EXHIBIT 1.1
SALES AGENCY FINANCING AGREEMENT
Sales Agency Financing Agreement (this
"Agreement"), dated as of May 19, 2009
between EastGroup Properties, Inc., a Maryland corporation
(the "Company"), and
BNY MELLON CAPITAL MARKETS,
LLC, a Delaware limited
liability company
("BNYMCM").
W I T N E S S E T H:
WHEREAS, the Company has authorized and proposes to issue and sell
in the manner
contemplated by this Agreement up to 1,600,000 Common Shares
upon the terms and
subject to the conditions contained herein; and
WHEREAS, BNYMCM has been appointed by
the Company as its agent to sell the
Common Shares and agrees to use its commercially reasonable
efforts to sell the
Common Shares offered by the Company
upon the terms and subject to the
conditions contained herein.
NOW THEREFORE, in consideration of the premises,
representations, warranties,
covenants and agreements contained
herein, and for other good and valuable
consideration, the receipt and sufficiency of
which are hereby acknowledged,
intending to be legally bound hereby, the parties hereto agree as
follows:
ARTICLE I
DEFINITIONS
Section 1.01 Certain Definitions. For purposes of this
Agreement, capitalized
terms used herein and not otherwise defined shall have the
following respective
meanings:
"Actual Sold Amount" means the
number of Issuance Shares that BNYMCM has
sold during the Selling Period.
"Affiliate" of a Person means
another Person that directly or indirectly,
through one or more intermediaries, controls,
is controlled by, or is under
common control with, such first- mentioned Person. The term
"control" (including
the terms "controlling," "controlled by" and "under common
control with") means
the possession, direct or indirect,
of the power to direct or cause the
direction of the management and
policies of a Person, whether through the
ownership of voting securities, by contract or otherwise.
"Applicable Time" means the time of
sale of any Common Shares pursuant to
this Agreement.
"Closing" has the meaning set forth in
Section 2.02.
"Closing Date" means the date on which the
Closing occurs.
"Commission" means the United States
Securities and Exchange Commission.
"Commitment Period"
means the period commencing on the
date of this
Agreement and expiring on the earliest to occur of (x) the
date on which BNYMCM
shall have sold the Maximum Program Amount pursuant to this
Agreement, (y) the
date this Agreement is terminated
pursuant to Article VII and (z) the third
anniversary of the date of this Agreement.
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"Common Shares" shall mean shares of
the Company's Common Stock issued or
issuable pursuant to this Agreement.
"Common Stock" shall mean the Company's
Common Stock, $0.0001 par value per
share.
"Effective Date" has the meaning set forth
in Section 3.03.
"Exchange Act" means the Securities
Exchange Act of 1934, as amended.
"Floor Price" means the
minimum price set by the Company in the Issuance
Notice below which BNYMCM shall not
sell Common Shares during the Selling
Period, which may be adjusted by the
Company at any time during the Selling
Period and which in no event shall be less than $1.00 without
the prior written
consent of BNYMCM, which may be withheld in BNYMCM's sole
discretion.
"Issuance" means each occasion the
Company elects to exercise its right to
deliver an Issuance Notice requiring BNYMCM to use its
commercially reasonable
efforts to sell the Common Shares as specified in such Issuance
Notice, subject
to the terms and conditions of this Agreement.
"Issuance Amount" means the aggregate
Sales Price of the Issuance Shares to
be sold by BNYMCM with respect to any Issuance, which may not
exceed $40 million
without the prior written consent of BNYMCM, which may
be withheld in BNYMCM's
sole discretion.
"Issuance Date" means any Trading Day
during the Commitment Period that an
Issuance Notice is deemed delivered pursuant to Section 2.03(b)
hereof.
"Issuance Notice" means a written
notice to BNYMCM delivered in accordance
with this Agreement in the form attached hereto as Exhibit A.
"Issuance Price" means the Sales Price
less the Selling Commission.
"Issuance Shares" means
all shares of Common Stock issued or
issuable
pursuant to an Issuance that has occurred or may occur
in accordance with the
terms and conditions of this Agreement.
"Material Adverse Effect" means a
material adverse effect on the business,
assets, operations, properties, prospects or condition
(financial or otherwise)
of the Company and its Subsidiaries, taken as a whole,
or any material adverse
effect on the Company's ability to consummate the
transactions contemplated by,
or to execute, deliver and perform its obligations under, this
Agreement.
"Maximum Program Amount" means
1,600,000 Common Shares (or, if less, the
aggregate amount of Common Shares registered under the Registration
Statement).
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"Person" means an
individual or a corporation,
partnership, limited
liability company, trust, incorporated or
unincorporated association, joint
venture, joint stock company, governmental
authority or other entity of any
kind.
"Principal Market" means the New York
Stock Exchange.
