Exhibit 1.1
3,000,000 Shares
KILROY REALTY
CORPORATION
7.50% Series F Cumulative
Redeemable Preferred Stock
Liquidation Preference $25.00 Per
Share
Underwriting
Agreement
dated November 4,
2004
WACHOVIA CAPITAL MARKETS,
LLC
A.G. EDWARDS & SONS,
INC.
KEYBANC CAPITAL
MARKETS,
a division of McDONALD
INVESTMENTS INC.
RBC DAIN RAUSCHER
INC.
3,000,000 Shares
KILROY REALTY
CORPORATION
7.50% Series F Cumulative Redeemable Preferred
Stock
Liquidation Preference $25.00 Per
Share
UNDERWRITING
AGREEMENT
November 4, 2004
WACHOVIA CAPITAL MARKETS, LLC
A.G. EDWARDS & SONS, INC.
KEYBANC CAPITAL MARKETS,
a division of McDONALD
INVESTMENTS INC.
RBC DAIN RAUSCHER INC.
As representatives of the several
underwriters
c/o Wachovia Capital Markets, LLC
One Wachovia Center
301 South College Street
Charlotte, North Carolina 28288
Ladies and Gentlemen:
Introductory
. Kilroy Realty Corporation, a Maryland
corporation (the “ REIT ”), proposes to issue
and sell to the several underwriters named in Schedule 1
attached hereto (the “ Underwriters ”) an
aggregate of 3,000,000 shares (the “ Firm Shares
”) of its 7.50% Series F Cumulative Redeemable Preferred
Stock (liquidation preference $25.00 per share), par value $0.01
per share (“ Series F Preferred Stock ”).
Wachovia Capital Markets, LLC (“ Wachovia Securities
”), A.G. Edwards & Sons, Inc., KeyBanc Capital Markets, a
division of McDonald Investments Inc. and RBC Dain Rauscher Inc.
have agreed to act as representatives of the several Underwriters
(in such capacity, the “ Representatives ”) in
connection with the offering and sale of the Shares (as defined
below). The REIT also proposes to issue and sell to the several
Underwriters not more than an additional 450,000 shares (the
“ Additional Shares ”) of its Series F Preferred
Stock if and to the extent that you, as the Representatives, shall
have determined to exercise, on behalf of the Underwriters, the
right to purchase such shares of Series F Preferred Stock granted
to the Underwriters in Section 1(a) hereof. The Firm Shares and the
Additional Shares are hereinafter collectively referred to as the
“ Shares .”
The following are each a “
Subsidiary ” and are collectively referred to as the
“ Subsidiaries ”: (i) Kilroy Realty, L.P., a
Delaware limited partnership (the “ Operating
Partnership ”); (ii) Kilroy Realty Finance Partnership,
L.P., a Delaware limited partnership (“ Finance
Partnership ” and, together with the Operating
Partnership, the “ Partnerships ”); (iii) Kilroy
Realty Finance, Inc., a Delaware corporation and a wholly-owned
subsidiary of the REIT (“ KRF ”); (iv) Kilroy
Services, LLC, a Delaware limited liability company (“
KSLLC ”); (v) Kilroy Realty Partners, L.P., a Delaware
limited partnership (“ KRPLP ”); and (vi) Kilroy
Realty TRS, Inc., a Delaware corporation and wholly-owned
subsidiary of the Operating Partnership (“ KRTRS
”). The REIT and the Subsidiaries are referred to in this
Agreement as the “ Company .”
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The REIT and the Operating
Partnership confirm their agreements with the Underwriters as
follows:
1. Agreement to Sell and
Purchase.
(a) General . The REIT hereby
agrees to issue and sell to the several Underwriters the Firm
Shares upon the terms herein set forth. On the basis of the
representations, warranties and agreements herein contained, and
upon the terms but subject to the conditions herein set forth, the
Underwriters agree, severally and not jointly, to purchase from the
REIT the respective number of Firm Shares set forth opposite their
names on Schedule 1 attached hereto. The purchase price per
Firm Share to be paid by the several Underwriters to the REIT shall
be $25.00 per share (the “ Purchase Price
”).
The REIT hereby agrees to issue and
sell to the several Underwriters the Additional Shares upon the
terms herein set forth. On the basis of the representations,
warranties and agreements herein contained, and upon the terms but
subject to the conditions herein set forth, the Underwriters shall
have the one-time right to purchase from the REIT, severally and
not jointly, up to 450,000 Additional Shares at the Purchase Price.
The Representatives may exercise this right on behalf of the
Underwriters by giving written notice of each election to exercise
the option not later than 30 days after the date of this Agreement.
Any exercise notice shall specify the number of Additional Shares
to be purchased by the Underwriters and the date on which such
shares are to be purchased. The purchase date must be at least one
business day after the written notice is given and may not be
earlier than the closing date for the Firm Shares or later than 10
business days after the date of such notice. Additional Shares may
be purchased as provided in Section 2 hereof solely for the purpose
of covering over-allotments made in connection with the offering of
the Firm Shares. On the day, if any, that Additional Shares are to
be purchased (the “ Option Closing Date ”), each
Underwriter agrees, severally and not jointly, to purchase the
number of Additional Shares (subject to such adjustments to
eliminate fractional shares as you may determine) that bears the
same proportion to the total number of Additional Shares to be
purchased on the Option Closing Date as the number of Firm Shares
set forth in Schedule 1 attached hereto opposite the name of
such Underwriter bears to the total number of Firm
Shares.
