filed with the
Commission or any securities exchange, and any such publicly available
information concerning the Company or any of its subsidiaries as you may
reasonably request.
(i) During the period when the Prospectus is required to be delivered
under the Act or the Exchange Act in connection with sales of the Shares, to
file all documents required to be filed by it with the Commission pursuant to
Section 13, 14 or 15 of the Exchange Act within the time periods required by the
Exchange Act.
(j) To pay all costs, expenses, fees and taxes incident to (i) the
preparation, printing, filing and distribution under the Act of the Registration
Statement and any amendment thereto (including financial statements and
exhibits), each preliminary prospectus, the Prospectus and all amendments and
supplements to any of them prior to or during the period specified in Section
5(b), (ii) the printing and delivery of this Agreement and the Blue Sky
Memorandum (including the reasonable disbursements of counsel for the
Underwriter relating to the printing and delivery of the Blue Sky Memorandum),
(iii) the qualification of registration of the Shares for offer and sale under
the securities, Blue Sky laws or real estate
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syndication laws of the several states in accordance with Section 5(f) hereof,
(iv) the fee of and the filings and clearance, if any, with the National
Association of Securities Dealers, Inc. (the "NASD") in connection with the
Offering, (v) the fee of and the listing of the Shares on the New York Stock
Exchange, Inc. ("NYSE"), (vi) furnishing such copies of the Registration
Statement, the Prospectus and all amendments and supplements thereto as may be
requested for use in connection with the offering or sale of the Shares by the
Underwriter, (vii) the preparation, issuance and delivery of certificates for
the Shares to the Underwriter, (viii) the costs and charges of any transfer
agent or registrar, (ix) any transfer taxes imposed on the sale by the Company
of the Shares to the Underwriter and (x) the fees and disbursements of the
Company's counsel and accountants.
(k) The Company will use its best efforts to maintain the listing of the
Shares on the NYSE for a period of three years after the Closing Date and
thereafter unless the Company's Board of Directors determines that it is no
longer in the best interests of the Company for the Shares to continue to be so
listed.
(l) The Company will use its best efforts to do and perform all things
required to be done and performed under this Agreement by the Company prior to
the Closing Date and to satisfy all conditions precedent to the delivery of the
Shares.
(m) The Company will use the net proceeds received by it from the sale of
the Shares in the manner specified in the Prospectus Supplement under "Use of
Proceeds."
(n) The Company will prepare and file or transmit for filing with the
Commission in accordance with Rule 424(b) of the Act copies of the Prospectus.
(o) The Company will use its best efforts to ensure that the Company
continues to qualify as a "real estate investment trust" ("REIT") under Sections
856 through 860 of the Internal Revenue Code of 1986, as amended (the "Code"),
for a period of three years after the date of this Agreement unless the
Company's Board of Directors determines that it is no longer in the best
interest of the Company to be so qualified.
(p) The Company will not at any time, directly or indirectly, take any
action intended, or which might reasonably be expected, to cause or result in,
or which will constitute, stabilization of the price of the Shares to facilitate
the sale or resale of any Shares in violation of the Act.
6. Representations and Warranties of the Company. The Company represents and
warrants to the Underwriter as of the date hereof and the Closing Date that:
(a) The Registration Statement became effective on September 26, 1997. 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 the Company, threatened by the Commission or
by the state securities authority of any
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jurisdiction. No order preventing or suspending the use of the Prospectus has
been issued and no proceeding for that purpose has been instituted or, to the
knowledge of the Company, threatened by the Commission or by the state
securities authority of any jurisdiction.
(b) The Registration Statement and the Prospectus, including the financial
statements, schedules and related notes included in the Prospectus or
incorporated therein by reference and, if applicable, any Term Sheet to the
Prospectus, as of the date hereof and at the time the Registration Statement
became effective, and when any post-effective amendment to the Registration
Statement or Rule 462(b) Registration Statement becomes effective or any
amendment or supplement to the Prospectus is filed with the Commission, did or
will comply in all material respects with all applicable provisions of the Act
and will contain all statements required to be stated therein in accordance with
the Act. The Prospectus, including the financial statements, schedules and
related notes included in the Prospectus or incorporated therein by reference,
and if applicable, any Term Sheet to the Prospectus, as of the date hereof and
at the time the Registration Statement became effective, and at the Closing
Date, and when any post-effective amendment to the Registration Statement or
Rule 462(b) Registration Statement becomes effective or any amendment or
supplement to the Prospectus is filed with the Commission, did or will comply in
all material respects with all applicable provisions of the Act and will contain
all statements required to be stated therein in accordance with the Act. On the
date the Registration Statement was declared effective, on the date hereof, on
the date of filing of any Rule 462(b) Registration Statement and on the Closing
Date, no part of the Registration Statement or any amendment did or will contain
an untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary in order to make the statements therein not
misleading. On the date the Registration Statement was declared effective, on
the date hereof, as of its date, on the date of filing of any Rule 462(b)
Registration Statement and at the Closing Date, the Prospectus and the
Prospectus Supplement did not or will not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading. If a Rule 462(b) Registration Statement is filed in connection with
the offering and sale of the Shares, the Company will have complied or will
comply with the requirements of Rule 111 under the Act relating to the payment
of filing fees therefor. The foregoing representations and warranties in this
Section 6(b) do not apply to any statements or omissions made in reliance on and
in conformity with information relating to the Underwriter furnished in writing
to the Company by the Underwriter specifically for inclusion in the Registration
Statement or Prospectus or any amendment or supplement thereto. The Company has
not distributed any offering material in connection with the offering or sale of
the Shares other than the Registration Statement, the Prospectus or any other
materials, if any, permitted by the Act (which were disclosed to the Underwriter
and Underwriter's counsel).
(c) Each 462(b) Registration Statement, if any, complied or will comply
when so filed in all material respects with all applicable provisions of the
Act; did not or will not contain an untrue statement of a material fact or omit
to state a material fact required to be
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stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; and the Prospectus
delivered to the Underwriter for use in connection with the offering of the
Shares will, at the time of such delivery, 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) The documents incorporated or deemed to be incorporated by reference
in the Prospectus pursuant to Item 12 of Form S-3 under the Act, at the time
they were, or hereafter are, filed with the Commission, complied and will comply
in all material respects with the requirements of the Exchange Act, and, when
read together with other information in and incorporated by reference in the
Prospectus, at the time the Registration Statement became effective, and as of
the Closing Date, or during the period specified in Section 5(b) did not and
will not include an untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The foregoing
representations and warranties in this Section 6(d) do not apply to any
statements or omissions made in reliance on and in conformity with information
relating to the Underwriter furnished in writing to the Company by the
Underwriter specifically for inclusion in the Registration Statement or
Prospectus or any amendment or supplement thereto.
