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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 EARLIEST EVENT REPORTED: MARCH 10, 1997
CAPSTONE CAPITAL CORPORATION
(Exact Name of Registrant as Specified in its Charter)
MARYLAND
(State or Other Jurisdiction of Incorporation)
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1-11345 631-115479
Commission File Number (I.R.S. Employer Identification No.)
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1000 URBAN CENTER DRIVE, SUITE 630
BIRMINGHAM, ALABAMA 35242
(Address of Principal Executive Offices/Zip Code)
(205) 967-2092
(Registrant's Telephone Number)
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ITEM 5. OTHER EVENTS
In connection with the Company's Registration Statement on Form S-3 (File
33-97926) effective December 6, 1995, and the related Prospectus Supplement,
dated March 10, 1997, the Company has entered into an Underwriting Agreement
with Smith Barney Inc. and NatWest Securities Limited (together, the
"Underwriters") for an offering of $65,000,000 aggregate principal amount of
6.55% Convertible Subordinated Debentures due 2002 (the "Convertible
Debentures") plus an additional $9,750,000 aggregate principal amount of
Convertible Debentures upon exercise by the Underwriters of the over-allotment
option granted therein.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of Business Acquired.
None.
(b) Pro Forma Financial Information.
None.
(c) Exhibits.
1 Underwriting Agreement.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated: March 27, 1997
CAPSTONE CAPITAL CORPORATION
By: /s/ JOHN W. McROBERTS
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John W. McRoberts
President and Chief Executive Officer
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EXHIBIT INDEX
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PAGE
DOCUMENT NO.
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1.1 -- Underwriting Agreement......................................
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EXHIBIT 1.1
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EXHIBIT 1.1
$65,000,000
CAPSTONE CAPITAL CORPORATION
6.55% Convertible Subordinated Debentures due 2002
UNDERWRITING AGREEMENT
March 10, 1997
Smith Barney Inc.
NatWest Securities Limited
c/o SMITH BARNEY INC.
388 Greenwich Street
New York, New York 10013
Dear Sirs:
Capstone Capital Corporation, a Maryland corporation (the "Company")
qualified for federal income tax purposes as a real estate investment trust
pursuant to Sections 856 through 860 of the Internal Revenue Code of 1986, as
amended (the "Code"), proposes to issue and sell $65,000,000 aggregate
principal amount of its 6.55% Convertible Subordinated Debentures due 2002
(the "Firm Debentures") to the Underwriters named in Exhibit A hereto (the
"Underwriters"). The Company also proposes to sell to the Underwriters, upon
the terms and conditions set forth in Section 2 hereof, up to an additional
$9,750,000 aggregate principal amount of its 6.55% Convertible Subordinated
Debentures due 2002 (the "Additional Debentures") to cover over-allotments, if
any. The Firm Debentures and the Additional Debentures are hereinafter
collectively referred to as the "Debentures." The Debentures will be issued
pursuant to the provisions of an Indenture to be dated as of March 14, 1997
between the Company and AmSouth Bank of Alabama, as Trustee (the "Trustee"), as
supplemented by the First Supplemental Indenture thereto dated as of March 14,
1997 (as so supplemented, the "Indenture"). The Company's common stock, par
value .001 per share, is hereinafter referred to as the "Common Stock".
The Company wishes to confirm as follows its agreements with you in
connection with the several purchases of the Debentures by the Underwriters.
1. REGISTRATION STATEMENT AND PROSPECTUS. The Company has
prepared and filed with the Securities and Exchange Commission (the
"Commission") in accordance with the provisions of the Securities Act of 1933,
as amended, and the rules and regulations of the Commission thereunder
(collectively, the "Act"), a registration statement (the file number 33-
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97926) on Form S-3 under the Act (the "registration statement"), including a
prospectus subject to completion relating to the Debentures, and such
amendments to such registration statement as may have been required prior to
the date hereof have been similarly prepared and have been filed with the
Commission. Such registration statement, as so amended, and any post-effective
amendments thereto, have been declared by the Commission to be effective under
the Act. Such registration statement, as amended at the date of this Agreement
meets the requirements set forth in Rule 415(a)(1)(x) under the Act and
complies in all other material respects with said Rule. The Company will next
file with the Commission pursuant to Rule 424(b) under the Act a final
prospectus supplement to the basic prospectus included in such registration
statement, as so amended, describing the Debentures and the offering thereof,
in such form as has been provided to or discussed with, and approved by the
Underwriters. The term "Registration Statement" as used in this Agreement
means the registration statement, as amended at the time it became effective,
as supplemented or amended prior to the execution of this Agreement, including
(i) all financial schedules and exhibits thereto and (ii) all documents
incorporated by reference or deemed to be incorporated by reference therein.
If it is contemplated, at the time this Agreement is executed, that a
post-effective amendment to the registration statement will be filed and must
be declared effective before the offering of the Debentures may commence, the
term "Registration Statement" as used in this Agreement means the registration
statement as amended by said post-effective amendment. The term "Basic
Prospectus" as used in this Agreement means the prospectus included in the
Registration Statement. The term "Prepricing Prospectus" as used in this
Agreement means any preliminary form of the prospectus supplement subject to
completion specifically relating to the Debentures, in the form first filed
with, or transmitted for filing to, the Commission pursuant to Rule 424 under
the Act. The term "Prospectus Supplement" as used in this Agreement means any
prospectus supplement specifically relating to the Debentures, in the form
filed with, or transmitted for filing to, the Commission pursuant to Rule 424
under the Act. The term "Prospectus" as used in this Agreement means the Basic
Prospectus together with the Prospectus Supplement except that if such Basic
Prospectus is amended or supplemented on or prior to the date on which the
Prospectus Supplement was first filed pursuant to Rule 424, the term
"Prospectus" shall refer to the Basic Prospectus as so amended or supplemented
and as supplemented by the Prospectus Supplement. Any reference in this
Agreement to the registration statement, the Registration Statement, the Basic
Prospectus, any Prepricing Prospectus, any Prospectus Supplement or the
Prospectus shall be deemed to refer to and include the documents incorporated
by reference therein pursuant to Form S-3 under the Act, as of the date of the
registration statement, the Registration Statement, the Basic Prospectus, such
Prepricing Prospectus, such Prospectus Supplement or the Prospectus, as the
case may be, and any reference to any amendment or supplement to the
registration statement, the Registration Statement, the Basic Prospectus, any
Prepricing Prospectus, any Prospectus Supplement or the Prospectus shall be
deemed to refer to and include any documents filed after such date under the
Securities Exchange Act of 1934, as amended (the "Exchange Act") which, upon
filing, are incorporated by reference therein, as required by paragraph (b) of
Item 12 of Form S-3. As used herein, the term "Incorporated Documents" means
the documents which at the time are incorporated by reference in the
registration statement, the Registration Statement, the Basic Prospectus, any
Prepricing Prospectus, any Prospectus Supplement, the Prospectus, or any
amendment or supplement thereto.
2. AGREEMENTS TO SELL AND PURCHASE. The Company hereby agrees,
subject to all the terms and conditions set forth herein, to issue and sell to
each Underwriter and, upon the basis of the representations, warranties and
agreements of the Company herein contained and subject to all the terms and
conditions set forth herein, each Underwriter agrees, severally and
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not jointly, to purchase from the Company, at a purchase price of 87.59% of the
principle amount thereof (the "purchase price"), the principal amount of Firm
Debentures set forth opposite the name of such Underwriter in Exhibit A hereto
(or such principal amount of Firm Debentures increased as set forth in Section
10 hereof).
The Company also agrees, subject to all the terms and conditions set
forth herein, to sell to the Underwriters, and, upon the basis of the
representations, warranties and agreements of the Company herein contained and
subject to all the terms and conditions set forth herein, the Underwriters
shall have the right to purchase from the Company, pursuant to an option (the
"over-allotment option") which may be exercised at any time prior to 9:00 P.M.,
New York City time, on the 30th day after the date of the Prospectus (or, if
such 30th day shall be a Saturday or Sunday or a holiday, on the next business
day thereafter when the New York Stock Exchange is open for trading) up to
$9,750,000 principal amount of Additional Debentures at the same purchase price
as the Firm Debentures. Additional Debentures may be purchased only for the
purpose of covering overallotments made in connection with the offering of the
Firm Debentures. Upon any exercise of the over-allotment option, each
Underwriter, severally and not jointly, agrees to purchase from the Company the
principal amount of Additional Debentures which bears the same proportion to
the principal amount of Additional Debentures to be sold by the Company as the
principal amount of Firm Debentures set forth opposite the name of such
Underwriter in Exhibit A hereto (or such principal amount of Firm Debentures
increased as set forth in Section 10 hereof) bears to the principal amount of
Firm Debentures.
3. TERMS OF PUBLIC OFFERING. The Company has been advised by you
that the Underwriters propose to make a public offering of their respective
portions of the Debentures as soon after the Registration Statement and this
Agreement have become effective as in your judgment is advisable and initially
to offer the Debentures upon the terms set forth in the Prospectus.
4. DELIVERY OF THE DEBENTURES AND PAYMENT THEREFOR. Delivery to
the Underwriters of and payment for the Firm Debentures shall be made at the
office of Smith Barney Inc., 388 Greenwich Street, New York, New York 10013, at
10:00 A.M., New York City time, on March 14, 1997 (the "Closing Date"). The
place of closing for the Firm Debentures and the Closing Date may be varied by
agreement between you and the Company.
