Exhibit 1.1
D IGITAL R EALTY T RUST , I NC .
20,000,000 Shares a /
Common Stock
($0.01 par value)
Underwriting Agreement
New York, New York
October 28, 2004
Citigroup Global Markets Inc.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
As Representatives of the several
Underwriters,
c/o Citigroup Global Markets Inc.
388 Greenwich Street
New York, New York 10013
Ladies and Gentlemen:
Digital Realty Trust, Inc., a
corporation organized under the laws of the State of Maryland (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,
20,000,000 shares of Common Stock, $0.01 par value (“Common
Stock”) of the Company (said shares to be issued and sold by
the Company being hereinafter called the “Underwritten
Securities”). The Company also proposes to grant to the
Underwriters an option to purchase up to 3,000,000 additional
shares of Common Stock to cover over-allotments (the “Option
Securities”; the Option Securities, together with the
Underwritten Securities, being hereinafter called the
“Securities”). To the extent there are no additional
Underwriters listed on Schedule I other than you, the term
Representatives as used herein shall mean you, as Underwriters, and
the terms Representatives and Underwriters shall mean either the
singular or plural as the context requires. Certain terms used
herein are defined in Section 17 hereof.
The Company is the sole general
partner of Digital Realty Trust, L.P., a Maryland limited
partnership (the “Operating Partnership”), the
Company’s operating partnership subsidiary. On or prior to
the Closing Date (as hereafter defined), the Company will complete
a series of transactions (the “Formation Transactions”)
described in the Prospectus under the captions
a / Plus an option to purchase from
the Company, up to 3,000,000 additional Securities to cover
over–allotments.
“Structure and Formation of Our
Company” and “Certain Relationships and Related
Transactions” pursuant to which certain persons will
contribute their direct and indirect interests in certain
properties, and interests in entities holding such properties (the
“Property Partnerships”), to the Operating
Partnership.
As part of the offering contemplated
by this Agreement, Citigroup Global Markets Inc. has agreed to
reserve out of the Securities set forth opposite its name on
Schedule I to this Agreement, up to 93,805 shares (the
“Directed Share Program”), for sale to the
Company’s employees, officers, and directors and other
parties associated with the Company or its subsidiaries
(collectively, “Participants”). The Securities to be
sold by Citigroup Global Markets Inc. pursuant to the Directed
Share Program (the “Directed Shares”) will be sold by
Citigroup Global Markets Inc. pursuant to this Agreement at the
public offering price. Any Directed Shares not orally confirmed for
purchase by any Participants by 8:00 A.M. New York City time on the
business day following the date on which this Agreement is executed
will be offered to the public by Citigroup Global Markets Inc. as
set forth in the Prospectus.
1. Representations and
Warranties . Each of the Company and the Operating Partnership,
jointly and severally, represents and warrants to, and agrees with,
each Underwriter as set forth below in this Section 1.
(a) The Company has prepared and
filed with the Commission a registration statement (file number
333-117865) on Form S-11, including a related preliminary
prospectus, for registration under the Act of the offering and sale
of the Securities. The Company may have filed one or more
amendments thereto, including a related preliminary prospectus,
each of which has previously been furnished to you. The Company
will next file with the Commission one of the following: either (1)
prior to the Effective Date of such registration statement, a
further amendment to such registration statement (including the
form of final prospectus) or (2) after the Effective Date of such
registration statement, a final prospectus in accordance with Rules
430A and 424(b). In the case of clause (2), the Company has
included in such registration statement, as amended at the
Effective Date, all information (other than Rule 430A Information)
required by the Act and the rules thereunder to be included in such
registration statement and the Prospectus. As filed, such amendment
and form of final prospectus, or such final prospectus, shall
contain all Rule 430A Information, together with all other such
required information, and, except for such modifications to which
the Representatives do not reasonably object, shall be in all
substantive respects in the form furnished to you prior to the
Execution Time or, to the extent not completed at the Execution
Time, shall contain only such specific additional information and
other substantive changes (beyond that contained in the latest
Preliminary Prospectus) as the Company has advised you, prior to
the Execution Time, will be included or made therein.
(b) On the Effective Date, the
Registration Statement did or will, and when the Prospectus is
first filed (if required) in accordance with Rule 424(b) and on the
Closing Date (as defined herein) and on any date on which Option
Securities are purchased, if such date is not the Closing Date (a
“settlement date”), the Prospectus (and any supplements
thereto) will, comply in all material respects with the applicable
requirements of the Act and the rules thereunder; on the Effective
Date and at the
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Execution Time, the Registration
Statement did not or 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, on the Effective Date, the Prospectus, if not
filed pursuant to Rule 424(b), will not, and on the date of any
filing pursuant to Rule 424(b) and on the Closing Date and any
settlement date, the Prospectus (together with any supplement
thereto) 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). 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 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 by the Commission
or by the state securities authority of any
jurisdiction.