(e) The historical financial statements and the related notes thereto,
included or incorporated by reference in the Registration Statement and the
Prospectus, comply in all material respects with the requirements of the Act and
the Exchange Act, as applicable, and present fairly the consolidated financial
position of the Company and its consolidated subsidiaries as of the dates
indicated and the results of their operations and the changes in their cash
flows for the periods specified; the financial statements with respect to the
Investments (as defined in the Prospectus) acquired by the Company, together
with related notes, incorporated by reference in the Registration Statement or
the Prospectus, present fairly a summary of gross income and direct operating
expenses or a summary of gross income, as the case may be, of such Investments
(as such term is defined in the Prospectus) for the indicated periods; the
foregoing financial statements have been prepared in conformity with generally
accepted accounting principles applied on a consistent basis, and the supporting
schedules included or incorporated by reference in the Registration Statement
present fairly the information required to be stated therein; the pro forma
financial information, and the related notes thereto, included or incorporated
by reference in the Registration Statement and the Prospectus comply in all
material respects with the applicable requirements of the Act and the Exchange
Act, as applicable; the assumptions used in preparing such pro forma information
are reasonable and the adjustments used therein are appropriate to give effect
to the transactions referred to therein; and the other financial and statistical
information and data set forth in the Registration Statement and the Prospectus
are accurately presented in all material respects and prepared on a basis
consistent with the books and records of the Company and its consolidated
subsidiaries.
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(f) Since the respective dates as of which information is given in the
Registration Statement and the Prospectus, (i) there has not been any material
adverse change, or any development involving a prospective material adverse
change, in or affecting the condition (financial or otherwise), business,
prospects, Investments, net worth or results of operations of the Company and
its subsidiaries, taken as a whole, otherwise than as set forth or contemplated
in the Prospectus; and (ii) except as set forth or contemplated in the
Prospectus, neither the Company nor any of its subsidiaries has entered into any
transaction or agreement (whether or not in the ordinary course of business)
material to the Company and its subsidiaries, taken as a whole.
(g) The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the state of Maryland, with
corporate power and authority to own or lease its property and to conduct its
business as described in the Prospectus, and is duly qualified as a foreign
corporation for the transaction of business and is in good standing under the
laws of each other jurisdiction in which it owns or leases property, or conducts
any business, so as to require such qualification, other than where the failure
to be so qualified or in good standing would not (1) have a material adverse
effect on the condition (financial or otherwise), business, prospects, property,
net worth or results of operations of the Company and its subsidiaries, taken as
a whole, (2) adversely affect the issuance or validity of the Shares or (3)
adversely affect the consummation of any of the transactions contemplated by
this Agreement (each of (1), (2) and (3) above, a "Material Adverse Effect");
except for investments in its subsidiaries, in short-term investment securities
and in other securities as described in the Registration Statement or
Prospectus, the Company has no direct or indirect equity or other interest in
any corporation, partnership, trust or other entity; each of the subsidiaries of
the Company is defined on Schedule I hereto and has been duly organized and is
validly existing as a corporation or limited partnership, as the case may be, in
good standing under the laws of its jurisdiction of organization with corporate
or partnership power and authority, as the case may be, to own or lease its
property and conduct its business as presently conducted and as described in the
Prospectus, and has been duly qualified as a foreign corporation or foreign
limited partnership, as the case may be, for the transaction of business and is
in good standing under the laws of each other jurisdiction in which it owns or
leases property, or conducts any business, so as to require such qualification,
other than where the failure to be so qualified or in good standing would not
have a Material Adverse Effect; all the outstanding shares of capital stock of
each subsidiary have been duly authorized and validly issued and are fully paid
and nonassessable; except as disclosed in Schedule I hereto, all the outstanding
shares of capital stock and all partnership interests of each subsidiary are
owned by the Company, directly or indirectly, free and clear of all liens,
encumbrances, security interests and claims.
(h) This Agreement has been duly authorized, executed and delivered by the
Company.
(i) The Shares have been duly authorized and, when issued and delivered to
the
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Underwriter against payment therefor in accordance with the terms hereof, will
be validly issued, fully paid and nonassessable. Application has been made to
list the Shares on the NYSE. The form of certificate for the Shares will comply
with all applicable legal and NYSE requirements. The holders of outstanding
shares of capital stock of the Company are not entitled to preemptive or other
rights to subscribe for the Shares. The capital stock of the Company conforms to
the description thereof in the Registration Statement and the Prospectus.
(j) Neither the Company nor any of its subsidiaries is, or with the giving
of notice or lapse of time or both would be, in violation of or in default under
(1) its Articles of Incorporation, Certificate of Incorporation or partnership
agreement, as the case may be (in each case as amended to the date of this
Agreement), (2) its Bylaws (as amended to the date of this Agreement) or (3) any
indenture, mortgage, deed of trust, loan agreement, partnership agreement or
other agreement or instrument or obligation to which the Company or any of its
subsidiaries is a party or by which it or any of its Investments is bound,
except, with respect to clauses (2) and (3), for violations and defaults which
individually or in the aggregate would not have a Material Adverse Effect; the
issue and sale of the Shares and the performance by the Company of all of the
obligations under this Agreement and the consummation of the transactions herein
contemplated will not conflict with or result in a breach of any of the terms or
provisions of, or constitute a default under, any indenture, mortgage, deed of
trust, loan agreement, partnership agreement or other material agreement or
instrument to which the Company or any of its subsidiaries is a party or by
which the Company or of its subsidiaries is bound or to which any of the
Investments or assets of the Company or any of its subsidiaries is subject,
except for such conflicts, breaches, defaults or violations which individually
or in the aggregate would not have a Material Adverse Effect, nor will any such
action result in any violation of the provisions of the Articles of
Incorporation (as amended to the date of this Agreement) or the Bylaws (as
amended to the date of this Agreement) of the Company or any applicable law or
statute or any order, rule or regulation of any court or governmental agency or
body having jurisdiction over the Company or any of its Investments, except for
such violations which individually or in the aggregate would not have a Material
Adverse Effect; and no consent, approval, authorization, order, registration or
qualification of or with any such court or governmental agency or body is
required for the issue and sale of the Shares or the consummation by the Company
of the transactions contemplated by this Agreement, except such consents,
approvals, authorizations, orders, registrations or qualifications (x) as have
been obtained under the Act and the Exchange Act, (y) as may be required under
state securities or Blue Sky laws or Sections 2710 and 2720 of the Conduct Rules
of the NASD in connection with the purchase and distribution of the Shares by
the Underwriter or (z) the failure to obtain which would not have a Material
Adverse Effect.