"Prospectus" has the meaning set forth in
Section 3.01.
"Registration Statement" has the meaning
set forth in Section 3.01.
"Representation Date"
has the meaning set forth in
the introductory
paragraph of Article III.
"Sales Price" means the actual
sale execution price of each Common Share
sold by BNYMCM on the Principal
Market hereunder in the case of
ordinary
brokers' transactions, or as otherwise agreed by the parties in
other methods of
sale.
"Securities Act" means the Securities Act
of 1933, as amended.
"Selling Commission" means
1.0% of the Sales Price of Common Shares sold
during a Selling Period.
"Selling Period" means the period of one
to twenty consecutive Trading Days
(as determined by the Company in the Company's sole
discretion and specified in
the applicable Issuance Notice) following the Trading
Day on which an Issuance
Notice is delivered or deemed to be
delivered pursuant to Section 2.03(b)
hereof.
"Settlement Date" means the
third business day following each Trading Day
during the applicable Selling Period, when the Company
shall deliver to BNYMCM
the amount of Common Shares sold on such Trading Day and BNYMCM
shall deliver to
the Company the Issuance Price received on
such sales. Alternatively, the
Company may settle all sales for each
Selling Period on the business day
following the last day of the Selling Period, whereon the
Company shall deliver
to BNYMCM the amount of Common Shares sold during the Selling
Period and BNYMCM
shall deliver to the Company the Issuance Price received on such
sales.
"Significant Subsidiary" has the meaning
set forth in Section 3.05.
"Trading Day" means any day
which is a trading day on the New York Stock
Exchange, other than a day on which trading is
scheduled to close prior to its
regular weekday closing time.
"Voting Stock" of any Person as of any
date means the capital stock of such
Person that is at the time entitled to vote in
the election of the Board of
Directors of such Person.
ARTICLE II
ISSUANCE AND SALE OF COMMON STOCK
Section 2.01 Issuance. (a) Upon the terms and subject to the
conditions of this
Agreement, the Company may issue Common Shares through
BNYMCM and BNYMCM shall
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use its commercially reasonable efforts to sell
Common Shares based on and in
accordance with such number of Issuance
Notices as the Company in its sole
discretion shall choose to deliver during
the Commitment Period until the
aggregate number of Common Shares sold under this
Agreement equals the Maximum
Program Amount or this Agreement is
otherwise terminated. Subject to the
foregoing and the other terms and
conditions of this Agreement, upon the
delivery of an Issuance Notice, and unless
the sale of the Issuance Shares
described therein has been suspended,
cancelled or otherwise terminated in
accordance with the terms of this Agreement, BNYMCM
will use its commercially
reasonable efforts consistent with its normal
trading and sales practices to
sell such Issuance Shares up to the amount specified in
such Issuance Notice
into the Principal Market, and otherwise in
accordance with the terms of such
Issuance Notice. BNYMCM will provide
written confirmation to the Company no
later than the opening of the Trading Day
next following the Trading Day on
which it has made sales of Issuance Shares hereunder
setting forth the portion
of the Actual Sold Amount for such Trading Day, the
corresponding Sales Price
and the Issuance Price payable to the Company in
respect thereof. BNYMCM may
sell Issuance Shares in the manner described in
Section 2.01(b) herein. The
Company acknowledges and agrees that (i) there can be
no assurance that BNYMCM
will be successful in selling Issuance
Shares and (ii) BNYMCM will incur no
liability or obligation to the Company or any other
Person if it does not sell
Issuance Shares for any reason other
than a failure by BNYMCM to use its
commercially reasonable efforts consistent
with its normal trading and sales
practices to sell such Issuance Shares as required
under this Section 2.01. In
acting hereunder, BNYMCM will be acting as agent
for the Company and not as
principal.
(b) Method of Offer and Sale. The Common Shares may be
offered and sold (1) in
privately negotiated transactions (if and only if
the parties hereto have so
agreed in writing), or (2) by any other method
or payment permitted by law
deemed to be an "at the market" offering
as defined in Rule 415 under the
Securities Act, including sales made directly on the
Principal Market or sales
made to or through a market maker or
through an electronic communications
network. Nothing in this Agreement shall be
deemed to require either party to
agree to the method of offer and sale specified in clause (1)
above, and either
party may withhold its consent thereto in such party's sole
discretion.
(c) Issuances. Upon the terms and subject to the conditions set
forth herein, on
any Trading Day as provided in Section 2.03(b)
hereof during the Commitment
Period on which the conditions set forth in
Section 5.01 and 5.02 hereof have
been satisfied, the Company may
exercise an Issuance by the delivery of an
Issuance Notice, executed by the Chief Executive Officer or
the Chief Financial
Officer of the Company, to BNYMCM. The number of
Issuance Shares that BNYMCM
shall use its commercially reasonable efforts to sell
pursuant to such Issuance
shall have an aggregate Sales Price equal to the Issuance
Amount. Each Issuance
will be settled on the applicable Settlement Date following the
Issuance Date.
