Exhibit 10.1
UNITED DOMINION REALTY TRUST, INC.
(a Virginia corporation)
PLACEMENT AGENCY AGREEMENT
Dated: March 14, 2002
UNITED DOMINION REALTY TRUST, INC.
(a Virginia corporation)
PLACEMENT AGENCY AGREEMENT
March 14, 2002
Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
North Tower
World Financial Center
New York, New York 10281-1209
Ladies and Gentlemen:
United Dominion Realty Trust, Inc., a Virginia corporation (the "Company"),
confirms its agreement with Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner &
Smith Incorporated ("Merrill Lynch" or the "Placement Agent"), to act as
placement agent for the Company, as set forth in this agreement (the
"Agreement"), with respect to the issue and sale by the Company and the purchase
by Cohen & Steers Capital Management, Inc., a Maryland corporation (the
"Purchaser"), of 3,000,000 shares of common stock, $1.00 par value per share, of
the Company ("Common Stock" or the "Securities").
In acting as the Placement Agent, Merrill Lynch will seek to place the
Securities with the Purchaser on a reasonable best efforts basis, acting as the
Company's agent and not as a principal in the placement of the Securities.
Merrill Lynch may separately engage, at its own expense and with the prior
approval of the Company, sub-agents as it may deem necessary or appropriate.
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-3 (No. 333-92667) covering the
registration of Common Stock, debt securities, and preferred stock (the "Shelf
Securities") under the Securities Act of 1933, as amended (the "1933 Act"),
including the related base prospectus. Promptly after execution and delivery of
this Agreement, the Company will either (i) prepare and file a prospectus in
accordance with the provisions of Rule 430A ("Rule 430A") of the rules and
regulations of the Commission under the 1933 Act (the "1933 Act Regulations"),
if applicable, and paragraph (b) of Rule 424 ("Rule 424(b)") of the 1933 Act
Regulations or (ii) if the Company has elected to rely upon Rule 434 ("Rule
434") of the 1933 Act Regulations, prepare and file a term sheet (a "Term
Sheet") in accordance with the provisions of Rule 434 and Rule 424(b). The
information included in any such prospectus or in any such Term Sheet, as the
case may be, that was omitted from such registration statement at the time it
became effective but that is deemed to be part of such registration statement at
the time it became effective, if applicable, (a) pursuant to paragraph (b) of
Rule 430A is referred to as "Rule 430A Information" or (b) pursuant to paragraph
(d) of Rule 434 is referred to as "Rule 434 Information." Each prospectus used
before such registration statement became effective, and any prospectus that
omitted, as applicable, the Rule 430A Information or the Rule 434 Information,
that was used after such effectiveness and prior to the execution and delivery
of this Agreement, is herein called a "preliminary prospectus." Such
registration statement, including the exhibits thereto, schedules thereto, if
any, and the documents incorporated by reference therein pursuant to Item 12 of
Form S-3 under the 1933 Act, at the time it became effective and including the
Rule 430A Information and the Rule 434 Information, as applicable, is herein
called the "Registration Statement." Any registration statement filed pursuant
to Rule 462(b) of the 1933 Act Regulations is herein referred to as the "Rule
462(b) Registration Statement," and after such filing the term "Registration
Statement" shall include the Rule 462(b) Registration Statement. The final
prospectus supplement dated March 14, 2002, together with the accompanying base
prospectus, including the documents incorporated by reference therein pursuant
to Item 12 of Form S-3 under the 1933 Act, in the form first furnished to the
Purchaser for use in connection with the offering is herein called the
"Prospectus." If Rule 434 is relied on, the term "Prospectus" shall refer to the
preliminary prospectus together with the Term Sheet and all references in this
Agreement to the date of the Prospectus shall mean the date of the Term Sheet.
For purposes of this Agreement, all references to the Registration Statement,
any preliminary prospectus, the Prospectus or any Term Sheet or any amendment or
supplement to any of the foregoing shall be deemed to include the copy filed
with the Commission pursuant to its Electronic Data Gathering, Analysis and
Retrieval system ("EDGAR").
All references in this Agreement to financial statements and schedules and other
information which is "contained," "included" or "stated" in the Registration
Statement, any preliminary prospectus or the Prospectus (or other references of
like import) shall be deemed to mean and include all such financial statements
and schedules and other information which is incorporated by reference in the
Registration Statement, any preliminary prospectus or the Prospectus, as the
case may be; and all references in this Agreement to amendments or supplements
to the Registration Statement, any preliminary prospectus or the Prospectus
shall be deemed to mean and include the filing of any document under the
Securities Exchange Act of 1934, as amended (the "1934 Act"), which is
incorporated by reference in the Registration Statement, such preliminary
prospectus or the Prospectus, as the case may be.
As used herein, the term "Subsidiary" means a corporation or a partnership a
majority of the outstanding voting stock, partnership or membership interests,
as the case may be, of which is owned or controlled, directly or indirectly, by
the Company or by one or more other Subsidiaries of the Company, including,
without limitation, United Dominion Realty L.P., a Virginia limited partnership
("UDR Operating Partnership"), and Heritage Communities L.P., a Delaware limited
partnership ("Heritage Operating Partnership" and, together with UDR Operating
Partnership, the "Operating Partnerships").