(c) (i) The Company has been duly
incorporated and is validly existing as a corporation in good
standing under the laws of State of Maryland with full corporate
power and authority to own or lease, as the case may be, and to
operate its properties and conduct its business as described in the
Prospectus, and to enter into and perform its obligations under
this Agreement and the Formation Transaction Documents (as
hereafter defined) to which it is a party and as general partner of
the Operating Partnership to cause the Operating Partnership to
enter into and perform the Operating Partnership’s
obligations under this Agreement and the Formation Transaction
Documents to which the Operating Partnership is a party and is duly
qualified to do business as a foreign corporation and is in good
standing under the laws of each jurisdiction which requires such
qualification except where the failure to be so qualified would not
reasonably be expected to have a material adverse effect on the
condition (financial or otherwise), prospects, earnings, business
or properties of the Company and its subsidiaries, taken as a
whole, whether or not arising from transactions in the ordinary
course of business.
(ii) The Operating Partnership has
been duly formed and is validly existing as a limited partnership
in good standing under the laws of the State of Maryland with full
power and authority to own or lease, as the case may be, and to
operate its properties and conduct its business as described in the
Prospectus and to enter into and perform its obligations under this
Agreement and the Formation Transaction Documents to which it is a
party, and is duly qualified to do business and is in good standing
as a foreign limited partnership under the laws of each
jurisdiction which requires such qualification except where the
failure to be so qualified would not reasonably be expected to have
a material adverse effect on the condition (financial or
otherwise), prospects, earnings, business or properties of the
Company and its subsidiaries, taken as a whole, whether or not
arising from transactions in the ordinary course of business. At
the Closing Date, the aggregate percentage interests of the Company
and the limited partners
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in the Operating Partnership will be
as set forth in the Prospectus; provided, that to the extent any
portion of the over-allotment option described in Section 2(b)
hereof is exercised at the Closing Date, the percentage interest of
the Company and of such limited partners in the Operating
Partnership will be adjusted accordingly.
(iii) Each subsidiary (as defined
below) of the Company has been duly formed and is validly existing
as a corporation, limited liability company or limited partnership,
as the case may be, in good standing under the laws of the
jurisdiction in which it is chartered or organized with full power
and authority (corporate and other) to own or lease, as the case
may be, and to operate its properties and conduct its business as
described in the Prospectus, and is duly qualified to do business
as a foreign corporation, limited liability company or limited
partnership, as the case may be, and is in good standing under the
laws of each jurisdiction which requires such qualification except
where the failure to be so qualified would not reasonably be
expected to have a material adverse effect on the condition
(financial or otherwise), prospects, earnings, business or
properties of the Company and its subsidiaries, taken as a whole,
whether or not arising from transactions in the ordinary course of
business.
(d) All the outstanding shares of
capital stock or other ownership interests of each subsidiary have
been duly and validly authorized and issued and are fully paid and
nonassessable, and, as of the Closing Date, except as otherwise set
forth in the Prospectus, all outstanding shares of capital stock or
other ownership interests of the subsidiaries will be owned by the
Company either directly or through wholly owned subsidiaries free
and clear of any perfected security interest or any other security
interests, claims, mortgages, pledges, liens, encumbrances or other
restrictions of any kind (collectively, “Liens”),
except for Liens securing indebtedness as described in the
Prospectus and except where such Liens would not individually or in
the aggregate materially affect or interfere in any material
respect with the Company’s ability to exercise control over
each of such subsidiaries. Except as set forth in the Prospectus,
there are no outstanding options, warrants or other rights to
purchase, agreements or other obligations to issue, or rights to
convert any obligations into or exchange any securities or
interests for capital stock or other ownership interests of any
subsidiary.
(e) The Company’s authorized
equity capitalization is as set forth in the Prospectus; the
capital stock of the Company conforms in all material respects to
the description thereof contained in the Prospectus; the
outstanding shares of Common Stock have been duly and validly
authorized and issued and are fully paid and nonassessable; the
Securities have been duly and validly authorized, and, when issued
and delivered to and paid for by the Underwriters pursuant to this
Agreement, will be fully paid and nonassessable; the Securities are
duly listed, and admitted and authorized for trading, subject to
official notice of issuance and evidence of satisfactory
distribution, on the New York Stock Exchange; the certificates for
the Securities are in valid and sufficient form; the holders of
outstanding shares of capital stock of the Company are not entitled
to preemptive or other rights to subscribe for the Securities; and,
except as set forth in the Prospectus, no options, warrants or
other rights to purchase, agreements or other obligations to issue,
or rights to convert any obligations into or exchange any
securities for, shares of capital stock of or ownership interests
in the Company are outstanding; all
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offers and sales of the
Company’s shares of Common Stock prior to the date hereof
were at all relevant times duly registered under the Act or were
exempt from the registration requirements of the Act and were duly
registered or the subject of an available exemption from the
registration requirements of the applicable state securities or
blue sky laws.
