Exhibit 1.1
EXECUTION COPY
PS Business Parks, Inc.
5,000,000 Depositary Shares
Each Representing 1/1,000 of a Share
of
6.70% Cumulative Preferred Stock, Series
P
Liquidation Preference Equivalent to
$25.00 Per Depositary Share
Underwriting Agreement
Charlotte, North
Carolina
January 9, 2007
Wachovia Capital Markets,
LLC
Morgan Stanley & Co.
Incorporated
As Representatives of the several
Underwriters
c/o Wachovia Capital Markets, LLC
301 South College Street
Charlotte, North Carolina 28288
Ladies and Gentlemen:
PS Business Parks, Inc., a real
estate investment trust (“REIT”) and a California
corporation (the “Company”), proposes to sell to the
several underwriters named in Schedule I hereto (the
“Underwriters”), for whom you (the
“Representatives”) are acting as representatives, an
aggregate of 5,000,000 shares (the “Firm Shares”) of
its Depositary Shares (the “Depositary Shares”) each
representing 1/1,000th of a share of 6.70% Cumulative Preferred
Stock, Series P, stated value $25,000 per share (the
“Preferred Stock”). The Company also proposes to sell
to the Underwriters up to an additional 750,000 shares (the
“Additional Shares”) of Depositary Shares. The Firm
Shares and the Additional Shares are collectively referred to as
the “Shares”.
The shares of Preferred Stock
represented by the Shares (the “Preferred Shares”)
will, when issued, be deposited by the Company against delivery of
Depositary Receipts (the “Depositary Receipts”) to be
issued by American Stock Transfer & Trust Company, as
Depositary (the “Depositary”), under a Deposit
Agreement (the “Deposit Agreement”) among the Company,
the Depositary and the holders from time to time of the Depositary
Receipts issued thereunder. Each Depositary Receipt will represent
one or more Depositary Shares.
The Company wishes to confirm as
follows its agreement with you and the other several Underwriters
on whose behalf you are acting, in connection with the several
purchases of the Shares by the Underwriters.
The terms which follow, when used in
this Agreement, shall have the meanings indicated:
“Act” shall mean the
Securities Act of 1933, as amended, and the rules and regulations
of the Commission promulgated thereunder.
“amend,”
“amendment” or “supplement” with respect to
the Registration Statement, any Preliminary Prospectus or the
Prospectus shall be deemed to refer to and include the filing of
any document under the Exchange Act after the Effective Date of the
Registration Statement, or the issue date of any Preliminary
Prospectus or the Prospectus, as the case may be, deemed to be
incorporated therein by reference.
“Commission” shall mean
the United States Securities and Exchange Commission.
“Effective Date” shall
mean each date that the Registration Statement and any
post-effective amendment or amendments thereto became or become
effective.
“Exchange Act” shall
mean the Securities Exchange Act of 1934, as amended, and the rules
and regulations of the Commission promulgated
thereunder.
“Execution Time” shall
mean the date and time that this Agreement is executed and
delivered by the parties hereto.
“Preliminary Prospectus”
shall mean any preliminary prospectus or preliminary prospectus
supplement relating to the Shares and the Preferred Shares, in each
case filed pursuant to Rule 424(b).
“Prospectus” shall mean
the final prospectus in the form first furnished to the
Underwriters for use in connection with the offering of Shares and
any Preliminary Prospectus that forms a part thereof and any
Prospectus Supplement relating to the Shares that is first filed
pursuant to Rule 424(b) after the Execution Time.
“Registration Statement”
shall mean the Registration Statement referred to in
Section 4(a), including exhibits and financial statements
thereto, as amended at the Execution Time and, in the event any
post-effective amendment thereto becomes effective prior to the
Closing Date, shall also mean such registration statement as so
amended.
“Rule 424” refers to
such rule under the Act.
Any reference herein to the
Registration Statement, a Preliminary Prospectus or the Prospectus
shall be deemed to refer to and include the documents incorporated
by reference therein either pursuant to the terms of the
Registration Statement or pursuant to Item 12 of Form S-3
which were filed under the Exchange Act on or before the Effective
Date of the Registration Statement or the issue date of such
Preliminary Prospectus or the Prospectus, as the case may be
(collectively, the “Incorporated
Documents”).
1. Agreements to Sell and
Purchase .
(a) On the basis of the
representations, warranties and agreements of the Company herein
contained and subject to all the terms and conditions of this
Agreement, the Company agrees to sell to the Underwriters and each
Underwriter agrees, severally and not jointly, to purchase from the
Company, at a purchase price of $24.2125 per share (the
“purchase price per share”), except for Firm Shares
sold by the Underwriters to institutional investors as agreed by
the Company and the Underwriters for which the purchase price shall
be $24.5000 per share, the
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number of Firm Shares set forth opposite the
name of such Underwriter in Schedule I hereto (or such number of
Firm Shares increased as set forth in Section 9
hereof).
