Exhibit 1.1
Execution
Copy
TRUSTREET PROPERTIES,
INC.
Common Stock
UNDERWRITING
AGREEMENT
dated December 6, 2005
Banc of America Securities
LLC
Merrill Lynch, Pierce,
Fenner & Smith Incorporated
UNDERWRITING
AGREEMENT
December 6, 2005
BANC OF AMERICA SECURITIES
LLC
MERRILL LYNCH &
CO.
MERRILL LYNCH, PIERCE,
FENNER & SMITH
INCORPORATED
as Representatives of the several
Underwriters
c/o Banc of America Securities
LLC
9 West 57 th Street
New York, New York 10019
Ladies and Gentlemen:
Introductory
. Trustreet Properties, Inc., a
Maryland corporation, (the “Company”), proposes to
issue and sell to the several underwriters named in Schedule A (the
“Underwriters”) an aggregate of 7,000,000 shares (the
“Firm Shares”) of its Common Stock, par value $0.001
per share (the “Common Stock”). In addition, the
Company has granted to the Underwriters an option to purchase up to
an additional 1,050,000 shares (the “Optional Shares”)
of Common Stock, as provided in Section 2. The Firm Shares
and, if and to the extent such option is exercised, the Optional
Shares are collectively called the “Shares”. Banc of
America Securities LLC (“BAS”) and Merrill
Lynch & Co., Merrill Lynch, Pierce, Fenner &
Smith Incorporated (“Merrill Lynch”) have agreed to act
as representatives of the several Underwriters (in such capacity,
the “Representatives”) in connection with the offering
and sale of the Shares.
To the extent there are no
additional Underwriters listed on Schedule A other than you,
the terms Representatives and Underwriters as used herein shall
mean you, as Underwriters. The terms Representatives and
Underwriters shall mean either the singular or plural as the
context requires.
The Company was formed as a result
of (a) the merger on February 25, 2005 of CNL Restaurant
Properties, Inc., a Maryland corporation, (“CNLRP”),
with and into U.S. Restaurant Properties, Inc., a Maryland
corporation (“USRP”) (the “CNLRP Merger”),
and pursuant to which USRP was the surviving corporation and
changed its name to “Trustreet Properties, Inc.”
following consummation of the CNLRP Merger and (b) the mergers
on February 25, 2005 of separate newly-formed wholly owned
Subsidiaries (as defined below) of USRP with and into each of the
income funds listed in Schedule B , each a Florida
limited partnership (each, an “Income Fund” and,
collectively, the “Income Funds”) (the “Income
Fund Mergers” and,
together with the CNLRP Merger, the
“Mergers”), pursuant to which each Income Fund became a
wholly owned Subsidiary of the Company.
As used herein, the term
“Subsidiary” means, with respect to a party, any
corporation, partnership, joint venture, limited liability company
or other business association or entity, whether incorporated or
unincorporated, of which (i) such party or any other
Subsidiary of such party is a general partner (excluding
partnerships, the general partnership interests of which held by
such party and/or one or more of its Subsidiaries do not have a
majority of the voting interest in such partnership),
(ii) such party and/or one or more of its Subsidiaries holds
voting power to elect a majority of the board of directors or other
governing body performing similar functions, or (iii) such
party and/or one or more of its Subsidiaries, directly or
indirectly, owns or controls more than 50% of the equity,
membership, partnership or similar interests.
The Company hereby confirms its
agreements with the Underwriters as follows:
SECTION 1. Representations and
Warranties . The Company hereby represents, warrants and
covenants to each Underwriter as of the date hereof, the Initial
Sale Time (as defined herein), the Closing Date (as defined herein)
and at any Subsequent Closing Date (as defined herein) as
follows:
(a) The Company has prepared and
filed with the Securities and Exchange Commission (the
“Commission”) a registration statement on Form S-3
(File No. 333-125803), for the registration of up to
$700,000,000 of Common Stock (including the Shares), preferred
stock, depositary shares and debt securities of the Company, and
the offering thereof from time to time in accordance with Rule 415
under the Securities Act of 1933 and the rules and regulations
promulgated thereunder (collectively, the “Securities
Act”). Such registration statement and the prospectus
constituting a part thereof, in each case as supplemented by the
prospectus supplement relating to the offering of the Shares (the
“Prospectus Supplement”), including in each case all
documents incorporated or deemed incorporated by reference therein
as of the date of the Prospectus Supplement and as of the Closing
Date, and the required information, if any, deemed to be a part
thereof pursuant to Rule 430A or Rule 434 under the Securities Act
or the Securities Exchange Act of 1934 and the rules and
regulations promulgated thereunder (collectively, the
“Exchange Act”), or otherwise, are collectively
referred to herein as the “Registration Statement” and
the “Prospectus”, respectively; provided ,
however , that a Prospectus Supplement shall be deemed to
have supplemented the Prospectus only with respect to the offering
of the Shares. Any registration statement filed by the Company
pursuant to Rule 462(b) under the Securities Act is called the
“Rule 462(b) Registration Statement”, and from and
after the date and time of filing of the Rule 462(b) Registration
Statement the term “Registration Statement” shall
include the Rule 462(b) Registration Statement. Any preliminary
prospectus included in the Registration Statement or filed with the
Commission pursuant to Rule 424(a) of the rules and regulations of
the Commission under the Act is hereinafter called a
“preliminary prospectus.” The term “Statutory
Prospectus” shall mean any preliminary prospectus, as amended
or supplemented, relating to the Shares that is included in the
Registration Statement immediately prior to the Initial Sale Time
(as defined herein), including any document incorporated or deemed
to be incorporated by reference therein. Any reference
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herein to any preliminary prospectus
or the Prospectus shall be deemed to refer to and include the
documents incorporated or deemed incorporated by reference therein
pursuant to Item 12 of Form S-3 under the Securities Act, as
of the date of such preliminary prospectus or Prospectus, as the
case may be; any reference to any amendment or supplement to any
preliminary prospectus or the Prospectus shall be deemed to refer
to and include any documents filed after the date of such
preliminary prospectus or Prospectus, as the case may be, under the
Exchange Act, and incorporated or deemed incorporated by reference
in such preliminary prospectus or Prospectus, as the case may be;
and any reference to any amendment to the Registration Statement
shall be deemed to refer to and include any annual report of the
Company filed pursuant to Section 13(a) or 15(d) of the
Exchange Act after the effective date of the Registration Statement
that is incorporated by reference in the Registration Statement.