(k) Other than as set forth or contemplated in the Prospectus, there are
no legal or governmental proceedings pending or, to the knowledge of the
Company, threatened to which the Company or its subsidiaries is or may be a
party or to which any property of the Company or its subsidiaries is or may be
the subject which, if determined adversely to the
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<PAGE> 11
Company, could individually or in the aggregate reasonably be expected to have a
Material Adverse Effect; there are no contracts or other documents of a
character required to be filed as an exhibit to the Registration Statement or
required to be described in the Registration Statement or the Prospectus which
are not filed or described as required; and the descriptions of the terms of all
such contracts and documents contained or incorporated by reference in the
Registration Statement or Prospectus are complete and correct in all material
respects.
(l) The authorized capital stock of the Company consists of 50,000,000
million shares of Common Stock, $.001 par value per share, and 10,000,000
million shares of preferred stock, $.001 par value per share, 3,000,000 shares
of which have been designated as 8 7/8% Series A Cumulative Redeemable Preferred
Stock. All of the issued shares of capital stock of the Company have been duly
and validly authorized and issued and are fully paid and nonassessable.
(m) The Company or any of its subsidiaries has good and marketable title
to each of the Investments, in each case free of any lien, mortgage, pledge,
charge or encumbrance of any kind except those (i) described in the Prospectus
or (ii) which do not materially affect or detract from the value of such
Investments or interfere with the use made and proposed to be made of such
Investments by the Company and its subsidiaries and which individually and in
the aggregate are in an amount which is not material to the Company.
(n) Except as disclosed in the Prospectus, each entity identified in the
Prospectus as a tenant of any of the Investments, or a subtenant thereof, has
entered into a lease or a sublease, if applicable, for the possession of such
Investment; except as disclosed in the Prospectus, each such lease is in full
force and effect and neither the Company nor any of its subsidiaries has notice
of any defense to the obligations of the tenant thereunder or any claim asserted
or threatened by any person or entity, which claim, if sustained, would have a
Material Adverse Effect; and except as disclosed in the Prospectus, the lessor
under each lease has complied with its obligations under such lease in all
material respects and neither the Company nor any of its subsidiaries has notice
of any default by the tenant under such lease which, individually or in the
aggregate with other such defaults, would have a Material Adverse Effect.
(o) The mortgages and deeds of trust encumbering the Investments are not
(i) cross-defaulted to any indebtedness other than indebtedness of the Company
or any of its subsidiaries or (ii) cross-collateralized to any property not
owned by the Company or its subsidiaries.
(p) The Company and its subsidiaries are insured by insurers of recognized
financial responsibility against such losses and risks and in such amounts as
are customary in the business in which they are engaged and such insurance is
adequate for the value of their property; all policies of insurance insuring the
Company or its subsidiaries or its respective businesses, assets, employees,
officers, trustees and directors, as the case may be, are in full force and
effect; each of the Company and its subsidiaries is in compliance with the terms
of
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<PAGE> 12
such policies in all material respects and there are no claims by the Company or
by its subsidiaries under any such policy as to which any insurance company is
denying liability or defending under a reservation of rights clause, other than
claims which individually or in the aggregate would not have a Material Adverse
Effect.
(q) The Company has filed all federal, state and foreign income tax
returns which have been required to be filed and have paid all taxes indicated
by said returns and all assessments received by it to the extent that such taxes
have become due and are not being contested in good faith.
(r) The Company and each of its subsidiaries owns, possesses and has
obtained all material licenses, permits, certificates, consents, orders,
approvals and other authorizations from, and has made all material declarations
and filings with, all federal, state, local and other governmental authorities,
all self-regulatory organizations and all courts and other tribunals necessary
to own or lease, as the case may be, and to operate its Investments and to carry
on its business as conducted as of the date hereof, except in each case where
the failure to obtain licenses, permits, certificates, consents, orders,
approvals and other authorizations, or to make all declarations and filings,
would not have a Material Adverse Effect, and neither the Company nor any of its
subsidiaries has received any notice of any proceeding relating to revocation or
modification of any such license, permit, certificate, consent, order, approval
or other authorization, except as described in the Prospectus and except, in
each case, where such revocation or modification would not have a Material
Adverse Effect; and the Company and each of its subsidiaries are in compliance
with all laws, rules and regulations relating to the conduct of their respective
businesses as conducted as of the date hereof, except where noncompliance with
such laws, rules or regulations would not have a Material Adverse Effect.
(s) To the knowledge of the Company, its independent accountants who have
certified certain of the financial statements filed with the Commission as part
of, or incorporated by reference in, the Registration Statement or the
Prospectus, are independent public accountants as required by the Act.
(t) To the knowledge of the Company, no relationship, direct or indirect,
exists between or among the Company or its subsidiaries on the one hand, and the
directors, trustees, officers, stockholders, customers or suppliers of the
Company or its subsidiaries on the other hand, which is required by the Act to
be described in the Registration Statement and the Prospectus which is not so
described.
(u) The Company has never been, is not now, and immediately after giving
effect to the sale of the Shares under this Agreement will not be, an
"investment company" or entity "controlled" by an "investment company," within
the meaning of the Investment Company Act of 1940, as amended (the "Investment
Company Act").
(v) With respect to all tax periods regarding which the Internal Revenue
Service is
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or will be entitled to assert any claim against any of the Company has met the
requirements for qualification as a REIT under Sections 856 through 860 of the
Code, and the present and contemplated operations, assets and income of the
Company and its subsidiaries, taken as a whole, continue to meet such
requirements.
(w) The conditions for the use by the Company of a registration statement
on Form S-3 set forth in the General Instructions to Form S-3 have been
satisfied and the Company is entitled to use such form for the transactions
contemplated herein.
(x) Other than as disclosed in the Prospectus, the Company has no
knowledge of (a) the unlawful presence of any hazardous substances, hazardous
materials, toxic substances or waste materials (collectively, "Hazardous
Materials") on any of the Investments or (b) any unlawful spills, releases,
discharges or disposals of Hazardous Materials that have occurred or are
presently occurring on or from the Investments, which presence or occurrence
would individually or in the aggregate have a Material Adverse Effect.
