Exhibit 1.1
KILROY REALTY
CORPORATION
Common Stock
UNDERWRITING
AGREEMENT
dated May 29, 2009
Merrill Lynch, Pierce,
Fenner & Smith Incorporated
J.P. Morgan Securities
Inc.
Underwriting
Agreement
May 29, 2009
Merrill Lynch, Pierce,
Fenner & Smith Incorporated
One Bryant Park
New York, New York 10036
J.P. Morgan Securities
Inc.
383 Madison Avenue
New York, New York 10179
As Representatives of the several
Underwriters
Ladies and Gentlemen:
Introductory
. Kilroy Realty Corporation, a
Maryland corporation (the “Company”), proposes to issue
and sell to the several underwriters named in Schedule A (the
“Underwriters”) an aggregate of 8,750,000 shares (the
“Firm Shares”) of its Common Stock, par value $0.01 per
share (the “Common Stock”). In addition, the Company
has granted to the Underwriters an option to purchase up to an
additional 1,312,500 shares (the “Optional Shares”) of
Common Stock, as provided in Section 2. The Firm Shares and,
if and to the extent such option is exercised, the Optional Shares
are collectively called the “Shares.” Merrill Lynch,
Pierce, Fenner & Smith Incorporated (“Merrill
Lynch”) and J.P. Morgan Securities Inc. (“J.P.
Morgan”) have agreed to act as representatives of the several
Underwriters (in such capacity, the “Representatives”)
in connection with the offering and sale of the Shares.
To the extent there are no
additional Underwriters listed on Schedule A other than you,
the terms Representatives and Underwriters as used herein shall
mean you, as Underwriters and Representatives. The terms
Representatives and Underwriters shall mean either the singular or
plural as the context requires.
References in this Agreement to
“subsidiaries” of the Company shall include the
Operating Partnership (as defined below).
The Company and Kilroy Realty, L.P.,
a Delaware limited partnership (the “Operating
Partnership”), hereby confirm their respective agreements
with the Underwriters as follows:
SECTION 1. Representations and
Warranties of the Company and the Operating
Partnership.
The Company and the Operating
Partnership, jointly and severally, represent and warrant to, and
covenant with, each Underwriter as follows:
(a) The Company has prepared and
filed with the Securities and Exchange Commission (the
“Commission”) a registration statement on Form S-3
(File No. 333-153584), and a related base prospectus dated
September 19, 2008 (the “Base Prospectus”), to be
used in connection with the public offering and sale of the Shares.
Such registration statement, including the financial statements,
exhibits and schedules thereto, at each time of effectiveness under
the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder (collectively, the
“Securities Act”), including any required information
deemed to be a part thereof at the time of effectiveness pursuant
to Rule 430B under the Securities Act or the Securities Exchange
Act of 1934, as amended, and the rules and regulations promulgated
thereunder (collectively, the “Exchange Act”), is
called the “Registration Statement.” Any preliminary
prospectus supplement to the Base Prospectus that describes the
Shares and the offering thereof and is used prior to filing of the
Prospectus, including, but not limited to, the Pre-Pricing
Prospectus (as defined below), is called, together with the Base
Prospectus, a “preliminary prospectus.” The term
“Prospectus” shall mean the final prospectus supplement
dated May 29, 2009 relating to the Shares (the
“Prospectus Supplement”), together with the Base
Prospectus, that are first filed pursuant to Rule 424(b) after the
date and time that this Agreement is executed and delivered by the
parties hereto (the “Execution Time”). Any reference
herein to the Registration Statement, any preliminary prospectus
including, but not limited to, the Pre-Pricing Prospectus, the Base
Prospectus, the Prospectus Supplement or the Prospectus shall be
deemed to refer to and include the documents incorporated by
reference therein pursuant to Item 12 of Form S-3 under the
Securities Act; any reference to any amendment or supplement to any
preliminary prospectus or the Prospectus shall be deemed to refer
to and include any documents filed after the date of such
preliminary prospectus or Prospectus, as the case may be, under the
Exchange Act, and incorporated by reference in such preliminary
prospectus or Prospectus, as the case may be; and any reference to
any amendment to the Registration Statement shall be deemed to
refer to and include any annual report of the Company filed
pursuant to Section 13(a) or 15(d) of the Exchange Act after
the effective date of the Registration Statement that is
incorporated by reference in the Registration Statement.
