Exhibit 1.1
NATIONWIDE HEALTH PROPERTIES,
INC.
5,000,000 SHARES OF COMMON
STOCK
CONTROLLED EQUITY
OFFERING SM
SALES
AGREEMENT
September 22, 2006
CANTOR FITZGERALD &
CO.
110 East 59th Street
New York, NY 10022
Ladies and Gentlemen:
NATIONWIDE HEALTH PROPERTIES, INC.,
a Maryland corporation (the “ Company ”),
confirms its agreement (this “ Agreement
”) with Cantor Fitzgerald & Co.
(“CF&Co”), as follows:
1. Issuance and Sale of
Shares . The Company agrees that, from time to time during the
term of this Agreement, on the terms and subject to the conditions
set forth herein, it may issue and sell through CF&Co, acting
as agent and/or principal, up to 5,000,000 shares (the
“Shares”) of the Company’s common stock, par
value $0.10 per share (the “ Common Stock
”). The issuance and sale of Shares through CF&Co will be
effected pursuant to the Registration Statement (as defined below)
filed by the Company and declared effective by the Securities and
Exchange Commission (the “ Commission ”),
although nothing in this Agreement shall be construed as requiring
the Company to use the Registration Statement to issue
Shares.
The Company has filed, in accordance
with the provisions of the Securities Act of 1933, as amended, and
the rules and regulations thereunder (collectively, the “
Securities Act ”), with the Commission a
registration statement on Form S-3 (File No. 333-127366),
including a base prospectus, with respect to equity and other
offerings, including the Shares, and which incorporates by
reference documents that the Company has filed or will file in
accordance with the provisions of the Securities Exchange Act of
1934, as amended, and the rules and regulations thereunder
(collectively, the “ Exchange Act ”). The
Company has prepared a prospectus supplement (the “
Prospectus Supplement ”) to the base prospectus
included as part of such registration statement, relating to the
offering of the Shares. The Company has furnished to CF&Co, for
use by CF&Co, copies of one or more prospectuses included as
part of such registration statement, as supplemented by the
Prospectus Supplement. Except where the context otherwise requires,
such registration statement, as amended when it became effective,
including all documents filed as part thereof or incorporated by
reference therein, and including any information contained in a
Prospectus (as defined below) subsequently filed with the
Commission pursuant to Rule 424(b) under the Securities Act and
also including any other registration statement filed pursuant to
Rule 462(b) under the Securities Act, collectively, are herein
called the “ Registration Statement ,”
and the base prospectus, including all documents
incorporated therein by reference, included in
the Registration Statement, as it may be supplemented by the
Prospectus Supplement, in the form filed by the Company with the
Commission pursuant to Rule 424(b) under the Securities Act is
herein called the “ Prospectus .” Any
reference herein to the Registration Statement, the Prospectus or
any amendment or supplement thereto shall be deemed to refer to and
include the documents incorporated by reference therein, and any
reference herein to the terms “amend,”
“amendment” or “supplement” with respect to
the Registration Statement or the Prospectus shall be deemed to
refer to and include the filing after the execution hereof of any
document with the Commission deemed to be incorporated by reference
therein (such documents incorporated or deemed to be incorporated
by reference are herein called the “Incorporated
Documents”). For purposes of this Agreement, all references
to the Registration Statement, the Prospectus or to any amendment
or supplement thereto shall be deemed to include any copy filed
with the Commission pursuant to its Electronic Data Gathering
Analysis and Retrieval System (“ EDGAR
”).
2. Placements . Each time
that the Company wishes to issue and sell Shares hereunder (each, a
“ Placement ”), it will notify CF&Co
of the proposed terms of such Placement. If CF&Co wishes to
accept such proposed terms (which it may decline to do for any
reason in its sole discretion) or, following discussions with the
Company, wishes to accept amended terms, CF&Co will issue to
the Company a written notice setting forth the terms that CF&Co
is willing to accept, including without limitation the number of
Shares (“ Placement Shares ”) to be
issued, the manner(s) in which sales are to be made, the date or
dates on which such sales are anticipated to be made, any minimum
price below which sales may not be made, and the capacity in which
CF&Co may act in selling Placement Shares hereunder (as
principal, agent or both) (a “ Placement Notice
”), the form of which is attached hereto as Schedule 1
. The amount of any discount, commission or other compensation to
be paid by the Company to CF&Co shall be equal to up to two and
one quarter percent (2.25%) of the gross proceeds from sales
of the Shares pursuant to the terms of this Agreement. The terms
set forth in a Placement Notice will not be binding on the Company
or CF&Co unless and until the Company delivers written notice
of its acceptance of all of the terms of such Placement Notice (an
“ Acceptance ”) to CF&Co; provided,
however, that neither the Company nor CF&Co will be bound by
the terms of a Placement Notice unless the Company delivers to
CF&Co an Acceptance with respect thereto prior to 4:30 p.m.
(New York time) on the Business Day (as defined below) following
the Business Day on which such Placement Notice is received by
Company in accordance with Section 12 (Notices). It is
expressly acknowledged and agreed that neither the Company nor
CF&Co will have any obligation whatsoever with respect to a
Placement or any Placement Shares unless and until CF&Co
delivers a Placement Notice to the Company and the Company accepts
such Placement Notice by means of an Acceptance, and then only upon
the terms specified therein and herein. In the event of a conflict
between the terms of this Agreement and the terms of a Placement
Notice, the terms of the Placement Notice will control.