(b) The Company also agrees, subject
to all the terms and conditions set forth herein, to sell to the
Underwriters, and, upon the basis of the representations,
warranties and agreements of the Company herein contained and
subject to all the terms and conditions set forth herein, the
Underwriters shall have the right to purchase from the Company, at
the purchase price per share, plus accumulated dividends, if any,
on an Additional Share to the date of purchase, pursuant to an
option (the “over-allotment option”) which may be
exercised at any time and from time to time prior to 9:00 P.M., New
York City time, on the 30th day after the date of the Prospectus
(or, if such 30th day shall be a Saturday or Sunday or a holiday,
on the next business day thereafter when the American Stock
Exchange is open for trading), up to an aggregate of 750,000
Additional Shares. Additional Shares may be purchased only for the
purpose of covering over-allotments made in connection with the
offering of the Firm Shares. Upon any exercise of the
over-allotment option, each Underwriter, severally and not jointly,
agrees to purchase from the Company the number of Additional Shares
(subject to such adjustments as you may determine in order to avoid
fractional shares) which bears the same proportion to the number of
Additional Shares to be purchased by the Underwriters as the number
of Firm Shares set forth opposite the name of such Underwriter in
Schedule I hereto (or such number of Firm Shares increased as set
forth in Section 9 hereof) bears to the aggregate number of
Firm Shares.
2. Terms of Public Offering
.
The Company has been advised by you
that the Underwriters propose to make a public offering of their
respective portions of the Shares as soon after this Agreement has
been entered into and the Registration Statement (as defined
herein), and, if necessary, any post-effective amendment to the
Registration Statement, has become effective as in your judgment is
advisable and initially to offer the Shares upon the terms set
forth in the Prospectus.
3. Delivery of the Shares and
Payment Therefor .
Delivery to the Underwriters of and
payment for the Firm Shares shall be made at the office of Wachovia
Capital Markets, LLC, 301 South College Street, Charlotte, North
Carolina 28288, at 10:00 A.M., New York City time, on
January 17, 2007 (the “Closing Date”). The place
of closing for the Firm Shares and the Closing Date may be varied
by agreement between you and the Company.
Delivery to the Underwriters of and
payment for any Additional Shares to be purchased by the
Underwriters shall be made at the aforementioned office of Wachovia
Capital Markets, LLC at such time on such date (the “Option
Closing Date”), which may be the same as the Closing Date but
shall in no event be earlier than the Closing Date nor earlier than
three nor later than ten business days after the giving of the
notice hereinafter referred to, as shall be specified in a written
notice from you on behalf of the Underwriters to the Company of the
Underwriters’ determination to purchase a number, specified
in such notice, of Additional Shares. The place of closing for any
Additional Shares and the Option Closing Date for such Shares may
be varied by agreement between you and the Company.
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Certificates for the Firm Shares and
for any Additional Shares shall be registered in such names and in
such denominations as you shall request prior to 1:00 P.M., New
York City time, on the second business day preceding the Closing
Date or any Option Closing Date, as the case may be. Such
certificates shall be made available to you in New York City for
inspection and packaging not later than 9:30 A.M., New York City
time, on the business day immediately preceding the Closing Date or
the Option Closing Date, as the case may be. The certificates
evidencing the Firm Shares and any Additional Shares to be
purchased hereunder shall be delivered to you on the Closing Date
or the Option Closing Date, as the case may be, against payment of
the purchase price therefor by wire transfer of immediately
available funds to the order of the Company.
4. Representations, Warranties
and Agreements of the Primary Entities.
The Company and PS Business Parks,
L.P., a limited partnership under the laws of the state of
California (the “Operating Partnership,” and together
with the Company, the “Primary Entities”), jointly and
severally, represent and warrant to and agree with the Underwriters
that:
(a) The Company has filed with the
Commission a registration statement, file number 333-112969, on
Form S-3, including the related prospectus included in the
Registration Statement, for the registration under the Act, of the
offering and sale of, inter alia , the Shares. The Company
may have filed one or more amendments thereto, including each
related prospectus, and one or more prospectus supplements thereto,
each of which has previously been furnished to the Representatives.