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(b) Compliance with Registration
Requirements . The Registration Statement has become effective
under the Securities Act and there are no outstanding requests of
the Commission for additional or supplemental information. No stop
order suspending the effectiveness of the Registration Statement is
in effect, the Commission has not issued any order or notice
preventing or suspending the use of the Registration Statement, any
preliminary prospectus or the Prospectus and no proceedings for
such purpose have been instituted or are pending or, to the best
knowledge of the Company or the Operating Partnership, are
contemplated or threatened by the Commission.
Each preliminary prospectus and the
Prospectus when filed complied in all material respects with the
Securities Act and the rules thereunder. Each of the Registration
Statement and any post-effective amendment thereto, at each time of
effectiveness (including, without limitation, each “new
effective date” with respect to the Underwriters pursuant to
Rule 430B(f)(2) of the Securities Act) and at the date hereof,
complied and will comply in all material respects with the
Securities Act and did not and will not contain any untrue
statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the
statements therein not misleading. The Prospectus, as amended or
supplemented, as of its date, at the date hereof, at the time of
any filing pursuant to Rule 424(b), at the Closing
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Date (as defined herein) and at any Subsequent
Closing Date (as defined herein), did not and will not contain any
untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not
misleading. The representations and warranties set forth in the two
immediately preceding sentences do not apply to statements in or
omissions from the Registration Statement or any post-effective
amendment thereto, or the Prospectus, or any amendments or
supplements thereto, made in reliance upon and in conformity with
information relating to any Underwriter furnished to the Company
and the Operating Partnership in writing by the Representatives
expressly for use therein, it being understood and agreed that the
only such information furnished by the Representatives consists of
the information described as such in Section 8(b) hereof.
There is no contract or other document required to be described in
the Prospectus or to be filed as an exhibit to the Registration
Statement that has not been described or filed as
required.
(c) Documents incorporated by
reference. The documents incorporated by reference in the
Prospectus, when they became effective or were filed with the
Commission, as the case may be, conformed in all material respects
to the requirements of the Securities Act or the Exchange Act, as
applicable. Any documents to be filed and incorporated by reference
in the Prospectus or any further amendment or supplement to any
documents previously filed and incorporated by reference, when such
documents become effective or are filed with the Commission, as the
case may be, will conform in all material respects to the
requirements of the Securities Act or the Exchange Act, as
applicable, and the rules and regulations of the Commission
thereunder.
(d) Disclosure Package . The
term “Disclosure Package” shall mean (i) the Base
Prospectus together with the preliminary prospectus dated
May 28, 2009 (the “Pre-Pricing Prospectus”),
(ii) the issuer free writing prospectuses as defined in
Rule 433 of the Securities Act, if any, identified in
Schedule C hereto (each, an “Issuer Free Writing
Prospectus”), (iii) any other free writing prospectus
that the parties hereto shall hereafter expressly agree in writing
to treat as part of the Disclosure Package and (iv) the
information included on Schedule D hereto including, but not
limited to, information regarding the number of Shares being sold
and the price at which the Shares will be sold to the public. As of
8:30 a.m. (Eastern time) on the date of execution and delivery
of this Agreement (the “Applicable Time”), the
Disclosure Package did not contain any untrue statement of a
material fact or omit to state any material fact necessary in order
to make the statements therein, in the light of the circumstances
under which they were made, not misleading. The preceding sentence
does not apply to statements in or omissions from the Disclosure
Package based upon and in conformity with written information
furnished to the Company and the Operating Partnership by any
Underwriter through the Representatives specifically for use
therein, it being understood and agreed that the only such
information furnished by or on behalf of any Underwriter consists
of the information described as such in Section 8(b)
hereof.
(e) Company is Well-Known
Seasoned Issuer . (i) At the time of filing the
Registration Statement, (ii) at the time of the most recent
amendment thereto for the purposes of complying with
Section 10(a)(3) of the Securities Act (whether such amendment
was by post-effective amendment, incorporated report filed pursuant
to Section 13 or 15(d) of the Exchange Act or form of
prospectus), (iii) at the time the Company or any person
acting on its behalf (within the meaning, for this clause only, of
Rule 163(c) of the Securities Act) made any offer
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relating to the Shares in reliance on the
exemption of Rule 163 of the Securities Act, and (iv) at the
Execution Time of this Agreement (with such date being used as the
determination date for purposes of this clause (iv)), the Company
was and is a “well known seasoned issuer” as defined in
Rule 405 of the Securities Act. The Registration Statement is an
“automatic shelf registration statement,” as defined in
Rule 405 of the Securities Act and the Company has not received
from the Commission any notice pursuant to Rule 401(g)(2) of the
Securities Act objecting to use of the automatic shelf registration
statement form.