Representations and Warranties.
------------------------------
Representations and Warranties by the Company and the Operating
Partnerships. Each of the Company and the Operating Partnerships represents and
warrants to the Placement Agent as of the date hereof, and as of the Closing
Time referred to in Section 2(b) hereof, and agrees with the Placement Agent, as
follows:
(i) On the Effective Date, the Registration Statement did, and
when the Prospectus is first filed (if required) in accordance with
Rule 424(b) and as of Closing Time, the Prospectus (and any supplements
thereto) will, comply in all material respects with the applicable
requirements of the Act and the Exchange Act and the respective rules
thereunder; on the Effective Date and at the Execution Time, the
Registration Statement did not contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein not
misleading; and, the Prospectus, on the date of any filing pursuant to
Rule 424(b) and as of Closing Time (together with any supplement
thereto) will not include any untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made,
not misleading; provided, however, that the Company makes no
representations or warranties as to the information contained in or
omitted from the Registration Statement or the Prospectus (or any
supplement thereto) in reliance upon and in conformity with information
furnished in writing to the Company by or on behalf of the Placement
Agent specifically for inclusion in the Registration Statement or the
Prospectus (or any supplement thereto).
(ii) Each of the Company and its Subsidiaries has been duly
incorporated and is validly existing as a corporation or a limited
partnership in good standing under the laws of the jurisdiction in
which it is chartered or organized with full corporate or partnership
power and authority to own or lease, as the case may be, and to operate
its properties and conduct its business as described in the Prospectus,
and is duly qualified to do business as a foreign corporation or
limited partnership and is in good standing under the laws of each
jurisdiction which requires such qualification (except in any case in
which the failure to so qualify or to be in good standing would not
2
have a material adverse effect on the condition (financial or
otherwise), prospects, earnings, business or properties of the Company
and its Subsidiaries, taken as a whole, whether or not arising from
transactions in the ordinary course of business, except as set forth in
or contemplated in the Prospectus (exclusive of any supplement
thereto));
(iii) all the outstanding shares of capital stock of each
Subsidiary corporation have been duly and validly authorized and issued
and are fully paid and nonassessable, and, except as otherwise set
forth in the Prospectus, all outstanding shares of capital stock of the
Subsidiaries are owned by the Company either directly or through wholly
owned subsidiaries free and clear of any perfected security interest or
any other security interests, claims, liens or encumbrances;
(iv) the Company's authorized equity capitalization is as set
forth in the Prospectus; the capital stock of the Company conforms in
all material respects to the description thereof contained in the
Prospectus; the outstanding shares of Common Stock have been duly and
validly authorized and issued and are fully paid and nonassessable; the
Securities have been duly and validly authorized, and, when issued and
delivered to and paid for by the Purchaser pursuant to this Agreement,
will be fully paid and nonassessable; the Securities are duly listed,
and admitted and authorized for trading, subject to official notice of
issuance and evidence of satisfactory distribution, on the New York
Stock Exchange; the certificates for the Securities are in valid and
sufficient form; the holders of outstanding shares of capital stock of
the Company are not entitled to preemptive or other rights to subscribe
for the Securities; and, except as set forth in the Prospectus, no
options, warrants or other rights to purchase, agreements or other
obligations to issue, or rights to convert any obligations into or
exchange any securities for, shares of capital stock of or ownership
interests in the Company are outstanding.
(v) There is no franchise, contract or other document of a
character required to be described in the Registration Statement or
Prospectus, or to be filed as an exhibit thereto, which is not
described or filed as required; and the statements in the Prospectus
under the headings "Federal Income Tax Consequences of Our Status as a
REIT", "Description of Our Capital Stock" and "Federal Income Tax
Consequences of United Dominion's Status as a REIT," insofar as such
information constitutes matters of law or legal conclusions, are
correct in all material respects.
(vi) This Agreement has been duly authorized, executed and
delivered by the Company and constitutes a valid and binding obligation
of the Company enforceable in accordance with its terms.
(vii) The Company is not and, after giving effect to the
offering and sale of the Securities and the application of the proceeds
thereof as described in the Prospectus, will not be an "investment
company" as defined in the Investment Company Act of 1940, as amended.
(viii) No consent, approval, authorization, filing with or
order of any court or governmental agency or body is required in
connection with the transactions contemplated herein, except such as
have been obtained under the Act and such as may be required under the
blue sky laws of any jurisdiction in connection with the purchase of
the Securities by the Purchaser in the manner contemplated herein and
in the Prospectus.