The Company has filed with, or transmitted for filing to, or shall
promptly hereafter file with or transmit for filing to, the
Commission a prospectus supplement (the “Prospectus
Supplement”) specifically relating to the Shares pursuant to
Rules 415 and 424 under the Act. The Company has included or will
include in such Registration Statement, as amended at the Execution
Time, and in the Prospectus Supplement all information required by
the Act and the rules thereunder to be included therein with
respect to the Shares and the offering thereof. As filed, such
Registration Statement, as so amended, and form of final prospectus
contained in the Registration Statement and Prospectus Supplement,
contains or will contain all required information with respect to
the Shares and the offering thereof and, except to the extent the
Representatives shall agree in writing to a modification, shall be
in all substantive respects in the form furnished to the
Underwriters prior to the date hereof or, to the extent not
completed at the Execution Time, shall contain only such specific
additional information and other changes as the Company has advised
the Representatives, prior to the Execution Time, will be included
or made therein.
(b) At the respective times the
Registration Statement and each amendment thereto became effective,
and on the Closing Date, the Registration Statement complied and
will comply in all material respects with the requirements of the
Act and the rules thereunder and did not contain and will not
contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in
order to make the statements therein not misleading; and, the
Prospectus and any amendments or supplements thereto, at the time
the Prospectus or any such amendment or supplement was issued and
on the Closing Date, and on the Option Closing Date, if applicable,
complied and will comply in all material respects with the
requirements of the Act and
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the rules thereunder and did not and
will not include 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; provided, however, that the Company makes no
representations or warranties as to the information contained in or
omitted from the Registration Statement or the Prospectus (or any
supplement thereto) in reliance upon and in conformity with
information furnished in writing to the Company by or on behalf of
any Underwriter through the Representatives specifically for
inclusion in the Registration Statement or the Prospectus (or any
supplement thereto).
(c) As of the Applicable Time (as
defined below), the Issuer General Use Free Writing Prospectus(es)
(as defined below) issued at or prior to the Applicable Time and
the Statutory Prospectus (as defined below) all considered together
(collectively, the “General Disclosure Package”), did
not include 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; provided, however, that the Company makes no
representations or warranties as to the information contained in or
omitted from the General Disclosure Package in reliance upon and in
conformity with information furnished in writing to the Company by
or on behalf of any Underwriter through the Representatives
specifically for inclusion therein. As used in this subsection and
elsewhere in this Agreement:
“Applicable Time” means
10:30 A.M. (Eastern time) on January 9, 2007 or such other
time as agreed by the Company and the Representatives.
“Statutory Prospectus”
means the prospectus relating to the Shares contained in the
Registration Statement at the Effective Date, including any
document incorporated by reference therein and any Preliminary
Prospectus.
“Issuer Free Writing
Prospectus” means any “issuer free writing
prospectus,” as defined in Rule 433 of the Act, relating to
the Shares that (i) is required to be filed with the
Commission by the Company, (ii) is a “roadshow 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 Shares 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 by the
Company’s records pursuant to Rule 433(g) of the
Act.
“Issuer General Use Free
Writing Prospectus” means any Issuer Free Writing Prospectus
that is intended for general distribution to prospective investors,
as evidenced by its being specified in Schedule II
hereto.
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 that the Company notified or notifies the
Representatives, did not, does not and will not include any
information that conflicted, conflicts or will conflict with any
information
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contained in the Registration
Statement 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.
(d) The documents incorporated or
deemed to be incorporated by reference in the Registration
Statement, the Prospectus and the General Disclosure Package, at
the time they were or hereafter are filed with the Commission,
complied and will comply in all material respects with the
requirements of the Exchange Act, and the rules and regulations of
the Commission thereunder and, when read together with the other
information in the General Disclosure Package, at the Applicable
Time, and with the Prospectus, at the date of the Prospectus, on
the Closing Date and on the Option Closing Date, if applicable, did
not and will not include an untrue statement of a material fact or
omit to state a material fact necessary to make the statements
therein, in light of the circumstances, under which they were made,
not misleading.
(e) Ernst & Young LLP, an
accounting firm that audited certain financial statements and
supporting schedules included in, or incorporated by reference
into, the Registration Statement and the Prospectus, are, and
during the periods covered by such reports were, independent public
accountants as required by the Act, and are registered as a public
accounting firm with the Public Company Accounting Oversight Board.
PricewaterhouseCoopers LLP, an accounting firm that also audited
certain financial statements and supporting schedules included in,
or incorporated by reference into, the Registration Statement and
the Prospectus, are, and during the periods covered by such reports
were, independent public accountants as required by the
Act.