(f) The units of limited partnership
(“Units”) of the Operating Partnership issued or to be
issued in connection with the Formation Transactions, including
without limitation, the Units to be issued to the Company, have
been duly authorized for issuance by the Operating Partnership to
the holders or prospective holders thereof, and at the Closing Date
will be validly issued and fully paid. The Units will be exempt
from registration or qualification under the Act and applicable
state securities laws. None of the Units will be issued in
violation of the preemptive or other similar rights of any security
holder of the Operating Partnership or any other person or entity.
Except as set forth in the Prospectus, there are no outstanding
options, warrants or other rights to purchase, agreements or other
obligations to issue, or rights to convert any obligations into or
exchange any securities or interests for, Units or other ownership
interests of the Operating Partnership.
(g) There is no franchise, contract
or other document of a character required to be described in the
Registration Statement or Prospectus, or to be filed as an exhibit
thereto, which is not described or filed as required; and the
statements in the Prospectus under the headings
“Management’s Discussion and Analysis of Financial
Condition and Results of Operations—Liquidity and Capital
Resources—Material Provisions of Consolidated Indebtedness to
be Outstanding After this Offering,” “Description of
the Partnership Agreement of Digital Realty Trust, L.P.,”
“Description of Securities,” “Material Provisions
of Maryland Law and of Our Charter and Bylaws” and
“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.
(h) This Agreement and each of (i)
the GI Partners contribution agreement, (ii) the eBay Data Center
purchase agreement, (iii) the 200 Paul Avenue and 1100 Space Park
Drive contribution agreement, (iv) the Univision Tower contribution
agreement, (v) the amended and restated agreement of limited
partnership of the Operating Partnership, (vi) the Carrier Center
option agreement and (vii) the transition services agreement, in
each case as identified in the Prospectus under the captions
“Certain Relationships and Related Transactions” and/or
“Structure and Formation of Our Company” (collectively,
the “Formation Transaction Documents”) has been duly
authorized, executed and delivered by the Company and the Operating
Partnership to which it is a party; each Formation Transaction
Document to which it is a party constitutes a legally valid and
binding obligation of each of the Company and the Operating
Partnership, enforceable against each of the Company and the
Operating Partnership in accordance with its terms, except to the
extent that such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization or other similar laws
relating to or affecting creditors’ rights and general
principles of equity and except as rights to indemnity and
contribution thereunder may be limited by applicable law or
policies underlying such law.
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(i) Each of the Company and the
Operating Partnership is not and, after giving effect to the
offering and sale of the Securities and the application of the
proceeds thereof as described in the Prospectus, will not be an
“investment company” as defined in the Investment
Company Act of 1940, as amended.
(j) No consent, approval,
authorization, filing with or order of any court or governmental
agency or body is required in connection with the transactions
contemplated herein or by the Formation Transaction Documents,
except such as have been obtained under the Act, such as may be
required under the blue sky laws of any jurisdiction in connection
with the purchase and distribution of the Securities by the
Underwriters in the manner contemplated herein and in the
Prospectus or such consents, approvals, authorizations, filings or
orders that will be obtained or completed by the Closing Date or
the absence of which, individually or in the aggregate, would not
reasonably be expected to have a material adverse effect on the
condition (financial or otherwise), prospects, earnings, business
or properties of the Company and its subsidiaries, taken as a
whole, whether or not arising from transactions in the ordinary
course of business.
(k) Neither the issue and sale of
the Securities nor the consummation of any other of the
transactions herein contemplated or by the Formation Transaction
Documents nor the fulfillment of the terms hereof or thereof will
conflict with, result in a breach or violation of, or imposition of
any lien, charge or encumbrance upon any property or assets of the
Company or any of its subsidiaries pursuant to, (i) the charter or
by-laws of the Company or the organizational or other governing
documents of any of its subsidiaries, (ii) the terms of any
indenture, contract, lease, mortgage, deed of trust, note
agreement, loan agreement or other agreement, obligation,
condition, covenant or instrument to which the Company or any of
its subsidiaries is a party or bound or to which its or their
property is subject, or (iii) 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, except, in the case of clauses (ii) or
(iii) above, for such conflicts, breaches, violations, liens,
charges or encumbrances that, individually or in the aggregate,
would not reasonably be expected to have a material adverse effect
on the condition (financial or otherwise), prospects, earnings,
business or properties of the Company and its subsidiaries, taken
as a whole, whether or not arising from transactions in the
ordinary course of business.