(f) Intentionally
omitted.
(g) Issuer Free Writing
Prospectuses . Each Issuer Free Writing Prospectus, as of its
issue date did not and, unless superseded by a subsequent Issuer
Free Writing Prospectus, as of the date of this Agreement, does not
include any information that conflicted or conflicts with the
information contained in the Registration Statement. If at any time
following the date of this Agreement, there occurs an event or
development as a result of which such Issuer Free Writing
Prospectus would conflict with the information contained in the
Registration Statement, the Company will promptly notify the
Representatives and will promptly amend or supplement, at its own
expense, such Issuer Free Writing Prospectus to eliminate or
correct such conflict. The foregoing two sentences do not apply to
statements in or omissions from any Issuer Free Writing Prospectus
based upon and in conformity with written information furnished to
the Company and the Operating Partnership by any Underwriter
through the Representatives specifically for use therein, it being
understood and agreed that the only such information furnished by
any Underwriter consists of the information described as such in
Section 8(b) hereof.
(h) Accuracy of Statements in
Prospectus . The statements in the Disclosure Package and the
Prospectus under the captions “Description of Capital
Stock” as supplemented by the statements under the caption
“Supplemental Description of Capital Stock,”
“Description of Material Provisions of the Partnership
Agreement of Kilroy Realty, L.P.” (other than as set forth
under the heading “—Series B Junior Participating
Preferred Units”), as supplemented by the statements under
the caption “Supplemental Description of Material Provisions
of the Partnership Agreement of Kilroy Realty, L.P.,”
“Certain Provisions of Maryland Law and of our Charter and
Bylaws” as supplemented by the statements under the caption
“Supplemental Description of Certain Provisions of Maryland
Law and of our Charter and Bylaws” and “Plan of
Distribution,” in Exhibit 99.1 to the Company’s Current
Report on Form 8-K filed on May 28, 2009, under the heading
“United States Federal Income Tax Considerations,” and
in the Company’s Annual Report on Form 10-K for the fiscal
year ended December 31, 2008 under the captions “Risk
Factors- Common limited partners of the Operating Partnership have
limited approval rights, which may prevent us from completing a
change of control transaction that may be in the best interests of
stockholders,” “Risk Factors-Limited partners of the
Operating Partnership must approve the dissolution of the Operating
Partnership and the disposition of properties they
contributed,” “Risk Factors-There are restrictions on
the ownership of our capital stock, which limit the opportunities
for a change of control at a premium to existing
stockholders” and “Risk Factors-Our charter contains
provisions that may delay, deter or prevent a change of control
transaction” as supplemented by the statements under the
caption “Supplemental Description of Certain Provisions of
Maryland Law and of our Charter and Bylaws” in the Disclosure
Package and the Prospectus, 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 in all material
respects.
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(i) Distribution of Offering
Material By the Company . The Company has not distributed and
will not distribute, prior to the later of the last Subsequent
Closing Date (as defined below) and the completion of the
Underwriters’ distribution of the Shares, any offering
material in connection with the offering and sale of the Shares
other than the Pre-Pricing Prospectus, the Prospectus, any Issuer
Free Writing Prospectus reviewed and consented to by the
Representatives or included in Schedule C hereto or the
Registration Statement.
(j) The Underwriting
Agreement . This Agreement has been duly authorized, executed
and delivered by the Company and the Operating
Partnership.
(k) Authorization of the
Shares . The Shares have been duly authorized for issuance and
sale pursuant to this Agreement and, when issued and delivered by
the Company to the Underwriters pursuant to this Agreement on the
Closing Date or any Subsequent Closing Date, will be validly
issued, fully paid and nonassessable. The issuance of the Shares is
not subject to any preemptive rights, rights of first refusal or
other similar rights to subscribe for or purchase the
Shares.
(l) No Transfer Taxes . There
are no transfer taxes or other similar fees or charges under
federal law or the laws of any state, or any political subdivision
thereof, required to be paid in connection with the execution and
delivery of this Agreement or the issuance by the Company or sale
by the Company of the Shares.