(f) The financial statements
(including the notes and schedules thereto) included in, or
incorporated by reference into, the Registration Statement, the
General Disclosure Package and the Prospectus present fairly the
financial position of the respective entity or entities or group
presented therein at the respective dates indicated and the results
of their operations for the respective periods specified; except as
otherwise stated in the Registration Statement, the General
Disclosure Package and Prospectus, said financial statements have
been prepared in conformity with generally accepted accounting
principles applied on a consistent basis; the supporting schedules
included or incorporated by reference in the Registration
Statement, the General Disclosure Package and the Prospectus
present fairly the information included or incorporated therein and
have been prepared on a basis consistent, except as may be noted
therein, with that of the financial statements included in, or
incorporated by reference into, the Registration Statement, the
General Disclosure Package and the Prospectus and the books and
records of the respective entities presented therein. The summary
and selected financial data included in, or incorporated by
reference into, the Prospectus present fairly the information shown
therein as at the respective dates and for the respective periods
specified, and the summary and selected financial data have been
presented on a basis consistent with the financial statements so
set forth in the Prospectus and other financial information. Pro
forma financial information included in or incorporated by
reference into the Registration Statement, the General Disclosure
Package and the Prospectus has been prepared in accordance with the
applicable requirements of the Act and guidelines of the American
Institute of Certified Public Accountants (the “AICPA”)
with respect to
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pro forma financial information and
includes all adjustments necessary to present fairly the pro forma
financial position of the Company at the respective dates indicated
and the results of operations for the respective periods specified.
All financial statements that are required under the Act or the
Exchange Act to be included in, or incorporated by reference into,
the Registration Statement, the General Disclosure Package and the
Prospectus are included in, or incorporated by reference into, the
Registration Statement, the General Disclosure Package and the
Prospectus.
(g) No stop order suspending the
effectiveness of the Registration Statement or any part thereof has
been issued and no proceeding for that purpose has been instituted
or, to the knowledge of the Primary Entities, threatened by the
Commission or by the state securities authority of any
jurisdiction. No order preventing or suspending the use of the
Prospectus has been issued and no proceeding for that purpose has
been instituted or, to the knowledge of the Primary Entities,
threatened by the Commission or by the state securities authority
of any jurisdiction.
(h) 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 been no adverse change in the
condition (financial or otherwise), or in the earnings, assets,
business affairs or business prospects of the Primary Entities or
any subsidiary of the Company (the Primary Entities, such
subsidiaries or any entity through which the Primary Entities own a
joint venture interest in any property being sometimes hereinafter
collectively referred to as the “Transaction Entities”
and individually as a “Transaction Entity”), or any
property in which any Transaction Entity directly or indirectly
owns an interest (a “Facility”), whether or not arising
in the ordinary course of business, which would be material to the
Transaction Entities, considered as one enterprise (any such
adverse change being hereinafter referred to as a “Material
Adverse Change”); (B) no material casualty loss or
condemnation or other adverse event with respect to any of the
Facilities has occurred; (C) there have been no material
transactions or acquisitions entered into by the Transaction
Entities, other than those in the ordinary course of business;
(D) none of the Transaction Entities has incurred any material
obligation or liability, direct, contingent or otherwise;
(E) there has been no material change in the short-term debt
or long-term debt of the Transaction Entities; (F) except for
regular quarterly distributions in amounts per share described in
the Prospectus, there has been no dividend or distribution of any
kind declared, paid or made by the Company, on any class of its
capital shares; and (G) since September 30, 2006, and
with the exception the Company’s grant of options to
purchase, in the aggregate, zero (0) shares of common stock of
the Company, par value $.01 per share (“Common Stock”),
there has been no change in the capital shares of the Company or
partnership interests in the Operating Partnership (the
“Units”).
(i) The Company has been duly
organized and is validly existing as a corporation in good standing
under and by virtue of the laws of the State of California, with
power and authority to own, lease and operate its properties and to
conduct the business in which it is engaged or proposes to engage,
as described in the Registration Statement, the General Disclosure
Package and the Prospectus, and to enter into and perform its
obligations under this Agreement and the other Company Documents
(as
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hereinafter defined) to which it is
a party; and the Company is duly qualified or registered to
transact business and is in good standing in each jurisdiction in
which such qualification or registration is required, whether by
reason of the ownership or leasing of property or the conduct of
business, except where the failure to so qualify or register would
not result in a Material Adverse Change. Other than the Operating
Partnership and PSBP Industrial, LLC, a Delaware limited liability
company, none of the subsidiaries of the Company is a
“significant subsidiary” as such term is defined in
Rule 405 under the Act. The Company owns no direct or indirect
equity interest in any entity other than the Transaction Entities
and in PSCC, Inc.