(l) No holders of securities of the
Company have rights to the registration of such securities under
the Registration Statement. Except as set forth in the Prospectus,
there are no contracts, agreements or understandings between the
Company or the Operating Partnership and any person granting such
person the right to require the Company or the Operating
Partnership to file a registration statement under the Act with
respect to any securities of the Company or the Operating
Partnership owned or to be owned by such person or to require the
Company or the Operating Partnership to include such securities in
any securities being registered pursuant to any other registration
statement filed by the Company or the Operating Partnership under
the Act.
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(m) The consolidated historical
financial statements and schedules of the Company and its
consolidated subsidiaries included in the Prospectus and the
Registration Statement present fairly in all material respects the
financial condition, results of operations and cash flows of the
Company as of the dates and for the periods indicated, comply as to
form in all material respects with the applicable accounting
requirements of the Act and have been prepared in conformity with
generally accepted accounting principles applied on a consistent
basis throughout the periods involved (except as otherwise noted
therein). The selected financial data set forth under the caption
“Selected Financial Data” in the Prospectus and
Registration Statement fairly present in all material respects, on
the basis stated in the Prospectus and the Registration Statement,
the information included therein. The pro forma financial
statements included in the Prospectus and the Registration
Statement include assumptions that provide a reasonable basis for
presenting the significant effects directly attributable to the
transactions and events described therein, the related pro forma
adjustments give appropriate effect to those assumptions, and the
pro forma adjustments reflect the proper application of those
adjustments to the historical financial statement amounts in the
pro forma financial statements included in the Prospectus and the
Registration Statement. The pro forma financial statements included
in the Prospectus and the Registration Statement comply as to form
in all material respects with the applicable accounting
requirements of Regulation S-X under the Act and the pro forma
adjustments have been properly applied to the historical amounts in
the compilation of those statements.
(n) No action, suit or proceeding by
or before any court or governmental agency, authority or body or
any arbitrator involving the Company or any of its subsidiaries or
its or their property is pending or, to the best knowledge of the
Company, threatened that (i) could reasonably be expected to have a
material adverse effect on the performance of this Agreement or the
Formation Transaction Documents or the consummation of any of the
transactions contemplated hereby or thereby or (ii) could
reasonably be expected to have a material adverse effect on the
condition (financial or otherwise), prospects, earnings, business
or properties of the Company and its subsidiaries, taken as a
whole, whether or not arising from transactions in the ordinary
course of business, except as set forth in or contemplated in the
Prospectus (exclusive of any supplement thereto).
(o) (i) Upon consummation of the
Formation Transactions, except with respect to the Carrier Center
property, which the Operating Partnership has an option to acquire
and which option is expected to be exercised simultaneously with,
or shortly after, the Closing Date, the Company or its subsidiaries
will have fee simple title (or in the case of the ASM Lithography
property, a leasehold interest, and in the case of the eBay Data
Center property, a 75% tenancy in common interest) to all of the
properties described in the Prospectus as owned or leased by them
and the improvements (exclusive of improvements owned by tenants)
located thereon (the “Properties”), in each case, free
and clear of all liens, encumbrances, claims, security interests,
restrictions and defects, except such as are set forth in the title
reports and commitments listed on Schedule 1(o) hereto, are
disclosed in the Prospectus or do not affect the value of such
Property and do not interfere with the use made and proposed to be
made of such Property by the Company and any subsidiary; (ii)
except as otherwise set forth in or contemplated in the
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Prospectus, the mortgages and deeds
of trust encumbering the Properties described in the Prospectus are
not convertible into debt or equity securities of the Company or
the Operating Partnership and such mortgages and deeds of trust are
not cross-defaulted or cross-collateralized to any property not
owned directly or indirectly by the Company or its subsidiaries;
(iii) neither the Company nor any of its subsidiaries has received
from any governmental authority any written notice of any
condemnation of or zoning change affecting the Properties or any
part thereof, and none of the Company or any subsidiary knows of
any such condemnation or zoning change which is threatened and
which if consummated would reasonably be expected to have a
material adverse effect on the condition (financial or otherwise),
prospects, earnings, business or properties of the Company and its
subsidiaries, taken as a whole, whether or not arising from
transactions in the ordinary course of business; (iv) each of the
Properties 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 Properties), except
if and to the extent disclosed in the Prospectus and except for
such failures to comply that would not individually or in the
aggregate reasonably be expected to materially affect the value of
such Property or interfere in any material respect with the use
made and proposed to be made of such Property by the Company or any
subsidiary; (v) the Company or a subsidiary has obtained a title
insurance policy on, or a so-called “fairway
endorsement” on existing title policies (in states where such
endorsement is available) covering, the fee interests (or leasehold
interests in the case of the ASM Lithography property) from a title
insurance company, or, if such title insurance policy has not yet