3. Sale of Placement Shares by
CF&Co . Subject to the terms and conditions herein set
forth, upon the Company’s Acceptance of a Placement Notice,
and unless the sale of the Placement Shares described therein has
been suspended or otherwise terminated in accordance with the terms
of this Agreement, CF&Co will use its commercially reasonable
efforts consistent with its normal trading and sales practices to
sell such Placement Shares up to the amount specified, and
otherwise in accordance with the terms of such Placement Notice.
CF&Co will provide written confirmation to the Company no later
than the opening of the Trading Day (as
2
defined below) next following the Trading Day on
which it has made sales of Placement Shares hereunder setting forth
the number of Placement Shares sold on such day, the compensation
payable by the Company to CF&Co with respect to such sales
pursuant to Section 2, and the Net Proceeds (as defined below)
payable to the Company, with an itemization of deductions made by
CF&Co (as set forth in Section 5(a)) from gross proceeds
for the Placement Shares that it receives from such sales.
CF&Co may sell Placement Shares by any method permitted by law
deemed to be an “at the market” offering as defined in
Rule 415 of the Securities Act, including without limitation sales
made directly on the New York Stock Exchange (the “
Exchange ”), on any other existing trading
market for the Common Stock or to or through a market maker.
CF&Co may also sell Placement Shares in privately negotiated
transactions. The Company acknowledges and agrees that
(i) there can be no assurance that CF&Co will be
successful in selling Placement Shares, and (ii) CF&Co
will incur no liability or obligation to the Company or any other
person or entity if it does not sell Placement Shares for any
reason other than a failure by CF&Co to use its commercially
reasonable efforts consistent with its normal trading and sales
practices to sell such Placement Shares as required under this
Section 3 . For the purposes hereof, “
Trading Day ” means any day on which Common
Stock is purchased and sold on the principal market on which the
Common Stock is listed or quoted.
4. Suspension of Sales . The
Company or CF&Co may, upon notice to the other party in writing
(including by email correspondence if receipt of such
correspondence is actually acknowledged by the party to whom the
notice is sent, other than via auto-reply) or by telephone
(confirmed immediately by verifiable facsimile transmission),
suspend any sale of Placement Shares; provided, however ,
that such suspension shall not affect or impair either
party’s obligations with respect to any Placement Shares sold
hereunder prior to the receipt of such notice. Each of the Parties
agrees that no such notice shall be effective against the other
unless it is made to one of the individuals named on Schedule
2 hereto, as such Schedule may be amended from time to
time.
5. Settlement .
(a) Settlement of Placement
Shares . Unless otherwise specified in the applicable Placement
Notice, settlement for sales of Placement Shares will occur on the
third (3rd) Business Day (or such earlier day as is industry
practice for regular-way trading) following the date on which such
sales are made (each, a “ Settlement Date
”). The amount of proceeds to be delivered to the Company on
a Settlement Date against receipt of the Placement Shares sold (the
“ Net Proceeds ”) will be equal to the
aggregate sales price received by CF&Co at which such Placement
Shares were sold, after deduction for (i) CF&Co’s
commission, discount or other compensation for such sales payable
by the Company pursuant to Section 2 hereof,
(ii) any other amounts due and payable by the Company to
CF&Co hereunder pursuant to Section 7(g) (Expenses)
hereof, and (iii) any transaction fees imposed by any
governmental or self-regulatory organization in respect of such
sales.
(b) Delivery of Placement
Shares . On or before each Settlement Date, the Company will,
or will cause its transfer agent to, electronically transfer the
Placement Shares being sold by crediting CF&Co’s or its
designee’s (provided CF&Co shall have given the Company
written notice of such designee prior to the Settlement Date)
account at The Depository Trust Company through its Deposit and
Withdrawal at Custodian System or by such
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other means of delivery as may be
mutually agreed upon by the parties hereto and, upon receipt of
such Placement Shares, which in all cases shall be freely tradable,
transferable, registered shares in good deliverable form, CF&Co
will deliver the related Net Proceeds in same day funds to an
account designated by the Company prior to the Settlement Date. If
the Company defaults in its obligation to deliver Placement Shares
on a Settlement Date, the Company agrees that in addition to and in
no way limiting the rights and obligations set forth in
Section 9(a) (Indemnification) hereto, it will
(i) hold CF&Co harmless against any loss, claim, damage,
or expense (including reasonable legal fees and expenses), as
incurred, arising out of or in connection with such default by the
Company and (ii) pay to CF&Co any commission, discount, or
other compensation to which it would otherwise have been entitled
absent such default; provided, however, that the Company shall not
be obligated to so indemnify and reimburse CF&Co if the
Placement Shares are not delivered due to (i) a suspension or
material limitation in trading in securities generally on the New
York Stock Exchange, the American Stock Exchange or the NASDAQ;
(ii) a general moratorium on commercial banking activities
declared by either federal or New York State authorities or a
material disruption in commercial banking or securities settlement
or clearance services in the United States; (iii) an outbreak
or escalation of hostilities or acts of terrorism involving the
United States or a declaration by the United States of a national
emergency or war: or (iv) any other calamity or crisis or any
change in financial, political or economic conditions in the United
States or elsewhere.