The REIT and the Operating
Partnership each hereby agree that, without the prior written
consent of Wachovia Securities on behalf of the Underwriters, it
will not, during the period ending 30 days after the date of the
Closing Date (as defined below), (i) offer, pledge, sell, contract
to sell, sell any option or contract to purchase, purchase any
option or contract to sell, grant any option, right or warrant to
purchase, lend, or otherwise transfer or dispose of, directly or
indirectly, any class or series of preferred stock, par value $0.01
per share (“ Preferred Stock ”), of the REIT or
any class or series of preferred units of partnership interest
(“ Preferred Units ”) of the Operating
Partnership or any securities convertible into or exercisable or
exchangeable for any class or series of Preferred Stock or
Preferred Units or (ii) enter into any swap or other arrangement
that transfers to another, in whole or in part, any of the economic
consequences of ownership of any class or series of Preferred Stock
or Preferred Units, whether any such transaction described in
clause (i) or (ii) above is to be settled by delivery of any class
or series of Preferred Stock or Preferred Units or such other
securities, in cash or otherwise. The foregoing sentence shall not
apply to (A) the Shares to be sold hereunder, (B) the issuance of
3,000,000 (or up to 3,450,000 if the option described in Section
1(a) is exercised by the Representatives) 7.50% Series F Cumulative
Redeemable Preferred Units (the “ Series F Preferred
Units ”) of the Operating Partnership, (C) the redemption
of the 9.250% Series D Cumulative Redeemable Preferred Units (the
“ Series D Preferred Units ”) of the Operating
Partnership, (D) the exchange of the 7.45% Series A Cumulative
Redeemable Preferred Units (the “ Series A Preferred
Units ”)
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of the Operating Partnership for
7.45% Series A Cumulative Redeemable Preferred Stock, par value
$0.01 per share (the “ Series A Preferred Stock
”), of the REIT or (E) the exchange of the Series D Preferred
Units for the 9.250% Series D Cumulative Redeemable Preferred
Stock, par value $0.01 per share (the “ Series D Preferred
Stock ”), of the REIT.
(b) Terms of Public Offering
. The REIT is advised by the Representatives that the Underwriters
propose to make a public offering of their respective portions of
the Shares as soon after the Registration Statement and this
Agreement have become effective as in the Representative’s
judgment is advisable. The REIT is further advised by the
Representatives that the Shares are to be offered to the public
initially at $25.00 a share (the “ Public Offering
Price ”) and to certain dealers selected by you at a
price that represents a concession not in excess of $0.50 a share
under the Public Offering Price, and that any Underwriter may
allow, and such dealers may reallow, a concession to any
Underwriter or to certain other dealers.
2. Delivery and
Payment.
(a) Payment for the Shares .
Payment for the Firm Shares shall be made by wire transfer in
immediately available-funds to the order of the REIT at 10:00 a.m.,
New York City time, on December 8, 2004, or at such other time on
the same or such other date, not later than December 15, 2004, as
shall be agreed in writing by the Representatives and the REIT (the
“ Closing Date ”).
Payment for the Additional Shares
shall be made by wire transfer in immediately available-funds to
the order of the REIT at 10:00 a.m., New York City time, on the
date specified in the corresponding notice described in Section
1(b) or at such other time on the same or on such other date, in
any event not later than February 2, 2005, as shall be agreed in
writing by the Representatives and the REIT.
It is understood that the
Representatives have been authorized, for their own accounts and
the accounts of the several Underwriters, to accept delivery of and
receipt for, and make payment of the purchase price for, the Shares
the Underwriters have agreed to purchase. Wachovia Securities,
individually and not as a Representative of the Underwriters, may
(but shall not be obligated to) make payment for any Shares to be
purchased by any Underwriter whose funds shall not have been
received by the Representatives by the Closing Date or the Option
Closing Date, as the case may be, for the account of such
Underwriter, but any such payment shall not relieve such
Underwriter from any of its obligations under this
Agreement.
(b) Delivery of the Shares .
The Firm Shares and Additional Shares shall be registered in such
names and in such denominations as you shall request in writing not
later than one full business day prior to the Closing Date or the
Option Closing Date, as the case may be. The REIT shall deliver, or
cause to be delivered, a credit representing the Firm Shares or the
Additional Shares, as the case may be, to an account or accounts at
The Depository Trust Company, as designated by the Representatives,
for the accounts of the Representatives and the several
Underwriters at the Closing Date or the Option Closing Date, as the
case may be, against the irrevocable release of a wire transfer of
immediately available funds for the amount of the purchase price
therefor. Time shall be of the essence, and delivery at the time
and place specified in this Agreement is a further condition to the
obligations of the Underwriters.
The cost of original issue tax
stamps, if any, in connection with the issuance and delivery of the
Shares by the REIT to the Underwriters shall be borne by the REIT.
The REIT and the Operating Partnership will pay and save the
Underwriters and any subsequent holder of the
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Shares harmless from any and all
liabilities with respect to or resulting from any failure or delay
in paying Federal and state stamp and other transfer taxes, if any,
which may be payable or determined to be payable in connection with
the original issuance or sale to the Underwriters of the
Shares.
