DEVELOPERS DIVERSIFIED REALTY
CORPORATION
(an Ohio corporation)
Goldman, Sachs
& Co.
85 Broad Street
New York, New York 10004
Developers
Diversified Realty Corporation, an Ohio corporation (the
“Company”), and Deutsche Bank Securities Inc. as agent
for one of its affiliates (“Deutsche Bank”), Merrill
Lynch, Pierce, Fenner & Smith Incorporated as agent for one of
its affiliates (“Merrill Lynch”) and J.P. Morgan
Securities Inc. as agent for one of its affiliates
(“JPMorgan” and, together with Deutsche Bank and
Merrill Lynch, the “Forward Sellers”), at the
Company’s request in connection with the letter agreement
dated the date hereof between the Company and Deutsche Bank AG
London, acting through Deutsche Bank as agent (the “Deutsche
Bank Forward Agreement”), the letter agreement dated the date
hereof between the Company and Merrill Lynch International, acting
through Merrill Lynch as agent (the “Merrill Lynch Forward
Agreement”) and the letter agreement dated the date hereof
between the Company and JPMorgan Chase Bank, National Association,
acting through JPMorgan as agent (the “JPMorgan Forward
Agreement” and, together with the Deutsche Bank Forward
Agreement and the Merrill Lynch Forward Agreement, the
“Forward Agreements”), each relating to the forward
sale by the Company, of a number of common shares, without par
value, of the Company (“Common Shares”) equal to the
number of Common Shares to be borrowed and sold by each of the
Forward Sellers pursuant to this Agreement, confirm their
respective agreements with Goldman, Sachs & Co. (the
“Underwriter”) with respect to the sale by the Forward
Sellers and the purchase by the Underwriter of the respective
numbers of Common Shares set forth in Schedule I. Deutsche
Bank AG London, Merrill Lynch International and JPMorgan Chase
Bank, National Association are hereinafter referred to as the
“Forward Counterparties.” The 11,599,134 Common Shares
to be borrowed and sold by the Forward Sellers to the Underwriter
are referred to as the “Underwritten Securities.” The
Underwritten Securities to be purchased by the Underwriter and any
Common Shares to be issued and sold by the Company to the
Underwriter pursuant to Section 13 hereof are hereinafter
called, collectively, the “Securities.”
1.
Representations and Warranties . The Company represents and
warrants to the Underwriter, each Forward Seller and each Forward
Counterparty, as of the date hereof, at the Applicable Time
referred to in Section 1(c) and as of the Closing Date
that:
(a) The Company
has filed with the Securities and Exchange Commission (the
“Commission”) an automatic shelf registration statement
on Form S-3 (No. 333-139118), including the related
preliminary prospectus or prospectuses, which
registration
statement
became effective upon filing under Rule 462(e) of the rules and
regulations of the Commission (the “1933 Act
Regulations”) under the Securities Act of 1933, as amended
(the “1933 Act”). Such registration statement covers
the registration of the Securities under the 1933 Act. The Company
will prepare and file a prospectus supplement relating to the
offering of Securities (“Prospectus Supplement”) in
accordance with the provisions of Rule 430B
(“Rule 430B”) of the 1933 Act Regulations and
paragraph (b) of Rule 424 (“Rule 424(b)”) of
the 1933 Act Regulations. Any information included in such
Prospectus Supplement that was omitted from such registration
statement at the time it became effective but that is deemed to be
part of and included in such registration statement pursuant to
Rule 430B is referred to as “Rule 430B
Information.” Each prospectus used in connection with the
offering of Securities that omitted Rule 430B Information is
herein called a “preliminary prospectus.” Such
registration statement, at any given time, including the amendments
thereto to such time, the exhibits and any schedules thereto at
such time, the documents incorporated by reference therein pursuant
to Item 12 of Form S-3 under the 1933 Act at such time and the
documents otherwise deemed to be a part thereof or included therein
by 1933 Act Regulations, is herein called the “Registration
Statement.” The Registration Statement at the time it
originally became effective is herein called the “Original
Registration Statement.” The final prospectus and the
applicable Prospectus Supplement in the form first furnished to the
Underwriter for use in connection with the offering of Securities,
including the documents incorporated by reference therein pursuant
to Item 12 of Form S-3 under the 1933 Act as of the date
thereof and any preliminary prospectuses that form a part thereof,
is herein called the “Prospectus;” provided, however,
that a Prospectus Supplement shall be deemed to have supplemented
the Prospectus only with respect to the offering of the Securities
to which it relates.
All references in
this Agreement to financial statements and schedules and other
information which is “contained,”
“included” or “stated” in the Registration
Statement, any preliminary prospectus or the Prospectus (and all
other references of like import) shall be deemed to mean and
include all such financial statements and schedules and other
information which is or is deemed to be incorporated by reference
in or otherwise deemed by the 1933 Act Regulations to be a part of
or included in the Registration Statement, any preliminary
prospectus or the Prospectus, as the case may be; and all
references in this Agreement to amendments or supplements to the
Registration Statement, any preliminary prospectus or the
Prospectus shall be deemed to mean and include, without limitation,
the filing of any document under the Securities Exchange Act of
1934, as amended (the “1934 Act”), which is or is
deemed to be incorporated by reference in or otherwise deemed by
the 1933 Act Regulations to be a part of or included in the
Registration Statement, such preliminary prospectus or the
Prospectus, as the case may be.