6. Representations and Warranties
of the Company . The Company represents and warrants to, and
agrees with, CF&Co that as of the date of this Agreement and as
of each Representation Date (as defined in Section 7(m)
below) on which a certificate is required to be delivered pursuant
to Section 7(m) of this Agreement, as the case may
be:
(a) the Registration Statement has
heretofore been declared effective under the Securities Act; no
stop order of the Commission preventing or suspending the use of
the base prospectus, the Prospectus Supplement or the Prospectus,
or the effectiveness of the Registration Statement, has been
issued, and no proceedings for such purpose have been instituted
or, to the Company’s knowledge, are contemplated by the
Commission; the Company is eligible to use Form S-3 under the
Securities Act with respect to the Registration Statement, and the
conditions to the use of Form S-3 with respect to the
Registration Statement in connection with the offering and sale of
the Shares as contemplated hereby have been satisfied; the
Registration Statement as of the date of this Agreement meets, and
the offering and sale of the Shares as contemplated hereby complies
with, the requirements of Rule 415 under the Act. The
Registration Statement complied when it became effective, complies
and, at each Settlement Date and the time when the Prospectus
Supplement, or any amendment or supplement thereto, is filed with
the Commission under Rule 424(b) under the Securities Act,
will comply, and each base prospectus, the Prospectus Supplement
and the Prospectus conformed as of their respective dates, conform
and, at each Settlement Date, and the time when the Prospectus
Supplement, or any amendment or supplement thereto, is filed with
the Commission under Rule 424(b) under the Securities Act,
will conform in all material respects with the requirements of the
Securities Act (including Rule 415 under the Act); the
Registration Statement did not at the time of effectiveness, does
not and, at each Settlement Date and the time when the Prospectus
Supplement, or any amendment or supplement thereto, is filed with
the Commission under Rule 424(b) under the Securities Act,
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 base
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prospectus, the Prospectus
Supplement and the Prospectus did not as of their respective dates,
do not and, at each Settlement Date and any time at which the
Prospectus is delivered in connection with any sale of Shares, 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, in light of the circumstances under which
they were made, not misleading; provided, however, that the Company
makes no warranty or representation with respect to any statement
contained in the Registration Statement or the Prospectus in
reliance upon and in conformity with information furnished in
writing by CF&Co to the Company expressly for use in the
Registration Statement or the Prospectus; each Incorporated
Document, at the time such document was filed with the Commission,
at the times the base prospectus, the Prospectus Supplement and
Prospectus were filed with the Commission under Rule 424(b)
under the Act and at the time the Registration Statement became
effective, complied in all material respects with the requirements
of the Securities Act and the Exchange Act and did 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 Company has not
distributed and will not distribute any “prospectus”
(within the meaning of the Securities Act) or offering material in
connection with the offering or sale of the Shares other than the
then most recent Prospectus Supplement, in each case accompanied by
the then most recent base prospectus;
(b) as of the date of this
Agreement, the Company has an authorized and outstanding
capitalization as set forth in the Registration Statement and the
Prospectus and, as of each Settlement Date, the Company shall have
an authorized and outstanding capitalization as set forth in the
Registration Statement and the Prospectus (subject, in each case,
to the issuance of shares of Common Stock upon exercise of stock
options and warrants disclosed as outstanding in the Registration
Statement and the Prospectus, the grant of options under existing
stock option plans described in the Registration Statement and the
Prospectus and the issuance of Common Stock pursuant to the
Company’s dividend reinvestment and stock purchase plans
described in the Registration Statement and Prospectus); all of the
issued and outstanding shares of capital stock, including the
Common Stock, of the Company have been duly authorized and validly
issued and are fully paid and non-assessable, have been issued in
compliance, in all material respects, with all federal and state
securities laws and were not issued in violation of any preemptive
right or similar right; no further approval or authority of the
stockholders or the Board of Directors of the Company are required
for the issuance and sale of the Shares;
(c) 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 the
corporate power and authority to acquire, own, lease and operate
its properties, and to lease the same to others, and to conduct its
business as described in the Registration Statement and the
Prospectus, to execute and deliver this Agreement and to issue and
sell the Shares as contemplated herein; and the Company is in
compliance in all respects with the laws, orders, rules,
regulations and directives issued or administered by such
jurisdictions, except where the failure to be in compliance would
not, individually or in the aggregate, have a Material Adverse
Effect (as defined below);
(d) the Company is duly qualified to
do business as a foreign corporation and is in good standing in
each jurisdiction (and attached hereto as Schedule 3 is
an accurate and complete list of each such jurisdiction) where the
ownership or leasing of its properties or the
5
conduct of its business requires
such qualification, except where the failure to be so qualified and
in good standing would not, individually or in the aggregate,
either (i) have a material adverse effect on the business,
financial condition, results of operations or prospects of the
Company and its subsidiaries taken as a whole or (ii) prevent
consummation of the transactions contemplated hereby (the
occurrence of such effect or such prevention described in the
foregoing clauses (i) and (ii) being herein referred to
as a “ Material Adverse Effect ”);
(e) Each subsidiary of the Company
(each a “ Subsidiary ” and collectively, the
“ Subsidiaries ”) that is a significant
subsidiary (each a “ Significant Subsidiary ”
and collectively, the “ Significant Subsidiaries
”) has been duly incorporated or organized and is validly
existing as a corporation, limited liability company or limited
partnership, as the case may be, in good standing under the laws of
the jurisdiction of its incorporation or organization, has
corporate power and authority to own, lease and operate its
properties and conduct its business as described in the Prospectus
and is duly qualified as a foreign corporation, limited liability
company or limited partnership, as the case may be, 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 so qualify would not have a Material Adverse Effect; all
of the issued and outstanding capital stock of, or other ownership
interests in, each such Significant Subsidiary has been duly
authorized and validly issued, is fully paid and non-assessable
and, except for directors’ qualifying shares, is owned by the
Company, directly or through subsidiaries, free and clear of any