(c) Delivery of Prospectus to the
Underwriters . Not later than 12:00 p.m. on the second business
day following the date of this Agreement, the REIT shall deliver or
cause to be delivered copies of the Prospectus (as defined below)
in such quantities and at such places as the Underwriters shall
reasonably request.
3. Representations and
Warranties . Each of the REIT and the Operating Partnership
jointly and severally represents and warrants to and agrees with
each of the Underwriters that:
(a) The REIT meets the requirements
for use of Form S-3. A registration statement (Registration No.
333-45097) on Form S-3 relating to the Shares, including a
prospectus (as amended, the “ Base Prospectus
”), has been prepared by the REIT and filed with the
Securities and Exchange Commission (the “ Commission
”) and has been declared effective under the Securities Act
of 1933, as amended (the “ Securities Act ”),
and the rules and regulations promulgated thereunder (the “
Rules and Regulations ”). Such registration statement
and prospectus may have been amended or supplemented prior to the
date of this Agreement; any such amendment or supplement was so
prepared and filed, and any such amendment after the effective date
of such registration statement has become effective. No stop order
suspending the effectiveness of such registration statement has
been issued, and no proceeding for that purpose has been instituted
or, to the knowledge of the REIT or the Operating Partnership,
threatened by the Commission. Copies of such registration statement
and prospectus, any such amendments or supplements and all
documents incorporated by reference therein that were filed with
the Commission on or prior to the date of this Agreement have been
delivered or made available to the Underwriters. A prospectus
supplement (the “ Prospectus Supplement ”)
setting forth the terms of the Shares and of their sale and
distribution has been or will be so prepared and will be filed
pursuant to Rule 424(b) of the Rules and Regulations on or before
the second business day after the date hereof (or such earlier time
as may be required by the Rules and Regulations). The term “
Registration Statement ” means such registration
statement as amended to the date of this Agreement, including
financial statements and all exhibits and any information deemed to
be included therein (whether by virtue of Rule 430A of the Rules
and Regulations or otherwise) and any prospectus supplement filed
thereafter with the Commission and shall include the documents
incorporated by reference therein pursuant to Item 12 of Form S-3
which were filed under the Securities Exchange Act of 1934, as
amended (the “ Exchange Act ”). The term “
Prospectus ” means, collectively, the Base Prospectus
together with any prospectus supplement, in the respective forms
they are filed with the Commission pursuant to Rule 424(b) of the
Rules and Regulations, and includes the documents incorporated by
reference in the Base Prospectus and in any prospectus supplement.
Any reference herein to the terms “ amend ,”
“ amendment ” or “ supplement
” with respect to the Registration Statement or the
Prospectus shall be deemed to refer to and include the filing after
the execution hereof of any document with the Commission deemed to
be incorporated by reference therein. For purposes of this
Underwriting Agreement (other than in connection with any opinion
given by counsel in Section 5 hereof, which hereby expressly
excludes any copy filed via Electronic Data Gathering, Analysis and
Retrieval System (“ EDGAR ”)), all references to
the Registration Statement, the Prospectus or any amendment or
supplement thereto shall be deemed to include any copy filed with
the Commission pursuant to EDGAR, and such copy shall be identical
(except to the extent permitted by Regulation S-T) to any
Registration Statement or Prospectus, as the case may be, delivered
to the Representatives for use in connection with the offering of
the Shares by the REIT.
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(b) Each part of the Registration
Statement, when such part became or becomes effective, and the
Prospectus and any amendment or supplement thereto, on the date of
filing thereof with the Commission and at the Closing Date and at
the Option Closing Date, including the financial statements and
other information included or to be included or incorporated by
reference or to be incorporated by reference in the Registration
Statement or the Prospectus, conformed or will conform in all
material respects with the requirements of the Securities Act, the
Rules and Regulations, the Exchange Act and the rules and
regulations thereunder (the “ Exchange Act Rules and
Regulations ”), as applicable, and will contain all
statements required to be stated therein in accordance with the
Securities Act, the Rules and Regulations, the Exchange Act and the
Exchange Act Rules and Regulations, as applicable; each part of the
Registration Statement, when such part became or becomes effective,
did not or will not contain an untrue statement of a material fact
or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading; the
Prospectus and any amendment or supplement thereto, on the date of
filing thereof with the Commission and at the Closing Date and at
the Option Closing Date, did not or 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. The
foregoing representations and warranties in this Section 3(b) do
not apply to any statements or omissions made in reliance on and in
conformity with information relating to any Underwriter furnished
in writing to the REIT by such Underwriter specifically for
inclusion in the Registration Statement or the Prospectus or any
amendment or supplement thereto. The REIT and the Operating
Partnership acknowledge that the only information furnished in
writing to the REIT by the Underwriters specifically for inclusion
in the Registration Statement, any preliminary Prospectus (the
“ Preliminary Prospectus ”) or the Prospectus is
the information set forth in Exhibit A hereto. None of the
REIT or any of the Subsidiaries has distributed any offering
material in connection with the offering or sale of the Shares
other than the Registration Statement, the Preliminary Prospectus,
the Prospectus or other materials, if any, permitted by the
Securities Act. The REIT will use commercially reasonable efforts
to cause the Shares to be approved for listing on the New York
Stock Exchange (“ NYSE ”).