(j) The Operating Partnership has
been duly organized and is validly existing as a limited
partnership in good standing under and by virtue of the laws of the
State of California, with partnership power and authority to own,
lease and operate its properties, to conduct the business in which
it is engaged and proposes to engage, in each case as described in
the Registration Statement, the General Disclosure Package and the
Prospectus, and to enter into and perform its obligations under
this Agreement and the other Company Documents to which it is a
party. The Operating Partnership is duly qualified or registered as
a foreign partnership and is in good standing in each jurisdiction
in which such qualification or registration is required, whether by
reason of the ownership or leasing of property or the conduct of
business, except where the failure to so qualify or register would
not result in a Material Adverse Change. The Company is the sole
general partner of the Operating Partnership. The Agreement of
Limited Partnership of the Operating Partnership (the
“Operating Partnership Agreement”) is in full force and
effect in the form in which it was incorporated by reference as an
exhibit in the Company’s Quarterly Report on Form 10-Q for
the quarter ended June 30, 2006, and as of the date hereof,
the aggregate percentage interests of the Company (in its capacity
as both a general partner and a limited partner) and the limited
partners other than the Company in the Operating
Partnership’s common units are 74.5% and 25.5%,
respectively.
(k) Each of the Transaction Entities
has been duly organized and is validly existing as a corporation,
limited partnership or other legal entity, as the case may be, in
good standing under and by virtue of the laws of its state of
organization with the requisite power and authority to own, lease
and operate its properties, to conduct the business in which it is
engaged or proposes to engage, and to enter into and perform its
obligations under the Company Documents to which it is a party, if
any. Each of the Transaction Entities is duly qualified or
registered as a foreign corporation, limited partnership or other
legal entity, as the case may be, to transact business and is in
good standing in each jurisdiction in which such qualification or
registration is required, whether by reason of the ownership or
leasing of a property or the conduct of business, except where the
failure to so qualify or register would not result in a Material
Adverse Change. All of the issued and outstanding capital stock,
units of limited partnership or other equity interest, as the case
may be, of each of the Transaction Entities is duly authorized,
validly issued, fully paid and, in the case of capital stock,
nonassessable, and has been offered and sold in compliance with all
applicable laws (including, without limitation, federal and state
securities laws) and, except as disclosed in the Registration
Statement, the General Disclosure Package and the Prospectus, the
capital stock, units of
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limited partnership or other equity
interest, as the case may be, are owned by the Company, directly or
indirectly, free and clear of any security interest, mortgage,
pledge, lien, encumbrance, claim, restriction or equities. No
shares of capital stock, units of limited partnership or other
equity interest, as the case may be, of any of the Transaction
Entities are reserved for any purpose, and there are no outstanding
securities convertible into or exchangeable for any capital stock,
units of limited partnership or other equity interest, as the case
may be, of any of the Transaction Entities and no outstanding
options, rights (preemptive or otherwise) or warrants to purchase
or to subscribe for shares of such capital stock, units of limited
partnership or other equity interest, as the case may be, or any
other securities of such Transaction Entities, except as disclosed
in the Registration Statement, the General Disclosure Package and
the Prospectus.
(l) The Company has an authorized
capitalization as set forth in the Registration Statement, the
General Disclosure Package and the Prospectus (including the
Incorporated Documents), and all of the issued capital stock of the
Company has been duly authorized and is validly issued, fully paid
and nonassessable and has been offered and sold in compliance with
all applicable laws (including, without limitation, federal and
state securities laws) and conforms to the description thereof
contained in the Registration Statement, the General Disclosure
Package and the Prospectus. Except for Common Stock issuable upon
the exercise of options and restricted stock units granted under
the Company’s 1997 Stock Option and Incentive Plan, the
Company’s 2003 Stock Option and Incentive Plan and the
Company’s Retirement Plan for Non-Employee Directors, upon
exchange of interests in the Operating Partnership or as described
in the Prospectus, no capital stock of the Company is reserved for
any purpose, and there are (A) no outstanding securities
convertible into or exchangeable for any capital stock of the
Company, (B) no options, rights or warrants to purchase or to
subscribe for such capital stock or any other securities of the
Company or (C) no outstanding preemptive rights, rights of
first refusal or co-sale, registration or similar rights with
respect to capital stock of the Company, which by their terms are
applicable to the offering or sale of the Shares hereunder, which
have not been waived pursuant to binding agreements in connection
with the offering and sale of the Shares hereunder.
(m) The Shares and the Preferred
Shares have been duly authorized and, when issued and delivered by
the Company pursuant to this Agreement and, in the case of the
Shares, the Deposit Agreement, against payment of the consideration
therefor, will be validly issued, fully paid and nonassessable.