security interest, mortgage, pledge, lien, encumbrance, claim or
equity; and attached hereto as Schedule 4 is an
accurate and complete list of the Significant
Subsidiaries;
(f) the Shares have been duly and
validly authorized and, when issued and delivered against payment
therefor as provided herein, will be duly and validly issued, fully
paid and non-assessable and free of preemptive rights and similar
rights;
(g) the capital stock of the
Company, including the Shares, conforms in all material respects to
the description thereof contained in the Registration Statement and
the Prospectus, and the certificates for the Shares are in due and
proper form and the holders of the Shares will not be subject to
personal liability solely by reason of being such
holders;
(h) this Agreement has been duly
authorized, executed and delivered by the Company;
(i) neither the Company nor any of
the Significant Subsidiaries is in breach or violation of or in
default under (nor has any event occurred which with notice, lapse
of time or both would result in any breach or violation of,
constitute a default under or give the holder of any indebtedness
(or a person acting on such holder’s behalf) the right to
require the repurchase, redemption or repayment of all or a part of
such indebtedness under) (i) its respective charter or bylaws,
or other organizational documents, or any indenture, mortgage, deed
of trust, bank loan or credit agreement or other evidence of
indebtedness, or (ii) any license, lease, contract or other
agreement or instrument to which the Company or any of the
Significant Subsidiaries is a party or by which any of them or any
of their respective properties may be bound or affected, or
(iii) any federal, state or, to the Company’s knowledge,
local regulation or rule, or the rules and regulations of the
Exchange, or any decree, judgment or order applicable to the
Company or any
6
of the Subsidiaries or any of their
respective properties, except, in the case of clauses (ii) and
(iii), for breaches, violations, defaults and events that would
not, individually or in the aggregate, have a Material Adverse
Effect; and the execution, delivery and performance of this
Agreement and the issuance and sale of the Shares and the
consummation of the transactions contemplated hereby will neither
(A) conflict with, result in any breach or violation of or
constitute a default under (nor constitute any event which with
notice, lapse of time or both would result in any breach or
violation of or constitute a default under or give the holder of
any indebtedness (or a person acting on such holder’s behalf)
the right to require the repurchase, redemption or repayment of all
or a part of such indebtedness under) the charter or bylaws, or
other organizational documents, of the Company or any of the
Subsidiaries, or any indenture, mortgage, deed of trust, bank loan
or credit agreement or other evidence of indebtedness, or any
license, lease, contract or other agreement or 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
affected, or any federal, state or, to the Company’s
knowledge, local law, regulation or rule, or the rules and
regulations of the Exchange, or any decree, judgment or order
applicable to the Company or any of the Subsidiaries; nor
(B) result in the creation or imposition of any lien, charge,
claim or encumbrance upon any of the properties (real and personal
(including, without limitation, mortgage loans and unsecured
loans)) described in the Registration Statement or Prospectus as
being owned by the Company or any of the Subsidiaries (the “
Properties ” and, such of the Properties that are real
property, the “ Real Properties ”), except, in
the case of clause (B), for liens, charges, claims and
encumbrances that would not, individually or in the aggregate, have
a Material Adverse Effect;
(j) no consent, approval,
authorization, order or decree of any court or governmental agency
or body is required for the consummation by the Company of the
transactions contemplated by this Agreement, except such as may be
required under the Act or as may be required by state securities or
blue sky laws;
(k) no person has the right to act
as an underwriter or as a financial advisor to the Company in
connection with the offer and sale of the Shares, whether as a
result of the filing or effectiveness of the Registration Statement
or the sale of the Shares as contemplated thereby or otherwise; no
person has the right, contractual or otherwise, to cause the
Company to register under the Securities Act any shares of Common
Stock or shares of any other capital stock or other securities of
the Company;
(l) each of the Company and the
Significant Subsidiaries has all necessary licenses,
authorizations, consents and approvals and has made all necessary
filings required under any federal, state, local or foreign law,
regulation or rule, and has obtained all necessary licenses,
authorizations, consents and approvals from other persons, in order
to acquire and own, lease or sublease, lease to others and conduct
its respective business as described in the Registration Statement
or Prospectus, except where the failure to have or obtain such
licenses, authorizations, consents and approvals and to make such
filings would not, individually or in the aggregate, have a
Material Adverse Effect; neither the Company nor any of the
Subsidiaries is in violation of, or in default under, or has
received notice of any proceedings relating to revocation or
modification of, any such license, authorization, consent or
approval or any federal, state, local or foreign law, regulation or
rule or any decree, order or judgment applicable to the
7
Company or any of the Subsidiaries,
except where such violation, default, revocation or modification
would not, individually or in the aggregate, have a Material
Adverse Effect;
(m) there are no contracts or
documents which are required to be filed as exhibits to the
Registration Statement or any Incorporated Documents which have not
been so filed as required;
(n) except as disclosed in the
Registration Statement and Prospectus, there are no actions, suits,
claims, investigations or proceedings pending or, to the
Company’s knowledge, threatened to which the Company or any
of the Subsidiaries is or would be a party, or of which any of the
respective properties or assets of the Company and the
Subsidiaries, or any Property, is or would be subject at law or in
equity, before or by any federal, state, local or foreign
governmental or regulatory commission, board, body, authority or
agency, except any such action, suit, claim, investigation or
proceeding which should not have a reasonable possibility of
resulting in a judgment, decree or order having, individually or in
the aggregate, a Material Adverse Effect;
(o)
Ernst & Young LLP, whose report on the
consolidated financial statements of the Company and the
Subsidiaries is incorporated by reference in the Registration
Statement and the Prospectus, is an independent registered public
accounting firm as required by the Securities Act;
(p) the financial statements
included or incorporated by reference in the Registration Statement
and the Prospectus, together with the related notes and schedules,
present fairly the consolidated financial position of the Company
and the Subsidiaries as of the dates indicated and the consolidated
results of operations and cash flows of the Company and the
Subsidiaries for the periods specified and have been prepared in
compliance with the requirements of the Securities Act and Exchange