All references in this Agreement to the Registration Statement, the
Rule 462(b) Registration Statement, a preliminary prospectus, the
Prospectus, or any amendments or supplements to any of the
foregoing, shall include any copy thereof filed with the Commission
pursuant to its Electronic Data Gathering, Analysis and Retrieval
System (“EDGAR”).
(b) Compliance with Registration
Requirements . The Registration Statement has been declared
effective by the Commission under the Securities Act. The Company
has complied to the Commission’s satisfaction with all
requests of the Commission for additional or supplemental
information. No stop order suspending the effectiveness of the
Registration Statement is in effect and no proceedings for such
purpose have been instituted or are pending or, to the best
knowledge of the Company, are contemplated or threatened by the
Commission.
Each preliminary prospectus and the
Prospectus when filed complied in all material respects with the
Securities Act and the rules thereunder and, if filed by electronic
transmission pursuant to EDGAR (except as may be permitted by
Regulation S-T under the Securities Act), was identical to the copy
thereof delivered to the Underwriters for use in connection with
the offer and sale of the Shares. Each of the Registration
Statement and any post-effective amendment thereto, at the time it
became effective and at the Closing Date and at any Subsequent
Closing Date, complied and will comply in all material respects
with the Securities Act and did not and will not contain any untrue
statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the
statements therein not misleading. The Prospectus (including any
Prospectus wrapper), as amended or supplemented, as of its date, at
the date hereof, at the time of any filing pursuant to Rule 424(b),
at the Closing Date (as defined herein) and at any Subsequent
Closing Date (as defined herein), did not and will not contain any
untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not
misleading. The representations and warranties set forth in the two
immediately preceding sentences do 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, made in reliance upon and in conformity with
information relating to any Underwriter furnished to the Company in
writing by the Representatives expressly for use therein, it being
understood and agreed that the only such information furnished by
the Representatives consists of the information
described
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as such in Section 8 hereof.
There is no contract or other document required to be described in
the Prospectus or to be filed as exhibits to the Registration
Statement which has not been described or filed as
required.
(c) Incorporation By
Reference . The documents incorporated or deemed incorporated
by reference in the Registration Statement and the Prospectus, when
they became effective or were filed with the Commission, as the
case may be, conformed in all material respects to the requirements
of the Exchange Act and the rules and regulations of the Commission
thereunder, and none of such documents contained an untrue
statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading; and any further documents so filed and
incorporated or deemed incorporated by reference in the
Registration Statement and the Prospectus or any further amendment
or supplement thereto, when such documents become effective or are
filed with the Commission, as the case may be, will conform in all
material respects to the requirements of the Securities Act or the
Exchange Act, as applicable, and the rules and regulations of the
Commission thereunder 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.
(d) Disclosure Package . The
term “Disclosure Package” shall mean (i) the
Statutory Prospectus, if any, (ii) the issuer free writing
prospectuses as defined in Rule 433 of the Securities Act (each, an
“Issuer Free Writing Prospectus”), if any, identified
in Schedule E hereto, (iii) the information included on
Schedule F hereto and (iv) any other free writing
prospectus that the parties hereto shall hereafter expressly agree
to treat as part of the Disclosure Package. As of 9:00 pm
(Eastern time) on the date of this Agreement (the “Initial
Sale Time”), the Disclosure Package did not contain 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 preceding sentence does not apply to statements in
or omissions from the Disclosure Package based upon and in
conformity with written information furnished to the Company by any
Underwriter through the Representatives specifically for use
therein, it being understood and agreed that the only such
information furnished by or on behalf of any Underwriter consists
of the information described as such in Section 8
hereof.
(e) Issuer Free Writing
Prospectuses . Each Issuer Free Writing Prospectus, as of its
issue date and at all subsequent times through the completion of
the public offer and sale of the Shares or until any earlier date
of which the Company notified or notifies the Representatives as
described in Section 3(d), did not, does not and will not
include any information that conflicted, conflicts or will conflict
with the information contained in the Registration Statement or the
Prospectus, including any document incorporated by reference
therein that has not been superseded or modified. The foregoing
sentence does not apply to statements in or omissions from any
Issuer Free Writing Prospectus based upon and in conformity with
written information furnished to the Company by any Underwriter
through the Representatives specifically for use therein, it being
understood and agreed that the only such information furnished by
any Underwriter consists of the information described as such in
Section 8 hereof.
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(f) Accuracy of Statements in
Prospectus . The statements in each of the Statutory Prospectus
and the Prospectus under the heading “Federal Income Tax
Considerations,” insofar as such statements summarize legal
matters, agreements, documents or proceedings discussed therein,
are accurate and fair summaries of such legal matters, agreements,
documents or proceedings.
(g) Distribution of Offering
Material By the Company . The Company has not distributed and
will not distribute, prior to the later of the last Subsequent
Closing Date (as defined below) and the completion of the
Underwriters’ distribution of the Shares, any offering
material in connection with the offering and sale of the Shares
other than a preliminary prospectus, the Prospectus, any Issuer
Free Writing Prospectus reviewed and consented to by the
Representatives or the Registration Statement.
(h) The Underwriting
Agreement . This Agreement has been duly authorized, executed
and delivered by, and is a valid and binding agreement of, the
Company, enforceable against the Company in accordance with its
terms.
(i) Authorization of the
Shares . The Shares to be purchased by the Underwriters from
the Company have been duly authorized for issuance and sale
pursuant to this Agreement and, when paid for by the underwriters
and issued and delivered by the Company to the Underwriters
pursuant to this Agreement on the Closing Date or any Subsequent
Closing Date, will be validly issued, fully paid and
nonassessable.