(b) (A) At
the time of filing the Original Registration Statement, (B) at
the time of the most recent amendment thereto for the purposes of
complying with Section 10(a)(3) of the 1933 Act (whether such
amendment was by post-effective amendment, incorporated report
filed pursuant to Section 13 or 15(d) of the 1934 Act or form
of prospectus), (C) at the time the Company or any person
acting on its behalf (within the meaning, for this clause only, of
Rule 163(c) of the 1933 Act Regulations) made any
2
offer relating
to the Securities in reliance on the exemption of Rule 163 of
the 1933 Act Regulations, and (D) at the date hereof, the
Company was and is a “well-known seasoned issuer” as
defined in Rule 405 of the 1933 Act Regulations
(“Rule 405”). The Registration Statement is an
“automatic shelf registration statement,” as defined in
Rule 405, that initially became effective within three years
of the date hereof, and the Securities since their registration on
the Registration Statement, have been and remain eligible for
registration by the Company on a Rule 405 “automatic
shelf registration statement.”
If immediately
prior to the third anniversary (the “Renewal Deadline”)
of the filing of the Original Registration Statement, any of the
Underwritten Securities remain unsold by the Underwriter, the
Company will prior to the Renewal Deadline (i) promptly notify
you and (ii) promptly file, if it has not already done so and is
eligible to do so, a new automatic shelf registration statement
relating to the Securities, in a form satisfactory to you. If the
Company is no longer eligible to file an automatic shelf
registration statement, the Company will prior to the Renewal
Deadline (i) promptly notify you, (ii) promptly file, if
it has not already done so, a new registration statement or
post-effective amendment on the proper form relating to the
Securities, in a form satisfactory to you, (iii) use its best
efforts to cause such registration statement or post-effective
amendment to be declared effective as soon as practicable and
(iv) promptly notify you of such effectiveness. In addition,
the Company has not received from the Commission any notice
pursuant to Rule 401(g)(2) of the 1933 Act Regulations
objecting to the use of the automatic shelf registration statement
form. If at any time when Securities remain unsold by the
Underwriter the Company receives from the Commission a notice
pursuant to Rule 401(g)(2) or otherwise ceases to be eligible
to use the automatic shelf registration statement form, the Company
will (i) promptly notify you, (ii) promptly file a new
registration statement or post-effective amendment on the proper
form relating to the Securities, in a form satisfactory to you,
(iii) use its best efforts to cause such registration
statement or post-effective amendment to be declared effective as
soon as practicable, and (iv) promptly notify you of such
effectiveness. The Company will take all other action necessary or
appropriate to permit the public offering and sale of the
Securities to continue as contemplated in the expired registration
statement, or the registration statement that was the subject of
the Rule 401(g)(2) notice or for which the Company has
otherwise become ineligible, as the case may be. References herein
to the Registration Statement relating to the Securities shall
include such new automatic shelf registration statement or such new
registration statement or post-effective amendment, as the case may
be.
At the time of
filing the Original Registration Statement, at the earliest time
thereafter that the Company or another offering participant made a
bona fide offer (within the meaning of Rule 164(h)(2)
of the 1933 Act Regulations) of the Securities, at the date hereof,
the Company was not and is not an “ineligible issuer,”
as defined in Rule 405.
(c) The Original
Registration Statement became effective upon filing under Rule
462(e) of the 1933 Act Regulations (“Rule 462(e)”)
on December 4, 2006, and any post-effective amendment thereto
also became effective upon filing under Rule 462(e). No stop
order suspending the effectiveness of the Registration Statement
has been issued
3
under the 1933
Act and no proceedings for that purpose have been instituted or are
pending or, to the knowledge of the Company, are contemplated by
the Commission, and any request on the part of the Commission for
additional information has been complied with.
If applicable, any
offer that is a written communication relating to the Securities
made prior to the filing of the Original Registration Statement by
the Company or any person acting on its behalf (within the meaning,
for this paragraph only, of Rule 163(c) of the 1933 Act
Regulations) has been filed with the Commission in accordance with
Rule 163 of the 1933 Act Regulations
(“Rule 163”) and otherwise complied with the
requirements of Rule 163, including without limitation the
legending requirement, to qualify such offer for the exemption from
Section 5(c) of the 1933 Act provided by Rule 163.
At the respective
times the Original Registration Statement and each amendment
thereto (including amendments filed for the purpose of complying
with Section 10(a)(3) of the 1933 Act) became effective, at
each deemed effective date with respect to the Underwriter pursuant
to Rule 430B(f)(2) of the 1933 Act Regulations, at the date
hereof, at the Applicable Time and at the Closing Date, the
Registration Statement complied, complies and will comply in all
material respects with the requirements of the 1933 Act and the
1933 Act Regulations, and the Registration Statement did not, 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.
Any preliminary
prospectus (including the prospectus filed as part of the
Registration Statement or any amendment thereto) complied when so
filed in all material respects with the 1933 Act and the 1933 Act
Regulations and any such preliminary prospectus and the Prospectus
delivered or made available to the Underwriter for use in
connection with this offering was and will, at the time of such
delivery, be identical to the electronically transmitted copies
thereof filed with the Commission pursuant to EDGAR, except to the
extent permitted by Regulation S-T.