Act and in conformity with generally accepted accounting principles
applied on a consistent basis during the periods involved; any pro
forma financial statements or data included or incorporated by
reference in the Registration Statement and the Prospectus comply
with the requirements of Regulation S-X of the Securities Act,
including, without limitation, Article 11 thereof, and the
assumptions used in the preparation of such pro forma financial
statements and data are reasonable, the pro forma adjustments used
therein are appropriate to give effect to the circumstances
referred to therein and the pro forma adjustments have been
properly applied to the historical amounts in the compilation of
those statements and data; the other financial and statistical data
set forth or incorporated by reference in the Registration
Statement and the Prospectus are accurately presented and prepared
on a basis consistent with the financial statements and books and
records of the Company; the Company and the Subsidiaries do not
have any material liabilities or obligations, direct or contingent
(including any off-balance sheet obligations or any “variable
interest entities” within the meaning of Financial Accounting
Standards Board Interpretation No. 46), not disclosed in the
Registration Statement and the Prospectus; and all disclosures
contained in the Registration Statement or the Prospectus,
including the documents incorporated by reference therein,
regarding “non-GAAP financial measures” (as such term
is defined by the rules and regulations of the Commission) comply,
in all material respects, with Regulation G of the Exchange Act and
Item 10 of Regulation S-K under the Securities Act, to the
extent applicable;
8
(q) subsequent to the respective
dates as of which information is given in the Registration
Statement and the Prospectus, there has not been (i) any
material adverse change in the business, financial condition,
results of operations or prospects of the Company and the
Subsidiaries taken as a whole, (ii) any transaction, other
than in the ordinary course, which is material to the Company and
the Subsidiaries taken as a whole, (iii) any obligation,
direct or contingent (including any off-balance sheet obligations),
incurred by the Company or any Subsidiary, which is material to the
Company and the Subsidiaries taken as a whole, (iv) any change
in the capital stock or outstanding indebtedness of the Company or
any Subsidiaries or (v) except for regular quarterly dividends
on the Common Stock or the Company’s outstanding preferred
stock, any dividend or distribution of any kind declared, paid or
made on the capital stock of the Company;
(r) the Company is not required to
be registered under the Investment Company Act of 1940, as amended
(the “ Investment Company Act ”).
(s) the Company and the Subsidiaries
have good title to the Properties, and, in the case of Real
Property, free and clear of all liens, claims, mortgages, deeds of
trust, restrictions, security interests and other encumbrances or
defects (“Property Encumbrances”), except as disclosed
in the Registration Statement and Prospectus and except for
(x) the leasehold interests of lessees in the Real Property of
the Company and the Subsidiaries held under lease (the
“Leases”) and (y) any other Property Encumbrances
that would not, individually or in the aggregate, have a Material
Adverse Effect or a material adverse effect on such Property; and
all Property Encumbrances on or affecting the Properties which are
required to be disclosed in the Prospectus or Registration
Statement are disclosed therein as required;
(t) each of the Leases has been duly
authorized by the Company or a Subsidiary, as applicable, and is a
valid, subsisting and enforceable agreement of the Company or such
Subsidiary, as applicable, enforceable in accordance with its
terms, except as such enforceability may be limited by bankruptcy,
insolvency, reorganization or other similar laws affecting
creditors’ rights generally or general equitable
principles;
(u) except as otherwise disclosed in
the Prospectus, the Company has no knowledge of: (i) the
unlawful presence of any hazardous substances, hazardous materials,
toxic substances or waste materials (collectively, “
Hazardous Materials ”) on any of its properties or
(ii) any unlawful spills, releases, discharges or disposal of
Hazardous Materials that have occurred or are presently occurring
on or from its properties as a result of any construction on or
operation and use of its properties, which presence or occurrence
would have a Material Adverse Effect; and in connection with the
construction on or operation and use of its properties, the Company
has no knowledge of any material failure to comply with all
applicable local, state and federal environmental laws,
regulations, ordinances and administrative and judicial orders
relating to the generation, recycling, reuse, sale, storage,
handling, transport and disposal of any Hazardous Materials that
could have a Material Adverse Effect;
(v) the Company has adequate title
insurance on its properties owned in fee by the Company or its
Significant Subsidiaries;
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(w) the Company, and each of the
Significant Subsidiaries, maintains a system of internal accounting
controls sufficient to provide reasonable assurance 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 book value for assets is compared with the
fair market value of such assets (computed in accordance with
generally accepted accounting principles) at reasonable intervals
and appropriate action is taken with respect to any
differences;
(x) the Company is in compliance in
all material respects with all applicable effective provisions of
the Sarbanes-Oxley Act of 2002 (the “ Sarbanes-Oxley
Act ”) and the rules and regulations of the Commission
and the Exchange promulgated thereunder;
(y) at all times since
December 31, 1985, the Company has met, currently meets, and
as of the time of purchase or additional time of purchase, as the
case may be, will meet, the requirements for qualification and
taxation as a real estate investment trust (“ REIT
”) under the Internal Revenue Code of 1986 (the “
Code ”); the Company intends to continue to meet such
requirements unless the Company’s board of directors in good
faith determines by resolution that it is in the best interests of
the Company’s stockholders not to meet such
requirements;
(z) neither the Company nor any of
the Subsidiaries has taken, directly or indirectly, any action
designed to stabilize or manipulate, under the Exchange Act or
otherwise, or which has constituted or might reasonably be expected
to cause or result in, under the Exchange Act or otherwise, the
stabilization or manipulation of, the price of the Shares to
facilitate the sale or resale of the Shares;
(aa) the Company is not a party to
any agreement with an agent or underwriter for any other
“at-the-market” or continuous equity transaction;
and
(bb) the Company acknowledges and
agrees that CF&Co has informed the Company that CF&Co may,
to the extent permitted under the Securities Act and the Exchange
Act, purchase and sell shares of Common Stock for its own account
while this Agreement is in effect; provided, that
(i) no such purchase or sales shall take place while a
Placement Notice is in effect (except to the extent CF&Co may
engage in sales of Placement Shares purchased or deemed purchased
from the Company as a “riskless principal” or in a
similar capacity) and (ii) the Company shall not be deemed to
have authorized or consented to any such purchases or sales by
CF&Co.