been issued, a binding commitment by such title insurance company
to issue such a policy, in any event covering each Property, with
coverage in an amount at least equal to 80% of the cost of
acquisition of such Property, including the principal amount of any
indebtedness assumed with respect to the Property, provided that
for any coverage less than 100% of such Property’s cost
(including the principal amount of any indebtedness to be assumed
with respect to the Property), such policy includes a so-called
“tie-in endorsement” in states where such endorsement
is available; (vi) true, correct and complete copies of the leases,
exhibits, schedules or other documents that comprise the leases
described in the “Business and Properties” section of
the Prospectus where the tenant has been specifically identified
(the “Major Leases”) have been provided to the
Underwriters or their counsel; (vii) except as set forth in the
Prospectus, neither the Company nor any subsidiary holds any
Property under a ground lease; and (viii) to the knowledge of the
Company and the Operating Partnership, except as set forth in or
contemplated in the Prospectus, reflected in the pro forma
financial statements or as disclosed in any tenant estoppel
certificates, and, with respect to (A), (B) and (C) below, except
as would not individually or in the aggregate reasonably be
expected to materially affect the value of such Property or
interfere in any material respect with the use made and proposed to
be made of such Property by the Company or any subsidiary: (A) no
rentals or other amounts due under the Major Leases have been paid
more than one (1) month in advance; (B) no tenant has asserted in
writing any defense or set-off against the payment of rent in
connection with the Major Leases nor has any tenant contested any
tax, operating cost or other escalation payment or occupancy
charge, or any other amounts payable under its Major Leases; (C)
all tenants, licensees, franchisees or other parties under the
Major Leases are in possession of their respective premises; (D)
none of the
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Major Leases has been assigned,
mortgaged, pledged, sublet, hypothecated or otherwise encumbered,
except for Liens securing indebtedness described in the Prospectus;
(E) neither the Company nor the Operating Partnership has waived in
writing any material provision under any Major Lease; (F) there are
no uncured events of default, or events that with the giving of
notice or passage of time, or both, would constitute an event of
default, by any tenant under any of the terms and provisions of the
Major Leases; and (G) no tenant under any of the leases at the
Properties has a right of first refusal to purchase the premises
demised under such lease.
(p) The Company and its subsidiaries
own, possess, license or have other rights to use, on reasonable
terms, all patents, patent applications, trade and service marks,
trade and service mark registrations, trade names, copyrights,
licenses, inventions, trade secrets, technology, know-how and other
intellectual property (collectively, the “Intellectual
Property”) reasonably necessary for the conduct of the
Company’s and the Operating Partnership’s business as
now conducted or as proposed in the Prospectus to be conducted.
Except as set forth in the Prospectus; (i) to the Company’s
or the Operating Partnership’s best knowledge, there is no
material infringement by third parties of any such Intellectual
Property and (ii) there is no pending or, to the Company’s or
the Operating Partnership’s best knowledge, threatened
action, suit, proceeding or claim by others that the Company or the
Operating Partnership infringes or otherwise violates any patent,
trademark, copyright, trade secret or other proprietary rights of
others, and the Company is unaware of any other fact which would
form a reasonable basis for any such claim.
(q) Neither the Company nor any
subsidiary is in violation or default of (i) any provision of its
charter, bylaws or other organizational or governing documents,
(ii) the terms of any indenture, contract, lease, mortgage, deed of
trust, note agreement, loan agreement or other agreement,
obligation, condition, covenant or instrument to which it is a
party or bound or to which its property is subject, or (iii) 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,
in the case of clauses (ii) or (iii) above, for such violations or
defaults that, individually or in the aggregate, would not
reasonably be expected to have a material adverse effect on the
condition (financial or otherwise), prospects, earnings, business
or properties of the Company and its subsidiaries, taken as a
whole, whether or not arising from transactions in the ordinary
course of business.
(r) KPMG LLP, who have certified the
financial statements and supporting schedules included in the
Prospectus and delivered their reports with respect to the audited
financial statements and schedules included in the Prospectus, are
independent public accountants within the meaning of the Act and
the applicable published rules and regulations
thereunder.
(s) The Company and each of its
subsidiaries has filed all foreign, federal, state and local tax
returns that are required to be filed or has requested extensions
thereof (except in any case in which the failure so to file would
not reasonably be expected to
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have a material adverse effect on
the condition (financial or otherwise), prospects, earnings,
business or properties of the Company and its subsidiaries, taken
as a whole, whether or not arising from transactions in the
ordinary course of business, except as set forth in or contemplated
in the Prospectus (exclusive of any supplement thereto) and has
paid all taxes required to be paid by it and any other assessment,
fine or penalty levied against it, to the extent that any of the
foregoing is due and payable, except for any such tax, assessment,
fine or penalty that is currently being contested in good faith or
as would not reasonably be expected to have a material adverse
effect on the condition (financial or otherwise), prospects,
earnings, business or properties of the Company and its
subsidiaries, taken as a whole, whether or not arising from
transactions in the ordinary course of business, except as set
forth in or contemplated in the Prospectus (exclusive of any
supplement thereto).