(j) No Transfer Taxes . 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 connection with the execution and
delivery of this Agreement or the issuance by the Company or sale
by the Company of the Shares.
(k) No Applicable Registration or
Other Similar Rights . There are no persons with registration
or other similar rights to have any equity or debt securities
registered for sale under the Registration Statement or included in
the offering contemplated by this Agreement, except for such rights
as have been duly waived.
(l) No Material Adverse
Change . Except as otherwise disclosed in the Disclosure
Package, subsequent to the respective dates as of which information
is given in the Disclosure Package: (i) there has been no
material adverse change, or any development that could reasonably
be expected to result in a material adverse change, in the
condition, financial or otherwise, or in the earnings, business,
properties, operations or prospects, whether or not arising from
transactions in the ordinary course of business, of the Company and
its Subsidiaries, considered as one entity (any such change is
called a “Material Adverse Change”); (ii) the
Company and its Subsidiaries, considered as one entity, have not
incurred any material liability or obligation, indirect, direct or
contingent, not in the ordinary course of business nor entered into
any material transaction or agreement not in the ordinary course of
business; and (iii) except for regular quarterly or monthly
dividends on common stock of the Company or its predecessors,
regular distributions declared, paid or made in accordance with the
terms of any claim or series
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of the Company’s or its
predecessors’ preferred stock, or distributions made by
non-wholly owned Subsidiaries in the ordinary course, there has
been no dividend or distribution of any kind declared, paid or made
by the Company or, except for dividends paid to the Company or any
other Subsidiaries, any of its Subsidiaries on any class of capital
stock or repurchase or redemption by the Company or any of its
Subsidiaries of any class of capital stock.
(m) Independent Accountants .
Each of PricewaterhouseCoopers LLP and Deloitte & Touche
LLP, who have expressed their opinion with respect to the financial
statements (which term as used in this Agreement includes the
related notes thereto) and related schedules filed with the
Commission as a part of the Registration Statement and included in
the Disclosure Package and the Prospectus, are independent public
accountants with respect to the Company as required by the
Securities Act and the Exchange Act and the applicable published
rules and regulations thereunder. Any non-audit services provided
by PricewaterhouseCoopers LLP to the Company have been approved by
the audit committee of the board of directors or equivalent
managing body of the Company.
(n) Preparation of the Financial
Statements . The financial statements, together with the
related schedules and notes of (i) CNLRP and its consolidated
subsidiaries, (ii) USRP and its consolidated subsidiaries,
(iii) the Income Funds and (iv) the Company and its
consolidated subsidiaries, in each case filed with the Commission
as a part of or incorporated or deemed incorporated by reference in
the Registration Statement and included or incorporated by
reference in the Disclosure Package and the Prospectus, present
fairly the consolidated financial position of (i) CNLRP and
its consolidated subsidiaries, (ii) USRP and its consolidated
subsidiaries, (iii) the Income Funds and (iv) the Company
and its consolidated subsidiaries, respectively, as of and at the
dates indicated and the results of their operations and cash flows
for the periods specified. Such financial statements and the
related schedules comply as to form with the applicable accounting
requirements of the Securities Act and have been prepared in
conformity with generally accepted accounting principles applied on
a consistent basis throughout the periods involved, except as may
be expressly stated in the related notes thereto. No other
financial statements or supporting schedules are required to be
included or incorporated by reference in the Registration
Statement. The financial data set forth in each of the Statutory
Prospectus and the Prospectus under the caption “Selected
Financial Data” fairly presents the information set forth
therein on a basis consistent with that of the audited or
unaudited, as the case may be, financial statements incorporated by
reference in the Statutory Prospectus. The unaudited pro forma
condensed consolidated financial statements of the Company and its
consolidated subsidiaries and the related notes thereto
incorporated by reference in each of the Statutory Prospectus and
the Prospectus and the Registration Statement present fairly the
information contained therein, have been prepared in accordance
with the Commission’s rules and guidelines with respect to
pro forma financial statements and have been properly presented on
the bases described therein, and the assumptions used in the
preparation thereof are reasonable and the adjustments used therein
are appropriate to give effect to the transactions and
circumstances referred to therein.
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(o) Ratio of Earnings to Fixed
Charges and Preferred Stock Dividends . The Company’s
ratios of earnings to fixed charges and preferred stock dividends
set forth in each of the Statutory Prospectus and the Prospectus
under the caption “Ratio of Earnings to Fixed Charges and
Preferred Stock Dividends” and in Exhibit 12 to the
Registration Statement have been calculated in compliance with
Item 503(d) of Regulation S-K under the Securities
Act.
(p) Incorporation and Good
Standing of the Company and its Subsidiaries . Each of the
Company and its Subsidiaries has been duly incorporated or formed
and is validly existing as a corporation, limited liability
company, limited partnership, general partnership or other legal
entity and is in good standing under the laws of the jurisdiction
of its incorporation or organization and has power and authority to
own, lease and operate its properties and to conduct its business
as described in the Disclosure Package and, in the case of the
Company, to enter into and perform its obligations under this
Agreement. Each of the Company and each of its Subsidiaries is duly
qualified as a foreign corporation, limited liability company or
partnership, as applicable, 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 for such jurisdictions where the
failure to so qualify or to be in good standing would not,
individually or in the aggregate, result in a Material Adverse
Change. All of the issued and outstanding capital stock or
partnership or other ownership interests of each Subsidiary has
been duly authorized and validly issued, is fully paid and
nonassessable and, except as otherwise disclosed in
Schedule C hereof, is owned by the Company directly or
through subsidiaries, free and clear of any security interest,
mortgage, pledge, lien, encumbrance or claim. None of the
outstanding shares of capital stock of any Subsidiary was issued in
violation of the pre-emptive or similar rights of any security
holder of such Subsidiary. The Company does not own or control,
directly or indirectly, any corporation, association or other
entity other than the subsidiaries listed in such
Schedule C.
(q) Capitalization and Other
Capital Stock Matters . The Common Stock (including the Shares)
conforms in all material respects to the description thereof
contained in the each of the Disclosure Package and the Prospectus.