As of the
Applicable Time, any Issuer Free Writing Prospectus (as defined
below) issued at or prior to the Applicable Time and listed on
Schedule II, the Statutory Prospectus (as defined below) and
the information agreed to in writing by the Company and the
Underwriter as the information to be conveyed orally by the
Underwriter to purchasers of the Securities at the Applicable Time,
as set forth on Schedule II, and including the information
contained in the Preliminary Prospectus Supplement of the Company,
dated the date hereof, all considered together (collectively, the
“General Disclosure Package”) did not include any
untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not
misleading.
The
representations and warranties in the preceding three paragraphs
shall not apply to statements in or omissions from the Registration
Statement or any post-effective amendment thereto or the Prospectus
or any amendments or supplements thereto, or the General Disclosure
Package made in reliance upon and in conformity with
information
4
furnished to
the Company in writing by the Underwriter, any Forward Seller or
any Forward Counterparty expressly for use in the Registration
Statement or any post-effective amendment thereto, or the
Prospectus, or any amendments or supplements thereto, or the
General Disclosure Package.
As used in this
subsection and elsewhere in this Agreement:
“Applicable
Time” means 5:30 p.m. (New York City time) on
December 4, 2006 or such other time as agreed by the Company
and the Underwriter.
“Issuer Free
Writing Prospectus” means any “issuer free writing
prospectus,” as defined in Rule 433 of the 1933 Act
Regulations (“Rule 433”), relating to the
Securities (including any identified on Schedule II hereto)
that (i) is required to be filed with the Commission by the
Company, (ii) is a “road show that is a written
communication” within the meaning of Rule 433(d)(8)(i),
whether or not required to be filed with the Commission or
(iii) is exempt from filing pursuant to Rule 433(d)(5)(i)
because it contains a description of the Securities or of the
offering that does not reflect the final terms, in each case in the
form filed or required to be filed with the Commission or, if not
required to be filed, in the form retained in the Company’s
records pursuant to Rule 433(g).
“Statutory
Prospectus” as of any time means the prospectus relating to
the Securities that is included in the Registration Statement
immediately prior to that time, including the documents
incorporated by reference therein and any preliminary or other
prospectus deemed to be a part thereof.
(d) The documents
incorporated or deemed to be incorporated by reference in the
Registration Statement and the Prospectus, at the time they were or
hereafter are filed with the Commission, complied and will comply
in all material respects with the requirements the 1934 Act and the
rules and regulations of the Commission thereunder (the “1934
Act Regulations”), as applicable, and, when read together
with the other information in the Prospectus, (a) at the time
the Original Registration Statement became effective, (b) at
the Applicable Time and (c) at the Closing Date did 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 in
order to make the statements therein, in light of the circumstances
under which they were made, not misleading.
(e) Each Issuer
Free Writing Prospectus identified on Schedule II hereto, as
of its issue date and at all subsequent times through the Closing
Date or until any earlier date that the Company notified or
notifies the Underwriter as described in Section 6(b), did
not, does not and will not include any information that conflicted,
conflicts or will conflict with the information contained in the
Registration Statement, the General Disclosure Package or the
Prospectus, including any document incorporated by reference
therein and any preliminary or other prospectus deemed to be a part
thereof that has not been superseded or modified. The foregoing
sentence does not apply to statements in or omissions from any such
Issuer Free Writing Prospectus based upon and in
conformity
5
with written
information furnished to the Company by the Underwriter, Forward
Seller or Forward Counterparty specifically for use
therein.
(f) Since the
respective dates as of which information is given in the
Registration Statement, the General Disclosure Package and the
Prospectus, except as otherwise stated therein, (A) there has
not occurred any material adverse change or any development that is
reasonably likely to involve a material adverse change in the
condition, financial or otherwise, or in the earnings, business or
business prospects of the Company and its subsidiaries considered
as one enterprise from that set forth in the Prospectus (exclusive
of any amendments or supplements thereto subsequent to the date of
this Agreement), (B) there have been no transactions entered into
by the Company or its subsidiaries which are material with respect
to the Company and its subsidiaries considered as one enterprise
other than those in the ordinary course of business and
(C) except for regular quarterly distributions on the Common
Shares, and regular distributions declared, paid or made in
accordance with the terms of any class or series of the
Company’s preferred shares, there has been no dividend or
distribution of any kind declared, paid or made by the Company on
any class of its capital shares.
(g) The
consolidated financial statements and supporting schedules of the
Company included in, or incorporated by reference into, the
Registration Statement, the General Disclosure Package and the
Prospectus present fairly the financial position of the Company and
its consolidated subsidiaries as of the dates indicated and the
results of their operations for the periods specified; except as
otherwise stated in the Registration Statement, the General
Disclosure Package and the Prospectus, said financial statements
have been prepared in conformity with generally accepted accounting
principles (“GAAP”) applied on a consistent basis; and
the supporting schedules, if any, included in, or incorporated by
reference into, the Registration Statement, the General Disclosure
Package and the Prospectus present fairly in all material respects
the information required to be stated therein. To the best of the
Company’s knowledge, the consolidated financial statements
and supporting schedules of Inland Retail Real Estate Trust, Inc.