Delivery to the Underwriters of and payment for any Additional
Debentures to be purchased by the Underwriters shall be made at the
aforementioned office of Smith Barney Inc. at such time on such date (the
"Option Closing Date"), which may be the same as the Closing Date but shall in
no event be earlier than the Closing Date nor earlier than two nor later than
ten business days after the giving of the notice hereinafter referred to, as
shall be specified in a written notice from you on behalf of the Underwriters
to the Company of the Underwriters' determination to purchase a principal
amount, specified in such notice, of Additional Debentures. The place of
closing for any Additional Debentures and the Option Closing Date for such
Debentures may be varied by agreement between you and the Company.
The Firm Debentures and any Additional Debentures to be purchased
hereunder shall be registered in such names and in such denominations as you
shall request prior to 9:30 A.M., New York City time, on the second business
day preceding the Closing Date or any Option Closing Date, as the case may be.
The Debentures to be delivered to the Underwriters shall be made available to
you in New York City for inspection and packaging not later than 9:30 A.M., New
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York City time, on the business day next preceding the Closing Date or the
Option Closing Date, as the case may be. The Firm Debentures and any
Additional Debentures to be purchased hereunder shall be delivered to you on
the Closing Date or the Option Closing Date, as the case may be, against
payment of the purchase price therefor in immediately available funds.
5. AGREEMENTS OF THE COMPANY. The Company agrees with the
several Underwriters as follows:
(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
Debentures may commence, the Company will endeavor to cause the Registration
Statement or such post-effective amendment to become effective as soon as
possible and will advise you promptly and, if requested by you, will confirm
such advice in writing, when the Registration Statement or such post-effective
amendment has become effective.
(b) The Company will advise you promptly and, if
requested by you, will confirm such advice in writing: (i) of any request by
the Commission for amendment of or a supplement to the Registration Statement,
any Prepricing Prospectus, any Prospectus Supplement or the Prospectus or for
additional information; (ii) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement or of the
suspension of qualification of the Debentures for offering or sale in any
jurisdiction or the initiation of any proceeding for such purpose; and (iii)
within the period of time referred to in paragraph (f) below, of any change in
the Company's condition (financial or other), business, prospects, properties,
net worth or results of operations, or of the happening of any event, which
makes any statement of a material fact made in the Registration Statement or
the Prospectus (as then amended or supplemented) untrue or which requires the
making of any additions to or changes in the Registration Statement or the
Prospectus (as then amended or supplemented) in order to state a material fact
required by the Act or the regulations thereunder to be stated therein or
necessary in order to make the statements therein not misleading, or of the
necessity to amend or supplement the Prospectus (as then amended or
supplemented) to comply with the Act or any other law. If at any time the
Commission shall issue any stop order suspending the effectiveness of the
Registration Statement, the Company will make every reasonable effort to obtain
the withdrawal of such order at the earliest possible time.
(c) The Company will furnish to you, without charge (i)
three signed copies of the registration statement as originally filed with the
Commission and of each amendment thereto, including financial statements and
all exhibits to the registration statement, (ii) such number of conformed
copies of the registration statement as originally filed and of each amendment
thereto, but without exhibits, as you may request, (iii) such number of copies
of the Incorporated Documents, without exhibits, as you may request, and (iv)
three copies of the exhibits to the Incorporated Documents.
(d) The Company will not file any amendment to the
Registration Statement or make any amendment or supplement to the Prospectus
or, prior to the end of the period of time referred to in the first sentence in
subsection (f) below, file any document which, upon filing becomes an
Incorporated Document, of which you shall not previously have been advised or
to which, after you shall have received a copy of the document proposed to be
filed, you shall object.
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(e) Prior to the execution and delivery of this
Agreement, the Company has delivered to you, without charge, in such quantities
as you have requested, copies of each form of the Prepricing Prospectus and of
each form of the Prospectus Supplement. The Company consents to the use, in
accordance with the provisions of the Act and with the securities or Blue Sky
laws of the jurisdictions in which the Debentures are offered by the several
Underwriters and by dealers, prior to the date of the Prospectus, of each
Prepricing Prospectus and each Prospectus Supplement so furnished by the
Company.
(f) As soon after the execution and delivery of this
Agreement as possible and thereafter from time to time for such period as in
the opinion of counsel for the Underwriters a prospectus is required by the Act
to be delivered in connection with sales by any Underwriter or dealer, the
Company will expeditiously deliver to each Underwriter and each dealer, without
charge, as many copies of the Prospectus (and of any amendment or supplement
thereto) as you may request. The Company consents to the use of the Prospectus
(and of any amendment or supplement thereto) in accordance with the provisions
of the Act and with the securities or Blue Sky laws of the jurisdictions in
which the Debentures are offered by the several Underwriters and by all dealers
to whom Debentures may be sold, both in connection with the offering and sale
of the Debentures and for such period of time thereafter as the Prospectus is
required by the Act to be delivered in connection with sales by any Underwriter
or dealer. If during such period of time any event shall occur that in the
judgment of the Company or in the opinion of counsel for the Underwriters is
required to be set forth in the Prospectus (as then amended or supplemented) or
should be set forth therein in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading, or if it
is necessary to supplement or amend the Prospectus (or to file under the
Exchange Act any document which, upon filing, becomes an Incorporated Document)
in order to comply with the Act or any other law, the Company will forthwith
prepare and, subject to the provisions of paragraph (d) above, file with the
Commission an appropriate supplement or amendment thereto, and will
expeditiously furnish to the Underwriters and dealers a reasonable number of
copies thereof. In the event that the Company and you agree that the
Prospectus should be amended or supplemented, the Company, if requested by you,
will promptly issue a press release announcing or disclosing the matters to be
covered by the proposed amendment or supplement.
(g) The Company will cooperate with you and, if
applicable, with counsel for the Underwriters in connection with the
registration or qualification of the Debentures and the Common Stock issuable
upon conversion of the Debentures for offering and sale by the Underwriters and
by dealers under the securities or Blue Sky laws of such jurisdictions as you
may designate and will file such consents to service of process or other
documents necessary or appropriate in order to effect such registration or
qualification; provided that in no event shall the Company be obligated to
qualify to do business in any jurisdiction where it is not now otherwise
required to be so qualified or to take any action which would subject it to
service of process in suits, other than those arising out of the offering or
sale of the Debentures, in any jurisdiction where it is not now so subject.
(h) The Company will make generally available to its
securityholders a consolidated earnings statement, which need not be audited,
covering a twelve-month period commencing after the effective date of the
Registration Statement and ending not later than 15 months thereafter, as soon
as practicable after the end of such period, which consolidated earnings
statement shall satisfy the provisions of Section 11(a) of the Act.
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(i) During the period of five years hereafter, the
Company will furnish to you (i) as soon as available, a copy of each report of
the Company mailed to stockholders or filed with the Commission, and (ii) from
time to time such other information concerning the Company as you may request.
(j) If this Agreement shall terminate or shall be
terminated after execution pursuant to any provisions hereof (otherwise than
pursuant to the second paragraph of Section 10 hereof or by notice given by you
terminating this Agreement pursuant to Section 10 or Section 11 hereof) or if
this Agreement shall be terminated by the Underwriters because of any failure
or refusal on the part of the Company to comply with the terms or fulfill any
of the conditions of this Agreement, the Company agrees to reimburse the
Underwriters for all out-of-pocket expenses (including fees and expenses of
counsel for the Underwriters) incurred by you in connection herewith.
(k) The Company will apply the net proceeds from the sale
of the Debentures to be sold by it hereunder substantially in accordance with
the description thereof set forth in the Prospectus Supplement.
(l) The Company will timely file the Prospectus pursuant
to Rule 424(b) under the Act and will advise you of the time and manner of such
filing.
(m) Except as provided in this Agreement, the Company
will not offer, sell, contract to sell or otherwise dispose of any common stock
or any securities convertible into or exercisable or exchangeable for common
stock or grant any options or warrants to purchase common stock (except
pursuant to the grant or exercise of options under the Company's Stock
Incentive or option plan(s) and shares of Common Stock issuable upon conversion
of the Company's 10 1/2% Convertible Subordinated Debentures due 2002) for the
period of 90 days after the date of the Prospectus, without the prior written
consent of Smith Barney Inc.
(n) The Company has furnished or will furnish to you
"lock-up" letters, in form and substance satisfactory to you, signed by all of
its current officers, certain of its current directors and each of its
stockholders designated by you.
(o) Except as stated in this Agreement and in the
Prepricing Prospectus, Prospectus Supplement and Prospectus, the Company has
not taken, nor will it take, directly or indirectly, any action designed to or
that might reasonably be expected to cause or result in stabilization or
manipulation of the price of any security of the Company to facilitate the sale
or resale of the Debentures.
(p) The Company will use its best efforts to have the
Debentures and the shares of Common Stock issuable upon conversion of the
Debentures listed, subject to notice of issuance, on the New York Stock
Exchange on or before the Closing Date.
(q) The Company will use its best efforts to continue to
qualify as a real estate investment trust ("REIT") under Sections 856 through
860 of the Code.
(r) The Company will not file any registration statement
with the Commission for the registration of any securities of the Company for a
period of 30 days after the date of the Prospectus Supplement without the prior
written consent of Smith Barney Inc.