Section 2.02 Effectiveness. The effectiveness of this
Agreement (the "Closing")
shall be deemed to take place concurrently with
the execution and delivery of
this Agreement by the parties hereto
and the completion of the closing
transactions set forth in the immediately following
sentence. At the Closing,
the following closing transactions shall
take place, each of which shall be
deemed to occur simultaneously with the Closing: (i)
the Company shall deliver
to BNYMCM a certificate executed by the Secretary
of the Company, signing in
such capacity, dated the Closing Date (A) certifying that
attached thereto are
true and complete copies of the
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resolutions duly adopted by the Board of
Directors of the Company or a duly
authorized committee thereof authorizing
the execution and delivery of this
Agreement and the consummation of
the transactions contemplated
hereby
(including, without limitation, the issuance of
the Common Shares pursuant to
this Agreement), which authorization shall be in full force and
effect on and as
of the date of such certificate and (B) certifying and
attesting to the office,
incumbency, due authority and specimen signatures
of each Person who executed
the Agreement for or on behalf of the Company; (ii) the Company
shall deliver to
BNYMCM a certificate executed by the Chief Executive
Officer, the President or
any Senior Vice-President of the Company and by the
Chief Financial Officer of
the Company, signing in such respective
capacities, dated the Closing Date,
confirming that the representations and warranties of
the Company contained in
this Agreement are true and correct and that the Company has
performed, in all
material respects, all of its obligations hereunder to be
performed on or prior
to the Closing Date and as to the matters set forth in
Section 5.01(a) hereof;
(iii) Jaeckle Fleischmann & Mugel, LLP, counsel to the Company,
shall deliver to
BNYMCM an opinion, dated the Closing Date and addressed to BNYMCM,
substantially
in the form of Exhibit B attached hereto; (iv) KPMG LLP shall
deliver to BNYMCM
a letter, dated the Closing Date, in form and substance
reasonably satisfactory
to BNYMCM; and (v) the Company shall pay
the expenses set forth in Section
9.02(ii), (iv) and (viii) hereof by wire transfer to the
account designated by
BNYMCM in writing prior to the Closing.
Section 2.03 Mechanics of Issuances. (a) Issuance
Notice. On any Trading Day
during the Commitment Period, the Company
may deliver an Issuance Notice to
BNYMCM, subject to the satisfaction of the conditions set forth in
Sections 5.01
and 5.02; provided, however, that (1) the Issuance
Amount for each Issuance as
designated by the Company in the applicable
Issuance Notice shall in no event
exceed $40 million without the prior written
consent of BNYMCM, which may be
withheld in BNYMCM's sole discretion and (2)
notwithstanding anything in this
Agreement to the contrary, BNYMCM shall have no further obligations
with respect
to any Issuance Notice if and to the extent the number of
Issuance Shares sold
pursuant thereto, together with the number of
Common Shares previously sold
under this Agreement, shall exceed the Maximum Program Amount. The
Company shall
have the right, in its sole discretion, to amend
at any time and from time to
time any Issuance Notice and, if
so notified, BNYMCM shall as
soon as
practicable, modify its offers to
sell consistent with any such amendment
notice.
(b) Delivery of Issuance Notice. An Issuance Notice shall be deemed
delivered on
the Trading Day that it is received by
facsimile or e-mail (and the Company
confirms such delivery by telephone (including voicemail message))
by BNYMCM. No
Issuance Notice or amendment thereto may be
delivered other than on a Trading
Day during the Commitment Period.
(c) Floor Price. BNYMCM shall not sell
Common Shares below the Floor Price
during the applicable Selling Period and such Floor Price may be
adjusted by the
Company at any time during the applicable Selling
Period upon notice to BNYMCM
and confirmation by BNYMCM to the Company.
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(d) Determination of Issuance Shares to be Sold. The
number of Issuance Shares
to be sold by BNYMCM with respect to any
Issuance shall be the Actual Sold
Amount during the Selling Period.
(e) Trading Guidelines. BNYMCM may, to the extent permitted under
the Securities
Act and the Exchange Act, purchase and sell
Common Stock for its own account
while this Agreement is in effect provided that
(i) no such purchase or sale
shall take place while an Issuance Notice is in
effect (except to the extent
BNYMCM may engage in sales of Issuance Shares purchased or deemed
purchased from
the Company as a "riskless principal" or in a
similar capacity), (ii) in no
circumstances shall BNYMCM have a short position in the Common
Stock for its own
account and (iii) the Company shall
not be deemed to have authorized or
consented to any such purchases or sales by
BNYMCM. In addition, the Company
hereby acknowledges and agrees that BNYMCM's affiliates may
make markets in the
Common Stock or other securities of the Company, in
connection with which they
may buy and sell, as agent or principal, for long or
short account, shares of
Common Stock or other securities of the
Company, at the same time BNYMCM is
acting as agent pursuant to this Agreement.