All of the issued and outstanding shares of Common Stock have been
duly authorized and validly issued, are fully paid and
nonassessable and have been issued in compliance with federal and
state securities laws. None of the outstanding shares of Common
Stock were issued in violation of any preemptive rights, rights of
first refusal or other similar rights to subscribe for or purchase
securities of the Company. There are no authorized or outstanding
options, warrants, preemptive rights, rights of first refusal or
other rights to purchase, or equity or debt securities convertible
into or exchangeable or exercisable for, any capital stock of the
Company or any of its subsidiaries other than those accurately
described in the Disclosure Package, and the issuance of the Shares
is not subject to the preemptive or other similar rights of any
security holder of the Company. The description of the
Company’s stock option, stock bonus and other stock plans or
arrangements, and the options or other rights granted thereunder,
set forth or incorporated by reference in each of the Disclosure
Package and the Prospectus accurately and fairly presents the
information required to be shown with respect to such plans,
arrangements,
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options and rights. No holder of the
Shares will be subject to personal liability by reason of being
such a holder.
(r) Listing . The Shares have
been approved for listing on the New York Stock Exchange, subject
only to official notice of issuance.
(s) Non-Contravention of Existing
Instruments; No Further Authorizations or Approvals Required .
Neither the Company nor any of its Subsidiaries is (i) in
violation or in default (or, with the giving of notice or lapse of
time, would be in default) (“Default”) under its
charter, by-laws or other constituent documents, (ii) in
Default under any indenture, mortgage, loan or credit agreement,
deed of trust, note, contract, franchise, lease or other agreement,
obligation, condition, covenant or instrument to which the Company
or any of its Subsidiaries is a party or by which it or any of them
may be bound (including, without limitation, the Company’s
71/2% Senior Notes due 2015 or the related indenture), or to which
any of the property or assets of the Company or any of its
subsidiaries is subject (each, an “Existing
Instrument”), or (iii) in violation of any statute, law,
rule, regulation, judgment, order or decree of any court,
regulatory body, administrative agency, governmental body,
arbitrator or other authority having jurisdiction over the Company
or such Subsidiary or any of its properties, as applicable, except
with respect to clauses (ii) and (iii) only, for such
Defaults or violations as would not, individually or in the
aggregate, result in a Material Adverse Change. The Company’s
execution, delivery and performance of this Agreement, the issuance
and delivery of the Shares and consummation of the transactions
contemplated hereby and thereby and by the Disclosure Package and
the Prospectus (i) have been duly authorized by all necessary
corporate action and will not result in any Default under the
charter, by-laws or other constituent documents of the Company or
any of its Subsidiaries, (ii) will not conflict with or
constitute a breach of, or Default or a Debt Repayment Triggering
Event (as defined below) under, or result in the creation or
imposition of any lien, charge or encumbrance upon any property or
assets of the Company or any of its Subsidiaries pursuant to, or
require the consent of any other party to, any Existing Instrument,
and (iii) will not result in any violation of any statute,
law, rule, regulation, judgment, order or decree applicable to the
Company or any of its subsidiaries of any court, regulatory body,
administrative agency, governmental body, arbitrator or other
authority having jurisdiction over the Company or any of its
Subsidiaries or any of its or their properties. No consent,
approval, authorization or other order of, or registration or
filing with, any court or other governmental or regulatory
authority or agency (each a “Governmental Entity”) is
required for the Company’s execution, delivery and
performance of this Agreement, the issuance and delivery of the
Shares and consummation of the transactions contemplated hereby and
thereby and by the Disclosure Package and the Prospectus, except
such as have been obtained or made by the Company and are in full
force and effect under the Securities Act, applicable state
securities or blue sky laws and from the NASD Inc. (the
“NASD”). As used herein, a “Debt Repayment
Triggering Event” means any event or condition which gives,
or with the giving of notice or lapse of time would give, the
holder of any note, debenture or other evidence of indebtedness (or
any person acting on such holder’s behalf) the right to
require the repurchase, redemption or repayment of all or a portion
of such indebtedness by the Company or any of its
Subsidiaries.
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(t) No Material Actions or
Proceedings . There are no legal or governmental actions, suits
or proceedings pending or, to the best of the Company’s
knowledge, threatened (i) against or affecting the Company or
any of its Subsidiaries, (ii) which has as the subject thereof
any officer or director of, or property owned or leased by, the
Company or any of its Subsidiaries or (iii) relating to
environmental or discrimination matters, where in any such case
(A) there is a reasonable possibility that such action, suit
or proceeding might be determined adversely to the Company or such
subsidiary and (B) any such action, suit or proceeding, if so
determined adversely, would reasonably be expected to result in a
Material Adverse Change or adversely affect the consummation of the
transactions contemplated by this Agreement. No material labor
problem or dispute with the employees of the Company or any of its
Subsidiaries exists or, to the best of the Company’s
knowledge, is threatened or imminent.
(u) Intellectual Property
Rights . The Company and its Subsidiaries own or possess
sufficient trademarks, trade names, patent rights, copyrights,
licenses, approvals, trade secrets and other similar rights
(collectively, “Intellectual Property Rights”)
reasonably necessary to conduct their businesses as now conducted;
and the expected expiration of any of such Intellectual Property
Rights would not result in a Material Adverse Change. Neither the
Company nor any of its Subsidiaries has received any notice of
infringement or conflict with asserted Intellectual Property Rights
of others, which infringement or conflict, if the subject of an
unfavorable decision, would result in a Material Adverse
Change.
(v) Tax Law Compliance . The
Company and its Subsidiaries have filed all necessary federal,
state and foreign income and franchise tax returns (after giving
effect to any filed extension) and have paid all taxes required to
be paid by any of them and, if due and payable, any related or
similar assessment, fine or penalty levied against any of them
(except (i) such taxes, fines or penalties being contested in
good faith by appropriate proceedings and for which the Company or
the applicable Subsidiary has set aside on its books adequate
reserves and (ii) where the failure to pay such taxes, fines
or penalties would not result in a Material Adverse Change). The
Company has made adequate charges, accruals and reserves in the
applicable financial statements referred to in Section 1(l)
above in respect of all federal, state and foreign income and
franchise taxes for all periods as to which the tax liability of
the Company or any of its Subsidiaries has not been finally
determined.