(m) No Applicable Registration or
Other Similar Rights . There are no persons with registration
or other similar rights to have any equity or debt securities
registered for sale under the Registration Statement, included in
the offering contemplated by this Agreement or otherwise registered
by the Company under the Securities Act.
(n) No Material Adverse
Change . Except as otherwise disclosed in the Disclosure
Package and the Prospectus, subsequent to the respective dates as
of which information is given in the Disclosure Package:
(i) there has been no material adverse change, or any
development that could reasonably be expected to result in a
material adverse change, in the condition, financial or otherwise,
or in the earnings, business, properties or operations, whether or
not arising from transactions in the ordinary course of business,
of the Company and its subsidiaries, considered as one entity (any
such change is called a “Material Adverse Change”);
(ii) the Company and its subsidiaries, considered as one
entity, have not incurred any material liability or obligation,
indirect, direct or contingent, nor entered into any material
transaction or agreement; and (iii) there has been no dividend
or distribution of any kind declared, paid or made by the Company
or, except for dividends paid to the Company or other subsidiaries,
any of its subsidiaries on any class of capital stock or repurchase
or redemption by the Company or any of its subsidiaries of any
class of capital stock.
(o) Independent Accountants .
Deloitte & Touche LLP, who have expressed their opinion
with respect to the financial statements (which term as used in
this Agreement includes the related notes thereto) and supporting
schedules filed with the Commission as a part of the
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Registration Statement and included in the
Disclosure Package and the Prospectus, are independent public
accountants with respect to the Company as required by the
Securities Act and the Exchange Act and the applicable published
rules and regulations thereunder.
(p) Preparation of the Financial
Statements . The financial statements filed with the Commission
as a part of or incorporated by reference in the Registration
Statement and included or incorporated by reference in the
Disclosure Package and the Prospectus present fairly the
consolidated financial position of the Company and its subsidiaries
as of and at the dates indicated and the results of their
operations and cash flows for the periods specified. The supporting
schedules included or incorporated by reference in the Registration
Statement present fairly the information required to be stated
therein. Such financial statements and supporting schedules comply
as to form in all material respects with the applicable accounting
requirements of the Securities Act and have been prepared in
conformity with generally accepted accounting principles applied on
a consistent basis throughout the periods involved, except as may
be expressly stated in the related notes thereto. No other
financial statements or supporting schedules are required to be
included or incorporated by reference in the Registration
Statement. The financial data under the caption “Selected
Financial Data” contained in documents incorporated by
reference in the Prospectus is presented in accordance with
Item 301 of Regulation S-K and derived from the audited
financial statements contained in the Registration
Statement.
(q) Intentionally
omitted.
(r) Incorporation and Good
Standing of the Company and its Subsidiaries . Each of the
Company and its subsidiaries has been duly organized and is validly
existing as a corporation, limited partnership or limited liability
company, as the case may be, in good standing under the laws of the
jurisdiction of its organization and has power and authority as a
corporation, limited partnership or limited liability company, as
the case may be, to own or lease, as the case may be, and operate
its properties and to conduct its business as described in the
Disclosure Package and the Prospectus and, in the case of the
Company and the Operating Partnership, to enter into and perform
its obligations under this Agreement. Each of the Company and each
subsidiary is duly qualified as a foreign corporation, limited
partnership or limited liability company, as the case may be, to
transact business and is in good standing in each jurisdiction in
which such qualification is required, whether by reason of the
ownership or leasing of property or the conduct of business, except
for such jurisdictions where the failure to so qualify or to be in
good standing would not, individually or in the aggregate, result
in a material adverse effect, on the condition, financial or
otherwise, or on the earnings, business, properties or operations,
whether or not arising from transactions in the ordinary course of
business, of the Company and its subsidiaries, considered as one
entity (a “Material Adverse Effect”). All of the issued
and outstanding shares of capital stock of each subsidiary that is
a corporation, all of the issued and outstanding limited and
general partnership interests of each subsidiary that is a limited
partnership and all of the issued and outstanding limited liability
company interests (or other similar interests) of each subsidiary
that is a limited liability company have been duly authorized and
validly issued, are fully paid and (except for general partnership
interests) nonassessable and, except as may be described in the
following sentence, are owned by the Company, directly or through
subsidiaries, free and clear of any Lien (as defined below).