(y) Other than as disclosed in the Prospectus, the Company and its
subsidiaries (i) are in compliance with any and all applicable federal, state
and local laws and regulations relating to the protection of human health and
safety, the environment or hazardous or toxic substances or wastes, pollutants
or contaminants ("Environmental Laws"), (ii) the Company has received all
material permits, licenses or other approvals required of it under applicable
Environmental Laws to conduct its business and (iii) is in compliance with all
terms and conditions of any such permit, license or approval, except where such
noncompliance with Environmental Laws, failure to receive required permits,
licenses or other approvals or failure to comply with the terms and conditions
of such permits, licenses or approvals would not individually or in the
aggregate have a Material Adverse Effect.
(z) In the ordinary course of business, the Company engages environmental
consultants and other experts to conduct reviews of the effect of Environmental
Laws on the business, operations and property of the Company and its
subsidiaries, in the course of which the Company identifies and evaluates
associated costs and liabilities (including, without limitation, any capital or
operating expenditures required for cleanup, closure of property or compliance
with Environmental Laws or any permit, license or approval, any related
constraints on operating activities and any potential liabilities to third
parties). On the basis of such reviews and other than as described in the
Prospectus, the Company has reasonably concluded that such associated costs and
liabilities would not, individually or in the aggregate, have a Material Adverse
Effect.
(aa) Subsequent to the respective dates as of which information is given
in the Prospectus, (i) the Company has not purchased any of its outstanding
shares of capital stock, or declared, paid or otherwise made any dividend or
distribution of any kind on its shares of capital stock other than regular
periodic dividends on such shares; and (ii) there has not been any material
change in the shares of capital stock of the Company or any material change in
the short-term debt or long-term debt of the Company and its subsidiaries on a
consolidated
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<PAGE> 14
basis, except as described in or contemplated by the Prospectus. Other than as
described in or contemplated by the Prospectus, including documents incorporated
therein by reference, there are no outstanding warrants or options to purchase
or rights to acquire any shares of capital stock of the Company and there are no
restrictions upon the voting or transfer of, or the declaration or payment of
any dividend or distribution on, any shares of capital stock of the Company
pursuant to the Company's Articles of Incorporation (as amended to the date of
this Agreement) or Bylaws (as amended to the date of this Agreement), any
agreement or other instrument to which the Company is a party or by which the
Company is bound, or any order, law, rule, regulation or determination of any
court, governmental agency or body (including, without limitation, any banking
or insurance regulatory agency or body), or arbitrator having jurisdiction over
the Company. No holders of securities of the Company or of securities
convertible into or exchangeable for securities of the Company have rights to
the registration of such securities of the Company under the Registration
Statement.
(bb) The Company and its subsidiaries and affiliates have not taken and
will not take, directly or indirectly, any action designed to, or that might be
reasonably expected to, cause or result in stabilization or manipulation of the
price of the Shares, and the Company and its subsidiaries and affiliates have
not distributed and agree not to distribute any prospectus or other offering
material in connection with the offering and sale of the Shares other than the
Prospectus or other material permitted by the Act.
(cc) The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurances that (i) transactions are executed
in accordance with management's general or specific authorization; (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain accountability for assets; (iii) access to assets is permitted only in
accordance with management's general or specific authorization; and (iv) the
recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(dd) There is (i) no significant unfair labor practice complaint pending
against any of the Company or its subsidiaries or, to the knowledge of the
Company, threatened against any of them, before the National Labor Relations
Board or any state or local labor relations board, and no significant grievance
or more significant arbitration proceeding arising out of or under any
collective bargaining agreement is so pending against the Company or its
subsidiaries or, to the knowledge of the Company, threatened against any of
them, and (ii) no significant strike, labor dispute, slowdown or stoppage
pending against the Company or its subsidiaries or, to the knowledge of the
Company, threatened against it or any of their subsidiaries except for such
actions specified in clause (i) or (ii) above which individually or in the
aggregate could not reasonably be expected to have a Material Adverse Effect.
(ee) No statement, representation, warranty or covenant made by the
Company in this Agreement or made in any certificate or document required by
this Agreement to be
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<PAGE> 15
delivered to the Underwriter is, or will be, when made, inaccurate, untrue or
incorrect in any material respect; it being understood that no representation is
made under this Section 6(ee) with respect to the Registration Statement or the
Prospectus which are the subject of representations contained in other
paragraphs in this Section 6.
(ff) Any certificate or other document signed by any officer or authorized
representative of the Company or any of its subsidiaries, and delivered to the
Underwriter or to counsel for the Underwriter in connection with the sale of the
Shares shall be deemed a representation and warranty by such entity or person,
as the case may be, to the Underwriter as to the matters covered thereby.
7. Indemnification.
(a) The Company agrees to indemnify and hold harmless the Underwriter and
each person, if any, who controls the Underwriter within the meaning of Section
15 of the Act or Section 20 of the Exchange Act, from and against any and all
losses, claims, damages, expenses, liabilities and judgments caused by or
resulting from any untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement or the Prospectus (as amended or
supplemented if the Company shall have furnished any amendments or supplements
thereto) or any preliminary prospectus, or caused by or resulting from any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading,
except insofar as such losses, claims, damages, expenses, liabilities or
judgments are caused by or result from any such untrue statement or omission or
alleged untrue statement or omission based upon and in conformity with
information relating to the Underwriter furnished in writing to the Company by
or on behalf of the Underwriter through you expressly for use therein, provided,
that this indemnity agreement with respect to any preliminary prospectus shall
not inure to the benefit of the Underwriter from whom the person asserting any
such losses, liabilities, claims, damages or expenses purchased Shares, or any
person controlling the Underwriter, if a copy of the prospectus (as then amended
or supplemented if the Company shall have furnished any such amendments or
supplements thereto) was not sent or given by or on behalf of the Underwriter to
such person, if such is required by law, at or prior to the written confirmation
of the sale of such Shares to such person and if the Prospectus (as so amended
or supplemented) would have corrected the defect giving rise to such loss,
liability, claim, damage or expense.