(c) The documents incorporated or to
be incorporated by reference in the Registration Statement or the
Prospectus or any amendment or supplement thereto or from which
information is so incorporated by reference, when they became or
become effective or were or are filed with the Commission, as the
case may be, complied or will comply in all material respects with
the requirements of the Securities Act or the Exchange Act, as
applicable, the Exchange Act Rules and Regulations and the Rules
and Regulations.
(d) The only direct or indirect
subsidiaries (as defined in the Rules and Regulations) of the REIT
are the Subsidiaries. Other than the Partnerships, none of the
Subsidiaries are “ significant subsidiaries ”
(as defined in the Rules and Regulations). The REIT and each of the
Subsidiaries is, and at the Closing Date and at the Option Closing
Date will be, an entity duly organized or formed, as the case may
be, and, in the case of an entity that is not a general
partnership, validly existing and in good standing under the laws
of the jurisdiction of its organization or incorporation. The REIT
and each of the Subsidiaries has, and at the Closing Date and at
the Option Closing Date will have, full power and authority to
conduct all the activities conducted by it, to own or lease all the
assets owned or leased by it and to conduct its business as
described in the Registration Statement and the Prospectus. The
REIT and each of the Subsidiaries is, and at the Closing Date and
at the Option Closing Date will be, duly licensed or qualified to
do business and (except for subsidiaries that are general
partnerships) in good standing as a foreign trust, limited
partnership, limited liability company or corporation, as the case
may be, in all jurisdictions in which the nature of the activities
conducted by it or the
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character of the assets owned or
leased by it makes such licensing or qualification necessary except
where the failure to be so qualified does not have a material
adverse effect on the business, properties, financial condition or
results of operations of the REIT and the Subsidiaries, taken as a
whole (“ Material Adverse Effect ”). (i) As of
the date of this Agreement, the REIT is, and, as of the Closing
Date and at the Option Closing Date, the REIT will be, the sole
general partner of the Operating Partnership, and as of the date of
this Agreement, the REIT does, and, as of the Closing Date and at
the Option Closing Date, the REIT will, subject to the exchange of
common limited partnership units in exchange for shares of the
REIT’s common stock pursuant to the Fifth Amended and
Restated Agreement of Limited Partnership of the Operating
Partnership (as amended through the date hereof, the “
Partnership Agreement ” ), own 87.7% of the
common limited partnership units in the Operating Partnership, (ii)
as of the date of this Agreement, the REIT does, and, as of the
Closing Date and at the Option Closing Date, the REIT will, own
100% of the capital stock of KRF, (iii) as of the date of this
Agreement, KRF is, and, as of the Closing Date and at the Option
Closing Date, KRF will, be the sole general partner of the Finance
Partnership, and, as of the date of this Agreement, KRF does, and,
as of the Closing Date and at the Option Closing Date, KRF will,
own a 1.0% partnership interest in the Finance Partnership, and, as
of the date of this Agreement, the Operating Partnership does, and,
as of the Closing Date and at the Option Closing Date, the
Operating Partnership will, own a 99.0% partnership interest in the
Finance Partnership, (iv) as of the date of this Agreement, the
Operating Partnership does, and, as of the Closing Date and at the
Option Closing Date, the Operating Partnership will, own all of the
capital stock of KRTRS, (v) as of the date of this Agreement, the
REIT is, and, as of the Closing Date and at the Option Closing
Date, the REIT will, be the general partner of KRPLP, and, as of
the date of this Agreement, the REIT does, and, as of the Closing
Date and at the Option Closing Date, the REIT will, own a 1.0%
partnership interest in KRPLP, and, as of the date of this
Agreement, the Operating Partnership does, and, as of the Closing
Date and at the Option Closing Date, the Operating Partnership
will, own a 99.0% partnership interest in KRPLP, and (vi) as of the
date of this Agreement, the REIT does, and, as of the Closing Date
and at the Option Closing Date, the REIT will, own a 1.0% interest
in KSLLC, and, as of the date of this Agreement, the Operating
Partnership does, and, as of the Closing Date and at the Option
Closing Date, the Operating Partnership will, own a 99.0% interest
in KSLLC. Except for the capital stock, limited liability company
interests or partnership interests (including the Series F
Preferred Units) of the Subsidiaries and as disclosed in the
Registration Statement, the REIT does not own, and at the Closing
Date and at the Option Closing Date will not own, directly or
indirectly, any shares of stock or any other equity or long-term
debt securities of any corporation or have any equity interest in
any firm, partnership, joint venture, association or other entity.
Complete and correct copies of the Articles of Amendment and
Restatement of the REIT, the Articles Supplementary of the REIT
designating its Series A Preferred Stock, the Articles
Supplementary of the REIT designating its Series B Junior
Participating Preferred Stock, the Articles Supplementary of the
REIT designating its Series D Preferred Stock, the Articles
Supplementary of the REIT designating its Series E Preferred Stock
(collectively, together with the Articles Supplementary (as defined
below), the “ Charter ”) and the Amended and
Restated Bylaws of the REIT and the limited partnership agreements
and operating agreements of the Subsidiaries, as applicable, the
charter documents of each of the Subsidiaries and all amendments
thereto have been delivered or made available to the Underwriters
and no changes therein will be made subsequent to the date hereof
and prior to the Option Closing Date, except as necessary to
consummate the transactions contemplated by this
Agreement.