Section 2.04 Settlements. Subject to the provisions of
Article V, on or before
each Settlement Date, the Company will, or will
cause its transfer agent to,
electronically transfer the Issuance Shares being sold
by crediting BNYMCM or
its designee's account at
The Depository Trust
Company through its
Deposit/Withdrawal At Custodian (DWAC)
System, or by such other means of
delivery as may be mutually agreed upon by the parties hereto
and, upon receipt
of such Issuance Shares, which in
all cases shall be freely
tradeable,
transferable, registered shares in good
deliverable form, BNYMCM will deliver
the related Issuance Price in same day funds delivered to an
account designated
by the Company prior to the Settlement
Date. If the Company defaults in its
obligation to deliver Issuance Shares on a Settlement
Date, the Company agrees
that it will (i) hold BNYMCM harmless against any loss, claim,
damage or expense
(including, without limitation, penalties,
interest and reasonable legal fees
and expenses), as incurred, arising out of or in connection with
such default by
the Company, and (ii) pay to BNYMCM any Selling
Commission to which it would
otherwise have been entitled absent such default. The parties
hereto acknowledge
and agree that, in performing its obligations under this
Agreement, BNYMCM may
borrow shares of Common Stock from stock
lenders, and may use the Issuance
Shares to settle or close out such borrowings.
Section 2.05 Use of Free Writing Prospectus. Neither the
Company nor BNYMCM has
prepared, used, referred to or distributed, or will
prepare, use, refer to or
distribute, without the other party's prior
written consent, any "written
communication" which constitutes a "free writing
prospectus" as such terms are
defined in Rule 405 under the Securities
Act with respect to the offering
contemplated by this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants
to, and agrees with, BNYMCM that as of
the Closing Date, as of each Issuance Date, as of each Settlement
Date and as of
any time that the Registration Statement or the
Prospectus shall be amended or
supplemented (each of the times referenced above
is referred to herein as a
"Representation Date"), except as may be disclosed in
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the Prospectus (including any documents incorporated by
reference therein and
any supplements thereto) on or before a Representation Date:
Section 3.01
Registration. The Common Stock is
registered pursuant to
Section 12(b) of the Exchange Act and is
currently listed and quoted on the
Principal Market under the trading symbol "EGP", and the Common
Shares have been
or will have been listed on the Principal Market prior to
delivery of the first
Issuance Notice hereunder, subject to notice of issuance. The
Company (i) meets
the requirements for the use of Form S-3 under the Securities
Act and the rules
and regulations thereunder for the registration of the transactions
contemplated
by this Agreement and (ii) has been subject to the requirements of
Section 12 of
the Exchange Act and has timely filed all
the material required to be filed
pursuant to Sections 13 and 14 of the Exchange Act for a
period of more than 12
calendar months (other than a report that is required
solely pursuant to Item
1.01, 1.02, 2.03, 2.04, 2.05, 2.06, 4.02(a) or 5.02(e) of Form
8-K).
The Company has filed with the Commission
an automatic shelf registration
statement on Form S-3 (Registration
No. 333-159328) which
registration
statement, as amended, became effective upon filing under
Rule 462(c) under the
Securities Act, for the registration of an indeterminate amount of
Common Shares
and other securities under the Securities Act,
and the offering thereof from
time to time pursuant to Rule 415
promulgated by the Commission under the
Securities Act. Such registration
statement (and any further registration
statements that may be filed by the Company for
the purpose of registering
additional Common Shares to be sold
pursuant to this Agreement), and the
prospectus constituting a part of such registration statement,
together with the
Prospectus Supplement (as defined in Section 5.01(k)) and any
pricing supplement
relating to a particular issuance of the Issuance
Shares (each, an "Issuance
Supplement"), including all documents incorporated or deemed
to be incorporated
therein by reference pursuant to Item 12 of Form S-3 under
the Securities Act,
in each case, as from time to time amended or
supplemented, are referred to
herein as the "Registration Statement" and
the "Prospectus," respectively,
except that if any revised prospectus is provided to
BNYMCM by the Company for
use in connection with the offering of the Common Shares that is
not required to
be filed by the Company pursuant to Rule 424(b)
promulgated by the Commission
under the Securities Act, the term
"Prospectus" shall refer to such revised
prospectus from and after the time it is first provided to
BNYMCM for such use.