(t) No material labor problem or
dispute with the employees of the Company or any of its
subsidiaries exists or is threatened or imminent.
(u) The Company and each of its
subsidiaries are insured by insurers of recognized financial
responsibility against such losses and risks and in such amounts as
are prudent and customary in the businesses in which they are
engaged; all policies of insurance and fidelity or surety bonds
insuring the Company or any of its subsidiaries or their respective
businesses, assets, employees, officers and directors are in full
force and effect; the Company and its subsidiaries are in
compliance with the terms of such policies and instruments in all
material respects; and there are no claims by the Company or any of
its subsidiaries under any such policy or instrument as to which
any insurance company is denying liability or defending under a
reservation of rights clause; neither the Company nor any such
subsidiary has been refused any insurance coverage sought or
applied for; and neither the Company nor any such subsidiary has
any reason to believe that it will not be able to renew its
existing insurance coverage as and when such coverage expires or to
obtain similar coverage from similar insurers as may be necessary
to continue its business at a cost that would not reasonably be
expected to have a material adverse effect on the condition
(financial or otherwise), prospects, earnings, business or
properties of the Company and its subsidiaries, taken as a whole,
whether or not arising from transactions in the ordinary course of
business, except as set forth in or contemplated in the Prospectus
(exclusive of any supplement thereto).
(v) No subsidiary of the Company is
currently prohibited, directly or indirectly, from paying any
dividends or distributions to the Company, from making any other
distribution on such subsidiary’s capital stock or equity
interests, 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 with respect to Global Stanford
Place III, LLC or except pursuant to the terms of any indebtedness
set forth in or contemplated in the Prospectus (exclusive of any
supplement thereto).
(w) The Company and its subsidiaries
possess all licenses, certificates, permits and other
authorizations issued by the appropriate federal, state or foreign
regulatory authorities necessary to conduct their respective
businesses, except for such licenses,
10
certificates, permits and other
authorizations the absence of which, individually or in the
aggregate, would not reasonably be expected to have a material
adverse effect on the condition (financial or otherwise),
prospects, earnings, business or properties of the Company and its
subsidiaries, taken as a whole, whether or not arising from
transactions in the ordinary course of business; and neither the
Company nor any such subsidiary has received any notice of
proceedings relating to the revocation or modification of any such
certificate, authorization or permit which, singly or in the
aggregate, if the subject of an unfavorable decision, ruling or
finding, would reasonably be expected to have a material adverse
effect on the condition (financial or otherwise), prospects,
earnings, business or properties of the Company and its
subsidiaries, taken as a whole, whether or not arising from
transactions in the ordinary course of business, except as set
forth in or contemplated in the Prospectus (exclusive of any
supplement thereto).
(x) The Company and each of its
subsidiaries maintain a system of internal accounting controls
sufficient to provide reasonable assurance that (i) transactions
are executed in accordance with management’s general or
specific authorizations; (ii) transactions are recorded as
necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to
maintain asset accountability; (iii) access to assets is permitted
only in accordance with management’s general or specific
authorization; and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any
differences.
(y) The Company has not taken,
directly or indirectly, any action designed to or that would
constitute or that would reasonably be expected to cause or result
in, under the Exchange Act or otherwise, stabilization or
manipulation of the price of any security of the Company to
facilitate the sale or resale of the Securities.
(z) The Company and its subsidiaries
are (i) in compliance with any and all applicable foreign, federal,
state and local laws and regulations relating to the protection of
human health and safety, the environment or hazardous or toxic
substances or wastes, pollutants or contaminants
(“Environmental Laws”), (ii) have received and are in
compliance with all permits, licenses or other approvals required
of them under applicable Environmental Laws to conduct their
respective businesses and (iii) have not received notice of any
actual or potential liability under any Environmental Laws, except
where such non-compliance with Environmental Laws, failure to
receive required permits, licenses or other approvals, or liability
would not, individually or in the aggregate, reasonably be expected
to have a material adverse change in the condition (financial or
otherwise), prospects, earnings, business or properties of the
Company and its subsidiaries, taken as a whole, whether or not
arising from transactions in the ordinary course of business,
except as set forth in or contemplated in the Prospectus (exclusive
of any supplement thereto). Except as set forth in the Prospectus,
neither the Company nor any of the subsidiaries has been notified
that it has been named as a “potentially responsible
party” under the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended. Except as
otherwise set forth in the Prospectus, and except as would not
individually or in the aggregate reasonably be expected to
materially affect the value of such Property or interfere in any
material respect with the
11
use made and proposed to be made of
such Property by the Company or any subsidiary, to the knowledge of
the Company and the Operating Partnership, there have been no and
are no (i) aboveground or underground storage tanks; (ii)
polychlorinated biphenyls (“PCBs”) or PCB-containing
equipment; (iii) asbestos or asbestos containing materials; (iv)
lead based paints; (v) mold or other airborne contaminants; or (vi)
dry-cleaning facilities in, on, under, or about any Property owned
by the Company, the Operating Partnership or their
subsidiaries.