(b) In case any action shall be brought against the Underwriter or any
person controlling the Underwriter, based upon any preliminary prospectus, the
Registration Statement or the Prospectus or any amendment or supplement thereto
and with respect to which indemnity may be sought against the Company, the
Underwriter shall promptly notify the Company in writing and the Company may, at
its election, assume the defense thereof, including the employment of counsel
reasonably satisfactory to such indemnified party and payment of all fees and
expenses. The Underwriter or any such controlling person shall have
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<PAGE> 16
the right to employ separate counsel in any such action and participate in the
defense thereof, but the fees and expenses of such counsel shall, if the Company
has assumed the defense as indicated above, be at the expense of the Underwriter
or such controlling person unless (i) the employment of such counsel shall have
been specifically authorized in writing by the Company, (ii) the Company shall
have failed to assume the defense and employ counsel or (iii) the named parties
to any such action (including any impleaded parties) include both the
Underwriter or such controlling person and the Company and the Underwriter or
such controlling person shall have been advised by such counsel that there may
be one or more legal defenses available to it which are different from or
additional to those available to the Company (in which case the Company shall
not have the right to assume the defense of such action on behalf of the
Underwriter or such controlling person, it being understood, however, that the
Company shall not, in connection with any one such action or separate but
substantially similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances, be liable for the fees and
expenses of more than one separate firm of attorneys (in addition to any local
counsel) for the Underwriter and controlling persons, which firm shall be
designated in writing by the Underwriter and that all such fees and expenses
shall be reimbursed as they are incurred). The Company shall not be liable for
any settlement of any such action effected without its written consent, but if
settled with their written consent, the Company agrees to indemnify and hold
harmless the Underwriter and any such controlling person from and against any
loss or liability by reason of such settlement to the extent required by this
Section 7. Notwithstanding the immediately preceding sentence, if in any case
where the fees and expenses of counsel are at the expense of the indemnifying
party and an indemnified party shall have requested the indemnifying party to
reimburse the indemnified party for such fees and expenses of counsel as
incurred, such indemnifying party agrees that it shall be liable for any
settlement of any action effected without its written consent, if (i) such
settlement is entered into more than forty business days after the receipt by
such indemnifying party of the aforesaid request and (ii) such indemnifying
party shall have failed to reimburse the indemnified party in accordance with
such request for reimbursement prior to the date of such settlement; provided,
however, that if it is determined by a final non appealable order of a court of
competent jurisdiction that the Company has no indemnification obligation under
this Section 7, all fees and expenses paid by the Company pursuant to this
sentence shall be returned to them upon demand. No indemnifying party shall,
without the prior written consent of the indemnified party, effect any
settlement of any pending or threatened proceeding in respect of which any
indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party, unless such settlement includes an
unconditional release of such indemnified party from all liability on claims
that are the subject matter of such proceeding.
(c) The Underwriter agrees to indemnify and hold harmless the Company and
each of its officers and directors who sign the Registration Statement and any
person controlling the Company within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act, to the same extent as the foregoing indemnity
from the Company to the Underwriter, but only with reference to and in
conformity with information relating to the Underwriter furnished in
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<PAGE> 17
writing by or on behalf of the Underwriter expressly for use in the Registration
Statement, the Prospectus or any preliminary prospectus. In case any action
shall be brought against the Company, any of its officers, directors, or any
person controlling the Company, based on the Registration Statement, the
Prospectus or any preliminary prospectus and in respect of which indemnity may
be sought against the Underwriter, the Underwriter shall have the rights and
duties given to the Company (except that if the Company shall have assumed the
defense thereof, the Underwriter shall not be required to do so, but may employ
separate counsel therein and participate in the defense thereof but the fees and
expenses of such counsel shall, except as otherwise provided herein, be at the
expense of the Underwriter), and the Company, its officers, directors, and any
person controlling the Company shall have the rights and duties given to the
Underwriter, by Section 7(b) hereof.
(d) If the indemnification provided for in this Section 7 is unavailable
to an indemnified party in respect of any losses, claims, damages, expenses,
liabilities or judgments referred to therein, then each indemnifying party, in
lieu of indemnifying such indemnified party, shall contribute to the amount paid
or payable by such indemnified party as a result of such losses, claims,
damages, expenses, liabilities and judgments (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company on the one
hand and the Underwriter on the other hand from the offering of the Shares or
(ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
the Company, on the one hand, and the Underwriter, on the other hand, in
connection with the statements or omissions which resulted in such losses,
claims, damages, expenses, liabilities or judgments, as well as any other
relevant equitable considerations. The relative benefits received by the
Company, on the one hand, and the Underwriter, on the other hand, shall be
deemed to be in the same proportion as the total net proceeds from the Offering
(before deducting expenses) received by the Company and the total underwriting
discounts and commissions received by the Underwriter, bear to the total price
to the public of the Shares, in each case as set forth in the table on the cover
page of the Prospectus. The relative fault of the Company, on the one hand, and
the Underwriter, on the other hand, shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission to state a material fact relates to information supplied by the
Company or the Underwriter and the parties' relative intent, knowledge, access
to information and opportunity to correct or prevent such statement or omission.
The Company and the Underwriter agree that it would not be just and
equitable if contribution pursuant to this Section 7(d) were determined by pro
rata allocation or by any other method of allocation which does not take account
of the equitable considerations referred to in the immediately preceding
paragraph. The amount paid or payable by an indemnified party as a result of the
losses, claims, damages, expenses, liabilities or judgments referred to in the
immediately preceding paragraph shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating or defending any such
action or claim. Notwithstanding the
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<PAGE> 18
provisions of this Section 7, the Underwriter shall not be required to
contribute any amount in excess of the amount by which the total price at which
the Shares underwritten by it and distributed to the public were offered to the
public exceeds the amount of any damages which the Underwriter has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
(e) The Underwriter confirms and the Company acknowledges that (i) the
statements with respect to the public offering of the Shares by the Underwriter
set forth on the cover page of the Prospectus Supplement, (ii) the legend
concerning overallotments on page 2 of the Prospectus Supplement, (iii) the
first and last sentences of the second paragraph under the caption
"Underwriting" in the Prospectus Supplement are correct and constitute the only
information concerning the Underwriter furnished in writing to the Company by or
on behalf of the Underwriter specifically for inclusion in the Registration
Statement and Prospectus.
8. Conditions of Underwriter's Obligations. The obligations of the Underwriter
to purchase the Shares under this Agreement are subject to the satisfaction of
each of the following conditions:
(a) All the representations and warranties of the Company contained in
this Agreement shall be true and correct, in all material respects, on the
Closing Date, with the same force and effect as if made on and as of the Closing
Date.
(b) No stop order suspending the effectiveness of the Registration
Statement shall have been issued and no proceedings for that purpose shall have
been commenced or shall be pending before or threatened by the Commission to the
knowledge, after due inquiry, of the Company. No stop order suspending the
effectiveness of the Registration Statement shall have been issued and no
proceedings for that purpose shall have been commenced or shall be pending
before or threatened by the state securities authority of any jurisdiction, to
the knowledge of the Company.