Promptly after the execution and delivery of this
Agreement, the Company will
prepare and file the Prospectus Supplement
relating to the Issuance Shares
pursuant to Rule 424(b) promulgated by the Commission under
the Securities Act,
as contemplated by Section 5.01(k) of this Agreement. As used in
this Agreement,
the terms "amendment" or "supplement" when applied to the
Registration Statement
or the Prospectus shall be deemed to include the filing by
the Company with the
Commission of any document under the Exchange Act after the
date hereof that is
or is deemed to be incorporated therein by reference.
Section 3.02 Incorporated
Documents. The documents incorporated or deemed
to be incorporated by reference in the Registration Statement and
the Prospectus
pursuant to Item 12 of Form S-3 (collectively, the "Incorporated
Documents"), as
of the date filed with the Commission under the Exchange Act,
complied and will
comply in all material respects to the requirements of the
Exchange Act and the
rules and regulations of the Commission promulgated as
applicable, and none of
such documents contained or will contain at such time an
untrue statement of a
material fact or omitted or will omit to state a material fact
necessary to make
the
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statements therein, in the light of the
circumstances under which they were
made, not misleading.
Section 3.03 Registration Statement;
Prospectus. No stop order suspending
the effectiveness of the Registration
Statement has been issued and no
proceeding for that purpose has been initiated or threatened by
the Commission.
The Registration Statement, as of the Effective Date,
conformed or will conform
in all material respects to the requirements of
the Securities Act, and the
rules and regulations of the Commission
promulgated thereunder and, as of the
Effective Date, does not and will not 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, and
the Prospectus, as of its
original issue date, as of the date of any filing
of an Issuance Supplement
thereto pursuant to Rule 424(b)
promulgated by the Commission under the
Securities Act, as of each Applicable Time
and as of the date of any other
amendment or supplement thereto,
conforms or will conform in all material
respects to the requirements of the Securities Act and the rules
and regulations
of the Commission promulgated thereunder and, as of such
respective dates, does
not and will not contain an untrue statement of a material fact or
omit to state
a material fact necessary to make the statements
therein, in the light of the
circumstances under which they were made, not
misleading; provided, however,
that this representation and warranty shall
not apply to any statements or
omissions made in reliance upon and in conformity with
information furnished in
writing to the Company by BNYMCM expressly for use in
the Prospectus. As used
herein, with respect to the Registration
Statement, the term "Effective Date"
means, as of a specified time, the later of (i) the date that
the Registration
Statement or the most recent post-effective amendment thereto was
or is declared
effective by the Commission under the Securities Act and (ii)
the date that the
Company's Annual Report on Form 10-K for its most recently
completed fiscal year
is filed with the Commission under the Exchange Act.
Section 3.04 Changes. Neither the
Company nor any Significant Subsidiary
has sustained since the date of the latest audited financial
statements included
or incorporated by reference in the Prospectus any material loss or
interference
with its business from fire, explosion, flood or other
calamity, whether or not
covered by insurance, or from any labor dispute or court or
governmental action,
order or decree, otherwise than as set forth or contemplated
in the Prospectus;
and, since the respective dates as
of which information is given in the
Registration Statement and the Prospectus,
(i) neither the Company nor any
Significant Subsidiary has incurred any liabilities or
obligations, direct or
contingent, or entered into any transactions, not
in the ordinary course of
business, that are material to the Company and its
Significant Subsidiary and
(ii) there has not been any material change in the
capital stock, except for
issuances of capital stock pursuant to the
Company's dividend reinvestment
program and employee benefit plans, or long-term debt, other
than the repayment
of current maturities of long-term
debt, of the Company or any Significant
Subsidiary or any material adverse
change, or any development involving a
prospective material adverse change, in or
affecting the business, assets,
general affairs, management, financial position, prospects,
shareholders' equity
or results of operations of the Company and its Subsidiaries,
otherwise than as
set forth or contemplated in the Prospectus.
Section 3.05 Organizational Matters. The
Company has been duly incorporated
and is validly existing as a corporation in good standing
under the laws of the
State of Maryland, with
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corporate power and authority to own or lease its properties
and to conduct its
business as described in the Registration
Statement and the Prospectus; the
Company is duly qualified to transact business and is
in good standing in each
jurisdiction in which the failure to so qualify would
have a Material Adverse
Effect. Each significant subsidiary, as defined in Rule 405 under
the Securities
Act, including, but not limited to, EastGroup
Properties, L.P. and EastGroup
Properties General Partners, Inc. (each a "Significant
Subsidiary"), has been
duly incorporated or formed and
is validly existing as a
corporation,
partnership or limited liability company in good standing
under the laws of its
jurisdiction of incorporation or formation
with corporate, partnership or
limited liability company power and authority to own or lease its
properties and
conduct its business as described in
the Registration Statement and the
Prospectus. Each Significant
Subsidiary is duly qualified as
a foreign
corporation, partnership or limited liability company
to transact business and
is in good standing in each
jurisdiction in which such
qualification is
required, whether by reason of the ownership or
leasing of property or the
conduct of business, except where the failure to be duly
incorporated or formed,
validly existing, have such power or authority or be so qualified
would not have
a Material Adverse Effect.