(w) Off-Balance Sheet
Transactions . All legal or governmental proceedings, affiliate
transactions, off-balance sheet transactions (including, without
limitation, transactions related to, and the existence of,
“variable interest entities” within the meaning of
Financial Accounting Standards Board Interpretation No. 46),
contracts, licenses, agreements, leases or documents of a character
required to be described in a Registration Statement on Form S-3
filed by the Company or to be filed as an exhibit to such a
Registration Statement or any Incorporated Document have been so
described or filed as required.
(x) Company Not an
“Investment Company” . The Company has been advised
of the rules and requirements under the Investment Company Act of
1940, as
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amended (the “Investment
Company Act”). The Company is not required, and after receipt
of payment for the Shares, will not be required to register as, an
“investment company” as defined under the Investment
Company Act and will use its best efforts to conduct its business
in a manner so that it will not become subject to the Investment
Company Act.
(y) Regulations T, U and X .
Neither the Company nor any of its Subsidiaries or any agent acting
on their behalf, other than the Underwriters, has taken or will
take any action that might cause this Agreement or the sale of the
Shares to violate Regulation T, U or X of the Board of Governors of
the Federal Reserve System, in each case as in effect, or as the
same may hereafter be in effect, on the Closing Date.
(z) Insurance . Each of the
Company and its Subsidiaries are insured by recognized, financially
sound institutions with policies in such amounts and with such
deductibles and covering such risks as are generally deemed
adequate and customary for their businesses including, but not
limited to, policies covering real and personal property owned or
leased by the Company and its Subsidiaries against theft, damage,
destruction, acts of vandalism and earthquakes. The Company has no
reason to believe that it, or any of its Subsidiaries will not be
able (i) to renew its existing insurance coverage as and when
such policies expire or (ii) to obtain comparable coverage
from similar institutions as may be necessary or appropriate to
conduct its business as now conducted and at a cost that would not
result in a Material Adverse Change. Neither the Company nor any of
its Subsidiaries has been denied any insurance coverage which it
has sought or for which it has applied except as would not result
in a Material Adverse Change.
(aa) No Restrictions on
Dividends . Except as set forth in Schedule C, no Subsidiary of
the Company is currently prohibited, directly or indirectly, from
paying any dividends to the Company, from making any other
distribution on such Subsidiary’s capital stock, from
repaying to the Company any loans or advances to such Subsidiary
from the Company or from transferring any of such
Subsidiary’s property or assets to the Company or any other
Subsidiary of the Company, except as described in or contemplated
by the Disclosure Package and the Prospectus.
(bb) No Price Stabilization or
Manipulation . Neither the Company nor any affiliate of the
Company has taken, nor will the Company or any affiliate of the
Company take, directly or indirectly, any action designed to or
that might be reasonably expected to cause or result in
stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Shares.
(cc) No Unlawful Contributions or
Other Payments . Neither the Company or any of its Subsidiaries
nor, to the best of the Company’s knowledge, any employee or
agent of the Company or any of its Subsidiaries, has made any
contribution or other payment to any official of, or candidate for,
any federal, state or foreign office in violation of any law or of
the character necessary to be disclosed in the Disclosure Package
and the Prospectus in order to make the statements therein not
misleading.
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(dd) Compliance with
Sarbanes-Oxley . Each of the Company and its Subsidiaries and
their respective officers and directors are in compliance with the
applicable provisions of the Sarbanes-Oxley Act of 2002 (the
“Sarbanes-Oxley Act”, which term, as used herein,
includes the rules and regulations of the Commission promulgated
thereunder).
(ee) Accounting Systems .
Each of the Company and its Subsidiaries maintains a system of
accounting controls that is in compliance with the Sarbanes-Oxley
Act and is sufficient to provide reasonable assurances that:
(i) transactions are executed in accordance with
management’s general or specific authorization;
(ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally
accepted accounting principles as applied in the United States and
to maintain accountability for assets; (iii) access to assets
is permitted only in accordance with management’s general or
specific authorization; and (iv) the recorded accountability
for assets is compared with existing assets at reasonable intervals
and appropriate action is taken with respect to any differences.
The Company has used its best efforts to establish and maintain
(i) disclosure controls and procedures (as defined in Rule
13a-15 promulgated under the Exchange Act) and (ii) internal
control over financial reporting (as defined in Rule 13a-15
promulgated under the Exchange Act). To the Company’s
knowledge, (i) such disclosure controls and procedures are
effective to ensure that material information relating to the
Company, including its consolidated Subsidiaries, is made known to
the senior management of the Company by others within those
entities, particularly during the period when the periodic reports
of the Company to which such information relates are required to be
prepared, (ii) such internal control over financial reporting
provides reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for
external purposes in accordance with GAAP, (iii) there are no
significant deficiencies or material weaknesses in the design or
operation of internal control of the Company over financial
reporting which could adversely affect the ability of the Company
to record, process, summarize and report financial data,
(iv) there is no fraud, whether or not material, that involves
management or other employees who have a significant role in
internal control of the Company over financial reporting, and
(v) since the date of the most recent evaluation of such
disclosure controls and procedures, there has been no significant
changes in internal controls or in other factors that would
significantly affect internal controls, including any corrective
actions with regard to significant deficiencies and material
weaknesses.
(ff) Loans to Directors and
Executive Officers . The Company has provided the
Representatives with true, correct and complete copies of all
documentation pertaining to any extension of credit in the form of
a personal loan made, directly or indirectly, by the Company or any
of its Subsidiaries to any of their respective directors or
executive officers, family members or affiliates. On or after
July 30, 2002, the Company, has not, directly or indirectly,
including through any of its Subsidiaries: (i) extended
credit, arranged to extend credit, or renewed any extension of
credit, in the form of a personal loan, to or for any director or
executive officer of the Company or to or for any family member or
affiliate of any such director or executive officer; or
(ii) made any material modification, including any renewal
thereof, to any term of any personal loan to
11
any such director or executive
officer, or any family member or affiliate of any such director or
executive officer, which loan was outstanding on July 30,
2002.