Without limiting the generality of the foregoing (i) as of the
date of this
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Agreement, the Company is, and, as of the
Closing Date and at any Subsequent Closing Date, the Company will
be, the sole general partner of the Operating Partnership, and as
of the date of this Agreement, the Company does, and, as of the
Closing Date and at any Subsequent Closing Date, the Company will,
subject to the redemption of common units of limited partnership
interest of the Operating Partnership (the “Common
Units”) in exchange for shares of 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 95.0% of the Common
Units, (ii) as of the date of this Agreement, the Company
does, and, as of the Closing Date and at any Subsequent Closing
Date, the Company will, own 100% of the capital stock of Kilroy
Realty Finance, Inc., a Delaware corporation and a wholly-owned
subsidiary of the Company (“KRF”), (iii) as of the
date of this Agreement, KRF is, and, as of the Closing Date and at
any Subsequent Closing Date, KRF will be, the sole general partner
of Kilroy Realty Finance Partnership, L.P., a Delaware limited
partnership (the “Finance Partnership”), and, as of the
date of this Agreement, KRF does, and, as of the Closing Date and
at any Subsequent 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 any Subsequent 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 any Subsequent
Closing Date, the Operating Partnership will, own all of the
capital stock of Kilroy Realty TRS, Inc., a Delaware corporation
and wholly-owned subsidiary of the Operating Partnership
(“KRTRS”), (v) as of the date of this Agreement,
the Company is, and, as of the Closing Date and at any Subsequent
Closing Date, the Company will, be the general partner of Kilroy
Realty Partners, L.P., a Delaware limited partnership
(“KRPLP”), and, as of the date of this Agreement, the
Company does, and, as of the Closing Date and at the Subsequent
Closing Date, the Company will, own a 1.0% partnership interest in
KRPLP, and the Operating Partnership does, and, as of the Closing
Date and at any Subsequent Closing Date, the Operating Partnership
will, own a 99.0% partnership interest in KRPLP, (vi) as of
the date of this Agreement, the Operating Partnership does, and, as
of the Closing Date and at any Subsequent Closing Date, the
Operating Partnership will, own a 100% interest in Kilroy Services,
LLC, a Delaware limited liability company (“KSLLC”),
(vii) as of the date of this Agreement, the Operating
Partnership does, and, as of the Closing Date and at any Subsequent
Closing Date, the Operating Partnership will, own a 100.0% interest
in Kilroy RB LLC, (viii) as of the date of this Agreement, the
Finance Partnership is, and, as of the Closing Date and at any
Subsequent Closing Date, the Finance Partnership will, own a 100.0%
partnership interest in Kilroy RB II LLC and (ix) as of the
date of this Agreement, the Company does, and, as of the Closing
Date and at any Subsequent Closing Date, the Company will, own a
99.0% interest in Kilroy Realty Management, L.P., a Delaware
limited partnership (“KRMLP”), and, as of the date of
this Agreement, the Operating Partnership does, and, as of the
Closing Date and at any Subsequent Closing Date, the Operating
Partnership will, own a 1.0% partnership interest in KRMLP. The
Company does not own or control, directly or indirectly, any
corporation, association or other entity other than the
subsidiaries listed in Exhibit 21 to the Company’s
Annual Report on Form 10-K for the fiscal year ended
December 31, 2008.
(s) Capitalization and Other
Capital Stock Matters . The authorized, issued and outstanding
capital stock of the Company is as set forth in the line items
appearing under the caption “Stockholders’
Equity” in the Company’s consolidated balance sheet as
of March 31, 2009 appearing in its Quarterly Report on Form
10-Q for the quarter ended March 31, 2009
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(other than for subsequent issuances or share
repurchases or cancellations, if any, pursuant to this Agreement,
any employee benefit plans or dividend reinvestment plans described
in the Disclosure Package and the Prospectus or upon exercise of
outstanding options described in the Disclosure Package and the
Prospectus, as the case may be, or upon the redemption of Common
Units pursuant to the Partnership Agreement). The Common Stock
(including the Shares) conforms in all material respects to the
description thereof contained in the Disclosure Package and the
Prospectus. All of the issued and outstanding shares of Common
Stock have been duly authorized and validly issued, are fully paid
and nonassessable and have been issued in compliance with federal
and state securities laws. None of the outstanding shares of Common
Stock were issued in violation of any preemptive rights, rights of
first refusal or other similar rights to subscribe for or purchase
securities of the Company. The Company has duly reserved a
sufficient number of shares of preferred stock, par value $0.01 per
share (the “Preferred Stock”), for issuance upon
exchange of the units of partnership interest of the Operating
Partnership. There are no authorized or outstanding options,
warrants, preemptive rights, rights of first refusal or other
rights to purchase, or equity or debt securities convertible into
or exchangeable or exercisable for, any capital stock of the
Company or any of its subsidiaries other than those accurately
described in the Disclosure Package and the Prospectus. The
description of the Company’s stock option, stock bonus and
other stock plans or arrangements, and the options or other rights
granted thereunder incorporated by reference in the Disclosure
Package and the Prospectus accurately and fairly presents the terms
and conditions of such plans, arrangements, options and rights in
all material respects.