(e) The outstanding securities of
the REIT have been duly authorized and are validly issued, fully
paid and nonassessable and are not subject to any preemptive or
similar right. The description of the common stock, par value $0.01
per share (the “ Common Stock ”), of the REIT
and each series and class of Preferred Stock, in the Registration
Statement and the Prospectus is,
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and at the Closing Date and at the
Option Closing Date will be, in all material respects, complete and
accurate. Except as set forth in or contemplated by the Prospectus,
the REIT does not have outstanding, and at the Closing Date and at
the Option Closing Date will not have outstanding, any options to
purchase, or any rights or warrants to subscribe for, or any
securities or obligations convertible into, or any contracts or
commitments to issue or sell, any Common Stock, any Preferred
Stock, any shares of capital stock of any Subsidiary or any such
warrants, convertible securities or obligations other than pursuant
to the 1997 Stock Option and Incentive Plan of the REIT and the
Operating Partnership. The REIT has duly reserved a sufficient
number of shares of Common Stock and Preferred Stock for issuance
upon exchange of the units of partnership interest of the Operating
Partnership. The authorized shares of capital stock of the REIT
conform in all material respects to the description thereof in the
Prospectus.
(f) The outstanding securities of
each of the Subsidiaries have been duly authorized and are validly
issued, fully paid and nonassessable, and, to the extent owned by
the REIT or any Subsidiary, are owned free and clear of all
security interests, mortgages, pledges, liens, encumbrances,
equities or claims and are not subject to any preemptive or similar
right. Except as set forth in the Prospectus, none of the
Subsidiaries have outstanding, and at the Closing Date and at the
Option Closing Date, none of the Subsidiaries will have
outstanding, any options to purchase, or any rights or warrants to
subscribe for, or any securities or obligations convertible into,
or any contracts or commitments to issue or sell, any shares of
capital stock, partnership interests or limited liability company
interests of the Subsidiaries. No waivers, consents or approvals of
the holders of any class or series of Preferred Units need to be
obtained in connection with the issuance and sale of the Shares,
except for those that have been obtained and delivered in writing
to the Representatives before the date of this
Agreement.
(g) The Shares will be, as of the
Closing Date and as of the Option Closing Date, duly authorized by
the REIT for issuance and sale pursuant to this Agreement, and upon
issuance against payment therefor in accordance with the terms
hereof, will be duly and validly issued and fully paid and
nonassessable and the issuance and sale thereof will not be subject
to any preemptive or similar right.
(h) The books, records and accounts
of the REIT and the Subsidiaries accurately and fairly reflect the
transactions in, and the dispositions of, the assets of, and the
results of operations of the REIT and the Subsidiaries. The
financial statements and schedules of the REIT and the Subsidiaries
(including all notes and schedules thereto) included or
incorporated by reference in the Registration Statement or the
Prospectus present fairly, in all material respects, the financial
position of the Company as of the respective dates thereof in
conformity with accounting principles generally accepted in the
United States of America. No other financial statements or
schedules of the REIT and the Subsidiaries are required by the
Securities Act, the Exchange Act or the Rules and Regulations to be
included in the Registration Statement or the Prospectus. Deloitte
& Touche LLP, independent public accountants, who have reported
on those of such financial statements and schedules which are
audited, are independent accountants with respect to the REIT and
the Subsidiaries as required by the Securities Act and the Rules
and Regulations.
(i) The Company maintains a system
of internal accounting controls sufficient to provide reasonable
assurance that (i) transactions are executed in accordance with
management’s general or specific authorization; (ii)
transactions are recorded as necessary to permit preparation of
financial statements in conformity with generally accepted
accounting principles and to maintain accountability for assets;
(iii) access to assets is permitted only in accordance with
management’s general or specific authorization; and (iv) the
recorded accountability for assets is
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compared with existing assets at
reasonable intervals and appropriate action is taken with respect
to any differences.
(j) Subsequent to the respective
dates as of which information is given in the Registration
Statement and the Prospectus and prior to the Closing Date and the
Option Closing Date, except as set forth in or contemplated by the
Registration Statement and the Prospectus, (i) there has not been
and will not have been any change in the capitalization of the REIT
or any of the Subsidiaries, or in the business, properties,
business prospects, condition (financial or otherwise) or results
of operations of the REIT or any of the Subsidiaries, arising for
any reason whatsoever, other than pursuant to the 1997 Stock Option
and Incentive Plan of the REIT and the Operating Partnership, the
dividend reinvestment plan of the REIT and exchanges of units of
partnership interest of the Operating Partnership for Common Stock
and Preferred Stock in accordance with the Partnership Agreement,
(ii) neither the REIT nor any of the Subsidiaries has incurred nor
will it voluntarily incur, or suffer to incur without seeking in
good faith the removal of, any material liabilities or obligations,
direct or contingent, nor has it entered into nor will it enter
into any material transactions other than pursuant to this
Agreement and the transactions referred to herein, (iii) neither
the REIT nor any of the Subsidiaries has or will have paid or
declared any dividends or other distributions of any kind on any
class of its capital stock, other than dividends payable on the
Series A Preferred Stock, the Series D Preferred Stock and the
Series E Preferred Stock in each case in accordance with the
Charter, distributions payable on the Series A Preferred Units, the
Series D Preferred Units and the Series E Preferred Units in each
case in accordance with the Partnership Agreement and dividends or
distributions payable on the Common Stock and the common units of
partnership interest of the Operating Partnership in accordance
with past practices and with such increases as may be approved by
the Board of Directors of the REIT, and (iv) there has been no
casualty loss or condemnation or other adverse event with respect
to any property of the REIT or any of the Subsidiaries, except as
would not have a Material Adverse Effect.