(gg) ERISA Compliance . The
Company and its Subsidiaries and any “employee benefit
plan” (as defined under the Employee Retirement Income
Security Act of 1974, as amended, and the regulations and published
interpretations thereunder (collectively, “ERISA”))
established or maintained by the Company or its Subsidiaries or
their “ERISA Affiliates” (as defined below) are in
compliance in all material respects with ERISA. “ERISA
Affiliate” means, with respect to the Company or any of its
Subsidiaries, any member of any group of organizations described in
Sections 414 of the Code of which the Company, or such Subsidiary,
as applicable, is a member. No “reportable event” (as
defined under ERISA) has occurred or is reasonably expected to
occur with respect to any “employee benefit plan”
established or maintained by the Company, any of its Subsidiaries
or any of their ERISA Affiliates. No “employee benefit
plan” established or maintained by the Company, or its
Subsidiaries or any of their ERISA Affiliates, if such
“employee benefit plan” were terminated, would have any
“amount of unfunded benefit liabilities” (as defined
under ERISA). Neither the Company nor its Subsidiaries or any of
their ERISA Affiliates has incurred or reasonably expects to incur
any liability under (i) Title IV of ERISA with respect to
termination of, or withdrawal from, any “employee benefit
plan” or (ii) Sections 412, 4971, 4975 or 4980B of the
Code. Each “employee benefit plan” established or
maintained by the Company or its Subsidiaries or any of their ERISA
Affiliates that is intended to be qualified under Section 401
of the Code is so qualified and nothing has occurred, whether by
action or failure to act, which would cause the loss of such
qualification.
(hh) Maintenance of REIT
Status . (i) Each of CNLRP and USRP, for all taxable years
commencing with its respective initial taxable year through the
date of the Mergers, has been operated so as to qualify as a real
estate investment trust (a “REIT”) within the meaning
of Section 856 of the Internal Revenue Code of 1986, as
amended (the “Code”) and the regulations and published
interpretations thereunder, and has been so qualified as a REIT for
such years, (ii) the Company, from the date of the Mergers to
the Closing Date, has operated, and expects to continue to operate,
in such a manner as to qualify as a REIT for the taxable year
beginning January 1, 2005 and (iii) CNLRP and the
Company, and to the knowledge of the Company, USRP, have not taken
or omitted to take any action which would result in a challenge to
their status as a REIT, and no such challenge is pending or, to the
Company’s knowledge, threatened. The Company intends to
continue to operate in such a manner as to qualify as a REIT. Each
Subsidiary of the Company which is a partnership or limited
liability company (i) has been since its formation and
continues to be treated for federal income tax purposes as a
partnership or disregarded as a separate entity, as the case may
be, and has not been treated for federal income tax purposes as a
corporation or an association taxable as a corporation and
(ii) has not since the later of its formation or the
acquisition by the Company of a direct or indirect interest therein
owned any assets (including, without limitation, securities) that
would cause the Company to violate Section 856(c)(4) of the
Code. Each Subsidiary of the Company that is a corporation has been
since the later of its formation or the acquisition by the Company
of a direct or indirect interest therein either a qualified REIT
subsidiary under Section 856(i) of the Code or a taxable REIT
subsidiary under Section
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856(1) of the Code or a corporation
joining in the consolidated taxable REIT subsidiary return. All
statements in each of the Disclosure Package and the Prospectus
regarding the Company’s qualification as a REIT are true,
complete and correct in all material respects.
(ii) Properties .
(A) Except as otherwise disclosed to the Representatives, each
of the Company and its Subsidiaries owns good and marketable fee
simple title (or leasehold estate) to each of the real properties
(collectively, the “Properties” and each, a
“Property”), in each case free and clear of any
security interests, mortgages, liens, encumbrances, equities,
claims and other defects, except such as do not materially and
adversely affect the value of such Property and do not materially
interfere with the use made or proposed to be made of such Property
by the Company or such Subsidiary. Except (i) as set forth in
existing title reports or existing surveys and easements granted in
the ordinary course of business, (ii) for the Company Leases
(as defined below), (iii) for any easements granted in the
ordinary course of business since the date of such title reports,
none of which, individually or in the aggregate, would result in a
Material Adverse Change, and (iv) mortgage encumbrances
related to securitizations or secured financings, no other person
has any real property ownership interest in any of the Properties.
Except as otherwise disclosed to the Representatives, none of the
Properties is subject to any restriction on (i) the sale or
other disposition thereof, except for rights of first refusal or
option to tenants of the Properties granted in the ordinary course
of business, or (ii) the financing or release of financing
thereon, except for such restrictions as would not result in a
Material Adverse Change. Except for rights of first refusal or
option to tenants of the Properties granted in the ordinary course
of business and other than pursuant to the Company’s
investment property sales program, the Company’s development
activity or the sale of portfolio properties believed to further
the Company’s ongoing management of the portfolio, none of
the Company or any of its Subsidiaries is obligated under or bound
by any option, right or first refusal, purchase contract or other
contract to sell or otherwise dispose of any Property or any other
interest in any Property.
(B) Valid policies of title
insurance have been issued or irrevocably committed to be issued
insuring the Company’s or its Subsidiary’s, as
applicable, fee simple title (or leasehold estate) to each of the
Properties (or leasehold estate) owned by it in amounts at least
equal to the purchase price thereof paid by the applicable entity
in the case of owned Properties, subject only to the matters and
exceptions disclosed in such policies. Such policies are, at the
date hereof, in full force and effect.
(C) There has been no physical
damage to any Properties which, individually or in the aggregate,
would result in a Material Adverse Change after giving effect to
any applicable insurance.