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(s) The Company agrees to comply with all the terms and
conditions of all agreements set forth in the representation letters of the
Company to DTC relating to the approval of the Debentures by DTC for "book
entry" transfer.
6. Representations and Warranties of the Company. The Company
represents and warrants to each Underwriter that:
(a) No order preventing or suspending the use of any
Prepricing Prospectus Supplement has been issued and no proceeding for that
purpose has been instituted or threatened by the Commission or the securities
authority of any state or other jurisdiction. 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 threatened by the
Commission or the securities authority of any state or other jurisdiction.
(b) The execution and delivery of, and the performance by
the Company of its obligations under, this Agreement, have been duly authorized
by all necessary corporate action of the Company, and, at the Closing Date or
the related Option Closing Date (as the case may be), this Agreement will have
been duly executed and delivered by the Company, and this Agreement will
constitute a valid and binding instrument of the Company enforceable against
the Company in accordance with its respective terms, subject to the effect of
bankruptcy, insolvency, moratorium, fraudulent conveyance, reorganization and
similar laws relating to creditors' rights generally and to the application of
equitable principles in any proceeding, whether at law or in equity, except as
rights to indemnity and contribution hereunder may be limited by federal or
state securities laws.
(c) Each Prepricing Prospectus included as part of the
registration statement as originally filed or as part of any amendment or
supplement thereto, or filed pursuant to Rule 424 under the Act, complied when
so filed in all material respects with the provisions of the Act. The
Commission has not issued any order preventing or suspending the use of any
Prepricing Prospectus.
(d) The Company and the transactions contemplated by this
Agreement meet the requirements for using Form S-3 under the Act. The
registration statement in the form in which it became or becomes effective and
also in such form as it may be when any post-effective amendment thereto shall
become effective and the Prospectus and any supplement or amendment thereto,
including the Prospectus Supplement, when filed with the Commission under Rule
424(b) under the Act, complied or will comply in all material respects with the
provisions of the Act and did not or will not at any such times contain an
untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading, except that this representation and warranty does not apply to
statements in or omissions from the registration statement or the Prospectus or
any supplement or amendment thereto made in reliance upon and in conformity
with (i) information relating to any Underwriter furnished to the Company in
writing by or on behalf of any Underwriter through you expressly for use
therein or (ii) the Trustee's Statement of Eligibility and Qualification (Form
T-1) under the Trust Indenture Act of 1939, as amended (the "1939 Act").
(e) The Incorporated Documents heretofore filed, when
they were filed (or, if any amendment with respect to any such document was
filed, when such amendment was filed), conformed in all material respects with
the requirements of the Act, the Exchange Act and the
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respective rules and regulations thereunder; any further Incorporated Documents
so filed will, when they are filed, conform in all material respects with the
requirements of the Act, the Exchange Act and the respective rules and
regulations thereunder; no such document when it was filed (or, if an amendment
with respect to any such document was filed, when such amendment was filed),
contained an untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
therein not misleading; and no such further document, when it is filed, will
contain an untrue statement of a material fact or will omit to state a material
fact required to be stated therein or necessary in order to make the statements
therein not misleading.
(f) The Company has not distributed and, prior to the
later to occur of (i) the Closing Date and (ii) completion of the distribution
of the Debentures, will not distribute any offering material in connection with
the offering and sale of the Debentures other than the Registration Statement,
the Prepricing Prospectus, the Prospectus Supplement, the Prospectus or other
materials, if any, permitted by the Act.
(g) The Indenture has been duly and validly authorized
and, upon its execution, delivery and performance by the Company and assuming
due execution, delivery and performance by the Trustee, will be a valid and
binding agreement of the Company, enforceable in accordance with its terms,
except as enforcement thereof may be limited by bankruptcy, insolvency or other
similar laws affecting creditors' rights generally, and has been (or will have
been) duly qualified under the 1939 Act and conforms to the description thereof
in the Registration Statement and the Prospectus.
(h) The Debentures have been duly authorized and, when
executed by the company and authenticated by the Trustee in accordance with the
Indenture and delivered to the Underwriters against payment therefor in
accordance with the terms hereof, will have been validly issued and delivered,
and will constitute valid and binding obligations of the Company entitled to
the benefits of the Indenture and enforceable in accordance with their terms,
except as enforcement thereof may be limited by bankruptcy, insolvency or other
similar laws affecting the enforcement of creditors' rights generally, and the
Debentures will conform to the description thereof in the Registration
Statement and the Prospectus.
(i) The authorized and outstanding capital stock of the
Company is as set forth under the caption "Description of Capital Stock" in the
Prospectus. All outstanding capital stock of the Company has been duly
authorized and validly issued, is fully paid and nonassessable and is free of
any preemptive or similar rights; the Debentures to be issued and sold by the
Company have been duly authorized and, when issued and delivered to the
Underwriters against payment therefor in accordance with the terms hereof, will
be validly issued, fully paid and nonassessable and free of any preemptive or
similar rights; the shares of Common Stock issuable upon conversion of the
Debentures have been duly and validly authorized and reserved for issuance and,
when delivered upon conversion of the Debentures in accordance with the
Indenture, will have been validly issued and fully paid and will be
nonassessable and free of any preemptive or similar rights.
(j) Except as disclosed in the Prospectus, there are no
outstanding options, warrants or other rights calling for the issuance of, nor
any commitment, plan or arrangement to issue, any shares of capital stock of
the Company or any security convertible into or exchangeable or exercisable for
capital stock of the Company.
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(k) No holder of any security of the Company or any other
person has the right, contractual or otherwise, which right has not been waived
by the holder thereof, (A) to cause the Company to sell or otherwise issue to
them, or to permit them to underwrite the sale of, the Debentures, or (B) as a
result of the filing of the registration statement or consummation of the
transactions contemplated by this Agreement, to require registration under the
Act of any shares of Common Stock or other securities of the Company.
(l) The Company is a corporation duly organized and
validly existing in good standing under the laws of the State of Maryland with
full corporate power and authority to own, lease and operate its properties and
to conduct its business as presently conducted and as disclosed in the
Registration Statement and the Prospectus, and is duly registered and qualified
to conduct its business and is in good standing in each jurisdiction or place
where the nature of its properties or the conduct of its business requires such
registration or qualification, except where the failure so to register or
qualify does not and will not have a material adverse effect on the condition
(financial or other), business, prospects, properties, net worth or results of
operations of the Company and the Subsidiaries (as hereinafter defined) taken
as a whole (a "Material Adverse Effect"). The term "Subsidiary" or
"Subsidiaries" means (A) a corporation, a majority of the voting or capital
stock of which is, at the time, directly or indirectly owned by the Company and
(B) any other partnership, joint venture, association, joint stock company,
trust, unincorporated organization or other entity (other than a corporation)
(collectively, a "Person") in which the Company, directly or indirectly, (i)
owns a majority of the equity interest thereof and (ii) has the power to elect
or direct the election of a majority of the members of the governing body of
such Person or otherwise has control over such Person (e.g., as the general or
managing partner of a partnership).
(m) The Company is organized and operates in a manner so
as to qualify as a REIT under the Code; the Company elected to be taxed as a
REIT commencing with the Company's taxable year ended December 31, 1994 and
will continue to so elect.
(n) Each Subsidiary is duly organized, validly existing
and in good standing in the jurisdiction of its incorporation, if a
corporation, and is legally formed and validly existing under the laws of the
jurisdiction of its organization, if a partnership, association or business
organization, with full corporate or organizational power and authority to own,
lease and operate its properties and to conduct its business as presently
conducted. Each Subsidiary is duly registered and qualified to conduct its
business (and, if a corporation, is in good standing) in each jurisdiction or
place where the nature of its properties or the conduct of its business
requires such registration or qualification, except where the failure so to
register or qualify does not and will not have a Material Adverse Effect; all
the outstanding shares of capital stock of each Subsidiary that is a
corporation have been duly authorized and validly issued, are fully paid and
nonassessable, and all ownership interests in each Subsidiary that is not a
corporation have been validly created pursuant to the partnership or other
agreements or organizational documents of each such Subsidiary, and the shares
or other interests owned by the Company are owned by the Company directly, or
indirectly through one of the other Subsidiaries, free and clear of any lien,
adverse claim, security interest, equity or other encumbrance.
(o) There are no legal or governmental proceedings
pending or, to the knowledge of the Company, threatened, against the Company or
any of the Subsidiaries, or to which the Company or any of the Subsidiaries, or
to which any of their respective properties is subject, that are required to be
disclosed in the Registration Statement or the Prospectus but are
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not disclosed as required, and there are no agreements, indentures, leases or
other instruments that are required to be disclosed in the Registration
Statement or the Prospectus or to be filed as an exhibit to the Registration
Statement or any Incorporated Document that are not disclosed or filed as
required by the Act or the Exchange Act.
(p) Neither the Company nor any of the Subsidiaries is
(i) in violation of its certificate or articles of incorporation, by-laws,
partnership agreements, or other organizational documents, or (ii) in violation
of any law, ordinance, administrative or governmental rule or regulation
applicable to the Company or any of the Subsidiaries, including any lending or
banking law, governmental rule or regulation, or of any decree of any court or
governmental agency or body having jurisdiction over the Company or any of the
Subsidiaries, or (iii) in default in any material respect in the performance of
any obligation, agreement or condition contained in any bond, debenture, note
or any other evidence of indebtedness or in any material agreement, indenture,
lease, mortgage or other instrument to which the Company or any of the
Subsidiaries is a party or by which any of them or any of their respective
properties may be bound.