(“IRRETI”) included in, or incorporated by reference
into, the Registration Statement, the General Disclosure Package
and the Prospectus present fairly the financial position of IRRETI
and its consolidated subsidiaries as of the dates indicated and the
results of their operations for the periods specified; except as
otherwise stated in the Registration Statement, the General
Disclosure Package and the Prospectus, said financial statements
have been prepared in conformity with generally accepted accounting
principles (“GAAP”) applied on a consistent basis and
the supporting schedules, if any, included in the Registration
Statement, the General Disclosure Package and the Prospectus
present fairly in all material respects the information required to
be stated therein. The selected financial data and the summary
financial information included in, or incorporated by reference
into, the Registration Statement, the General Disclosure Package
and the Prospectus present fairly the information shown therein and
have been compiled on a basis consistent with that of the audited
financial statements included in, or incorporated by reference
into, the Registration Statement, the General Disclosure Package
and the Prospectus. The statements of certain revenues and expenses
of the properties acquired or proposed to be acquired, if any,
included in, or incorporated by reference into, the Registration
Statement, the General Disclosure Package and the Prospectus
present fairly
6
in all material
respects the information set forth therein, have been prepared in
conformity with GAAP applied on a consistent basis and otherwise
have been prepared in accordance with the applicable financial
statement requirements of Rule 3-14 of the 1934 Act with
respect to real estate operations acquired or to be acquired. The
pro forma financial statements and other pro forma financial
information (including the notes thereto), included in, or
incorporated by reference into, the Registration Statement, the
General Disclosure Package and the Prospectus present fairly in all
material respects the information set forth therein, have been
prepared in accordance with the Commission’s rules and
guidelines with respect to pro forma financial statements and have
been properly compiled on the basis described therein and the
assumptions used in the preparation of such pro forma financial
statements and other pro forma financial information (including the
notes thereto) are reasonable and the adjustments used therein are
appropriate to give effect to the transactions or circumstances
referred to therein. All disclosures contained in the Registration
Statement, the General Disclosure Package and the Prospectus
regarding “non-GAAP financial measures” (as such term
is defined by the rules and regulations of the Commission), if any,
comply with Regulation G under the 1934 Act and Item 10
of Regulation S-K of the 1933 Act Regulations, to the extent
applicable.
(h)
PricewaterhouseCoopers llp , who has expressed its
opinion on the audited financial statements and related schedules
included in, or incorporated by reference into, the Registration
Statement, is an independent registered public accounting firm
within the meaning of the 1933 Act and the applicable 1933 Act
Regulations.
(i) The Company
has been duly organized and is validly existing and in good
standing as a corporation under the laws of the State of Ohio, with
power and authority (corporate and other) to own, lease and operate
its properties and to conduct its business as described in the
Registration Statement and the Prospectus; the Company is in
possession of and operating in compliance with all material
franchises, grants, authorizations, licenses, permits, easements,
consents, certificates and orders required for the conduct of its
business, all of which are valid and in full force and effect; and
the Company is duly qualified to do business and in good standing
as a foreign corporation in all other jurisdictions where its
ownership or leasing of properties or the conduct of its business
requires such qualification, except where failure to qualify and be
in good standing would not have a material adverse effect on the
condition, financial or otherwise, or on the earnings, business
affairs or business prospects of the Company and its subsidiaries
considered as one enterprise.
(j) Each
Significant Subsidiary, as defined herein, has been duly
incorporated or formed and is validly existing as a corporation,
partnership or limited liability company in good standing or in
full force and effect under the laws of the jurisdiction of its
incorporation or formation, has corporate, partnership or limited
liability company power and authority to own, lease and operate its
properties and to conduct its business and 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 so qualify would not have a material adverse
effect
7
on the
condition, financial or otherwise, or the earnings, business
affairs or business prospects of the Company and its subsidiaries
considered as one enterprise.
(k) The issued and
outstanding capital shares of the Company have been duly authorized
and validly issued and are fully paid and non-assessable and are
not subject to preemptive or other similar rights; and all of the
issued and outstanding capital stock of the Company’s
subsidiaries has been duly authorized and validly issued, is fully
paid and non-assessable and is owned directly by the Company, free
and clear of any security interest, mortgage, pledge, lien,
encumbrance, claim or equity, except for such security interests,
mortgages, pledges, liens, encumbrances, claims or equities that
would not have a material adverse effect on the condition,
financial or otherwise, or the earnings, business affairs or
business prospects of the Company and its subsidiaries considered
as one enterprise.
(l) Any Common
Shares to be issued and sold by the Company pursuant to
Section 13 hereof have been duly authorized by the Company for
issuance and sale pursuant to this Agreement and, when issued and
delivered pursuant to this Agreement against payment of the
consideration therefor specified herein, will be validly issued,
fully paid and non-assessable. Any Common Shares being sold
pursuant to this Agreement or the Forward Agreements, as the case
may be, conform in all material respects to all statements relating
thereto contained in the General Disclosure Package and the
Prospectus. The issuance of any Common Shares pursuant to
Section 13 hereof is not subject to preemptive or other
similar rights.