(c) (i) Since the date of the latest balance sheet included or
incorporated by reference in the Registration Statement and the Prospectus,
there shall not have been any Material Adverse Effect, (ii) other than as set
forth in the Prospectus, no proceedings shall be pending or, to the knowledge of
the Company, after due inquiry, threatened against the Company or any of the
Investments before or by any federal, state or other commission, board or
administrative agency, where an unfavorable decision, ruling or finding could
reasonably be expected to result in a Material Adverse Effect, and on the
Closing Date you shall have received a certificate dated the Closing Date,
signed by the Chief Executive Officer and the Chief Financial Officer of the
Company, confirming the matters set forth in paragraphs (a), (b) and (c) of this
Section 8.
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(d) You shall have received on the Closing Date opinions, dated the
Closing Date of Sirote & Permutt, P.C., counsel for the Company, in the forms
attached hereto as Annex A and Annex B.
(e) You shall have received on the Closing Date an opinion, dated the
Closing Date, of Hunton & Williams, counsel for the Underwriter, to the effect
that:
(i) the Shares have been duly authorized, and when issued and
delivered to the Underwriter against payment therefor as provided by
this Agreement, will have been validly issued and will be fully paid
and nonassessable, and the issuance of such Shares is not subject to
any preemptive or similar rights;
(ii) the Registration Statement has become effective under the Act
and, to the knowledge of such counsel, no stop order suspending its
effectiveness has been issued and no proceedings for that purpose
are pending before or threatened by the Commission;
(iii) this Agreement was duly and validly authorized, executed and
delivered by the Company; and
(iv) the Registration Statement, at the time it became effective,
and the Prospectus, as of the date of the Prospectus Supplement (in
each case, other than documents incorporated therein by reference
and the financial statements and supporting schedules and other
financial and statistical data included or incorporated by reference
therein, as to which no opinion need be rendered) complied as to
form in all material respects with the requirements of the Act.
In addition, Hunton & Williams shall state that they have
participated in conferences with officers and other representatives of the
Company and representatives of the independent public accountants for the
Company and representatives of the Underwriter at which the contents of the
Prospectus and related matters were discussed and, although they are not passing
upon and do not assume any responsibility for the accuracy, completeness or
fairness of the statements contained in the Registration Statement or the
Prospectus or the documents incorporated therein by reference, on the basis of
the foregoing (relying as to materiality to a large extent upon the opinions of
officers and other representatives of the Company), no facts have come to the
attention of such counsel which lead them to believe that the Registration
Statement, including the documents incorporated therein by reference, at the
time the Company filed its Annual Report on Form 10-K for the Year Ended
December 31, 1996, or at the date of the Underwriting Agreement, contained an
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements therein not misleading
or that the Prospectus, including the documents incorporated therein by
reference, at the time the Prospectus was first provided to the Underwriter for
use in connection with the offering of the Shares or at the date hereof,
contained or contains an untrue statement of a material fact or omitted or omits
to state a
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<PAGE> 20
material fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading (it being
understood that such counsel need express no opinion with respect to the
financial statements and schedules and other financial or statistical data
included in the Registration Statement, the Prospectus or the documents
incorporated therein by reference).
(f) On the date hereof, KPMG Peat Marwick LLP shall have furnished to the
Underwriter a letter, dated the date of its delivery, addressed to the
Underwriter and in form and substance satisfactory to the Underwriter (and to
its counsel), confirming that they are independent public accountants with
respect to the Company and its subsidiaries as required by the Act and with
respect to the financial and other statistical and numerical information
contained in the Registration Statement. At the Closing Date, KPMG Peat Marwick
LLP shall have furnished to the Underwriter a letter, dated the date of its
delivery, which shall confirm, on the basis of a review in accordance with the
procedures set forth in the letter from it, that nothing has come to its
attention during the period from the date of the letter referred to in the prior
sentence to a date (specified in the letter) not more than five days prior to
the Closing Date, which would require any change in its letter dated the date
hereof if it were required to be dated and delivered at the Closing Date.
(g) At the Closing Date, the Shares shall have been approved for listing
on the NYSE upon official notice of issuance.
(h) The Company and its subsidiaries shall not have failed at or prior to
the Closing Date, to perform or comply with any of the agreements pursuant to
Section 5 herein contained and required to be performed or complied with by the
Company at or prior to the Closing Date.
(i) At the Closing Date, Hunton & Williams shall have been furnished with
such documents and opinions as they may reasonably require for the purpose of
enabling them to pass upon the issuance and sale of the Shares, 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 Company in
connection with the issuance and sale of the Shares as herein contemplated shall
be reasonably satisfactory in form and substance to the Underwriter and Hunton &
Williams.
9. Effective Date of Agreement and Termination. This Agreement shall become
effective upon the execution of this Agreement.
This Agreement may be terminated at any time prior to the Closing
Date by you by written notice to the Company if any of the following has
occurred: (i) since the respective dates as of which information is given in the
Registration Statement and the Prospectus, there has been a Material Adverse
Effect, (ii) any outbreak or escalation of hostilities or other national or
international calamity or crisis or change in economic conditions or in the
financial markets of the United States or elsewhere that, in your judgment, is
material and adverse and
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would, in your judgment, make it impracticable or inadvisable (x) to commence or
continue the offering of the shares to the public or (y) to enforce contracts
for the sale of the shares, (iii) the suspension or material limitation of
trading in securities on the NYSE or material limitation on prices for
securities on either of such exchanges, (iv) (a) the downgrading of any of the
debt securities of the Company or any of its subsidiaries by any "nationally
recognized statistical rating organization" or the announcement by any such
organization of an initial rating with respect to any such securities that is
below the ratings of other such organizations in effect for such securities on
the date hereof, or (b) the public announcement by any such organization that it
has under surveillance or review, with possible negative implications, its
rating of any of such securities, (v) the enactment, publication, decree or
other promulgation of any federal or state statute, regulation, rule or order of
any court or other governmental authority which in your opinion would result in
a Material Adverse Effect, (vi) the declaration of a banking moratorium by
either federal or New York State authorities or (vii) the taking of any action
by any federal, state or local government or agency in respect of its monetary
or fiscal affairs which in your opinion has a material adverse effect on the
financial markets in the United States.
10. Miscellaneous. Notices given pursuant to any provision of this Agreement
shall be addressed as follows: (a) if to the Company, to 1000 Urban Center
Drive, Suite 630, Birmingham, Alabama 35242, Attention: Malcolm E. McVay, Chief
Financial Officer and (b) if to you, to Legg Mason Wood Walker, Incorporated,
Attention: Syndicate Department, 111 South Calvert Street, Baltimore, Maryland
21202, or in any case to such other address as the person to be notified may
have requested in writing.