7. Covenants of the Company .
The Company covenants and agrees with CF&Co that:
(a) Registration Statement
Amendments . After the date of this Agreement and during any
period in which a Prospectus relating to any Placement Shares is
required to be delivered by CF&Co under the Securities Act
(including in circumstances where such requirement may be satisfied
pursuant to Rule 172 under the Securities Act), (i) the
Company
10
will notify CF&Co promptly of
the time when any subsequent amendment to the Registration
Statement, other than documents incorporated by reference, has been
filed with the Commission and/or has become effective or any
subsequent supplement to the Prospectus has been filed and of any
request by the Commission for any amendment or supplement to the
Registration Statement or Prospectus or for additional information,
(ii) the Company will prepare and file with the Commission,
promptly upon CF&Co’s request, any amendments or
supplements to the Registration Statement or Prospectus that, in
CF&Co’s reasonable judgment, may be necessary or
advisable in connection with the distribution of the Placement
Shares by CF&Co (provided, however, that the failure of
CF&Co to make such request shall not relieve the Company of any
obligation or liability hereunder, or affect CF&Co’s
right to rely on the representations and warranties made by the
Company in this Agreement); (iii) the Company will not file
any amendment or supplement to the Registration Statement or
Prospectus relating to the Placement Shares (except for documents
incorporated by reference) unless a copy thereof has been submitted
to CF&Co a reasonable period of time before the filing and
CF&Co has not reasonably objected thereto (provided, however,
(A) that the failure of CF&Co to make such objection shall
not relieve the Company of any obligation or liability hereunder,
or affect CF&Co’s right to rely on the representations
and warranties made by the Company in this Agreement and
(B) that the Company has no obligation to provide CF&Co
any advance copy of such filing or to provide CF&Co an
opportunity to object to such filing if such filing does not name
CF&Co or does not relate to the transactions contemplated
hereunder) and the Company will furnish to CF&Co at the time of
filing thereof a copy of any document that upon filing is deemed to
be incorporated by reference into the Registration Statement or
Prospectus, except for those documents available via EDGAR; and
(iv) the Company will cause each amendment or supplement to
the Prospectus to be filed with the Commission as required pursuant
to the applicable paragraph of Rule 424(b) of the Securities Act
or, in the case of any document to be incorporated therein by
reference, to be filed with the Commission as required pursuant to
the Exchange Act, within the time period prescribed (the
determination to file or not file any amendment or supplement with
the Commission under this Section 7(a), based on the
Company’s reasonable opinion or reasonable objections, shall
be made exclusively by the Company).
(b) Notice of Commission Stop
Orders . The Company will advise CF&Co, promptly after it
receives notice or obtains knowledge thereof, of the issuance by
the Commission of any stop order suspending the effectiveness of
the Registration Statement, of the suspension of the qualification
of the Placement Shares for offering or sale in any jurisdiction,
or of the initiation of any proceeding for any such purpose; and it
will promptly use its commercially reasonable efforts to prevent
the issuance of any stop order or to obtain its withdrawal if such
a stop order should be issued.
(c) Delivery of Prospectus;
Subsequent Changes . During any period in which a Prospectus
relating to the Placement Shares is required to be delivered by
CF&Co under the Securities Act with respect to the offer and
sale of the Placement Shares (including in circumstances where such
requirement may be satisfied pursuant to Rule 172 under the
Securities Act), the Company will use its best efforts to comply
with all requirements imposed upon it by the Securities Act, as
from time to time in force, and to file on or before their
respective due dates all reports and any definitive proxy or
information statements required to be filed by the Company with the
Commission pursuant to Sections 13(a), 13(c), 14, 15(d) or
any
11
other provision of or under the
Exchange Act. If during such period any event occurs as a result of
which the Prospectus as then amended or supplemented would include
an untrue statement of a material fact or omit to state a material
fact necessary to make the statements therein, in the light of the
circumstances then existing, not misleading, or if during such
period it is necessary to amend or supplement the Registration
Statement or Prospectus to comply with the Securities Act, the
Company will promptly notify CF&Co to suspend the offering of
Placement Shares during such period and the Company will promptly
amend or supplement the Registration Statement or Prospectus (at
the expense of the Company) so as to correct such statement or
omission or effect such compliance.