(m) There is no
action, suit or proceeding before or by any court or governmental
agency or body, domestic or foreign, now pending, or, to the
knowledge of the Company, threatened against or affecting the
Company or its subsidiaries, which is required to be disclosed in
the Prospectus (other than as disclosed therein), or which might
result in any material adverse change in the condition, financial
or otherwise, business affairs or business prospects of the Company
and its subsidiaries considered as one enterprise, or might
materially and adversely affect the properties or assets thereof or
which might materially and adversely affect the consummation of
this Agreement or the Forward Agreements or the transactions
contemplated herein or therein; all pending legal or governmental
proceedings to which the Company or any of its subsidiaries is a
party or of which any of their respective property is the subject
which are not described in the General Disclosure Package and the
Prospectus, including routine litigation incidental to the
business, are, considered in the aggregate, not material; and there
are no material contracts or documents of the Company or its
subsidiaries which are required to be filed as exhibits to the
Registration Statement by the 1933 Act or by the 1933 Act
Regulations which have not been so filed.
(n) Neither the
Company nor any of its subsidiaries is in violation of its
respective Articles of Incorporation or other organizational
document, or its Code of Regulations or bylaws, as the case may be
(the “Code of Regulations”), or in default in the
performance or observance of any material obligation, agreement,
covenant or condition contained in any contract, indenture,
mortgage, loan agreement, note, lease or other instrument to which
it is a party or by which it or its properties may be
bound,
8
where such
defaults in the aggregate would have a material adverse effect on
the condition, financial or otherwise, or in the earnings, business
affairs or business prospects of the Company and its subsidiaries
considered as one enterprise; and the execution and delivery of
this Agreement and the Forward Agreements and the consummation of
the transactions contemplated herein and therein, have been duly
authorized by all necessary corporate action, and compliance by the
Company with its obligations hereunder will not conflict with or
constitute a breach of, or default under, or result in the creation
or imposition of any lien, charge or encumbrance upon any property
or assets of the Company or its subsidiaries pursuant to, any
contract, indenture, mortgage, loan agreement, note, lease or other
instrument to which the Company or any of its subsidiaries is a
party or by which it may be bound or to which any of the property
or assets of the Company or any of its subsidiaries is subject, nor
will such action result in any violation of the provisions of the
Articles of Incorporation or Code of Regulations or, to the best of
its knowledge, any law, administrative regulation or administrative
or court order or decree; and no consent, approval, authorization
or order of any court or governmental authority or agency is
required for the consummation by the Company of the transactions
contemplated by this Agreement and the Forward Agreements, except
such as has been obtained or as may be required under the 1933 Act,
the 1934 Act, state securities or Blue Sky laws or real estate
syndication laws in connection with the purchase and distribution
of the Securities by the Underwriter.
(o) The Company
has the full right, power and authority to execute and deliver each
of this Agreement and each Forward Agreement (collectively, the
“Transaction Documents”) to which it is a party and
perform its respective obligations thereunder; and all corporate
action required to be taken for the due and proper authorization,
execution and delivery of each of the Transaction Documents and the
consummation of the transactions contemplated thereby has been duly
and validly taken.
(p) The Common
Shares (if any) to be purchased by the Forward Counterparties from
the Company pursuant to the Forward Agreements have been duly and
validly authorized and reserved for issuance and sale to the
Forward Counterparties pursuant thereto and, when issued and
delivered by the Company, in accordance with the provisions of the
Forward Agreements against payment of the consideration set forth
therein, will be duly and validly issued, fully paid and
non-assessable; and the issuance of such Common Shares will not be
subject to any preemptive or similar rights.
(q) Each of the
Forward Agreements has been duly authorized, executed and delivered
by the Company and constitutes a valid and binding agreement of the
Company, enforceable against the Company in accordance with its
terms, except as enforceability may be limited by applicable
bankruptcy, insolvency or similar laws affecting the enforcement of
creditors’ rights generally or by equitable principles
relating to enforceability; and the Forward Agreements conform in
all material respects to the descriptions thereof in the
Prospectus.
(r) Starting with
its taxable year ended December 31, 1993, the Company has
elected under Section 856(c) of the Internal Revenue Code of 1986,
as amended (the “Code”), to be taxed as a real estate
investment trust (“REIT”), and such election has
not
9
been revoked or
terminated. The Company has qualified as a REIT for its taxable
years ended December 31, 1993 through December 31, 2005
and the Company has operated and intends to continue to operate so
as to qualify as a REIT thereafter.
(s) Starting with
its taxable year ended December 31, 1996 and through its
taxable year ended May 10, 2006, JDN Realty Corporation
(“JDN”) has elected under Section 856(c) of the Code to
be taxed as a REIT. JDN has qualified as a REIT for its taxable
years ended December 31, 1994 through its taxable year ended
May 10, 2006. To the best of the Company’s knowledge,
starting with its taxable year ended December 31, 1995 IRRETI
has elected under Section 856(c) of the Code to be taxed as a REIT.