(t) Intentionally
omitted.
(u) Non-Contravention of Existing
Instruments; No Further Authorizations or Approvals Required .
Neither the Company nor any of its subsidiaries is (i) in
violation or in default (or, with the giving of notice or lapse of
time, would be in default) (“Default”) under its
charter or bylaws, limited partnership agreement, limited liability
company agreement or similar organizational documents, as the case
may be, (ii) in Default under any indenture, mortgage, loan or
credit agreement, deed of trust, note, contract, franchise, lease
or other agreement, obligation, condition, covenant or instrument
to which the Company or such subsidiary is a party or by which it
may be bound, or to which any of the property or assets of the
Company or any of its subsidiaries is subject (each, an
“Existing Instrument”) or (iii) in violation of
any statute, law, rule, regulation, judgment, order or decree of
any court, regulatory body, administrative agency, governmental
body, arbitrator or other authority having jurisdiction over the
Company or such subsidiary or any of its properties, as applicable,
except with respect to clauses (ii) and (iii) only, for
such Defaults as would not, individually or in the aggregate, have
a Material Adverse Effect. The Company’s and the Operating
Partnership’s execution, delivery and performance of this
Agreement and consummation of the transactions contemplated hereby,
by the Disclosure Package and by the Prospectus (i) have been
duly authorized by all necessary corporate and partnership action
and will not result in any Default under the charter or bylaws or
other organizational documents of the Company or any subsidiary,
(ii) will not conflict with or constitute a breach of, or
Default under, or result in the creation or imposition of any Lien
upon any property or assets of the Company, the Operating
Partnership or any of their respective subsidiaries pursuant to, or
require the consent of any other party to, any Existing Instrument,
and (iii) will not result in any violation of any statute,
law, rule, regulation, judgment, order or decree applicable to the
Company, the Operating Partnership or any of their
respective
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subsidiaries of any court, regulatory body,
administrative agency, governmental body, arbitrator or other
authority having jurisdiction over the Company, the Operating
Partnership or any of their respective subsidiaries or any of its
or their properties, except with respect to clauses (ii)
and (iii) only, for such conflicts, breaches, Defaults, Liens,
consents or violations as would not, individually or in the
aggregate, have a Material Adverse Effect. No consent, approval,
authorization or other order of, or registration or filing with,
any court or other governmental or regulatory authority or agency
is required for the Company’s and the Operating
Partnership’s execution, delivery and performance of this
Agreement and consummation of the transactions contemplated hereby,
by the Disclosure Package and by the Prospectus, except such as
have been obtained or made by the Company and are in full force and
effect under the Securities Act, applicable state securities or
blue sky laws and from the Financial Industry Regulatory Authority
(the “FINRA”).
(v) No Material Actions or
Proceedings . There are no legal or governmental actions, suits
or proceedings pending or, to the best of the Company’s and
the Operating Partnership’s knowledge, threatened
(i) against or affecting the Company or any of its
subsidiaries or (ii) which has as the subject thereof any
property owned or leased by the Company or any of its subsidiaries
or, to the best of the Company’s and the Operating
Partnership’s knowledge, any officer or director, where in
any such case (A) there is a reasonable possibility that such
action, suit or proceeding might be determined adversely to the
Company or such subsidiary, or any officer or director of, or
property owned or leased by, the Company or any of its subsidiaries
and (B) any such action, suit or proceeding, if so determined
adversely, would reasonably be expected to have a Material Adverse
Effect or adversely affect the consummation of the transactions
contemplated by this Agreement.