The provisions of Sections 5, 6 and 7 shall remain operative and in
full force and effect, and will survive delivery of and payment for the Shares,
regardless of (i) any investigation, or statement as to the results thereof,
made by or on behalf of the Underwriter or by or on behalf of the Company, the
officers or directors of the Company or any controlling person of the Company
and (ii) acceptance of the Shares and payment for them hereunder.
In the event of termination of this Agreement, the provisions of
Sections 5(k) and 7 shall remain operative and in full force and effect.
If this Agreement shall be terminated by the Underwriter because of
any failure or refusal on the part of the Company to comply with the terms or to
fulfill any of the conditions of this Agreement, the Company agrees to reimburse
the Underwriter for all out-of-pocket expenses (including the fees and
documented disbursements of counsel) reasonably incurred by the Underwriter.
Except as otherwise provided, this Agreement has been and is made
solely for the benefit of and shall be binding upon the Company and the
Underwriter, any controlling persons referred to herein and their respective
successors and assigns, all as and to the extent provided in this Agreement, and
no other person shall acquire or have any right under or by
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<PAGE> 22
virtue of this Agreement. The term "successors and assigns" shall not include a
purchaser of any of the Shares from the Underwriter merely because of such
purchase.
This Agreement shall be governed and construed in accordance with
the laws of the State of New York.
This Agreement may be signed in various counterparts which together
shall constitute one and the same instrument.
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<PAGE> 23
Please confirm that the foregoing correctly sets forth the agreement
among the parties hereto.
Very truly yours,
CAPSTONE CAPITAL CORPORATION
By: /s/ Malcolm E. McVay
--------------------------------------
Malcolm E. McVay
Chief Financial Officer
LEGG MASON WOOD WALKER, INCORPORATED
By: /s/ Edmund J. Cashman, Jr.
--------------------------------
Edmund J. Cashman, Jr.
Senior Executive Vice President
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<PAGE> 1
Exhibit 5.1
[Letterhead of Sirote & Permutt, P.C.]
(205) 930-5108
December 23, 1997
Capstone Capital Corporation
1000 Urban Center Drive, Suite 630
Birmingham, Alabama 35242
Ladies and Gentlemen:
We have acted as counsel to Capstone Capital Corporation, a Maryland
corporation (the "Company"), in connection with the Company's Registration
Statement on Form S-3 (the "Registration Statement") filed by the Company on
July 18, 1997 with the Securities and Exchange Commission (the"Commission")
under the Securities Act of 1933, as amended (the "Act"), the Prospectus dated
September 26, 1997 ("Base Prospectus") and the Prospectus Supplement dated
December 18, 1997 (the "Prospectus Supplement," and together with the Base
Prospectus, the "Prospectus"). The Prospectus Supplement relates to the issuance
and sale of 615,385 shares of common stock, par value $.001 per share ("Common
Stock"), of the Company pursuant to the terms and conditions of that certain
Underwriting Agreement dated December 18, 1997 (the "Underwriting Agreement") by
and between the Company and Legg Mason Wood Walker, Incorporated (the
"Underwriter").
This opinion is furnished in accordance with the requirements of Item
601(b)(5) of Regulation S-K under the Act.
In connection with this opinion, we have examined originals or copies,
certified or otherwise identified to our satisfaction, of (i) the Registration
Statement, the Prospectus and the form of the Shares, (ii) the Articles of
Incorporation of the Company as in effect on the date hereof;(iii) the Amended
and Restated Bylaws of the Company as in effect on the date hereof; (iv)
resolutions adopted by the Board of Directors of the Company on December 18,
1997 (the "Board Resolutions"), and (v) resolutions adopted by the Pricing
Committee of the Board of Directors of the Company on December 18, 1997
(together with the Board Resolutions, the "Reoslutions") authorizing the Shares,
the Underwriting Agreement and the
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<PAGE> 2
issuance and sale of the Shares. We have also examined, and have relied as to
matters of fact upon, originals or copies, certified or otherwise identified to
our satisfaction, of such corporate records, agreements, documents and other
instruments and such certificates or comparable documents of public officials
and of officers and representatives of the Company, and have made such other and
further investigations, as we have deemed relevant and necessary as a basis for
the opinions hereinafter set forth.
In our examination, we have assumed the legal capacity of all natural
persons, the genuineness of all signatures, the authenticity of all documents
submitted to us as originals, the conformity to original documents of all
documents submitted to us as certified, conformed or photostatic copies and the
authenticity of the originals of such latter documents. In making our
examination of documents executed or to be executed by parties other than the
company, we have assumed that such parties had the power, corporate or other, to
enter into and perform all obligations thereunder and have also assumed the due
authorization by all requisite actions, corporate or other, and execution and
delivery by such parties of such documents and the validity and binding effect
thereof. As to any facts material to the opinions expressed herein that were not
independently established or verified, we have relied upon statements and
representations of officers and other representatives of the Company and others.
Based on the foregoing, and subject to the qualifications and limitations
stated herein, we are of the opinion that:
The Shares have been duly authorized and, following the issuance of the
Shares pursuant to the terms of the Underwriting Agreement and receipt by
the Company of the consideration for the Shares specified in the
Resolutions, the Shares will be validly issued, fully paid and
nonassessable.
In rendering the opinions expressed herein, we have assumed without
investigation that, with respect to each offer, issuance, sale, and delivery by
the Company of the Shares and each purchase by the purchasers thereof, (a) at
the time thereof and at all times subsequent thereto, such offer, issuance,
sale, delivery, and purchase did not violate, result in a breach of, or conflict
with any law, rule, regulation, order, judgment, or decree, in each case whether
then or subsequently in effect; (b) at the time thereof and at all times
subsequent thereto, the persons authorizing each such offer, issuance, sale,
delivery or purchase, did not violate any fiduciary or other duty owed by them;
(c) no event has taken place subsequent to any such offer, issuance, sale,
delivery or purchase, or will take place which would cause any such offer,
issuance, sale, delivery, or purchase, not to comply with any law, rule,
regulation, order, judgement, decree, or duty, or which would permit the Company
or any other party at any time thereafter to cancel, rescind, or otherwise avoid
any such offer, issuance, sale, delivery or purchase; (d) there was no
misrepresentation, omission, or deceit by the Company, or any such other party,
in connection with any such offer, issuance, sale, delivery or purchase; (e)
each offer, issuance, sale, delivery or purchase is governed by the laws of the
State of Maryland; (f) each other party to such offer, issuance, sale, delivery
or purchase (1)
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<PAGE> 3
had the power, authority, and the capacity to consummate such purchase, (2) duly
authorized such purchase, and each such transaction, (3) has duly and validly
taken all necessary corporate or other proceedings of the directors (or a
committee of directors), stockholders, and all other bodies to authorize the
purchase, and (4) has not violated or breached any term of the certificate of
incorporation, bylaws or other governing documents by any such purchaser.