To the best of the Company’s knowledge, IRRETI has qualified
as a REIT for its taxable years ended December 31, 1995
through December 31, 2005 and IRRETI has operated so as to
qualify as a REIT thereafter.
(t) Neither the
Company nor any of its subsidiaries is, or will be after the
consummation of the transactions contemplated by this Agreement and
the Forward Agreements, required to be registered as an investment
company under the Investment Company Act of 1940, as amended (the
“1940 Act”).
(u) Neither the
Company nor any of its subsidiaries is, or will be after the
consummation of the transactions contemplated by this Agreement and
the Forward Agreements, required to own or possess any trademarks,
service marks, trade names or copyrights in order to conduct the
business now operated by them.
(v) There are no
persons with registration or other similar rights to have any
securities registered pursuant to the Registration
Statement.
(w) None of the
Company or any of its subsidiaries or any of the officers,
directors, trustees or partners thereof acting on the
Company’s or such subsidiaries’ behalf has taken nor
will any of them take, directly or indirectly, any action resulting
in a violation of Regulation M under the 1934 Act or designed
to cause or result in, or which has constituted or which reasonably
might be expected to constitute, the stabilization or manipulation
of the price of the Securities.
(x) (A) The
Company or its subsidiaries have good and marketable title or
leasehold interest, as the case may be, to the portfolio properties
(the “Portfolio Properties”) described in the
Registration Statement, the General Disclosure Package and the
Prospectus as being owned by the Company or its subsidiaries
(except with respect to properties described in the Registration
Statement, the General Disclosure Package and the Prospectus as
being held by the Company through joint ventures), in each case
free and clear of all liens, encumbrances, claims, security
interests and defects (collectively, “Defects”), except
such as do not materially adversely affect the value of such
property or interests and do not materially interfere with the use
made and proposed to be made of such property or interests by the
Company or such subsidiaries, as the case may be; (B) the
joint venture interest in each property described in the
Registration Statement, the General Disclosure Package and the
Prospectus, as being held by the Company through a joint venture,
is owned free and clear of all Defects except for such Defects that
will not
10
have a material
adverse effect on the business, earnings or business prospects of
the Company and its subsidiaries considered as one enterprise;
(C) all liens, charges, encumbrances, claims or restrictions
on or affecting the properties and assets of the Company or its
subsidiaries are disclosed in the Registration Statement, the
General Disclosure Package and the Prospectus, except for any such
interests that will not have a material adverse effect on the
business, earnings or business prospects of the Company and its
subsidiaries considered as one enterprise; (D) none of the
Company, its subsidiaries or, to the best of the Company’s
knowledge, any lessee of any of the Portfolio Properties is in
default under any of the leases governing the Portfolio Properties
and the Company does not know of any event which, but for the
passage of time or the giving of notice, or both, would constitute
a default under any of such leases, except such defaults that would
not have a material adverse effect on the condition, financial or
otherwise, or on the earnings, business affairs or business
prospects of the Company and its subsidiaries considered as one
enterprise; (E) no tenant under any of the leases pursuant to
which the Company or its subsidiaries leases any of the Portfolio
Properties has an option or right of first refusal to purchase the
premises demised under such lease except (i) as otherwise
described in the Registration Statement, the General Disclosure
Package and the Prospectus and (ii) for such options or rights
of first refusal that, if exercised, would not have a material
adverse effect on the condition, financial or otherwise, or on the
earnings, business affairs or business prospects of the Company and
its subsidiaries considered as one enterprise; (F) each of the
Portfolio Properties complies with all applicable codes and zoning
laws and regulations, except for such failures to comply which
would not individually or in the aggregate have a material adverse
effect on the condition, financial or otherwise, or on the
earnings, business affairs or business prospects of the Company and
its subsidiaries considered as one enterprise; and (G) the
Company does not have knowledge of any pending or threatened
condemnation, zoning change or other proceeding or action that will
in any manner affect the size of, use of, improvements on,
construction on or access to the Portfolio Properties, except such
proceedings or actions that would not have a material adverse
effect on the condition, financial or otherwise, or on the
earnings, business affairs or business prospects of the Company and
its subsidiaries considered as one enterprise.
(y) The Company or
its subsidiaries have title insurance on each of the Portfolio
Properties (except with respect to each property described in the
Prospectus (or documents incorporated by reference therein) as held
by the Company through a joint venture) in an amount at least equal
to the greater of (A) the cost of acquisition of such
Portfolio Property and (B) the cost of construction of the
improvements located on such Portfolio Property except, in each
case, where the failure to maintain such title insurance would not
have a material adverse effect on the condition, financial or
otherwise, or on the earnings, business affairs or business
prospects of the Company and its subsidiaries considered as one
enterprise; the joint venture owning each property described in the
Prospectus (or documents incorporated by reference therein) as held
by the Company through a joint venture has title insurance on such
property in an amount at least equal to the greater of (A) the
cost of acquisition of such Portfolio Property by such joint
venture and (B) the cost of construction of the improvements
located on such Portfolio Property, except in each case, where the
failure to maintain such title insurance would not have a material
adverse effect on the condition, financial or otherwise, or on the
earnings,
11
business
affairs or business prospects of the Company and its subsidiaries
considered as one enterprise.