Section 3.06 Authorization;
Enforceability. The Company has the corporate
power and authority to execute, deliver and perform the terms
and provisions of
this Agreement and has taken all necessary
corporate action to authorize the
execution, delivery and performance by it
of, and the consummation of the
transactions to be performed by it contemplated by,
this Agreement. No other
corporate proceeding on the part of the Company is necessary,
and no consent of
any shareholder in its capacity as such of the
Company is required, for the
valid execution and delivery by the
Company of this Agreement, and
the
performance and consummation by the Company of the
transactions contemplated by
this Agreement to be performed by the Company. The Company has duly
executed and
delivered this Agreement. This
Agreement constitutes the valid and binding
obligation of the Company, enforceable against the
Company in accordance with
its terms, except as enforceability may be
limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting
the enforcement
of creditors' rights generally and by general principles of
equity (regardless
of whether enforcement is sought in a
proceeding in equity or at law) and by
limitations imposed by law and public policy on indemnification or
exculpation.
Section 3.07 Capitalization. The
Company has an authorized capitalization
as set forth in the Prospectus, and all of the issued shares of
capital stock of
the Company have been duly and validly authorized and issued
and are fully paid
and non-assessable; none of the outstanding
shares of capital stock of the
Company was issued in violation of the preemptive or other similar
rights of any
security holder of the Company; all of the issued
shares of capital stock or
other ownership interests of each
Significant Subsidiary have been duly and
validly authorized and issued and are fully paid
and non-assessable; and all
shares of capital stock or other
ownership interests of each Significant
Subsidiary (other than directors'
qualifying shares) are owned directly or
indirectly by the Company, free and clear of any liens,
encumbrances or security
interests, except as described in the Registration Statement and
the Prospectus.
The Common Shares (in an amount up to the Maximum Program Amount)
have been duly
and validly authorized by all necessary
corporate action on the part of the
Company. When issued against payment therefor as provided in this
Agreement, the
Common Shares will be validly issued, fully paid
and nonassessable, free and
clear of all preemptive rights,
claims, liens, charges, encumbrances
and
security interests of any nature whatsoever,
other than any of the foregoing
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created by BNYMCM. The capital stock of
the Company, including the Common
Shares, conforms to the description contained in
the Registration Statement.
Except as set forth in the
Prospectus, there are no outstanding
options,
warrants, conversion rights, subscription rights,
preemptive rights, rights of
first refusal or other rights or
agreements of any nature outstanding to
subscribe for or to purchase any shares of Common
Stock of the Company or any
other securities of the Company of any kind
binding on the Company (except
pursuant to dividend reinvestment, stock purchase or
ownership, stock option,
director or employee benefit plans ) and there are no
outstanding securities or
instruments of the Company containing anti-dilution or
similar provisions that
will be triggered by the issuance of the
Common Shares as described in this
Agreement. Except as set forth in the Prospectus, there are no
restrictions upon
the voting or transfer of any shares of the Company's Common
Stock pursuant to
the Company's Articles of Incorporation or
bylaws. There are no agreements or
other obligations (contingent or
otherwise) that may require the Company to
repurchase or otherwise acquire any shares of its
Common Stock. No Person has
the right, contractual or otherwise, to cause the Company to
issue to it, or to
register pursuant to the Securities Act, any
shares of capital stock or other
securities of the Company upon the filing of the
Registration Statement or the
issuance or sale of the Common Shares hereunder.
Section 3.08 No Conflicts. The
issuance and sale of the Common Shares, the
compliance by the Company with all of the provisions of
this Agreement and the
consummation of the transactions
contemplated herein do not and will
not
conflict with or result in a breach
or violation of any of the terms or
provisions of, or constitute a default under, or result
in the imposition of a
lien or security interest under, any
material indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument
to which the Company or
any Significant Subsidiary is a party or by which the Company or
any Significant
Subsidiary is bound or to which any of the
property or assets used in the
conduct of the business of the Company or any Significant
Subsidiary is subject,
nor will such action result in any violation of the
provisions of the Articles
of Incorporation or other organizational document or the
by-laws of the Company
or any Significant Subsidiary or, to the best of the
Company's knowledge, any
statute or any order, rule or regulation of any court or
governmental agency or
body having jurisdiction over the Company or any
Significant Subsidiary or any
of their properties; and no
consent, approval,
authorization, order,
registration or qualification of or with any court
or governmental agency or
body is required for the consummation
by the Company of the transactions
contemplated by this Agreement or in connection
with the issuance and sale of
the Common Shares hereunder, except such as have been,
or will have been prior
to the Closing Date, obtained under the Securities Act,
and for such consents,
approvals, authorizations, orders, registrations
or qualifications as may be
required under state securities or blue sky laws, as the case may
be, and except
in any case where the failure to obtain such consent,
approval, authorization,
order, registration or qualification would not have a Material
Adverse Effect.