(q) Neither the issuance and sale of the Debentures, the
issuance of the Common Stock upon conversion of the Debentures, the execution,
delivery or performance of this Agreement or the Indenture by the Company nor
the consummation by the Company of the transactions contemplated hereby (i)
requires any consent, approval, authorization or other order of or registration
or filing with, any court, regulatory body, administrative agency or other
governmental body, agency or official (except such as may be required for the
registration of the Debentures under the Act and the Exchange Act, the
registration under the Act of the Common Stock issuable upon the conversion of
the Debentures, the qualification of the Indenture under the 1939 Act and
compliance with the securities or Blue Sky laws of various jurisdictions, all
of which have been or will be effected in accordance with this Agreement) or
conflicts or will conflict with or constitutes or will constitute a breach of,
or a default under, the certificate or articles of incorporation, bylaws,
partnership agreements, or other organizational documents, of the Company or
any of the Subsidiaries or (ii) conflicts or will conflict with or constitutes
or will constitute a breach of, or a default under, any agreement, indenture,
lease, mortgage or other instrument to which the Company or any of the
Subsidiaries is a party or by which any of them or any of their respective
properties may be bound, or violates or will violate any statute, law,
regulation or filing or judgment, injunction, order or decree applicable to the
Company or any of the Subsidiaries or any of their respective properties, or
will result in the creation or imposition of any lien, charge or encumbrance
upon any property or assets of the Company or any of the Subsidiaries pursuant
to the terms of any agreement or instrument to which any of them is a party or
by which any of them may be bound or to which any of the property or assets of
any of them is subject.
(r) The accountants, KPMG Peat Marwick LLP, who have
certified or shall certify the financial statements included or incorporated by
reference in the Registration Statement and the Prospectus (or any amendment or
supplement thereto) are independent public accountants as required by the Act,
the Exchange Act and the respective rules and regulations thereunder.
(s) The financial statements, together with related
schedules and notes, included or incorporated by reference in the Registration
Statement and the Prospectus (and any amendment or supplement thereto), present
fairly the consolidated financial position, results of operations and changes
in financial position of the Company and the Subsidiaries on the basis stated
in the Registration Statement at the respective dates or for the respective
periods to which
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<PAGE> 12
they apply; such statements and related schedules and notes have been prepared
in accordance with generally accepted accounting principles consistently
applied throughout the periods involved, except as disclosed therein; and the
other financial and statistical information and data included or incorporated
by reference in the Registration Statement and the Prospectus (and any
amendment or supplement thereto) are accurately presented and prepared on a
basis consistent with such financial statements and the books and records of
the Company and the Subsidiaries. The other financial and statistical
information and data included in the Registration Statement and the Prospectus
(and any amendment or supplement thereto) are accurately presented and prepared
on a basis consistent with such financial statements and the books and records
of the Company and the Subsidiaries.
(t) Except as disclosed in the Registration Statement and
the Prospectus (or any amendment or supplement thereto), subsequent to the
respective dates as of which such information is given in the Registration
Statement and the Prospectus (or any amendment or supplement thereto), neither
the Company nor any of the Subsidiaries has incurred any liability or
obligation, direct or contingent, or entered into any transaction, not in the
ordinary course of business, that is material to the Company and the
Subsidiaries taken as a whole, and there has not been any change in the capital
stock, or material increase in the short-term debt or long-term debt, of the
Company or any of the Subsidiaries, or any material adverse change, or any
development involving or which may reasonably be expected to involve, a
prospective material adverse change in the condition (financial or other),
business, prospects, properties, net worth or results of operation of the
Company and the Subsidiaries taken as a whole.
(u) The Company or the Subsidiaries has good and
marketable title to all of the property (real and personal) disclosed in the
Prospectus as being owned by them, free and clear of all liens, claims,
security interests or other encumbrances except such as are disclosed in the
Registration Statement and the Prospectus or in any other document previously
made available to the Underwriters or to their counsel or such as do not
materially affect the value of such property and do not materially interfere
with the use made and proposed to be made of such property by the Company or
the Subsidiaries, and all the property disclosed in the Prospectus as being
held under lease by the Company and each of the Subsidiaries is held by it
under valid, subsisting and enforceable leases, free and clear of all liens,
claims, security interests and other encumbrances.
(v) The Company and the Subsidiaries have title insurance
on all real properties described in the Prospectus as owned or leased by them
(collectively, the "Properties"), in an amount at least equal to the aggregate
acquisition price paid by the Company or the Subsidiaries for such Properties
and the cost of construction of the improvements located on such properties.
(w) The Company and the Subsidiaries have title insurance
on each Mortgage Loan (as defined in the Prospectus) in an amount at least
equal to the aggregate principal amount of each such Mortgage Loan.
(x) The mortgages and deeds of trust encumbering the
Properties are not cross-defaulted or cross- collateralized to any property not
owned directly or indirectly by the Company.
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<PAGE> 13
(y) The Company and each of the Subsidiaries has such
permits, licenses, franchises and authorizations of governmental or regulatory
authorities ("permits") as are necessary to own its respective properties and
to conduct its business as presently conducted and in the manner disclosed in
the Prospectus, including the necessary lending or banking law permits, subject
to such qualifications as may be set forth in the Prospectus; the Company and
each of the Subsidiaries has fulfilled and performed all its material
obligations with respect to such permits and no event has occurred which
allows, or after notice or lapse of time would allow, revocation or termination
thereof or results in any other material impairment of the rights of the holder
of any such permit, subject in each case to such qualification as may be set
forth in the Prospectus; and, except as disclosed in the Prospectus, none of
such permits contains any restriction that is materially burdensome to the
Company or any of the Subsidiaries.
(z) Except as disclosed in the Prospectus, the Company
and the Subsidiaries own or possess all patents, trademarks, trademark
registrations, service marks, service mark registrations, trade names,
copyrights, licenses, inventions, trade secrets and rights disclosed in the
Prospectus as being owned by them or any of them or necessary for the conduct
of their respective businesses, and the Company is not aware of any claim to
the contrary or any challenge by any other person to the rights of the Company
and the Subsidiaries with respect to the foregoing.
(aa) Insurance, including property and casualty insurance,
in favor of the Company or the Subsidiaries, as the case may be, is in effect
and will be maintained with respect to the Properties, with insurers of
recognized financial responsibility, against such losses and risks in an amount
and on such terms as is reasonable and customary for business of the type
conducted by the Company, the Subsidiaries or lessees, sub-lessees or
mortgagors of the Properties, as the case may be; all policies of insurance
insuring the Company, the Subsidiaries, and lessees, sub- lessees or mortgagors
of the Properties, as the case may be, or their respective businesses, assets
(including the property and casualty insurance on the Properties), employees,
officers and directors are in full force and effect; the Company, each of the
Subsidiaries, and, to the best knowledge of the Company, each lessee,
sub-lessee and mortgagor of the Properties is in compliance with the terms of
such policies and instruments in all material respects; neither the Company nor
any of the Subsidiaries, or, to the best knowledge of the Company, no lessee,
sub-lessee or mortgagor of the Properties has received from any insurance
company written notice of any material defects or deficiencies affecting the
insurability of any of the Properties; and there are no claims by the Company,
any of the Subsidiaries or, to the best knowledge of the Company, any lessee,
sub-lessee or mortgagor under any such policy or instrument as to which any
insurance company is denying liability or defending under a reservation of
rights clause.
(ab) The Company and the Subsidiaries maintain a system of
internal accounting controls sufficient to provide reasonable assurances that
(i) transactions are executed in accordance with management's general or
specific authorization; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain accountability for assets; (iii) access
to 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.
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<PAGE> 14
(ac) Neither the Company nor any of its Subsidiaries nor
any employee or agent of the Company or any Subsidiary has made any payment of
funds of the Company or any Subsidiary or received or retained any funds in
violation of any law, rule or regulation.
(ad) The Company and each of the Subsidiaries have filed
all tax returns required to be filed, which returns are complete and correct,
and neither the Company nor any Subsidiary is in default in the payment of any
taxes which were payable pursuant to said returns or any assessments with
respect thereto.
(ae) The Company is not now, and, after sale of the
Debentures to be sold by the Company hereunder and application of the net
proceeds from such sale as described in the Prospectus under the caption "Use
of Proceeds," will not be, an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
(af) The Company and the Subsidiaries and, to the
Company's knowledge, the owner and operator of any property on which the
Company or the Subsidiaries holds a mortgage and the operator of any property
owned by the Company or the Subsidiaries (i) are in compliance with any and all
applicable foreign, 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 (as regulated by such
laws and regulations) ("Environmental Laws"), (ii) have received all permits,
licenses or other approvals under applicable Environmental Laws required in
connection with their businesses, properties or assets as conducted or
contemplated to be conducted as described in the Registration Statement, and
(iii) are 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, singly or in the aggregate, have a Material Adverse Effect.