(w) Labor Matters . No labor
problem or dispute with the employees of the Company or any of its
subsidiaries exists or, to the best of the Company’s and the
Operating Partnership’s knowledge, is threatened or imminent,
and neither the Company nor the Operating Partnership is aware of
any existing or imminent labor disturbance by the employees of any
of its or its subsidiaries’ principal suppliers, contractors
or customers, that could have a Material Adverse Effect.
(x) Intellectual Property
Rights . 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”) necessary
for the conduct of the Company’s business as now conducted or
as proposed in the Disclosure Package and the Prospectus to be
conducted.
(y) All Necessary Permits,
etc . The Company and each subsidiary possess such valid and
current licenses, certificates, authorizations or permits
(collectively, the “Permits”) issued by the appropriate
state, federal or foreign regulatory agencies or bodies necessary
to conduct their respective businesses except for such Permits
where the failure to so possess would not, individually or in the
aggregate, have a Material Adverse Effect, and neither the Company
nor any subsidiary has received any notice of proceedings relating
to the revocation or modification of, or non-compliance with, any
such license, certificate, authorization or permit which, singly or
in the aggregate, if the subject of an unfavorable decision, ruling
or finding, could reasonably be expected to have a Material Adverse
Effect.
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(z) Title to Properties .
Except as otherwise disclosed in the Disclosure Package and the
Prospectus, the Company and each of its subsidiaries has good and
marketable title to all the properties and assets reflected as
owned in the financial statements referred to in Section 1(p)
above, in each case free and clear of any Liens and other defects,
except such as do not materially and adversely affect the value of
such property and do not materially interfere with the use made or
proposed to be made of such property by the Company or such
subsidiary. To the best of the Company’s and the Operating
Partnership’s knowledge, the real property, improvements,
equipment and personal property held under lease by the Company or
any subsidiary are held under valid and enforceable leases, with
such exceptions as are not material and do not materially interfere
with the use made or proposed to be made of such real property,
improvements, equipment or personal property by the Company or such
subsidiary. All Liens on or affecting any of the properties and
assets of the Company or any of its subsidiaries which are required
to be disclosed in the Disclosure Package and the Prospectus are
disclosed therein. Each of the properties owned by the Company and
its 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
Disclosure Package and the Prospectus and except for such failures
to comply as would not result in a Material Adverse Effect; the
Company and the Operating Partnership have no knowledge of any
pending or threatened condemnation or zoning change that could
reasonably be expected in any material respect affect the size of,
use of, improvements of, construction on, or access to any of the
properties of the Company and its subsidiaries; and the Company 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 Company or its subsidiaries.
(aa) Tax Law Compliance . The
Company and its consolidated subsidiaries have filed all necessary
federal, state, local and foreign income and franchise tax returns
in a timely manner and have paid all taxes required to be paid by
any of them and, if due and payable, any related or similar
assessment, fine or penalty levied against any of them, except for
any taxes, assessments, fines or penalties as may be being
contested in good faith and by appropriate proceedings and except
to the extent a failure to so file or pay would not, individually
or in the aggregate, have a Material Adverse Effect. The Company
has made appropriate provisions in the applicable financial
statements referred to in Section 1(p) above in respect of all
federal, state, local and foreign income and franchise taxes for
all current or prior periods as to which the tax liability of the
Company or any of its consolidated subsidiaries has not been
finally determined.
(bb) Company Not an
“Investment Company.” Each of the Company and the
Operating Partnership has been advised of the rules and
requirements under the Investment Company Act of 1940, as amended
(the “Investment Company Act”). Neither the Company nor
the Operating Partnership is, and after receipt of payment for the
Shares and the application of the proceeds thereof as contemplated
under the caption “Use of Proceeds” in the Disclosure
Package and the Prospectus, neither the Company, the Operating
Partnership nor any other subsidiary of the Company will be, an
“investment company” within the meaning of the
Investment Company Act and each of the Company and Operating
Partnership will conduct its business in a manner so that it will
not become subject to the Investment Company Act.
10
(cc) Insurance . The Company
and its subsidiaries are insured by recognized, financially sound
and reputable institutions with policies in such amounts and with
such deductibles and covering such risks as are generally deemed
adequate and customary for their businesses including, but not
limited to, policies covering real and personal property owned or
leased by the Company and its subsidiaries against theft, damage,
destruction and acts of vandalism. All policies of insurance and
fidelity or surety bonds, if any, 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; and
neither the Company nor any such subsidiary has been refused any
insurance coverage sought or applied for where the failure to
obtain such insurance coverage would reasonably be expected to have
a Material Adverse Effect. The Company has no reason to believe
that it or any subsidiary will not be able (i) to renew its
existing insurance coverage as and when such policies expire or
(ii) to obtain comparable coverage from similar institutions
as may be necessary or appropriate to conduct its business as now
conducted and at a cost that would not have a Material Adverse
Effect.