(k) Neither the REIT nor any of the
Subsidiaries is, and after giving effect to the offering and sale
of the Shares and the application of the net proceeds therefrom as
described in the Prospectus will not be, an “ investment
company ” or an “ affiliated person ”
of, or “ promoter ” or “ principal
underwriter ” for, an “ investment company
,” as such terms are defined in the Investment Company Act of
1940, as amended (the “ Investment Company Act
”).
(l) Except as set forth in the
Registration Statement and the Prospectus, there are no actions,
suits or proceedings pending or, to the knowledge of the REIT or
the Operating Partnership, threatened against or affecting the REIT
or any of the Subsidiaries or any of their respective properties
that are required to be described in the Registration Statement or
the Prospectus under the Securities Act or the Rules and
Regulations that are not so described.
(m) The REIT and each of the
Subsidiaries has, and at the Closing Date and at the Option Closing
Date will have, (i) all licenses, permits, consents, orders,
approvals and other authorizations necessary to carry on its
business as contemplated in the Prospectus, except where the
failure to have such licenses, permits, consents, orders, approval
and other authorizations would not have a Material Adverse Effect,
and none of the REIT and the Subsidiaries has received notice of
proceedings related to the revocation or modification of any
license, permit, consent, order, approval or other authorization
which, individually or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would have a Material
Adverse Effect, (ii) complied in all material respects with all
laws, regulations and orders applicable to it or its business
(including, without limitation, the Sarbanes-Oxley Act of 2002 and
the rules and regulations promulgated thereunder), except where
failure to comply with any of the foregoing
8
would not have a Material Adverse
Effect, and (iii) performed all its material obligations required
to be performed by it, and is not, and at the Closing Date and at
the Option Closing Date will not be, in default, under any
indenture, mortgage, deed of trust, voting trust agreement, loan
agreement, bond, debenture, note agreement, lease, contract or
other agreement or instrument (collectively, a “ contract
or other agreement ”) to which it is a party or by which
its property is bound or affected, the violation of which would
have a Material Adverse Effect. To the knowledge of the REIT and
the Operating Partnership, no other party under any contract or
other agreement to which the REIT or any of the Subsidiaries is a
party is in default thereunder in such a manner that, individually
or in the aggregate, would have a reasonable likelihood of causing
a Material Adverse Effect. The REIT is not, nor at the Closing Date
and at the Option Closing Date will be, in violation of any
provision of the Charter or the Amended and Restated Bylaws of the
REIT. No Subsidiary is, nor at the Closing Date and at the Option
Closing Date will any of them be, in violation of any provision in
their respective organizational documents, except for such
violations as would not have a Material Adverse Effect or a
material adverse effect on the transactions contemplated by this
Agreement.
(n) No consent, approval,
authorization or order of, or any filing or declaration with, any
court or governmental agency or body is required for the
consummation by the REIT and the Operating Partnership of the
transactions on its part herein contemplated, except such as have
been obtained under the Securities Act or the Rules and Regulations
and such as may be required under state or Canadian securities or
blue sky laws or the bylaws in connection with the purchase and
distribution by the Underwriters of the Shares to be sold by the
REIT.
(o) Each of the REIT and the
Operating Partnership has full power and authority to enter into
this Agreement. This Agreement has been duly authorized, executed
and delivered by the REIT and the Operating Partnership and
constitutes a valid and binding agreement of the REIT and the
Operating Partnership and is enforceable against the REIT and the
Operating Partnership in accordance with the terms hereof, except
as rights to indemnification hereunder may be limited by applicable
law and except as the enforcement hereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar
laws relating to or affecting the rights and remedies of creditors
or by general equitable principles. The execution and delivery by
the REIT and the Operating Partnership of, and the performance by
the REIT and the Operating Partnership of this Agreement and the
consummation of the transactions contemplated hereby (including,
without limitation, the application of the net proceeds from the
sale of the Shares as described in the Prospectus, the redemption
of Series D Preferred Units and issuance of Series F Preferred
Units) will not (i) contravene any provision of applicable law or
the Charter, the Amended and Restated Bylaws of the REIT, the
Partnership Agreement or the organizational documents of any of the
Subsidiaries or (ii) result in the creation or imposition of any
lien, charge or encumbrance upon any of the assets of the REIT, the
Operating Partnership or any of the Subsidiaries pursuant to the
terms or provisions of, or result in a breach or violation of any
of the terms or provisions of, or constitute a default under, or
give any other party a right to terminate any of its obligations
under, or result in the acceleration of any obligation under, any
contract or other agreement to which the REIT, the Operating
Partnership or any of the Subsidiaries is a party or by which the
REIT, the Operating Partnership or any of the Subsidiaries or any
of their respective properties is bound or affected (including,
without limitation, that certain Fourth Amended and Restated
Revolving Credit Agreement dated as of October 22, 2004, among the
Operating Partnership, JP Morgan Chase Bank, as Bank and as
Administrative Agent, JP Morgan Securities Inc., as Joint Lead
Arranger and Joint Bookrunner, Bank of America Securities LLC, as
Joint Lead Arranger and Joint Bookrunner, Bank of America, N.A.,
Commerzbank AG and Wachovia Bank, National Association, as
Syndication Agents, Eurohypo AG, New York Branch, as Documentation
Agent, and the Banks listed therein), or (iii) violate or conflict
with any
9
judgment, ruling, decree, order,
statute, rule or regulation of any court or other governmental
agency or body applicable to the business or properties of the
REIT, the Operating Partnership or any of the Subsidiaries, except
in clauses (ii) and (iii) for such violations and conflicts as
would not have a Material Adverse Effect or a material adverse
effect on the transactions contemplated by this
Agreement.