(ag) There has been no storage, disposal, generation,
manufacture, refinement, transportation, handling, treatment, spill, discharge,
leak, emission, injection, dumping, or release of hazardous or toxic substances
or wastes, pollutants or contaminants by the Company or the Subsidiaries or, to
the knowledge of the Company, by any other person, at, to, or from any property
(including the Properties) now or previously owned or operated by the Company
or the Subsidiaries or now or previously subject to a mortgage held by the
Company or the Subsidiaries, except for any such storage, disposal, generation,
manufacture, refinement, transportation, handling, treatment, spill, discharge,
leak, emission, injection, dumping, or release which would not have, or could
not be reasonably likely to have singularly or in the aggregate, a Material
Adverse Effect; and, to the knowledge of the Company, there has been no spill,
discharge, leak, emission, injection, escape, dumping, or release at any other
location of any hazardous or toxic substances or wastes, pollutants or
contaminants generated at any property (including the Properties) now or
previously owned or operated by the Company or the Subsidiaries or now or
previously subject to a mortgage held by the Company or the Subsidiaries,
except for any such spill, discharge, leak, emission, injection, dumping, or
release which would not have, or could not be reasonably likely to have,
singularly or in the aggregate, a Material Adverse Effect.
(ah) The Company has complied with all provisions of
Florida Statutes, Section 517.075, relating to issuers doing business with
Cuba.
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<PAGE> 15
(ai) The Company has filed all reports and other documents
required to be filed by it under the Exchange Act.
(aj) Each of the Subsidiaries constitutes either a
partnership for federal income tax purposes or a "qualified REIT subsidiary"
within the meaning of Section 856(i) of the Code.
(ak) None of the assets of the Company or the Subsidiaries
constitute, nor will such assets, as of the Closing Date, constitute "plan
assets," as such term is defined in the Employee Retirement Income Security Act
of 1974, as amended ("ERISA").
(al) Subject to the provisions of applicable law, none of
the Subsidiaries is currently prohibited, directly or indirectly, from paying
any dividends to the Company, from making any other distributions on such
Subsidiary's capital stock or from repaying to the Company any loans or
advances to such Subsidiary's property or assets to the Company.
(am) The information and disclosures regarding the
Company's directors and officers, contained in the Company's Proxy Statement
for the Annual Meeting of Stockholders held on May 1, 1996, (i) are accurate
and consistent with the information provided to the Company by each director
and officer for that purpose and (ii) did not omit to disclose any fact that
should have been so disclosed under the rules and regulations of the Exchange
Act governing Proxy Statement disclosure obligations.
(an) After giving effect to the intended use of proceeds
from the offering of the Debentures as described in the Prospectus Supplement
under the caption "Use of Proceeds," the Debentures do not constitute
"corporate acquisition indebtedness" within the meaning of Section 279 of the
Code.
7. INDEMNIFICATION AND CONTRIBUTION. (a) The Company agrees to
indemnify and hold harmless each of you and each other Underwriter and each
person, if any, who controls any Underwriter within the meaning of Section 15
of the Act or Section 20(a) of the Exchange Act from and against any and all
losses, claims, damages, liabilities and expenses (including reasonable costs
of investigation) arising out of or based upon any untrue statement or alleged
untrue statement of a material fact contained in any Prepricing Prospectus or
in any Prospectus Supplement or in the Registration Statement or the Prospectus
or in any amendment or supplement thereto, or arising out of or based upon 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, liabilities or expenses arise
out of or are based upon any untrue statement or omission or alleged untrue
statement or omission which has been made therein or omitted therefrom in
reliance upon and in conformity with the information relating to such
Underwriter furnished in writing to the Company by or on behalf of any
Underwriter through you expressly for use in connection therewith; provided,
however, that the indemnification contained in this paragraph (a) with respect
to any Prepricing Prospectus shall not inure to the benefit of any Underwriter
(or to the benefit of any person controlling such Underwriter) on account of
any such loss, claim, damage, liability or expense arising from the sale of the
Debentures by such Underwriter to any person if a copy of the Prospectus shall
not have been delivered or sent to such person within the time required by the
Act and the regulations thereunder, and the untrue statement or alleged untrue
statement or omission or alleged omission of a material fact contained in such
Prepricing Prospectus was corrected in the Prospectus, provided that the
Company has delivered the Prospectus to the several Underwriters in requisite
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<PAGE> 16
quantity on a timely basis to permit such delivery or sending. The foregoing
indemnity agreement shall be in addition to any liability which the Company may
otherwise have.
(b) If any action, suit or proceeding shall be brought
against any Underwriter or any person controlling any Underwriter in respect of
which indemnity may be sought against the Company, such Underwriter or such
controlling person shall promptly notify the Company, and the Company shall
assume the defense thereof, including the employment of counsel and payment of
all fees and expenses. Such Underwriter or any such controlling person shall
have the right to employ separate counsel in any such action, suit or
proceeding and to participate in the defense thereof, but the fees and expenses
of such counsel shall be at the expense of such Underwriter or such controlling
person unless (i) the Company has agreed in writing to pay such fees and
expenses, (ii) the Company has failed to assume the defense and employ counsel,
or (iii) the named parties to any such action, suit or proceeding (including
any impleaded parties) include both such Underwriter or such controlling person
and the Company and such Underwriter or such controlling person shall have been
advised by its counsel that representation of such indemnified party and the
Company by the same counsel would be inappropriate under applicable standards
of professional conduct (whether or not such representation by the same counsel
has been proposed) due to actual or potential differing interests between them
(in which case the Company shall not have the right to assume the defense of
such action, suit or proceeding on behalf of such Underwriter or such
controlling person). It is understood, however, that the Company shall, in
connection with any one such action, suit or proceeding or separate but
substantially similar or related actions, suits or proceedings in the same
jurisdiction arising out of the same general allegations or circumstances, be
liable for the reasonable fees and expenses of only one separate firm of
attorneys (in addition to any local counsel) at any time for all such
Underwriters and controlling persons not having actual or potential differing
interests with you or among themselves, which firm shall be designated in
writing by Smith Barney Inc., 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, suit or proceeding effected without its written
consent, but if settled with such written consent, or if there be a final
judgment for the plaintiff in any such action, suit or proceeding, the Company
agrees to indemnify and hold harmless any Underwriter, to the extent provided
in the preceding paragraph, and any such controlling person from and against
any loss, claim, damage, liability or expense by reason of such settlement or
judgment.
(c) Each Underwriter agrees, severally and not jointly,
to indemnify and hold harmless the Company, its directors, its officers who
sign the Registration Statement, and any person who controls the Company within
the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act, to
the same extent as the foregoing indemnity from the Company to each
Underwriter, but only with respect to information relating to such Underwriter
furnished in writing by or on behalf of such Underwriter through you expressly
for use in the Registration Statement, the Prospectus, any Prepricing
Prospectus, any Prospectus Supplement, or any amendment or supplement thereto.
If any action, suit or proceeding shall be brought against the Company, any of
its directors, any such officer, or any such controlling person based on the
Registration Statement, the Prospectus or any Prepricing Prospectus, any
Prospectus Supplement, or any amendment or supplement thereto, and in respect
of which indemnity may be sought against any Underwriter pursuant to this
paragraph (c), such Underwriter shall have the rights and duties given to the
Company by paragraph (b) above (except that if the Company shall have assumed
the defense thereof such 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 be at such Underwriter's expense), and
the Company, its directors, any such officer,
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<PAGE> 17
and any such controlling person shall have the rights and duties given to the
Underwriters by paragraph (b) above. The foregoing indemnity agreement shall
be in addition to any liability which any Underwriter may otherwise have.
(d) If the indemnification provided for in this Section 7
is unavailable to an indemnified party under paragraphs (a) or (c) hereof in
respect of any losses, claims, damages, liabilities or expenses referred to
therein, then an 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, liabilities or expenses (i) in
such proportion as is appropriate to reflect the relative benefits received by
the Company on the one hand and the Underwriters on the other hand from the
offering of the Debentures, or (ii) if the allocation provided by clause (i)
above is not permitted by applicable law, in such proportion as is appropriate
to reflect not only the relative benefits referred to in clause (i) above but
also the relative fault of the Company on the one hand and the Underwriters on
the other in connection with the statements or omissions that resulted in such
losses, claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations. The relative benefits received by the Company on the
one hand and the Underwriters on the other shall be deemed to be in the same
proportion as the total net proceeds from the offering (before deducting
expenses) received by the Company bear to the total underwriting discounts and
commissions received by the Underwriters, 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 Underwriters 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 or alleged omission to state a
material fact relates to information supplied by the Company on the one hand or
by the Underwriters on the other hand and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
(e) The Company and the Underwriters agree that it would
not be just and equitable if contribution pursuant to this Section 7 were
determined by a pro rata allocation (even if the Underwriters were treated as
one entity for such purpose) or by any other method of allocation that does not
take account of the equitable considerations referred to in paragraph (d)
above. The amount paid or payable by an indemnified party as a result of the
losses, claims, damages, liabilities and expenses referred to in paragraph (d)
above 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 any claim or defending any such action, suit or
proceeding. Notwithstanding the provisions of this Section 7, no Underwriter
shall be required to contribute any amount in excess of the amount by which the
total price of the Debentures underwritten by it and distributed to the public
exceeds the amount of any damages which such Underwriter has otherwise been
required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations to contribute pursuant to
this Section 7 are several in proportion to the respective numbers of Firm
Debentures set forth opposite their names in Exhibit A hereto (or such numbers
of Firm Debentures increased as set forth in Section 10 hereof) and not joint.