Upon payment of the purchase price and delivery of the Shares in
accordance herewith, the Underwriters will receive the Shares, free
and clear of all security interests and liens. The terms of such
Shares conform in substance to all statements and descriptions
related thereto contained in the Prospectus. The form of share
certificates to be used to evidence such applicable Shares will be
in due and proper form and will comply with all applicable legal
and American Stock Exchange requirements. The issuance of such
Shares is not subject to any preemptive or other similar
rights.
(n) All the issued and outstanding
Units have been duly authorized and are validly issued and fully
paid and have been offered and sold or exchanged in compliance with
all applicable laws (including, without limitation, federal and
state securities laws).
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Except as described in the
Prospectus, there are no outstanding securities convertible or
exchangeable for any Units and no outstanding options, rights
(preemptive or otherwise) or warrants to purchase or to subscribe
for Units.
(o) The shares of Common Stock and
preferred stock issuable upon exchange of any of the outstanding
Units are duly and validly authorized by all necessary action and
such shares, when issued upon such exchange, will be duly and
validly issued, fully paid and nonassessable, and the issuance of
such shares upon such exchange will not be subject to preemptive or
other similar rights; the shares of Common Stock and preferred
stock so issuable conform in all material respects to all
statements relating thereto contained in the Prospectus.
(p) None of the Transaction Entities
is, and at the Closing Date and any later date on which Additional
Shares are to be issued none of the Transaction Entities will be,
in violation of its articles of incorporation, by-laws, certificate
of limited partnership, agreement of limited partnership or other
governing documents, as the case may be, and none of the
Transaction Entities is, and at the Closing Date and any later date
on which Additional Shares are to be issued none of the Transaction
Entities will be, in default in the performance or observance of
any obligation, agreement, covenant or condition contained in any
contract, indenture, mortgage, loan agreement, note, lease or other
instrument or of any applicable law, rule, order, administrative
regulation or administrative or court decree, to which such entity
is a party or by which such entity may be bound, or to which any of
its property or assets or any Facility may be bound or subject,
except for such violations and defaults that would not,
individually or in the aggregate, result in a Material Adverse
Change.
(q) (i) Each of this Agreement and
the Deposit Agreement has been duly and validly authorized,
executed and delivered by the Primary Entities which are parties
thereto and is a valid and binding agreement of each of the Primary
Entities which are parties thereto, enforceable against such
Primary Entities in accordance with its terms, except as such
enforceability may be subject to (A) bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or transfer or
similar laws affecting creditors’ rights generally and
(B) general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law);
(ii) at the Closing Date and any later date on which
Additional Shares are to be issued, each of this Agreement and the
Deposit Agreement will have been duly and validly authorized,
executed and delivered by the Primary Entities which are parties
thereto, and will be a valid and binding agreement of the Primary
Entities which are parties thereto, enforceable against such
Primary Entities in accordance with its terms, except as rights to
indemnification under this Agreement may be limited by applicable
law and except as such enforceability may be subject to
(A) bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance or transfer or similar laws affecting
creditors’ rights generally and (B) general principles
of equity (regardless of whether such enforceability is considered
in a proceeding in equity or at law); (iii) each agreement
filed pursuant to Item 601(b)(10) of Regulation S-K as an
exhibit to the Registration Statement and the Company’s
Annual Report on Form 10-K for the fiscal year ended
December 31, 2005, or any report filed subsequently by the
Company which is incorporated by reference into
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the Registration Statement (each a
“Material Agreement”) has been duly and validly
authorized, executed and delivered by the Transaction Entities
which are parties thereto and is a valid and binding agreement,
enforceable against the Transaction Entities which are parties
thereto in accordance with its terms, except as such enforceability
may be subject to (A) bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance or transfer or similar laws
affecting creditors’ rights generally and (B) general
principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law). This Agreement,
the Deposit Agreement, the Operating Partnership Agreement and the
Material Agreements are sometimes herein collectively called the
“Company Documents.”
(r) The execution and delivery of
this Agreement and the Deposit Agreement, the issuance of the
Preferred Shares, the issuance and sale of the Shares, the
performance of the obligations set forth herein or therein and the
consummation of the transactions contemplated hereby and thereby or
in the Prospectus by the Transaction Entities will not conflict
with or constitute a material breach or violation by such parties
of, or default under or result in the creation or imposition of any
lien, charge or encumbrance upon any Facility, or any other
property or asset of a Transaction Entity under or pursuant to,
(i) any of the other Company Documents or (ii) any
contract, indenture, mortgage, loan agreement, note, lease, joint
venture or partnership agreement or other instrument or agreement
to which any Transaction Entity is a party or by which they, any of
them, any of their respective properties or other assets or any
Facility may be bound or subject, nor will such action conflict
with or constitute a breach or violation by the Transaction
Entities of, or default under, (X) the articles of
incorporation, by-laws, certificate of limited partnership,
partnership agreement or other governing documents, as the case may
be, of any Transaction Entity or (Y) any applicable law, rule,
order, administrative regulation or administrative or court
decree.