(z) The mortgages
and deeds of trust encumbering the Portfolio Properties are not
convertible and neither the Company nor any of its subsidiaries
hold a participating interest therein and said mortgages and deeds
of trust are not cross-defaulted or cross-collateralized to any
property not owned by the Company or its subsidiaries.
(aa) The Company
has no knowledge of (a) the unlawful presence of any hazardous
substances, hazardous materials, toxic substances or waste
materials (collectively, “Hazardous Materials”) on any
of the Portfolio Properties or of (b) any unlawful spills,
releases, discharges or disposals of Hazardous Materials that have
occurred or are presently occurring from the Portfolio Properties
as a result of any construction on or operation and use of the
Portfolio Properties, which presence or occurrence would materially
adversely affect the condition, financial or otherwise, or the
earnings, business affairs or business prospects of the Company and
its subsidiaries considered as one enterprise. In connection with
the construction on or operation and use of the Portfolio
Properties, the Company represents that, as of the date of this
Agreement, 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
would have a material adverse effect on the condition, financial or
otherwise, or on the earnings, business affairs or business
prospects of the Company and its subsidiaries considered as one
enterprise.
(bb) No
relationship, direct or indirect, exists between or among any of
the Company or its subsidiaries, on the one hand, and any director,
officer, shareholder, customer or supplier of the Company or its
subsidiaries, on the other hand, which is required by the 1933 Act,
the 1934 Act, the 1933 Act Regulations or the 1934 Act Regulations
to be described in the Registration Statement or the Prospectus
which is not so described or is not described as required. There
are no outstanding loans, advances (except normal advances for
business expenses in the ordinary course of business) or guarantees
of indebtedness by the Company to or for the benefit of any of the
officers or directors of the Company or any of their respective
family members, except as disclosed in the Registration Statement,
the General Disclosure Package and the Prospectus.
(cc) The Company
and its subsidiaries maintain a system of internal accounting and
other controls sufficient to provide reasonable assurances that
(i) transactions are executed in accordance with
management’s general or specific authorizations, (ii)
transactions are recorded as necessary to permit preparation of
financial statements in conformity with GAAP and to maintain
accountability for assets, (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 existing assets at reasonable intervals and
appropriate action is taken with respect to any differences and
(v) the principal executive officers (or their equivalents)
and principal financial officers (or their equivalents) of the
Company have made all certifications required by Sections 302
and 906 of the Sarbanes-Oxley Act of 2002 (the
“Sarbanes-
12
Oxley
Act”) and any related rules and regulations promulgated by
the Commission, and the statements contained in any such
certification are complete and correct. Except as described in the
Prospectus, with respect to stock options or other equity incentive
grants (collectively, “Awards”) granted subsequent to
the adoption of the Sarbanes-Oxley Act on July 31, 2002
pursuant to the equity-based compensation plans of the Company and
its subsidiaries (the “Equity Plans”), (i) no
stock options have been granted with an exercise price based upon a
price of the Common Shares on a date occurring prior to the date of
approval of such grant, (ii) each such grant was made in
accordance with the material terms of the Equity Plans, the 1934
Act and all other applicable laws and regulatory rules or
requirements, including the rules of the New York Stock Exchange,
Inc. (the “NYSE”), and (iii) each such grant has
been properly accounted for in accordance with GAAP in the
financial statements (including the related notes) of the Company
and disclosed in the Company’s filings with the
Commission.
(dd) Except as
described in the General Disclosure Package and the Prospectus,
since the end of the Company’s most recent audited fiscal
year, there has been no change in the Company’s internal
control over financial reporting that has materially affected, or
is reasonably likely to materially affect, the Company’s
internal control over financial reporting. The Company has
established and maintains disclosure controls and procedures (as
such term is defined in Rule 13a-15 and 15d-15 under the 1934
Act) in accordance with the rules and regulations under the
Sarbanes-Oxley Act, the 1933 Act and the 1934 Act.
(ee) The Agreement
and Plan of Merger, dated October 20, 2006 (the “IRRETI
Agreement”), among IRRETI, the Company and DDR IRR
Acquisition LLC has been duly authorized, executed and delivered by
the Company, and constitutes a valid and binding agreement of the
Company enforceable in accordance with its terms, except as
enforcement thereof may be limited by bankruptcy, insolvency or
other similar laws relating to or affecting creditors’ rights
generally and by general equity principles (regardless of whether
enforcement is considered in a proceeding in equity or at law);
compliance by the Company with its obligations thereunder will not
conflict with or constitute a breach of, or default under, or
result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Company or its
subsidiaries pursuant to, any contract, indenture, mortgage, loan
agreement, note, lease or other instrument to which the Company or
any of its subsidiaries is a party or by which it may be bound or
to which any of the property or assets of the Company or any of its
subsidiaries is subject, nor will such action result in any
violation of the provisions of the Articles of Incorporation or
Code of Regulations or, to the best of its knowledge, any law,
administrative regulation or administrative or court order or
decree; no consent, approval, authorization or order of any court
or governmental authority or agency is required for the
consummation by the Company of the transactions contemplated by the
IRRETI Agreement, except such as has been obtained or are
contemplated; and statements in the Registration Statement, the
General Disclosure Package and the Prospectus relating to the
IRRETI Agreement are correct in all material respects.