(f) No indemnifying party shall, without the prior
written consent of the indemnified party, effect any settlement of any pending
or threatened action, suit or proceeding in respect of which any indemnified
party is or could have been a party and indemnity could have
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<PAGE> 18
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 action, suit or proceeding.
(g) Any losses, claims, damages, liabilities or expenses
for which an indemnified party is entitled to indemnification or contribution
under this Section 7 shall be paid by the indemnifying party to the indemnified
party as such losses, claims, damages, liabilities or expenses are incurred.
The indemnity and contribution agreements contained in this Section 7 and the
representations and warranties of the Company set forth in this Agreement shall
remain operative and in full force and effect, regardless of (i) any
investigation made by or on behalf of any Underwriter or any person controlling
any Underwriter, the Company, its directors or officers or any person
controlling the Company, (ii) acceptance of any Debentures and payment therefor
hereunder, and (iii) any termination of this Agreement. A successor to any
Underwriter or any person controlling any Underwriter, or to the Company, its
directors or officers, or any person controlling the Company, shall be entitled
to the benefits of the indemnity, contribution and reimbursement agreements
contained in this Section 7.
8. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The several
obligations of the Underwriters to purchase the Firm Debentures hereunder are
subject to the following 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
Debentures 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 by Rules 424 and 430A
under the Act 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 Company 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 your satisfaction.
(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 other),
business, prospects, properties, net worth or results of operations of the
Company or the Subsidiaries not contemplated by the Prospectus, which in your
opinion, would materially adversely affect the market for the Debentures, or
(ii) any event or development relating to or involving the Company or any
officer or director of the Company which makes any statement made in the
Prospectus untrue or which, in the 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 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 your opinion, materially
adversely affect the market for the Debentures.
(c) You shall have received on the Closing Date, an
opinion of Sirote & Permutt, P.C., special counsel for the Company, dated the
Closing Date and addressed to you, to the effect that:
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(i) The Company is a corporation duly
incorporated and validly existing in good standing under the laws of the State
of Maryland with full corporate power to own, lease and operate its properties
and to conduct its business as presently conducted and as disclosed in the
Registration Statement and the Prospectus (and any amendment or supplement
thereto), and is duly registered and qualified to conduct its business and is
in good standing in each jurisdiction or place where the nature of its
properties or the conduct of its business requires such registration or
qualification, except where the failure so to register or qualify does not have
a Material Adverse Effect;
(ii) To the best knowledge of such counsel, after
reasonable inquiry, the Company has no subsidiaries other than the
Subsidiaries. Each of the Subsidiaries is duly organized, validly existing and
in good standing in the jurisdiction of its incorporation, if a corporation,
and is legally formed and validly existing under the laws of the jurisdiction
of its organization, if a partnership, association or business organization,
with full corporate or organizational power and authority to own, lease and
operate its properties and to conduct its business as presently conducted and
as disclosed in the Registration Statement and the Prospectus (and any
amendment or supplement thereto) and is duly registered and qualified to
conduct its business and is in good standing in each jurisdiction or place
where the nature of its properties or the conduct of its business requires such
registration or qualification, except where the failure so to register or
qualify does not have a Material Adverse Effect; all the outstanding shares of
capital stock of each Subsidiary that is a corporation have been duly
authorized and validly issued and are fully paid and nonassessable, and all
ownership interests in each Subsidiary that is not a corporation have been
validly created pursuant to the partnership or other agreements or
organizational documents of each such Subsidiary. Except as described in the
Registration Statement and the Prospectus (and any amendment or supplement
thereto), all of such shares and interests in the Subsidiaries owned by the
Company are owned by the Company directly, or indirectly through one of the
other Subsidiaries, free and clear of any perfected security interest, or, to
the best knowledge of such counsel after reasonable inquiry, any other security
interest, lien, adverse claim, equity or other encumbrance;
(iii) The authorized stock of the Company conforms
in all material respects as to legal matters to the description thereof
contained in the Prospectus under the caption "Description of Capital Stock";
(iv) All the shares of stock of the Company
outstanding prior to the issuance of the Debentures to be issued and sold by
the Company hereunder, have been duly authorized and validly issued, are fully
paid and nonassessable.
(v) The Indenture has been duly and validly
authorized, executed and delivered by the Company and, assuming due execution
and delivery by the Trustee, is a valid and binding agreement of the Company,
enforceable in accordance with its terms, except as enforcement thereof may be
limited by bankruptcy, insolvency or other similar laws affecting creditors'
rights generally and by general principles of equity (whether considered in a
proceeding at law or in equity), and has been duly qualified under the 1939
Act; and the Indenture conforms in all material respects to the description
thereof in the Prospectus;
(vi) The Debentures conform in all material
respects to the description thereof in the Prospectus; the Debentures have been
duly and validly authorized and executed by the Company and, assuming due
authentication of the Debentures by the Trustee,
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<PAGE> 20
upon delivery to the Underwriters against payment therefor in accordance with
the terms hereof, will have been validly issued and delivered, and will
constitute valid and binding obligations of the Company entitled to the
benefits of the Indenture, except to the extent enforcement thereof may be
limited by bankruptcy, insolvency or other similar laws affecting creditors'
rights generally and by general principles of equity (whether considered in a
proceeding at law or in equity);
(vii) The shares of Common Stock issuable upon
conversion of the Debentures have been validly authorized and reserved for
issuance and, when delivered upon conversion of the Debentures, will have been
validly issued and fully paid and will be non-assessable and free of any (A)
preemptive rights or (B) to the knowledge of such counsel after reasonable
inquiry, similar rights that entitle or will entitle any person to acquire any
Common Stock upon the issuance of the Debentures and the issuance of the Common
Stock upon conversion of the Debentures by the Company;
(viii) Except as disclosed in the Prospectus, there
are no outstanding options, warrants or other rights calling for the issuance
of, and such counsel does not know of, any commitment, plan or arrangement to
issue, any shares of stock of the Company or any security convertible into or
exchangeable or exercisable for stock of the Company;
(ix) No holder of any security of the Company or
any other person has the right, contractual or otherwise, which right has not
been waived by the holder thereof, (A) to cause the Company to sell or
otherwise issue to them, or to permit them to underwrite the sale of, the
Debentures or (B) as a result of the filing of the Registration Statement or
consummation of the transactions contemplated by this Agreement, to require
registration under the Act of any shares of Common Stock or other securities of
the Company;
(x) The Registration Statement and all
post-effective amendments, if any, have become effective under the Act and, to
the best knowledge of such counsel, no stop order suspending the effectiveness
of the Registration Statement has been issued and no proceedings for that
purpose are pending before or contemplated by the Commission; and any required
filing of the Prospectus pursuant to Rule 424(b) has been made in accordance
with Rule 424(b);
(xi) The Company has full corporate power to enter
into this Agreement and to issue, sell and deliver the Debentures to be sold by
it to the Underwriters as provided herein, and this Agreement has been duly
authorized, executed and delivered by the Company and is a valid, legal and
binding agreement of the Company, enforceable against the Company in accordance
with its respective terms, subject to the qualification that the enforceability
of the Company's obligations hereunder and thereunder may be limited by
bankruptcy, insolvency, reorganization, moratorium, and other laws relating to
or affecting creditors' rights generally and by general equitable principles
and except as enforcement of rights to indemnity and contribution hereunder may
be limited by federal or state securities laws or principles of public policy;
(xii) Neither the Company nor any of the
Subsidiaries is (i) in violation of its respective certificate or articles of
incorporation, bylaws, partnership agreements, or other organizational
documents; or (ii) to the best knowledge of such counsel after reasonable
inquiry, is (A) in default in the performance of any material obligation,
agreement or condition contained
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<PAGE> 21
in any bond, debenture, note or other evidence of indebtedness or in any
material agreement, indenture, lease, or other instrument known to such counsel
to which such person is a party or by which any of them or their respective
properties may be bound, or (B) in violation of any law, ordinance,
administrative or governmental rule or regulation, including any lending or
banking law, governmental rule or regulation, applicable to the Company or any
Subsidiary or of any decree of any court or governmental agency or body having
jurisdiction over the Company or any of the Subsidiaries;
(xiii) Neither the issuance, offer, sale or delivery
of the Debentures, the issuance of Common Stock upon conversion of the
Debentures, the execution, delivery or performance of this Agreement or the
Indenture, compliance by the Company with the provisions hereof nor
consummation by the Company of the transactions contemplated hereby conflicts
or will conflict with or constitutes or will constitute a breach of, or a
default under, the certificate or articles of incorporation, bylaws,
partnership agreements or other organizational documents, of the Company or any
of the Subsidiaries or any agreement, indenture, lease, mortgage or other
instrument to which the Company or any of the Subsidiaries is a party or by
which any of them or any of their respective properties is bound that is an
exhibit to the Registration Statement or to any Incorporated Document, or is
known to such counsel after reasonable inquiry, or will result in the creation
or imposition of any lien, charge or encumbrance upon any property or assets of
the Company or any of the Subsidiaries, nor will any such action result in any
violation of any existing law, regulation, ruling (assuming compliance with all