(dd) No Restrictions on
Dividends . No subsidiary of the Company is currently
prohibited, directly or indirectly, from paying any dividends to
the Company, from making any other distribution on such
subsidiary’s capital stock, from repaying to the Company any
loans or advances to such subsidiary from the Company or from
transferring any of such subsidiary’s property or assets to
the Company or any other subsidiary of the Company, except as
described in or contemplated by the Disclosure Package and the
Prospectus or to the extent such limitation would not impair the
Company’s ability to maintain its status as a real estate
investment trust under the Code (as defined below).
(ee) No Price Stabilization or
Manipulation . The Company has not taken, directly or
indirectly, any action designed to or that might be reasonably
expected to cause or result in stabilization or manipulation of the
price of any security of the Company to facilitate the sale or
resale of the Shares.
(ff) Related Party
Transactions . There are no business relationships or
related-party transactions involving the Company, the Operating
Partnership or any other subsidiary or any other person required to
be described in the Disclosure Package or the Prospectus that have
not been described as required.
(gg) Internal Controls and
Procedures . The Company maintains (i) effective internal
control over financial reporting as defined in Rule 13a-15
under the Exchange Act, and (ii) a system of internal
accounting controls sufficient to provide reasonable assurance that
(A) transactions are executed in accordance with
management’s general or specific authorizations;
(B) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally
accepted accounting principles and to maintain asset
accountability; (C) access to assets is permitted only in
accordance with management’s general
11
or specific authorization; and (D) the
recorded accountability for assets is compared with the existing
assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(hh) No Material Weakness in
Internal Controls . Except as disclosed in the Disclosure
Package and the Prospectus, or in any document incorporated by
reference therein, since the end of the Company’s most recent
audited fiscal year, there has been (i) no material weakness
in the Company’s internal control over financial reporting
(whether or not remediated) and (ii) no change in the
Company’s internal control over financial reporting that has
materially affected, or is reasonably likely to materially affect,
the Company’s internal control over financial
reporting.
(ii) Intentionally
omitted.
(jj) No Unlawful Contributions or
Other Payments . Neither the Company nor any of its
subsidiaries nor, to the knowledge of the Company or the Operating
Partnership, 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 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.
“FCPA” means Foreign
Corrupt Practices Act of 1977, as amended, and the rules and
regulations thereunder.
(kk) No Conflict with Money
Laundering Laws . To the best of the Company’s and the
Operating Partnership’s knowledge, 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 applicable 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 and the Operating
Partnership, threatened.
(ll) No Conflict with OFAC
Laws . Neither the Company nor any of its subsidiaries nor, to
the knowledge of the Company and the Operating Partnership, 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
12
Department (“OFAC”); and the Company
will not directly 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.
(mm) Compliance with
Environmental Laws . Except as disclosed or incorporated by
reference in the Disclosure Package and the Prospectus:
(i) each property owned or leased by the Company or any of its
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; (ii) the
Company and its 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 Company or any of its subsidiaries, and no condition exists on,
in, under or, to the knowledge of the Company and the Operating
Partnership, adjacent to any such property that could result in the
incurrence of liabilities by the Company or any of its subsidiaries
or any violations by the Company or any of its subsidiaries of any
Environmental Law applicable to such property, give rise to the
imposition of any Lien 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 Company or any subsidiary nor, to the
knowledge of the Company and the Operating Partnership, any tenant
of any of the properties owned or leased by the Company and its
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
Company or any subsidiary nor, to the knowledge of the Company and
the Operating Partnership, any tenant of any of the properties
owned or leased by the Company and its 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 Company and its subsidiaries is included or, to the knowledge
of the Company 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 Company 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 Company and its subsidiaries and, to
the knowledge of the Company and the Operating Partnership, each
tenant at any of the properties owned or leased by the Company and
its subsidiaries (a) have received all permits, licenses or
other approvals required of them under applicable Environmental
Laws to conduct their respective businesses and (b) 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.
13
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, 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 (