(ff) There are no
transfer taxes or other similar fees or charges under Federal law
or the laws of any state, or any political subdivision thereof,
required to be paid in
13
connection with
the execution and delivery of this Agreement or the sale of the
Securities hereunder.
(gg) The Company
has not distributed, or prior to the later of the Closing Date and
the completion of the distribution of the Securities, will not
distribute, any offering material in connection with the offering
or sale of the Securities other than the Registration Statement,
the General Disclosure Package and the Prospectus (including any
supplement thereto) or any other materials, if any, permitted by
the 1933 Act (which were disclosed to the Underwriter and their
counsel) (it being understood that no representation is made with
respect to any other materials distributed by the
Underwriter).
(hh) No labor
problem or dispute with the employees of the Company or the
Subsidiaries exists or, to the knowledge of the Company, is
threatened or imminent, that would have a material adverse effect
on the condition, financial or otherwise, or the earnings, business
affairs or business prospects of the Company and its subsidiaries
considered as one enterprise, except as set forth in or
contemplated in the Registration Statement, the General Disclosure
Package and the Prospectus (exclusive of any supplement
thereto).
Any
certificate signed by any officer or representative of the Company
and delivered to the Underwriter or counsel for the Underwriter in
connection with the offering of the Securities shall be deemed a
representation and warranty by the Company, as to matters covered
thereby, to the Underwriter, each Forward Seller and each Forward
Counterparty.
2.
Representations and Warranties by the Forward Sellers . Each
of the Forward Sellers severally represents and warrants to the
Underwriter and the Company as of the date hereof, as of the
Applicable Time and as of the Closing Date as follows:
(a) This Agreement
has been duly authorized, executed and delivered by such Forward
Seller and, at the Closing Date, such Forward Seller will have full
right, power and authority to sell, transfer and deliver the
Underwritten Securities.
(b) The Forward
Agreement between the Company and the Forward Counterparty
affiliated with such Forward Seller has been duly authorized,
executed and delivered by such affiliated Forward Counterparty and
constitutes a valid and binding agreement of such Forward
Counterparty, enforceable against such Forward Counterparty in
accordance with its terms, except as enforcement thereof may be
limited by bankruptcy, insolvency or other similar laws relating to
or affecting creditors’ rights generally and by general
equity principles (regardless of whether enforcement is considered
in a proceeding in equity or at law).
(c) Such Forward
Seller will, at the Closing Date, have the free and unqualified
right to transfer the Underwritten Securities to be sold by such
Forward Seller, free and clear of any security interest, mortgage,
pledge, lien, charge, claim, equity or encumbrance of any kind; and
upon delivery of such Underwritten Securities and payment of the
purchase price therefor as herein contemplated, assuming the
Underwriter
14
has no notice
of any adverse claim, the Underwriter will have the free and
unqualified right to transfer the Underwritten Securities purchased
by it from such Forward Seller, free and clear of any security
interest, mortgage, pledge, lien, charge, claim, equity or
encumbrance of any kind.
3.
Purchase and Sale . (a) On the basis of the
representations and warranties contained in this Agreement, and
subject to its terms and conditions, each Forward Seller and the
Company (with respect to any Common Shares issued and sold by the
Company pursuant to Section 13 hereto), severally and not
jointly, hereby agrees to sell to the Underwriter, and the
Underwriter agrees to purchase from each Forward Seller and the
Company (with respect to any Common Shares issued and sold by the
Company pursuant to Section 13 hereto) the respective numbers
of Underwritten Securities set forth in Schedule I hereto (or
the proportionate number of Common Shares to be issued and sold by
the Company pursuant to Section 13, as the case may be) at
$64.66 per share (the “Purchase Price”).
(b) If all of the
conditions to effectiveness set forth in Section 3 of the
Forward Agreements are not satisfied on or prior to the Closing
Date, each Forward Seller, individually, in its sole judgment, may
choose not to borrow and deliver for sale the number of Common
Shares set forth in Schedule I opposite the name of such
Forward Seller under the column captioned “Number of
Underwritten Securities to be Sold.” In addition, in the
event that, in the sole judgment of any of the Forward
Counterparties, its affiliated Forward Seller is unable to borrow
and deliver for sale under this Agreement the full number of Common
Shares set forth in Schedule I opposite the name of such
affiliated Forward Seller or if, in such Forward
Counterparty’s sole judgment, it would be impracticable to do
so or would entail a stock loan cost in excess of a rate equal to
60 basis points per annum, then such Forward Seller shall only be
required to deliver for sale the aggregate number of Common Shares
that such Forward Seller is able, or determines is practicable, to
so borrow at or below such cost.
(c) If, pursuant
to Section 3(b), a Forward Seller does not borrow and deliver
for sale the number of Underwritten Securities set forth in
Schedule I opposite the name of such Forward Seller under the
column captioned “Number of Underwritten Securities to Be
Sold”, such Forward Seller will use its best efforts to
notify the Company no later than 5:00 p.m., New York City time, on
the first business day prior to the Closing Date.
4.
Delivery and Payment . Payment for the Underwritten
Securities shall be made to each Forward Seller (or, in the case of
delivery of
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