Members of our firm are admitted to the bar in the State of Alabama, and
we do not express any opinion as to the laws of any other jurisdiction. In
rendering this opinion with respect to Maryland law, we are relying on the
opinion of Ballard Spahr Andrews & Ingersoll. This opinion is limited to the
laws, including the rules and regulations, as in effect on the date hereof.
We hereby consent to the filing of this opinion with the Commission as an
exhibit to the Registration Statement and to the reference to our firm appearing
under the heading "Legal Matters" in the Registration Statement.
Very truly yours,
/s/ Sirote & Permutt, P.C.
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<PAGE> 1
Exhibit 5.2
[LETTERHEAD OF BALLARD SPAHR ANDREWS & INGERSOLL]
December 23, 1997
Capstone Capital Corporation
Suite 630
100 Urban Center Drive
Birmingham, Alabama 35242
Re: Capstone Capital Corporation: Registration
Statement on Form S-3 (No. 333-31639)
Ladies and Gentlemen:
We have served as Maryland counsel to Capstone Capital Corporation, a
Maryland corporation (the "Company"), in connection with certain matters of
Maryland law arising out of the Company's registration statement on Form S-3
(No. 333-31639) (the "Registration Statement") previously declared effective by
the Securities and Exchange Commission (the "Commission") under the Securities
Act of 1933, as amended (the "1933 Act"), relating to the offer and sale from
time to time of securities by the Company, as set forth in the prospectus which
forms a part of the Registration Statement (the "Prospectus"), and as to be set
forth in one or more supplements to the Prospectus (each, a "Prospectus
Supplement"). This opinion letter is rendered in connection with the sale and
issuance by the Company of up to 615,385 shares (the "Shares") of common stock,
$.001 par value per share (the "Common Stock"), of the Company, pursuant to an
Underwriting Agreement, dated December 18, 1997 (the "Underwriting Agreement"),
by and between Legg Mason Wood Walker, Incorporated (the "Underwriter") and the
Company, as described in a Prospectus Supplement dated December 18, 1997. Unless
otherwise defined herein, capitalized terms used herein shall have the meanings
assigned to them in the Registration Statement.
In connection with our representation of the Company, and as a basis for
the opinion hereinafter set forth, we have examined originals, or copies
certified or otherwise identified to our satisfaction, of the following
documents (hereinafter collectively referred to as the "Documents"):
1. The Registration Statement and the related form of prospectus
included therein in the form in which it was transmitted to the Commission under
the 1933 Act;
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<PAGE> 2
2. The charter of the Company (the "Charter"), certified as of a
recent date by the State Department of Assessments and Taxation of Maryland (the
"SDAT");
3. The Amended and Restated Bylaws of the Company, as certified as
of the date hereof by its Secretary;
4. Resolutions adopted by the Board of Directors of the Company (the
"Board") relating to the sale, issuance and registration of the Shares,
certified as of the date hereof by the Secretary of the Company (the
"Resolutions");
5. The form of certificate representing a share of Common Stock,
certified as of the date hereof by the Secretary of the Company;
6. A certificate of the SDAT as to the good standing of the Company,
dated as of a recent date;
7. A certificate executed by Malcolm E. McVay, Secretary of the
Company, dated as of the date hereof;
8. A copy of the fully executed Underwriting Agreement, certified as
of the date hereof by the Secretary of the Company; and
9. Such other documents and matters as we have deemed necessary or
appropriate to express the opinion set forth in this letter, subject to the
assumptions, limitations and qualifications stated herein.
In expressing the opinion set forth below, we have assumed, and so
far as is known to us there are no facts inconsistent with, the following:
1. Each of the parties (other than the Company) executing any of the
Documents has duly and validly executed and delivered each of the Documents to
which such party is a signatory, and such party's obligations set forth therein
are legal, valid and binding.
2. Each individual executing any of the Documents on behalf of a
party (other than the Company) is duly authorized to do so.
3. Each individual executing any of the Documents, whether on behalf
of such individual or another person, is legally competent to do so.
4. All Documents submitted to us as originals are authentic. All
Documents submitted to us as certified or photostatic copies conform to the
original documents. All signatures on all such Documents are genuine. All public
records reviewed or relied upon by us or on our behalf are true and complete.
All statements and information
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<PAGE> 3
contained in the Documents are true and complete. There are no oral or written
modifications of or amendments to the Documents, and there has been no waiver of
any of the provisions of the Documents, by action or omission of the parties or
otherwise.
5. The Shares will not be issued or transferred in violation of any
restriction or limitation contained in the Charter.
The phrase "known to us" is limited to the actual knowledge, without
independent inquiry, of the lawyers at our firm who have performed legal
services in connection with the issuance of this opinion.
Based upon the foregoing, and subject to the assumptions,
limitations and qualifications stated herein, it is our opinion that:
1. The Company is a corporation duly incorporated and existing under
and by virtue of the laws of the State of Maryland and is in good standing with
the SDAT.
2. The Shares have been duly authorized and, when and if delivered
against payment therefor in accordance with the resolutions of the Board, or a
duly authorized committee thereof, authorizing their issuance, the Shares will
be duly and validly issued, fully paid and nonassessable.
The foregoing opinion is limited to the laws of the State of
Maryland and we do not express any opinion herein concerning any other law. The
opinion expressed herein is subject to the effect of judicial decisions which
may permit the introduction of parol evidence to modify the terms or the
interpretation of agreements. We express no opinion as to compliance with the
securities (or "blue sky") laws of the State of Maryland.
We assume no obligation to supplement this opinion if any applicable
law changes after the date hereof or if we become aware of any fact that might
change the opinion expressed herein after the date hereof.
This opinion is being furnished to you solely for submission to the
Commission as an exhibit to the Company's Current Report on Form 8-K filed with
the Commission (the "8-K") and, accordingly, may not be relied upon by, quoted
in any manner to, or delivered to any other person or entity without, in each
instance, our prior written consent.
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<PAGE> 4
We hereby consent to the filing of this opinion as an exhibit to the
8-K and to the use of the name of our firm therein. In giving this consent, we
do not admit that we are within the category of persons whose consent is
required by Section 7 of the 1933 Act.
Very truly yours,
/s/ Ballard Spahr Andrews & Ingersoll