applicable state securities and Blue Sky laws), judgment, injunction, order or
decree known to such counsel after reasonable inquiry, applicable to the
Company, the Subsidiaries or any of their respective properties;
(xiv) Except as disclosed in the Prospectus (or any
supplement thereto), to the best knowledge of such counsel after due inquiry,
there are no legal or governmental proceedings pending or threatened against
the Company or any of the Subsidiaries, or to which the Company or any of the
Subsidiaries, or any of their property, is subject, which are required to be
disclosed in the Registration Statement or Prospectus (or any amendment or
supplement thereto);
(xv) No consent, approval, authorization or other
order of, or registration or filing with, any court, regulatory body,
administrative agency or other governmental body, agency, or official is
required on the part of the Company (except as have been obtained under the
Act, the Exchange Act, the 1939 Act, and such as may be required under state
securities or Blue Sky laws governing the purchase and distribution of the
Debentures and the shares of Common Stock issuable upon conversion of the
Debentures) for the valid issuance and sale of the Debentures to the
Underwriters as contemplated by this Agreement;
(xvi) Such counsel does not know of any agreements,
indentures, leases or other instruments required to be disclosed in the
Registration Statement or the Prospectus (or any amendment or supplement
thereto) or to be filed as an exhibit to the Registration Statement or any
Incorporated Document that are not disclosed or filed as required, and such
agreements, indentures, lease or other instruments as are summarized in the
Registration Statement or the Prospectus are fairly summarized in all respects;
(xvii) The Registration Statement and the Prospectus
and any supplements or amendments thereto (except for the financial statements
and the notes thereto and the schedules and other financial and statistical
data included therein, as to which such counsel
20
<PAGE> 22
need not express any opinion) comply as to form in all material respects with
the requirements of the Act; and each of the Incorporated Documents (except for
the financial statements and the notes thereto and the schedules and other
financial and statistical data included therein, as to which counsel need not
express any opinion) when filed complied as to form in all material respects
with the Exchange Act and the rules and regulations of the Commission
thereunder;
(xviii) The Company and each of the Subsidiaries are
duly licensed or authorized in each jurisdiction where they are required to be
so licensed or authorized to conduct their respective businesses; the Company
and each of the Subsidiaries have all other necessary orders, consents,
approvals, permits, licenses, franchises and authorizations of and from all
regulatory authorities to conduct their respective businesses as presently
conducted, including the necessary lending or banking law permits, and, to the
best of such counsel's knowledge after due inquiry, neither the Company nor any
of the Subsidiaries has received any notification from any regulatory authority
to the effect that any additional approval is required to be obtained by the
Company or any of the Subsidiaries;
(xix) The statements in the Registration Statement
and Prospectus under the captions "Risk Factors," "Description of Debt
Securities," "Description of Capital Stock," "Description of Debentures," and
"ERISA Considerations" insofar as such statements constitute summaries of the
legal matters, documents or proceedings referred to therein, fairly present the
information called for with respect to such legal matters, documents and
proceedings and fairly summarize the matters referred to therein;
(xx) The Company is not, and after the sale of the
Debentures and the application of the net proceeds therefrom as disclosed in
the Prospectus under the caption "Use of Proceeds" will not be, an "investment
company" within the meaning of the 1940 Act;
(xxi) The Company has filed all reports and other
documents required to be filed by it under the Exchange Act;
(xxii) None of the assets of the Company or the
Subsidiaries constitute "plan assets," as such term is defined in ERISA;
(xxiii) The Company was and is organized in
conformity with the requirements for qualification as a REIT and its proposed
method of operation, as described in the Prospectus, permits it to meet the
requirements for qualification under the Code;
(xxiv) The discussion in the Prospectus and the
Prospectus Supplement under the captions "Federal Income Tax Considerations"
and "Certain Federal Income Tax Considerations" are accurate in all material
respects and fairly summarize the United States federal income tax
considerations that are likely to be material to holders of the Debentures or
the shares of Common Stock issuable upon conversion of the Debentures who are
not subject to special treatment under the tax laws; and
(xxv) Each of the Subsidiaries constitutes either a
partnership for federal income tax purposes or a "qualified REIT subsidiary"
within the meaning of Section 856(i) of the Code.
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<PAGE> 23
In addition, such counsel shall state that they have participated in
the preparation of the Registration Statement and the Prospectus, including
review and discussion of the contents thereof (including review and discussion
of the contents of all Incorporated Documents), and nothing has come to the
attention of such counsel that has caused them to believe that the Registration
Statement (including the Incorporated Documents), at the time the Registration
Statement became effective, 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, as of its
date and as of the Closing Date or the Option Closing Date, as the case may be,
or that any amendment or supplement to the Prospectus, as of its respective
date, and as of the Closing Date or the Option Closing Date, as the case may
be, contained or contains any untrue statement of a material fact or omitted or
omits to state a material fact necessary in order to make the statements
herein, in the light of the circumstances under which they were or are made,
not misleading (it being understood that such counsel need express no opinion
with respect to the financial statements and the notes thereto and the
schedules and other financial and statistical data included in the Registration
Statement or the Prospectus or any Incorporated Document and, with respect to
the Registration Statement, except for the Statement[s] of Eligibility under
the 1939 Act of the Trustees under the Senior Debt Securities Indenture and the
Subordinated Debt Securities Indenture).
Such counsel shall also reaffirm as of the Closing Date their opinion
filed as Exhibit 8 to the Registration Statement.
In rendering their opinion as aforesaid, counsel may rely upon an
opinion, dated the Closing Date, of Ballard Spahr Andrews & Ingersoll with
respect to Maryland law and may rely upon other opinions, each dated the
Closing Date, of other counsel retained by them or the Company as to laws of
any jurisdiction other than the United States or the State of Alabama, provided
that (1) each such local counsel is acceptable to the Underwriters, (2) such
reliance is expressly authorized by each opinion so relied upon and a copy of
each such opinion is delivered to the Underwriters and is in form and substance
satisfactory to them and their counsel, and (3) counsel shall state in their
opinion that they believe that they and the Underwriters are justified in
relying thereon.
(d) You shall have received on the Closing Date
an opinion of Dewey Ballantine, counsel for the Underwriters, dated the Closing
Date and addressed to you, with respect to the matters referred to in clauses
(v), (vi), (vii) (other than subclause B), (x), (xi) and (xvii) of the
foregoing paragraph (c) and the third to last paragraph of the foregoing
paragraph (c), and such other related matters as you may request. In rendering
their opinion as aforesaid, such counsel may rely on the opinion, dated the
Closing Date and any Option Closing Date, of Ballard Spahr Andrews & Ingersoll
with respect to Maryland law.
(e) You shall have received letters addressed to
you and dated the date hereof and the Closing Date from KPMG Peat Marwick LLP,
independent certified public accountants, substantially in the forms heretofore
approved by you.
(f) (i) No stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for that
purpose shall have been taken or, to the knowledge of the Company, shall be
contemplated by the Commission at or prior to the Closing Date; (ii) there
shall not have been any change in the capital stock of the Company nor any
material increase in the short-term or long-term debt of the Company (other
than in the ordinary
22
<PAGE> 24
course of business) from that set forth or contemplated in the Registration
Statement or the Prospectus (or any amendment or supplement thereto); (iii)
there shall not have been, since the respective dates as of which information
is given in the Registration Statement and the Prospectus (or any amendment or
supplement thereto), except as may otherwise be stated in the Registration
Statement and Prospectus (or any amendment or supplement thereto), any material
adverse change in the condition (financial or other), business, prospects,
properties, net worth or results of operations of the Company and the
Subsidiaries taken as a whole; (iv) the Company and the Subsidiaries shall not
have any liabilities or obligations, direct or contingent (whether or not in
the ordinary course of business), that are material to the Company and the
Subsidiaries, taken as a whole, other than those reflected in the Registration
Statement or the Prospectus (or any amendment or supplement thereto); and (v)
all the representations and warranties of the Company contained in this
Agreement shall be true and correct on and as of the date hereof and on and as
of the Closing Date as if made on and as of the Closing Date, and you shall
have received a certificate, dated the Closing Date and signed by the chief
executive officer and the chief financial officer of the Company (or such other
officers as are acceptable to you), to the effect set forth in this Section
8(f) and in Section 8(g) hereof.
(g) The Company shall not have failed at or prior
to the Closing Date to have performed or complied with any of its agreements
herein contained and required to be performed or complied with by it hereunder
at or prior to the Closing Date.
(h) The Underwriters shall have received a
certificate dated the Closing Date signed by the chief financial officer of the
Company substantially in the form approved by the Underwriters, respecting the
Company's compliance with the financial covenants set forth in its credit
agreement with a consortium of banks led by Nationsbank, N.A. (South).
(i) The Underwriters shall have received a copy
of a letter respecting the consent by a consortium of banks led by Nationsbank,
N.A. (South) to the issuance of the Debentures.
(j) There shall not have been any announcement by
"nationally recognized statistical rating organization," as defined for
purposes of Rule 436(g) under the Act, that (i) it is downgrading its rating
assigned to any class of securities of the Company, or (ii) it is reviewing its
ratings assigned to any class of securities of the Company with a view to
possible downgrading, or with negative implications, or direction not
determined.
(k) Prior to the Closing Date, the Debentures and
the Common Stock issuable upon conversion of the Debentures shall have been
listed, subject to notice of issuance, on the New York Stock Exchange.
(l) The Company shall have furnished or caused to
be furnished to you such further certificates and documents as you shall have
requested.
All such opinions, certificates, letters and other documents will be
in compliance with the provisions hereof only if they are satisfactory in form
and substance to you and your counsel.