(p) The REIT and each of the
Subsidiaries has and at the Closing Date and at the Option Closing
Date will have good and marketable fee simple title to all of the
land underlying the properties and assets owned by it and good and
marketable title to all of the improvements located thereon, in
each case free and clear of all liens, charges, encumbrances or
restrictions, except such as (i) are described in the Prospectus,
(ii) liens for taxes not yet due and payable or (iii) are not
material to the business of the REIT or the Subsidiaries, taken as
a whole. All liens, charges or encumbrances on or affecting any of
the properties and assets of the REIT or any of the Subsidiaries
which are required to be disclosed in the Prospectus are disclosed
therein. The REIT and each of the Subsidiaries has and at the
Closing Date and at the Option Closing Date will have valid,
subsisting and enforceable leases for the properties leased by it,
with such exceptions as are not material and do not materially
interfere with the use made and proposed to be made of such
properties by the REIT and such subsidiaries; no person has an
option or right of first refusal to purchase all or any part of any
property of the REIT or any Subsidiary or any interest therein
which is material to the REIT and the Subsidiaries, taken as a
whole; each of the properties owned by the REIT and the
Subsidiaries complies with all applicable codes, laws and
regulations (including, without limitation, building and zoning
codes, laws and regulations and laws relating to access to such
properties), except if and to the extent described in the
Prospectus and except for such failures to comply as would not
result in a Material Adverse Effect; the REIT and the Operating
Partnership have no knowledge of any pending or threatened
condemnation or zoning change that will in any material respect
affect the size of, use of, improvements of, construction on, or
access to any of the properties of the REIT and the Subsidiaries;
and the REIT and the Operating Partnership have no knowledge of any
pending or threatened proceeding or action that will in any manner
affect the size of, use of, improvements on, construction on, or
access to any of the properties of the REIT or the
Subsidiaries.
(q) Title insurance in favor of the
REIT (or the Subsidiary which holds title to such property) is
maintained with respect to each of the properties owned by the REIT
and the Subsidiaries in such amounts as are customary for publicly
traded companies operating in the industry and sector in which the
REIT and the Subsidiaries operate, except, in each case, where the
failure to maintain such title insurance would not have a Material
Adverse Effect. Title insurance in favor of the mortgagee is
maintained in an amount equal to the maximum commitment of the
related loan.
(r) The mortgages and deeds of trust
encumbering the properties and assets of the REIT and the
Subsidiaries are not convertible nor does the REIT or any
Subsidiary hold a participating interest therein.
(s) Except as disclosed or
incorporated by reference in the Prospectus:
(i) each property owned or leased by
the REIT or any of the Subsidiaries, including, without limitation,
the Environment (as defined below) associated with such property,
is free of any Hazardous Substance (as defined below) in violation
of any Environmental Law (as defined below) applicable to such
property, except for Hazardous Substances that would not reasonably
be expected to result in a Material Adverse Effect;
10
(ii) the REIT and the Subsidiaries
have not caused or suffered to occur any Release (as defined below)
of any Hazardous Substance into the Environment on, in, under or
from any property owned or leased by the REIT or any of the
Subsidiaries, and no condition exists on, in, under or, to the
knowledge of the REIT and the Operating Partnership, adjacent to
any such property that could result in the incurrence of
liabilities or any violations of any Environmental Law applicable
to such property, give rise to the imposition of any Lien (as
defined below) under any Environmental Law, or cause or constitute
a health, safety or environmental hazard to any property, person or
entity, except in each case that would not reasonably be expected
to have a Material Adverse Effect;
(iii) neither the REIT or any
Subsidiary nor, to the knowledge of the REIT and the Operating
Partnership, any tenant of any of the properties owned or leased by
the REIT and the Subsidiaries has received any written notice of a
claim under or pursuant to any Environmental Law applicable to such
property or under common law pertaining to Hazardous Substances on
or originating from such property, except for any such claims which
would not have a Material Adverse Effect;
(iv) neither the REIT or any
Subsidiary nor, to the knowledge of the REIT and the Operating
Partnership, any tenant of any of the properties owned or leased by
the REIT and the Subsidiaries has received any written notice from
any Governmental Authority (as defined below) claiming any
violation of any Environmental Law applicable to such property that
is uncured or unremediated as of the date hereof, except for any
such violations which would not have a Material Adverse
Effect;
(v) no property owned or leased by
the REIT and the Subsidiaries is included or, to the knowledge of
the REIT and the Operating Partnership, proposed for inclusion on
the National Priorities List issued pursuant to CERCLA (as defined
below) by the United States Environmental Protection Agency (the
“ EPA ”), nor has the REIT or any Subsidiary
received any written notice from the EPA or any other Governmental
Authority proposing the inclusion of any such property on such
list;
(vi) the REIT and the Subsidiaries
and, to the knowledge of the REIT and the Operating Partnership,
each tenant at any of the properties owned or leased by the REIT
and the Subsidiaries (i) have received all permits, licenses or
other approvals required of them under applicable Environmental
Laws to conduct their respective businesses and (ii) are in
compliance with all terms and conditions of any such permit,
license or approval, except in each case where such noncompliance,
failure to receive required permits, licenses or other approvals or
failure to comply with the terms and conditions of such permits,
licenses or approvals would not have a Material Adverse Effect;
and
(vii) there are no costs or
liabilities associated with Environmental Laws (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) which would reasonably be expected to have a Material
Adverse Effect.