(s) (i) No labor dispute with
employees of either of the Primary Entities exists or is imminent,
and (ii) no Primary Entity is aware of any existing or
imminent labor disturbance by the employees of any of the
Transaction Entities’ principal suppliers, manufacturers or
contractors, which, in the case of either (i) or (ii), might
be expected to result in any Material Adverse Change. No collective
bargaining agreement exists with the employees of any of the
Primary Entities, and to the best knowledge of either of the
Primary Entities, no such agreement is imminent.
(t) 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
Primary Entities, after due inquiry, threatened against or
affecting any Transaction Entity, Facility or, to the knowledge of
the Company, any officer or director of the Company, which is
required to be disclosed in the Registration Statement and is not
adequately disclosed in the Preliminary Prospectus and the
Prospectus, or that, if determined adversely to any Transaction
Entity, Facility or such officer or director, will or could
reasonably be expected to result in a Material Adverse Change or to
prevent consummation of the transaction contemplated hereby. There
are no pending legal or governmental proceedings to which any
Transaction Entity is a party or of which they or any of their
respective properties or assets or any Facility is the subject,
including
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ordinary routine litigation
incidental to the business, that, considered in the aggregate,
could reasonably be expected to result in a Material Adverse
Change. There are no contracts or documents of any Transaction
Entity of a character required to be described in the Registration
Statement or the General Disclosure Package and Prospectus, or to
be filed as an exhibit, which is not described or filed as
required.
(u) At all times since its taxable
year ended December 31, 1990, the Company has been, and upon
the sale of the Shares the Company will continue to be, organized
and operated in conformity with the requirements for qualification
as a real estate investment trust under the Internal Revenue Code
of 1986, as amended (the “Code”), and its proposed
method of operation will enable it to continue to meet the
requirements for taxation as a real estate investment trust under
the Code.
(v) Each of the Transaction Entities
has filed all federal, state, local and foreign income tax returns
which have been required to be filed and has paid all taxes
required to be paid and any other assessment, fine or penalty
levied against it, to the extent that any of the foregoing is due
and payable, except, in all cases, for any such tax assessment,
fine or penalty that is being contested in good faith and except in
any case in which the failure to so pay would not result in a
Material Adverse Change.
(w) At all times since its
formation, the Operating Partnership has been, and upon the sale of
the Shares will continue to be, classified as a partnership for
Federal income tax purposes.
(x) None of the Transaction Entities
is, and at the Closing Date none of the Transaction Entities will
be, required to be registered under the Investment Company Act of
1940, as amended (the “1940 Act”).
(y) None of the Transaction Entities
is, and at the Closing Date none of the Transaction Entities will
be, required to own or possess or to obtain the consent of any
holder of any trademarks, service marks, trade names or copyrights
not now lawfully owned or possessed in order to conduct the
business proposed to be operated by the Transaction
Entities.
(z) No authorization, approval,
consent or order of any court or governmental authority or agency
or other entity or person is necessary in connection with the
offering, the execution and delivery of this Agreement or the
Deposit Agreement, the issuance of the Preferred Shares or the
issuance or sale of the Shares hereunder, except such as may be
required under the Act or state securities, real estate syndication
or blue sky laws, or the listing requirements of the American Stock
Exchange or such as have been received.
(aa) Each of the Transaction
Entities possesses, and at the Closing Date will possess, such
certificates, authorizations or permits issued by the appropriate
local, state, federal or foreign regulatory agencies or bodies
necessary to conduct the business now operated by it, or proposed
to be conducted by it, except for such certificates, authorizations
and permits, the failure to obtain, maintain or possess which by
any of the Transaction Entities would not result, singly or in the
aggregate, in a Material Adverse
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Change, and none of the Transaction
Entities has received any notice of proceedings relating to the
revocation or modification of any such certificate, authority or
permit which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would result in a Material
Adverse Change.
(bb) Except as disclosed in the
General Disclosure Package and the Prospectus, there are no persons
with registration or other similar rights to have any securities
registered pursuant to the Registration Statement that have not
been waived in connection with the offering and sale of the Shares
pursuant to this Agreement.