(D) Neither the Company nor any of
its Subsidiaries or, to the Company’s knowledge, any tenant
under a Lease, has received any notice with respect to any Property
to the effect that any condemnation or rezoning proceedings are
pending or threatened which, individually or in the aggregate,
would result in a Material Adverse Change. All work to be
performed, payments to be made and actions to be taken by the
Company or any of its Subsidiaries prior to the date hereof
pursuant to any agreement entered into with a Governmental Entity
in connection with a site approval, zoning
13
reclassification or other similar
action (e.g., local improvement district, road improvement
district, environmental mitigation) material to Company and its
Subsidiaries taken as a whole have been performed, paid or taken,
as the case may be, and to the Company’s knowledge, no
planned or proposed work, payments or actions that may be required
after the date hereof pursuant to such agreements are material to
Company and its Subsidiaries taken as a whole.
(jj) Leases . Except as set
forth in Schedule D hereto, each lease to which a
Property is subject (each, a “Lease” and together, the
“Leases”) is in full force and effect in accordance
with its terms and no Default has occurred that, in either case,
individually or in the aggregate, would result in a Material
Adverse Change. Neither the Company nor any of its Subsidiaries has
received written notice that it is in material Default thereunder,
and there exists no Default by the Company or any of its
Subsidiaries under such Lease.
(kk) Environmental Matters .
(A) Except as otherwise stated or incorporated by reference in
each of the Disclosure Package and the Prospectus or except for
such matters which have not had or would not, individually or in
the aggregate, reasonably be expected to result in a Material
Adverse Change:
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(i)
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none of the
Company or any of its Subsidiaries is in violation of any
applicable Environmental Laws (as defined below);
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(ii)
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no
Environmental Claims (as defined below) have been asserted or
assessed against the Company or any of its Subsidiaries or, to the
Company’s knowledge, any tenant under any of the Leases with
regard to any of the Properties, and no Environmental Claims are
pending or, to the Company’s knowledge, threatened against
the Company or any of its Subsidiaries or any tenants under any of
the Leases with regard to any of the Properties;
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(iii)
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there has not
been, and is not now present, any Contamination (as defined below)
at any property currently owned, leased or operated by the Company
and its Subsidiaries (including soils, groundwater, surface water
in, on or under such properties), and no such property is in the
National Priorities List or, to the Company’s knowledge, any
other list, schedule, log, inventory or record, however defined,
maintained by any federal, state or local Governmental Entity with
respect to sites from which there is or has been a Release (as
defined below) of a Hazardous Substance (as defined
below);
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(iv)
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there was no
Contamination at any property formerly owned, leased or operated by
the Company or any of its Subsidiaries during, or to the
Company’s knowledge, prior to the period
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14
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of ownership or
operation by such applicable entity (including soils, groundwater,
surface water in, on or under such properties), and no such
property is on the National Priorities List or, to the
Company’s knowledge, any other list, schedule, log, inventory
or record, however defined, maintained by any federal, state or
local Governmental Entity with respect to sites from which there is
or has been a Release of a Hazardous Substance;
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(v)
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neither the
Company nor any of its Subsidiaries or, to the Company’s
knowledge, any tenant of any Property is subject to any orders,
decrees, injunctions or other arrangements with any Governmental
Entity or is subject to any indemnity or other agreement with any
third party relating to liability under any Environmental Law or
relating to Hazardous Substances that obligates or may obligate the
Company or any of its Subsidiaries to pay money; and
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(vi)
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to the
Company’s knowledge, there are no events, conditions,
circumstances, practices, plans, or legal requirements (in effect
or reasonably anticipated), that could be expected to prevent the
Company or any of its Subsidiaries from, or materially increase the
burden on such entities of complying with applicable Environmental
Laws.
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(B) To the Company’s
knowledge, each of the representations and warranties contained in
paragraph (A) of this paragraph (kk), subject to the
exceptions listed in paragraph (A), is true and correct with
respect to any entity for which the Company or any of its
Subsidiaries has assumed or retained liability, whether by contract
or operation of law.
(C) For purposes of this Agreement,
the following terms shall have the following meanings:
(i) “Environmental Law”
means any law, statute, regulation, order, decree, permit,
authorization, code, ordinance, rule, policy, opinion, consent
decree, judicial order, administrative order, agency requirement,
or common law of any jurisdiction relating to: (x) the
environment, human health or safety associated with the
environment, or natural resources; (y) the handling, use,
presence, disposal, release or threatened release of any Hazardous
Substance; or (z) noise, odor, wetlands, pollution,
Contamination or any injury or threat of injury to persons or
property.
(ii) “Environmental
Claims” means: (x) any claim, demand, action or
proceeding brought or instigated by any Governmental Entity or
other third party in connection with any Environmental Law
(including without limitation civil, criminal and/or administrative
proceedings), whether or not seeking costs,
15
damages, penalties or expenses; and
(y) third party claims, actions, demands or proceedings, based
on negligence, trespass, strict liability, nuisance, toxic tort or
detriment to human health or welfare due to any Release of a
Hazardous Substance, and whether or not seeking costs, damages,
penalties or expenses.
(iii) “Contamination”
means the presence of, or Release on, under, from or to the
environment of any Hazardous Substance, except the routine storage
and use of Hazardous Substances from time to time in the ordinary
course of business, in compliance with Environmental Laws and with
good commercial practice.
(iv) “Release” means
mean the spilling, leaking, disposing, discharging, emitting,
depositing, injecting, leaching, escaping or any other release or
threatened release and whether intentional or unintentional, of any
Hazardous Substance.
(v) “Hazardous
Substance” means: (x) any hazardous substance, pollutant
or contaminant, as such terms are defined under the Comprehensive
Environmental Response, Compensation and Liability Act, as amended,
42 U.S.C. §§ 9601 et seq., or analogous state
Environmental Law; (y) any petroleum or petroleum product or
by-product, asbestos or asbestos-containing material,
urea-formaldehyde, lead-containing paint or plumbing,
polychlorinated biphenyls, radioactive materials or radon; and
(z) any other substance which is the subject of regulatory
action by any Governmental Entity pursuant to or could give rise to
liability under any Environmental Law.