(d) Listing of Placement
Shares . During any period in which the Prospectus relating to
the Placement Shares is required to be delivered by CF&Co under
the Securities Act with respect to the offer and sale of the
Placement Shares (including in circumstances where such requirement
may be satisfied pursuant to Rule 172 under the Securities
Act), the Company will use its commercially reasonable efforts to
cause the Placement Shares to be listed on the Exchange and to
qualify the Placement Shares for sale under the securities laws of
such jurisdictions as CF&Co reasonably designates and to
continue such qualifications in effect so long as required for the
distribution of the Placement Shares; provided, however ,
that the Company shall not be required in connection therewith to
qualify as a foreign corporation or dealer in securities or file a
general consent to service of process in any
jurisdiction.
(e) Delivery of Registration
Statement and Prospectus . The Company will furnish to
CF&Co and its counsel (at the expense of the Company) copies of
the Registration Statement, the Prospectus (including all documents
incorporated by reference therein) and all amendments and
supplements to the Registration Statement or Prospectus that are
filed with the Commission during any period in which a Prospectus
relating to the Placement Shares is required to be delivered under
the Securities Act (including all documents filed with the
Commission during such period that are deemed to be incorporated by
reference therein), in each case as soon as reasonably practicable
and in such quantities as CF&Co may from time to time
reasonably request and, at CF&Co’s request, will also
furnish copies of the Prospectus to each exchange or market on
which sales of the Placement Shares may be made; provided,
however , that the Company shall not be required to furnish any
document (other than the Prospectus) to CF&Co to the extent
such document is available on EDGAR.
(f) Earnings Statement . The
Company will make generally available to its security holders as
soon as practicable, but in any event not later than 15 months
after the end of the Company’s current fiscal quarter, an
earnings statement covering a 12-month period that satisfies the
provisions of Section 11(a) and Rule 158 of the Securities
Act.
(g) Expenses . The Company,
whether or not the transactions contemplated hereunder are
consummated or this Agreement is terminated, in accordance with the
provisions of Section 11 hereunder, will pay all expenses
incident to the performance of its obligations hereunder,
including, but not limited to, expenses relating to (i) the
preparation, printing and filing of the Registration Statement and
each amendment and supplement thereto, of each Prospectus and of
each amendment and supplement thereto, (ii) the preparation,
issuance and delivery of the Placement Shares, (iii) the
qualification of the Placement Shares under securities laws in
accordance with the provisions of Section 7(d) of this
Agreement, including filing fees
12
and any reasonable fees or
disbursements of counsel for CF&Co in connection therewith,
(iv) the printing and delivery to CF&Co of copies of the
Prospectus and any amendments or supplements thereto, and of this
Agreement, (v) the fees and expenses incurred in connection
with the listing or qualification of the Placement Shares for
trading on the Exchange, (vi) filing fees and expenses, if
any, of the Commission and the NASD Corporate Finance
Department.
(h) Use of Proceeds . The
Company will use the Net Proceeds as described in the Prospectus in
the section entitled “Use of Proceeds.”
(i) Notice of Other Sales .
During either the pendency of any Placement Notice given hereunder,
or any period in which the Prospectus relating to the Placement
Shares is required to be delivered by CF&Co, the Company shall
provide CF&Co notice as promptly as reasonably possible before
it offers to sell, contracts to sell, sells, grants any option to
sell or otherwise disposes of any shares of Common Stock (other
than Placement Shares offered pursuant to the provisions of this
Agreement) or securities convertible into or exchangeable for
Common Stock, warrants or any rights to purchase or acquire Common
Stock; provided, that such notice shall not be required in
connection with the issuance of shares of Common Stock upon
exercise of stock options and warrants disclosed as outstanding in
the Registration Statement and the Prospectus, the grant of options
under existing stock option plans described in the Registration
Statement and the Prospectus and the issuance of Common Stock
pursuant to the Company’s dividend reinvestment and stock
purchase plans described in the Registration Statement and
Prospectus.
(j) Change of Circumstances .
The Company will, at any time during the term of this Agreement, as
supplemented from time to time, advise CF&Co promptly after it
shall have received notice or obtained knowledge thereof, of any
information or fact that would alter or affect in any material
respect any opinion, certificate, letter or other document required
to be provided to CF&Co pursuant to Sections 7(m) and 7(o)
of this Agreement.
(k) Due Diligence Cooperation
. The Company will cooperate with any reasonable due diligence
review conducted by CF&Co or its agents in connection with the
transactions contemplated hereby, including, without limitation,
providing information and making available documents and senior
corporate officers, during regular business hours and at the
Company’s principal offices, as CF&Co may reasonably
request.
(l) Required Filings Relating to
Placement of Placement Shares . The Company agrees that on such
dates as the Securities Act shall require, the Company will
(i) file a prospectus supplement with the Commission under the
applicable paragraph of Rule 424(b) under the Securities Act (each
and every filing under Rule 424(b), a “ Filing
Date ”), which prospectus supplement will set forth,
within the relevant period, the amount of Placement Shares sold
through CF&Co, the Net Proceeds to the Company and the
compensation payable by the Company to CF&Co with respect to
such Placement Shares, and (ii) deliver such number of copies
of each such prospectus supplement to each exchange or market on
which such sales were effected as may be required by the rules or
regulations of such exchange or market.