As used herein: “ Hazardous
Substance ” shall include, without limitation, any
hazardous substance, hazardous waste, toxic or dangerous substance,
pollutant, solid waste or similarly designated materials,
including, without limitation, oil, petroleum or any
petroleum-derived substance or waste, asbestos or
asbestos-containing materials,
11
PCBs, pesticides, explosives,
radioactive materials, dioxins, urea formaldehyde insulation or any
constituent of any such substance, pollutant or waste, including
any such substance, pollutant or waste identified or regulated
under any Environmental Law (including, without limitation,
materials listed in the United States Department of Transportation
Optional Hazardous Material Table, 49 C.F.R. Section 172.101, as
heretofore amended, or in the EPA’s List of Hazardous
Substances and Reportable Quantities, 40 C.F.R. Part 302, as
heretofore amended); “ Environment ” shall mean
any surface water, drinking water, ground water, land surface,
subsurface strata, river sediment, buildings, structures, and
ambient, workplace and indoor air; “ Environmental Law
” shall mean the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended (42 U.S.C.
Section 9601 et seq.) (“ CERCLA ”), the Resource
Conservation and Recovery Act of 1976, as amended (42 U.S.C.
Section 6901, et seq.), the Clean Air Act, as amended (42 U.S.C.
Section 7401, et seq.), the Clean Water Act, as amended (33 U.S.C.
Section 1251, et seq.), the Toxic Substances Control Act, as
amended (15 U.S.C. Section 2601, et seq.), the Occupational Safety
and Health Act of 1970, as amended (29 U.S.C. Section 651, et
seq.), the Hazardous Materials Transportation Act, as amended (49
U.S.C. Section 1801, et seq.), and all other applicable federal,
state and local laws, ordinances, regulations, rules, orders,
decisions and permits relating to the protection of the environment
or of human health from environmental effects; “
Governmental Authority ” shall mean any federal, state
or local governmental office, agency or authority having the duty
or authority to promulgate, implement or enforce any Environmental
Law; “ Lien ” shall mean, with respect to any
property owned or leased by the REIT and the Subsidiaries, any
mortgage, deed of trust, pledge, security interest, lien,
encumbrance, penalty, fine, charge, assessment, judgment or other
liability in, on or affecting such property; and “
Release ” shall mean any spilling, leaking, pumping,
pouring, emitting, emptying, discharging, injecting, escaping,
leaching, dumping, emanating or disposing of any Hazardous
Substance into the Environment, including, without limitation, the
abandonment or discard of barrels, containers, tanks (including,
without limitation, underground storage tanks) or other receptacles
containing or previously containing any Hazardous Substance or any
release, emission, discharge or similar term, as those terms are
defined or used in any Environmental Law.
(t) Except as disclosed in the
Prospectus, there are no costs or liabilities associated with
Environmental Laws (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) which would have a Material
Adverse Effect.
(u) There are no statutes,
regulations, documents or contracts of a character required to be
described in the Registration Statement or the Prospectus or to be
filed as an exhibit to the Registration Statement which are not
described or filed as required. All such contracts and all
contracts relating to any tax exempt financings to which the REIT
or any Subsidiary is a party have been duly authorized, executed
and delivered by the REIT or such Subsidiary, constitute valid and
binding agreements of the REIT or such Subsidiary and are
enforceable against the REIT or such Subsidiary in accordance with
the terms thereof, except as rights to indemnification hereunder
may be limited by applicable law and except as the enforcement
hereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to or affecting the
rights and remedies of creditors or by general equitable
principles.
12
(v) Neither the REIT nor any of its
directors, officers or controlling persons has taken, directly or
indirectly, any action intended, or which might reasonably be
expected, to cause or result, under the Securities Act or
otherwise, in, or which has constituted, stabilization or
manipulation of the price of any security of the REIT or the
Operating Partnership or any security convertible into or
exchangeable for any security of the REIT or the Operating
Partnership or to facilitate the sale or resale of the
Shares.
(w) Except to the extent disclosed
in the Prospectus and filed as exhibits to the Registration
Statement, there are no contracts, agreements or understandings
between the REIT or the Operating Partnership and any person
granting such person the right to require the REIT or the Operating
Partnership to file a registration statement under the Securities
Act with respect to any securities of the REIT or the Operating
Partnership or to require the REIT or the Operating Partnership to
include such securities with the Shares registered pursuant to the
Registration Statement.
(x) No claims have been asserted by
any person to the use of any material trademarks, service marks or
trade names, if any, which are necessary for the conduct of the
businesses of the REIT and the Subsidiaries as described in the
Prospectus or challenging or questioning the validity or
effectiveness of any such trademark, service mark or trade name, if
any. The use, in connec