(aa) In the ordinary course of its
business, the Company periodically reviews the effect of
Environmental Laws on the business, operations and properties of
the Company and its subsidiaries, in the course of which it
identifies and evaluates associated costs and liabilities
(including, without limitation, any capital or operating
expenditures required for clean-up, closure of properties or
compliance with Environmental Laws, or any permit, license or
approval, any related constraints on operating activities and any
potential liabilities to third parties). On the basis of such
review, the Company has reasonably concluded that such associated
costs and liabilities would not, singly or in the aggregate,
reasonably be expected to have a material adverse effect on the
condition (financial or otherwise), prospects, earnings, business
or properties of the Company and its subsidiaries, taken as a
whole, whether or not arising from transactions in the ordinary
course of business, except as set forth in or contemplated in the
Prospectus (exclusive of any supplement thereto).
(bb) Neither the Company nor any of
its subsidiaries maintains or contributes to any “pension
plan” (within the meaning of Section 3(2) of the Employee
Retirement Income Security Act of 1974, as amended
(“ERISA”)) that is subject to Title IV of ERISA or any
“multiemployer plan” (within the meaning of Section
4001(a)(3) of ERISA). Each “pension plan” (within the
meaning of Section 3(2) of ERISA) maintained by the Company or any
of its subsidiaries which is intended to be qualified under Section
401(a) of the Code has received a favorable determination or
opinion letter from the Internal Revenue Service that such plan is
so qualified. Neither the Company nor any of its subsidiaries
maintains or is required to contribute to a “welfare
plan” (as defined in Section 3(1) of ERISA) which provides
retiree or other post-employment welfare benefits or insurance
coverage (other than “continuation coverage” (as
defined in Section 602 of ERISA) or as otherwise required by
applicable law). Each “employee benefit plan” (within
the meaning of Section 3(3) of ERISA) established or maintained by
the Company and/or one or more of its subsidiaries is in compliance
with the currently applicable provisions of ERISA except for such
failures to comply that would not individually or in the aggregate
reasonably be expected to have a material adverse effect on the
condition (financial or otherwise), prospects, earnings, business
or properties of the Company and its subsidiaries, taken as a
whole, whether or not arising from transactions in the ordinary
course of business.
(cc) There is and has been no
failure on the part of the Company and any of the Company’s
directors or officers, in their capacities as such, to comply with
any applicable provision of the Sarbanes Oxley Act of 2002 and the
rules and regulations promulgated in connection therewith (the
“Sarbanes Oxley Act”) except for such failures to
comply that would not individually or in the aggregate reasonably
be expected to have
12
a material adverse effect on the
condition (financial or otherwise), prospects, earnings, business
or properties of the Company and its subsidiaries, taken as a
whole, whether or not arising from transactions in the ordinary
course of business.
(dd) Neither the Company nor any of
its subsidiaries nor, to the knowledge of the Company, any
director, officer, agent, employee or affiliate of the Company or
any of its subsidiaries is aware of or has taken any action,
directly or indirectly, that would result in a violation by such
persons of the Foreign Corrupt Practices Act of 1977, as amended,
and the rules and regulations thereunder (“FCPA”),
including, without limitation, making use of the mails or any means
or instrumentality of interstate commerce corruptly in furtherance
of an offer, payment, promise to pay or authorization of the
payment of any money, or other property, gift, promise to give, or
authorization of the giving of anything of value to any
“foreign official” (as such term is defined in the
FCPA) or any foreign political party or official thereof or any
candidate for foreign political office, in contravention of the
FCPA and the Company, its subsidiaries and, to the knowledge of the
Company and the Operating Partnership, its affiliates have
conducted their businesses in compliance with the FCPA and have
instituted and maintain policies and procedures designed to ensure,
and which are reasonably expected to continue to ensure, continued
compliance therewith except for such violations or failures to
comply that would not individually or in the aggregate reasonably
be expected to have a material adverse effect on the condition
(financial or otherwise), prospects, earnings, business or
properties of the Company and its subsidiaries, taken as a whole,
whether or not arising from transactions in the ordinary course of
business.