(m) Representation Dates;
Certificate . During the term of this Agreement, on the date of
the first Placement Notice given hereunder and each time the
Company (i) files the
13
Prospectus relating to the Placement
Shares or amends or supplements the Registration Statement or the
Prospectus relating to the Placement Shares (other than a
prospectus supplement filed in accordance with Section 7(l) of
this Agreement) by means of a post-effective amendment, sticker, or
supplement but not by means of incorporation of document(s) by
reference to the Registration Statement or the Prospectus relating
to the Placement Shares; (ii) files an annual report on Form
10-K under the Exchange Act; (iii) files its quarterly reports
on Form 10-Q under the Exchange Act; (iv) files a report on
Form 8-K containing amended financial information (other than an
earnings release, to “furnish” information pursuant to
Items 2.02 or 7.01 of Form 8-K or to provide disclosure pursuant to
Item 8.01 of Form 8-K relating to the reclassifications of
certain properties as discontinued operations in accordance with
Statement of Financial Accounting Standards No. 144) under the
Exchange Act or (v) files a Form 8-K under the Exchange Act
for any other purpose (other than to “furnish”
information pursuant to Items 2.02 or 7.01 of Form 8-K) (each date
of filing of one or more of the documents referred to in clauses
(i) through (v) shall be a “ Representation
Date ”); the Company shall furnish CF&Co (but in
the case of clauses (iv) and (v) above only if CF&Co
reasonably determines that the information contained in such Form
8-K is material) with a certificate, in the form attached hereto as
Exhibit 7(m) . The requirement to provide a certificate
under this Section 7(m) shall be waived for any Representation
Date occurring during a fiscal quarter during which the Company
does not intend to sell Placement Shares prior to the next
occurring Representation Date; provided, however , that such
waiver shall not apply for any Representation Date on which the
Company files its annual report on Form 10-K. Notwithstanding the
foregoing, if the Company subsequently decides to sell Placement
Shares following a Representation Date when the Company relied on
such waiver and did not provide CF&Co with a certificate under
this Section 7(m) , then before CF&Co either
delivers the Placement Notice or sells any Placement Shares, the
Company shall provide CF&Co with a certificate, in the form
attached hereto as Exhibit 7(m) , dated the date of the
Placement Notice.
(n) Legal Opinion . On the
date of the first Placement Notice given hereunder, the Company
shall cause to be furnished to CF&Co a written opinion of
O’Melveny & Myers LLP, Venable LLP and
Cordray & Tomlin, P.C., substantially similar to the forms
attached hereto as Exhibit 7(n)(1), (2) and (3). Thereafter,
within five (5) Trading Days of each Representation Date, the
Company shall cause to be furnished to CF&Co a written opinion
of O’Melveny & Myers LLP substantially similar to
the form attached hereto as Exhibit 7(n)(4), modified, as
necessary, to relate to the Registration Statement and the
Prospectus as then amended or supplemented; provided,
however , that the requirement to provide such opinion shall be
waived for any Representation Date occurring during a fiscal
quarter during which the Company does not intend to sell Placement
Shares prior to the next occurring Representation Date; provided
further, however , that such waiver shall not apply for any
Representation Date on which the Company files its annual report on
Form 10-K. Notwithstanding the foregoing, if the Company
subsequently decides to sell Placement Shares following a
Representation Date when the Company relied on such waiver and did
not provide CF&Co with an opinion from
O’Melveny & Myers LLP under this
Section 7(n) , then before CF&Co either delivers
the Placement Notice or sells any Placement Shares, the Company
shall provide CF&Co with an opinion from
O’Melveny & Myers LLP dated the date of the
Placement Notice.
(o) Comfort Letter . On the
date of the first Placement Notice given hereunder and thereafter
within seven (7) Trading Days of each Representation Date or
any period in which
14
the Prospectus relating to the
Placement Shares is required to be delivered by CF&Co, each
time that the Registration Statement is amended or the Prospectus
supplemented to include additional amended financial information or
there is filed with the Commission any document incorporated by
reference into the Prospectus that contains additional amended
financial information (other than an earnings release, to
“furnish” information pursuant to Items 2.02 or 7.01 of
Form 8-K or to provide disclosure pursuant to Item 8.01 of
Form 8-K relating to the reclassifications of certain properties as
discontinued operations in accordance with Statement of Financial
Accounting Standards No. 144), the Company shall cause its
independent accountants to furnish CF&Co letters (the “
Comfort Letters ”), dated the date of such
Representation Date, in form and substance satisfactory to
CF&Co, (i) confirming that they are an independent
registered public accounting firm within the meaning of the
Securities Act and the rules and regulations of the Public Company
Accounting Oversight Board and are in compliance with the
applicable requirements relating to the qualification of
accountants under Rule 2-01 of Regulation S-X of the Commission,
(ii) stating, as of such date, the conclusions and findings of
such firm with respect to the financial information and other
matters ordinarily covered by accountants’ “comfort
letters” to underwriters in connection with registered public
offerings (the first such letter, the “ Initial Comfort
Letter ”) and (iii) updating the Initial Comfort
Letter with any information that would have been included in the
Initial Comfort Letter had it been given on such date and modified
as necessary to relate to the Registration Statement and the
Prospectus, as amended and supplemented to the date of
su