Section 3.09 Legal Proceedings.
Other than as set forth in the Prospectus,
there are no legal or governmental proceedings pending
to which the Company or
any of its Subsidiaries is a party or of which
any property of the Company or
any of its Subsidiaries is the subject which, if
determined adversely to the
Company or any of its Subsidiaries, would individually or in
the aggregate have
a Material Adverse Effect and, to the best of the Company's
knowledge, no such
proceedings are threatened or contemplated
by governmental authorities or
threatened by others.
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Section 3.10 Sale of Common
Shares. Immediately after any sale of Common
Shares by the Company hereunder, the aggregate amount
of Common Stock that has
been issued and sold by the Company
hereunder will not exceed the aggregate
amount of Common Stock registered under the
Registration Statement (in this
regard, the Company acknowledges
and agrees that BNYMCM shall
have no
responsibility for maintaining records with respect to
the aggregate amount of
Common Shares sold, or of otherwise monitoring the
availability of Common Stock
for sale, under the Registration Statement).
Section 3.11 Permits.
Each of the Company and its
Significant Subsidiaries has such permits,
licenses, franchises and
authorizations of governmental
or regulatory
authorities (the "permits") as are necessary to own its
respective properties
and to conduct its business in the manner described in
the Prospectus, except
where the failure to obtain such permits would
not reasonably be expected to
have a Material Adverse Effect; to the best knowledge
of the Company after due
inquiry, each of the Company and its Significant Subsidiaries
has fulfilled and
performed all its material obligations with
respect to such permits, except
where the failure to fulfill or perform any such obligation would
not reasonably
be expected to have a Material Adverse Effect;
and no event has occurred that
allows, or after notice or lapse of time would allow,
revocation or termination
of any material permits or would result in any other material
impairment of the
rights of the holder of any such material permits, subject in
each case to such
qualifications as may be set forth in the Prospectus.
Section 3.12 Investment
Company. The Company is not, and after giving
effect to the offering and sale of
the Common Shares, will not be,
an
"investment company" within the meaning of the
Investment Company Act of 1940,
as amended (the "1940 Act").
Section 3.13 Financial Condition; No
Adverse Changes.
(a) The financial statements,
together with related schedules and notes,
included in, or incorporated by reference into, the
Registration Statement and
the Prospectus, present fairly in all
material respects the consolidated
financial position, results of operations and changes
in financial position of
the Company and its consolidated
subsidiaries on the basis stated in the
Registration Statement and the Prospectus at the
respective dates or for the
respective periods to which they apply; such statements
and related schedules
and notes have been prepared in accordance with
generally accepted accounting
principles consistently applied throughout
the periods involved, except as
disclosed therein; and the other financial and statistical
information and data
included or incorporated by reference in the
Registration Statement and the
Prospectus are accurately presented and prepared on a basis
consistent with such
financial statements and the books
and records of the Company and
its
consolidated subsidiaries. No other financial statements are
required to be set
forth or to be incorporated by reference in the
Registration Statement or the
Prospectus under the Securities Act.
(b) The Company and its
consolidated subsidiaries maintain systems of
internal control over financial
reporting (as such term is defined in Rule
13a-15(f) under the Exchange Act) sufficient to
provide reasonable assurance
that (i) transactions are executed in accordance with
management's general or
specific authorizations; (ii) transactions are recorded
as necessary
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to permit preparation of financial
statements in conformity with generally
accepted accounting principles and to
maintain asset accountability; (iii)
access to assets is permitted only in accordance with
management's general or
specific authorization; (iv) the recorded accounting for assets is
compared with
the existing assets at reasonable intervals and appropriate action
is taken with
respect to any differences; and (v) material information relating
to the Company
and its subsidiaries is made known to the Company by its officers
and employees.
The Company's internal control over
financial reporting was effective as of
December 31, 2008, and the Company is not
aware of any material weaknesses
therein. Since the date of the latest audited financial
statements included or
incorporated by reference in the Prospectus, there has
been no change that has
materially affected, or is reasonably likely to materially affect,
the Company's
internal control over financial reporting.
(c) The Company maintains disclosure
controls and procedures (as such term
is defined in Rule 13a-15(e) of the
Exchange Act) that comply with
the
requirements of the Exchange Act and have been designed to
ensure that material
information relating to the Company and its Subsidiaries is
communicated to the
Company's principal executive officer and
principal financial officer. The
Company's disclosure controls and
procedures were effective as of March 31,
2009.