Any certificate or document signed by any officer of the Company and
delivered to you, or to counsel for the Underwriters, shall be deemed a
representation and warranty by the Company to each Underwriter as to the
statements made therein.
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<PAGE> 25
The several obligations of the Underwriters to purchase Additional
Debentures hereunder are subject to the satisfaction on and as of any Option
Closing Date of the conditions set forth in this Section 8, except that, if any
Option Closing Date is other than the Closing Date, the certificates, opinions
and letters referred to in paragraphs (c) through (i) shall be dated the Option
Closing Date in question and the opinions called for by paragraphs (c) and (d)
shall be revised to reflect the sale of Additional Shares.
9. EXPENSES. The Company agrees to pay the following costs and
expenses and all other costs and expenses incident to the performance by it of
its obligations hereunder: (i) the preparation, printing or reproduction, and
filing with the Commission of the registration statement (including financial
statements and exhibits thereto), each Prepricing Prospectus, each Prospectus
Supplement, the Prospectus, and each amendment or supplement to any of them,
this Agreement, the Indenture and the Statements of Eligibility and
Qualification of the Trustees; (ii) the printing (or reproduction) and delivery
(including postage, air freight charges and charges for counting and packaging)
of such copies of the registration statement, each Prepricing Prospectus, each
Prospectus Supplement, the Prospectus, the Incorporated Documents, and all
amendments or supplements to any of them, as may be reasonably requested for
use in connection with the offering and sale of the Debentures; (iii) the
preparation, printing, authentication, issuance and delivery of the Indenture
and the preparation, printing, authentication, issuance and delivery of the
Debentures, including any stamp taxes in connection with the original issuance
and sale of the Debentures; (iv) the printing (or reproduction) and delivery of
this Agreement, the preliminary and supplemental Blue Sky Memoranda and all
other agreements or documents printed (or reproduced) and delivered in
connection with the offering of the Debentures; (v) the registration of the
Debentures under the Exchange Act and the listing of the Debentures and the
shares of Common Stock issuable upon conversion of the Debentures; (vi) the
registration or qualification of the Debentures and the shares of Common Stock
issuable upon conversion of the Debentures for offer and sale under the
securities or Blue Sky laws of the several states as provided in Section 5(g)
hereof (including the reasonable fees, expenses and disbursements of counsel
relating to the preparation, printing or reproduction, and delivery of the
preliminary and supplemental Blue Sky Memoranda and such registration and
qualification); (vii) the filing fees and the fees and expenses of counsel for
the Underwriters in connection with any filings required to be made with the
National Association of Securities Dealers, Inc.; (viii) the fees and expenses
of the Trustee; (ix) the fees and expenses associated with obtaining ratings
for the Debentures from nationally recognized statistical rating organizations;
(x) the transportation and other expenses incurred by or on behalf of Company
representatives in connection with presentations to prospective purchasers of
the Debentures; and (xi) the fees and expenses of the Company's accountants and
the fees and expenses of counsel (including local and special counsel) for the
Company. Smith Barney Inc. shall reimburse the Company for out-of-pocket
expenses incurred by the Company in conjunction with this offering in an amount
not to exceed $250,000.
10. EFFECTIVE DATE OF AGREEMENT. This Agreement shall become
effective: (i) upon the execution and delivery hereof by the parties hereto;
or (ii) if, at the time this Agreement is executed and delivered, it is
necessary for the registration statement or a post-effective amendment thereto
to be declared effective before the offering of the Debentures may commence,
when notification of the effectiveness of the registration statement or such
post-effective amendment has been released by the Commission. Until such time
as this Agreement shall have become effective, it may be terminated by the
Company, by notifying you, or by you, by notifying the Company.
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<PAGE> 26
If either of the Underwriters shall fail or refuse to purchase the
Debentures which it is obligated to purchase on the Closing Date, and
arrangements satisfactory to the non-defaulting Underwriter and the Company for
the purchase of such Debentures by the non-defaulting Underwriter or by any
other party or parties satisfactory to the non-defaulting Underwriter and the
Company are not made within thirty-six (36) hours after such default, this
Agreement shall terminate without liability on the part of the non-defaulting
Underwriter or the Company. In any such case which does not result in
termination of this Agreement, either the non-defaulting Underwriter or the
Company shall have the right to postpone the Closing date, but in no event for
longer than seven (7) days, in order that the required changes, if any, in the
Registration Statement and the Prospectus or any other documents or
arrangements may be effected. Any action taken under this paragraph shall not
relieve the defaulting Underwriter from liability in respect of such default
under this Agreement. The term "Underwriter" as used in this Agreement
includes, for all purposes of this Agreement, any party not identified in this
Agreement who purchases Debentures which a defaulting Underwriter is obligated,
but fails or refuses, to purchase.
Any notice under this Section 10 may be given by telegram, telecopy or
telephone but shall be subsequently confirmed by letter.
11. TERMINATION OF AGREEMENT. This Agreement shall be subject to
termination in your absolute discretion, without liability on the part of any
Underwriter to the Company, by notice to the Company, if prior to the Closing
Date or any Option Closing Date (if different from the Closing Date and then
only as to the Additional Debentures), as the case may be, (i) trading in the
Common Stock of the Company shall be suspended or subject to any restriction or
limitation not in effect on the date of this Agreement, (ii) trading in
securities generally on the New York Stock Exchange, the American Stock
Exchange or the Nasdaq National Market shall have been suspended or materially
limited, (iii) there shall have been any downgrading in the rating of any debt
securities or preferred stock of the Company by any "nationally recognized
statistical rating organization" (as defined for purposes of Rule 436(g) under
the Act), or any public announcement that any such organization has under
surveillance or review its rating of any debt securities or preferred stock of
the Company (other than an announcement with positive implications of a
possible upgrading, and no implication of a possible downgrading, of such
rating), (iv) a general moratorium on commercial banking activities in New York
shall have been declared by either federal or state authorities, or (v) there
shall have occurred any outbreak or escalation of hostilities or other
international or domestic calamity, crisis or change in political, financial or
economic conditions, the effect of which on the financial markets of the United
States is such as to make it, in your judgment, impracticable or inadvisable to
commence or continue the offering of the Debentures at the offering price to
the public set forth on the cover page of the Prospectus or to enforce
contracts for the resale of the Debentures by the Underwriters. Notice of such
termination may be given to the Company by telegram, telecopy or telephone and
shall be subsequently confirmed by letter.
12. INFORMATION FURNISHED BY THE UNDERWRITERS. The only
Information furnished by or on behalf of the Underwriters through you (as such
information is referred to in Sections 6(b) and 7 hereof) shall be the
statements set forth in the last paragraph on the cover page, the stabilization
legend on the inside cover page, and the statements in the first and third
paragraphs under the caption "Underwriting" in the Prepricing Prospectus and
Prospectus Supplement.
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<PAGE> 27
13. MISCELLANEOUS. Except as otherwise provided in Sections 5, 10
and 11 hereof, notice given pursuant to any provision of this Agreement shall
be in writing and shall be delivered (i) if to the Company, at the office of
the Company at Capstone Capital Corporation, 1000 Urban Center Drive, Suite
630, Birmingham, Alabama 35242, Attention: John W. McRoberts, with a copy to
Sirote & Permutt, P.C., 2222 Arlington Avenue South, Birmingham, Alabama 35205,
Attention: John H. Cooper, Esq.; or (ii) if to you, care of Smith Barney Inc.,
388 Greenwich Street, New York, New York 10013, Attention: Manager, Investment
Banking Division, with a copy to Dewey Ballantine, 1301 Avenue of the Americas,
New York, New York 10019, Attention: Frederick W. Kanner, Esq.
This Agreement has been and is made solely for the benefit of the
several Underwriters, the Company, its directors and officers, and the other
controlling persons referred to in Section 7 hereof and their respective
successors and assigns, to the extent provided herein, and no other person
shall acquire or have any right under or by virtue of this Agreement. Neither
the term "successor" nor the term "successors and assigns" as used in this
Agreement shall include a purchaser from any Underwriter of any of the
Debentures in his status as such purchaser.
14. APPLICABLE LAW; COUNTERPARTS. This Agreement shall be
governed by and construed in accordance with the laws of the State of New York
applicable to contracts made and to be performed within the State of New York.
This Agreement may be signed in various counterparts which together
constitute one and the same instrument. If signed in counterparts, this
Agreement shall not become effective unless at least one counterpart hereof
shall have been executed and delivered on behalf of each party hereto.
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<PAGE> 28
Please confirm that the foregoing correctly sets forth the agreement
between the Company and the Underwriters.
Very truly yours,
CAPSTONE CAPITAL CORPORATION
By /s/ John W. McRoberts
----------------------------
Name: John W. McRoberts
Title: President and
Chief Executive Officer
Confirmed as of the date first
above mentioned.
SMITH BARNEY INC.
NATWEST SECURITIES LIMITED
By SMITH BARNEY INC.
By /s/ Ben Lorello
----------------------------
Name: Benjamin D. Lorello
Title: Managing Director
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<PAGE> 29
EXHIBIT A
Capstone Capital Corporation
Principal Amount of Firm
Underwriter Debentures to be Purchased
----------- --------------------------
Smith Barney Inc. $32,500,000
NatWest Securities Limited $32,500,000
Total $65,000,000
28