(cc) The outstanding shares of
Common Stock, the Company’s Depositary Shares Each
Representing 1/1000 th of a share of 8
3
/ 4 % Cumulative Preferred Stock, Series
F (the “Series F Stock”), the Company’s
Depository Shares Each Representing 1/1000 th of a share of 7.000% Cumulative
Preferred Stock, Series H (the “Series H Stock”), the
Company’s Depository Shares Each Representing 1/1000
th
of a share of 6.875%
Cumulative Preferred Stock, Series I (the “Series I
Stock”), the Company’s Depository Shares Each
Representing 1/1000 th of a share of 7.950% Cumulative
Preferred Stock, Series K (the “Series K Stock”), the
Company’s Depositary Shares Each Representing 1/1000
th
of a share of 7.60%
Cumulative Preferred Stock, Series L (the “Series L
Stock”), the Company’s Depositary Shares Each
Representing 1/1000 th of a share of 7.20% Cumulative
Preferred Stock, Series M (the “Series M Stock”) and
the Company’s Depositary Shares Each Representing
1/1000 th of a share of 7.375% Cumulative
Preferred Stock, Series O (the “Series O Series”), are
listed on the American Stock Exchange and the Shares will be listed
on the American Stock Exchange, subject to official notice of
issuance.
(dd) The Company has taken no action
designed to, or likely to have the effect of, terminating the
registration of the Common Stock, the Series F Stock, the Series H
Stock, the Series I Stock, the Series K Stock, the Series L Stock,
the Series M Stock or the Series O Stock under the Exchange Act or
delisting the Common Stock, the Series F Stock, the Series H Stock,
the Series I Stock, the Series K Stock, the Series L Stock, the
Series M Stock or the Series O Stock from the American Stock
Exchange, nor has the Company received any notification that the
Commission or the American Stock Exchange is contemplating
terminating any such registration or listing.
(ee) The Company has not distributed
and will not distribute prior to the later of (i) the Closing
Date or any later date on which Additional Shares are to be
purchased, as the case may be, or (ii) completion of the
distribution of the Shares, any offering material in connection
with the offering and sale of the Shares other than the
Registration Statement, the Prospectus, the General Disclosure
Package or other materials, if any, permitted by the
Act.
(ff) Neither the Company nor any of
its subsidiaries has at any time during the last five
(5) years (i) made any unlawful contribution to any
candidate for foreign office or failed to disclose fully any
contribution in violation of law, or (ii) made any payment to
any federal or state governmental officer or official, or other
person charged with
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similar public or quasi-public
duties, other than payments required or permitted by the laws of
the United States or any jurisdiction thereof.
(gg) The Company has not taken and
will not take, directly or indirectly, any action designed to or
that might reasonably be expected to cause or result in
stabilization or manipulation of the price of the Common Stock, the
Series F Stock, the Series H Stock, the Series I Stock, the Series
K Stock, the Series L Stock, the Series M Stock or the Series O
Stock to facilitate the sale or resale of the Shares in violation
of the Act.
(hh) (i) At the Closing Date and any
later date on which Additional Shares are to be issued, the
Company, the Operating Partnership or one of the other Transaction
Entities will have good and marketable title (or, with respect to
any Facilities located in Texas, good and indefeasible fee simple
title, or such substantially equivalent quality of title as
provided by the applicable title insurance policy) to each of the
Facilities and all other items of real property (and improvements
therein), in each case free and clear of all liens, encumbrances,
claims, security interests and defects, other than those
(A) referred to in the Registration Statement, the General
Disclosure Package and the Prospectus, (B) which are not
material in amount; (ii) all liens, charges, encumbrances,
claims or restrictions on or affecting any of the Facilities and
the assets of any Transaction Entity which are required to be
disclosed in the Registration Statement, the General Disclosure
Package and the Prospectus are disclosed therein; (iii) except
as otherwise described in the Registration Statement, the General
Disclosure Package and the Prospectus, neither Primary Entity is,
and, to the best knowledge of the Primary Entities, no Transaction
Entity is, in default under (A) any space or ground leases (as
lessor or lessee, as the case may be) relating to the Facilities,
or (B) any of the mortgage or other security documents or
other agreements encumbering or otherwise recorded against the
Facilities, and no Primary Entity knows, after due inquiry, 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 documents or
agreements; (iv) each of the Facilities complies with all
applicable codes, laws and regulations (including, without
limitation, building and zoning codes, laws and regulations and
laws relating to access to the Facilities); and (v) no Primary
Entity has knowledge of, after due inquiry, any pending or
threatened condemnation proceeding, 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
Facilities, except in each case for such matters as could not,
individually or in the aggregate, result in a Material Adverse
Change.
(ii) Each of the Facilities has
property, title, casualty and liability insurance in favor of
either the Company, the Operating Partnership, or one of the
Transaction Entities with respect to the Facilities by insurers of
recognized financial responsibility against such losses and risks
and in such amounts as are prud