(d) KPMG LLP, who has audited the
financial statements of the Company and
its consolidated subsidiaries that
are incorporated by reference in
the
Registration Statement and the Prospectus and has audited
the effectiveness of
the Company's internal control over
financial reporting, is an independent
registered public accounting firm as required by
the Securities Act and the
rules and regulations of the Commission
promulgated thereunder and the Public
Company Accounting Oversight Board.
Section 3.14 Use of Proceeds.
The Company will use the net proceeds from
the offering of Common Shares in the manner specified in
the Prospectus under
"Use of Proceeds."
Section 3.15
Environmental Matters. Other than as
set forth in the
Prospectus, (a) the Company and its subsidiaries are in
compliance in with all
applicable state and federal environmental
laws, except for instances of
noncompliance that, individually or in the aggregate, would
not have a Material
Adverse Effect, and (b) no event or condition has
occurred that may interfere
with the compliance by the Company and its subsidiaries with
any environmental
law or that may give rise to any liability under any
environmental law, in each
case that, individually or in the
aggregate, would have a Material Adverse
Effect.
Section 3.16 Insurance. Each of the
Company and its subsidiaries is insured
by insurers of recognized financial responsibility against such
losses and risks
and in such amounts as management of the Company believes to be
prudent.
Section 3.17 Officer's
Certificate. Any certificate signed by any officer
of the Company and delivered to BNYMCM or to counsel
for BNYMCM in connection
with an Issuance shall be deemed a representation and warranty by
the Company to
BNYMCM as to the matters covered thereby on the date of such
certificate.
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Section 3.18 Finder's
Fees. The Company has not incurred (directly
or
indirectly) nor will it incur, directly or
indirectly, any liability for any
broker's, finder's, financial advisor's
or other similar fee, charge or
commission in connection with this Agreement or the
transactions contemplated
hereby.
Section 3.19 Non-affiliated
Market Capitalization. As of the Effective
Date, the aggregate market value of the voting stock held by
non-affiliates of
the Company (computed using the price at which the Common Stock was
last sold as
of a date within 60 days prior to such date) exceeds $150
million.
Section 3.20 Taxes.
The Company and its subsidiaries have
filed all
necessary federal, state and foreign income and
franchise tax returns and paid
all taxes shown as due thereon; all such tax returns are complete
and correct in
all material respects; all tax liabilities are
adequately provided for on the
books of the Company and its subsidiaries
except to such extent as would not
have a Material Adverse Effect; the Company and its
subsidiaries have made all
necessary tax payments (including payroll
and/or withholding taxes) and are
current and up-to-date; and the Company and its
subsidiaries have no knowledge
of any tax proceeding or action pending or threatened against the
Company or its
subsidiaries which, individually or in the
aggregate, might have a Material
Adverse Effect. The Company has made adequate charges,
accruals and reserves in
the applicable financial statements
referred to in Section 3.13 hereof in
respect of all federal, state, local and foreign income and
franchise taxes for
all periods as to which the tax
liability of the Company or any of the
subsidiaries has not been finally determined.
Section 3.21 Partnership Status. Each of
the Company's subsidiaries that is
a partnership or a limited liability company, other than any
entity for which a
taxable REIT subsidiary election has been made ("Subsidiary
Partnerships"), is
properly classified either as a disregarded entity or as a
partnership, and not
as a corporation or as an association taxable as
a corporation, for federal
income tax purposes throughout the period from its
formation through the date
hereof, or, in the case of any Subsidiary
Partnerships that have terminated,
through the date of termination of such Subsidiary
Partnerships.
Section 3.22 REIT
Status. The Company is organized and has operated
in
conformity with the requirements for qualification and taxation as
a real estate
investment trust ("REIT") for each of its taxable years since
its formation and
its current organization and current and
proposed method of operation will
enable it to continue to meet the requirements for qualification
and taxation as
a REIT. No transaction event has occurred which could
cause the Company not to
be able to qualify as a REIT for its current taxable year or
any future taxable
year.
Section 3.23 REIT Compliance. KPMG
LLP (i) periodically tests procedures
and conducts annual compliance reviews designed to determine
compliance with the
REIT provisions of the Internal Revenue Code of
1986, as amended (the "Code")
and (ii) assists the Company in monitoring what
it believes are appropriate
accounting systems and procedures designed to determine compliance
with the REIT
provisions of the Code.
Section 3.24 Tax Disclosure.
The statements under the caption "Material
United States Federal Income Tax Consequences" in the Prospectus
are accurate in
all material respects.
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ARTICLE IV
COVENANTS
The Company covenants and
agrees during the term of this Agreement with
BNYMCM as follows:
&nbs