(ee) The operations of the Company
and its subsidiaries are and have been conducted at all times in
compliance with applicable financial recordkeeping and reporting
requirements of the Currency and Foreign Transactions Reporting Act
of 1970, as amended, the money laundering statutes of all
jurisdictions, the rules and regulations thereunder and any related
or similar rules, regulations or guidelines, issued, administered
or enforced by any governmental agency (collectively, the
“Money Laundering Laws”) and no action, suit or
proceeding by or before any court or governmental agency, authority
or body or any arbitrator involving the Company or any of its
subsidiaries with respect to the Money Laundering Laws is pending
or, to the best knowledge of the Company, threatened except for
such failures to comply, actions, suits or proceedings that would
not individually or in the aggregate reasonably be expected to have
a material adverse effect on the condition (financial or
otherwise), prospects, earnings, business or properties of the
Company and its subsidiaries, taken as a whole, whether or not
arising from transactions in the ordinary course of
business.
(ff) Except as would not
individually or in the aggregate reasonably be expected to have a
material adverse effect on the condition (financial or otherwise),
prospects, earnings, business or properties of the Company and its
subsidiaries, taken as a whole, whether or not arising from
transactions in the ordinary course of business, neither the
Company nor any of its subsidiaries nor, to the knowledge of the
Company, any director, officer, agent, employee or affiliate of the
Company or any of its subsidiaries is currently subject to any U.S.
sanctions administered by the Office of Foreign Assets Control of
the U.S. Treasury Department (“OFAC”); and the Company
will not directly
13
or indirectly use the proceeds of
the offering, or lend, contribute or otherwise make available such
proceeds to any subsidiary, joint venture partner or other person
or entity, for the purpose of financing the activities of any
person currently subject to any U.S. sanctions administered by
OFAC.
(gg) Except as set forth in the
Prospectus, the Company and its subsidiaries have good and
marketable title to all personal property owned by them, free and
clear of all encumbrances and defects; and all personal property
held under lease by the Company or any subsidiary are held by it
under valid, subsisting and enforceable leases, in each case, with
such exceptions as are not material and do not interfere with the
use made and proposed to be made of such property by the Company or
the subsidiary. !
(hh) No relationship, direct or
indirect, exists between or among the Company on the one hand, and
the directors, officers, or shareholders of the Company on the
other hand, which is required to be described in the Prospectus and
which is not so described.
(ii) The statistical and
market-related data included in the Prospectus and the Registration
Statement are based on or derived from sources that the Company
believes to be reliable and accurate.
(jj) Commencing with its taxable
year ending December 31, 2004, the Company will be organized and
operated in conformity with the requirements for qualification and
taxation as a real estate investment trust (a “REIT”)
under the Internal Revenue Code 1986, as amended (the
“Code”), and its proposed method of operation will
enable it to meet the requirements for qualification and taxation
as a REIT under the Code. Each of the Company’s corporate
subsidiaries qualifies as a “taxable REIT subsidiary”
within the meaning of Section 856(l) of the Code and all applicable
regulations under the Code.
(kk) The Company and Operating
Partnership and each of their subsidiaries (including any
predecessor entities) have not distributed, and prior to the later
of the Closing Date and the completion of the distribution of the
Underwritten Securities, will not distribute, any offering material
in connection with the offering or sale of the Underwritten
Securities other than the Registration Statement, the Prospectus or
any other materials, if any, permitted by the Act.
(ll) Furthermore, the Company and
the Operating Partnership represent and warrant to Citigroup Global
Markets Inc. that (i) the Registration Statement, the Prospectus
and any preliminary prospectus comply, and any further amendments
or supplements thereto will comply, with any applicable laws or
regulations of foreign jurisdictions in which the Prospectus or any
preliminary prospectus, as amended or supplemented, if applicable,
are distributed in connection with the Directed Share Program, and
that (ii) no authorization, approval, consent, license, order,
registration or qualification of or with any government,
governmental instrumentality or court, other than such as have been
obtained, is necessary under the securities laws and regulations of
foreign jurisdictions in which the Directed Shares are offered
outside the United States. The Company has not offered, or caused
the Underwriters to offer, Securities to any
14
person pursuant to the Directed
Share Program with the specific intent to unlawfully influence (i)
a tenant or vendor of the Company or the Operating Partnership to
alter the tenant’s or vendor’s level or type of
business with the Company or the Operating Partnership, or (ii) a
trade journalist or publication to write or publish favorable
information about the Company or its properties.
Any certificate signed by any
officer of the Company and delivered to the Representatives or
counsel for the Underwriters in connection with the offering of the
Securities pursuant to this Agreement shall be deemed a
representation and warranty by the Company, as to matters covered
thereby, to each Underwriter.
2. Purchase and Sale
.
(a) Subject to the terms and
c