(vi) “Environmental
Documents” means, for any person: (x) any and all
documents received by the person or its Subsidiaries from the
United States Environmental Protection Agency (“EPA”)
or any other Governmental Entity concerning the environmental
condition of any property owned, leased or operated at any time by
the person or any Subsidiary of the person, or the effect of the
person’s business operations or the business operations of
any Subsidiary of the person on the environmental condition of such
property; (y) any and all documents submitted by the person or
any Subsidiary of the person during the past five years to the EPA
or any state, county or municipal environmental or health agency
concerning the environmental condition of any property owned,
leased or operated at any time by the person or any Subsidiary of
the person, or the effect of the person’s business operations
or the business operations of any Subsidiary of the person on the
environmental condition of such property, and (z) any report,
study, assessment, audit, or other similar document that addresses
any issue of actual or potential noncompliance with, actual or
potential liability under or cost arising out of, or actual or
potential impact on business in connection with, any Environmental
Law or any proposed or anticipated change in or addition to
Environmental Law, that may in any way affect the person or any
entity for which it may be liable or any Subsidiary of the
person.
16
(ll) Permits . Each of the
Company and its Subsidiaries has all permits, licenses and
franchises from Governmental Entities required to conduct its
business as now being conducted or as presently contemplated to be
conducted, except for such permits, licenses and franchises the
absence of which have not resulted in and could not, individually
or in the aggregate, reasonably be expected to result in a Material
Adverse Change (the “Permits”). The Company and its
Subsidiaries are in compliance with the terms of the Permits,
except where the failure to so comply, individually or in the
aggregate, is not reasonably likely to result in a Material Adverse
Change. There is no pending threat of modification or cancellation
of any Permit that, individually or in the aggregate, could
reasonably be expected to result in a Material Adverse Change. To
the Company’s knowledge, no Permit will cease to be effective
as a result of the consummation of transactions contemplated by
this Agreement.
(mm) No Brokerage Commission
. There are no contracts, agreements or understandings between the
Company and any person that would give rise to a valid claim
against the Company or the Underwriters for a brokerage commission,
finder’s fee or other like payment in connection with the
transactions contemplated by this Agreement.
(nn) Termination of
Agreements . Neither the Company nor its Subsidiaries has sent
or received any communication regarding termination of, or intent
not to renew, any of the leases, contracts or agreements referred
to or described in each of the Disclosure Package and the
Prospectus, or filed as an exhibit to any Incorporated Document,
and no such termination or non-renewal has been threatened by the
Company or such Subsidiary or, to the knowledge of the Company, any
other party to any such contract or agreement, except for such
termination or non-renewal as would not, individually or in the
aggregate, result in a Material Adverse Change.
Any certificate signed by an officer
of the Company and delivered to the Underwriters or to counsel for
the Underwriters shall be deemed to be a representation and
warranty by the Company to the Underwriters as to the matters set
forth therein.
SECTION 2. Purchase, Sale and
Delivery of the Shares .
(a) The Firm Shares . The
Company agrees to issue and sell to the several Underwriters the
Firm Shares upon the terms herein set forth. On the basis of the
representations, warranties and agreements herein contained, and
upon the terms but subject to the conditions herein set forth, the
Underwriters agree, severally and not jointly, to purchase from the
Company the respective number of Firm Shares set forth opposite
their names on Schedule A. The purchase price per Firm Common Share
to be paid by the several Underwriters to the Company shall be
$14.25 per share.
(b) The Closing Date .
Delivery of certificates for the Firm Shares to be purchased by the
Underwriters in and payment therefor shall be made at the offices
of Sidley Austin Brown & Wood LLP, 787 Seventh Avenue, New
York, New York 10019 (or such other place as may be agreed to by
the Company and the Representatives) at 9:00 a.m. New York City
time, on December 12, 2005, or such other time and date
not
17
later than 1:30 p. m. New York time,
on December 22, 2005 as the Representatives shall designate by
notice to the Company (the time and date of such closing are called
the “Closing Date”).
(c) The Optional Shares; the
Subsequent Closing Date . In addition, on the basis of the
representations, warranties and agreements herein contained, and
upon the terms but subject to the conditions herein set forth, the
Company hereby grants an option to the several Underwriters to
purchase, severally and not jointly, up to an aggregate of
1,050,000 Optional Shares from the Company at the purchase price
per share to be paid by the Underwriters for the Firm Shares less
any dividends or distributions paid by the Company on the shares
initially purchased by the Underwriters but not on the shares to be
purchased upon exercise of the option to purchase additional
shares. The option granted hereunder may be exercised in whole or
in part at any time and from time to time upon notice by the
Representatives to the Company, which notice may be given at any
time within 30 days from the date of this Agreement. Such notice
shall set forth (i) the aggregate number of Optional Shares as
to which the Underwriters are exercising the option, (ii) the
names and denominations in which the certificates for the Optional
Shares are to be registered and (iii) the time, date and place
at which such certificates will be delivered (which time and date
may be simultaneous with, but not earlier than, the Closing Date;
and in such case the term “Closing Date” shall refer to
the time and date of delivery of certificates for the Firm Shares
and the Optional Shares). Each time and date of delivery, if
subsequent to the Closing Date, is called a “Subsequent
Closing Date” and shall be determined by the Representatives
and shall not be earlier than three nor later than five full
business days after delivery of such notice of exercise. If any
Optional Shares are to be purchased, each Underwriter agrees,
severally and not jointly, to purchase the number of Optional
Shares (subject to such adjustments to eliminate fractional shares
as the Representatives may determine) that bears the same
proportion to the total number of Optional Shares to be purchased
as the number of Firm Shares set forth on Schedule A opposite the
name of such Underwriter bears to the total number of Firm
Shares.
(d) Public Offering of Shares
. The Representatives hereby advise the Company that the
Underwriters intend to offer for sale to the public, as described
in the Prospectus, their respective portions of the Shares as soon
after this Agreement has been executed and the Registration
Statement has been declared effective as the Representatives, in
their sole judgment, have determined is advisable and p