(ix) Neither the issue and sale of the Securities nor the
consummation of any other of the transactions herein contemplated nor
the fulfillment of the terms hereof will conflict with, result in a
breach or violation or imposition of any lien, charge or encumbrance
upon any property or assets of the Company or any of its Subsidiaries
pursuant to, (i) the charter or by-laws of the Company or any of its
Subsidiaries, (ii) the terms of any indenture, contract, lease,
mortgage, deed of trust, note agreement, loan agreement or other
agreement, obligation, condition, covenant or instrument to which the
Company or any of its Subsidiaries is a party or bound or to which its
or their property is subject (except in any case in which such would
not have a material adverse effect on the condition (financial or
otherwise), prospects, earnings, business or properties of the Company
3
and its Subsidiaries, taken as a whole, whether or not arising from
transactions in the ordinary course of business, except as set forth in
or contemplated in the Prospectus (exclusive of any supplement
thereto)), or (iii) any statute, law, rule, regulation, judgment, order
or decree applicable to the Company or any of its Subsidiaries of any
court, regulatory body, administrative agency, governmental body,
arbitrator or other authority having jurisdiction over the Company or
any of its Subsidiaries or any of its or their properties (except in
any case in which such would not have a material adverse effect on the
condition (financial or otherwise), prospects, earnings, business or
properties of the Company and its Subsidiaries, taken as a whole,
whether or not arising from transactions in the ordinary course of
business, except as set forth in or contemplated in the Prospectus
(exclusive of any supplement thereto)).
(x) No holders of securities of the Company have rights to the
registration of such securities under the Registration Statement.
(xi) The consolidated historical financial statements and
schedules of the Company and its consolidated subsidiaries included in
the Prospectus and the Registration Statement present fairly in all
material respects the financial condition, results of operations and
cash flows of the Company as of the dates and for the periods
indicated, comply as to form with the applicable accounting
requirements of the Act and have been prepared in conformity with
generally accepted accounting principles applied on a consistent basis
throughout the periods involved (except as otherwise noted therein).
The financial information set forth under the caption "Recent
Developments" in the Prospectus and Registration Statement fairly
presents, on the basis stated in the Prospectus and the Registration
Statement, the information included therein.
(xii) No action, suit or proceeding by or before any court or
governmental agency, authority or body or any arbitrator involving the
Company or any of its Subsidiaries or its or their property is pending
or, to the best knowledge of the Company, threatened that (i) could
reasonably be expected to have a material adverse effect on the
performance of this Agreement or the consummation of any of the
transactions contemplated hereby or (ii) could reasonably be expected
to have a material adverse effect on the condition (financial or
otherwise), prospects, earnings, business or properties of the Company
and its Subsidiaries, taken as a whole, whether or not arising from
transactions in the ordinary course of business, except as set forth in
or contemplated in the Prospectus (exclusive of any supplement
thereto).
(xiii) Each of the Company and each of its Subsidiaries owns
or leases all such properties as are necessary to the conduct of its
operations as presently conducted.
(xiv) Neither the Company nor any Subsidiary is in violation
or default of (i) any provision of its charter or bylaws, (ii) the
terms of any indenture, contract, lease, mortgage, deed of trust, note
agreement, loan agreement or other agreement, obligation, condition,
covenant or instrument to which it is a party or bound or to which its
property is subject (except in any case in which such would not have a
material adverse effect on the condition (financial or otherwise),
prospects, earnings, business or properties of the Company and its
Subsidiaries, taken as a whole, whether or not arising from
transactions in the ordinary course of business, except as set forth in
or contemplated in the Prospectus (exclusive of any supplement
thereto)), or (iii) any statute, law, rule, regulation, judgment, order
or decree of any court, regulatory body, administrative agency,
governmental body, arbitrator or other authority having jurisdiction
over the Company or such Subsidiary or any of its properties (except in
any case in which such would not have a material adverse effect on the
condition (financial or otherwise), prospects, earnings, business or
properties of the Company and its Subsidiaries, taken as a whole,
whether or not arising from transactions in the ordinary course of
business, except as set forth in or contemplated in the Prospectus
(exclusive of any supplement thereto)), as applicable.
4
(xv) Ernst & Young LLP, who have certified certain financial
statements of the Company and its consolidated subsidiaries and
delivered their report with respect to the audited consolidated
financial statements and schedules included in the Prospectus, are
independent public accountants with respect to the Company within the
meaning of the Act and the applicable published rules and regulations
thereunder.
(xvi) 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 Securities hereunder.
(xvii) The Company has filed all foreign, federal, state and
local tax returns that are required to be filed or has requested
extensions thereof (except in any case in which the failure so to file
would not have a material adverse effect on the condition (financial or
otherwise), prospects, earnings, business or properties of the Company
and its Subsidiaries, taken as a whole, whether or not arising from
transactions in the ordinary course of business, except as set forth in
or contemplated in the Prospectus (exclusive of any supplement
thereto)) and has paid all taxes required to be paid by it and any
other assessment, fine or penalty levied against it, to the extent that
any of the foregoing is due and payable, except for any such
assessment, fine or penalty that is currently being contested in good
faith or as would not have a material adverse effect on the condition
(financial or otherwise), prospects, earnings, business or properties
of the Company and its Subsidiaries, taken as a whole, whether or not
arising from transactions in the ordinary course of business, except as
set forth in or contemplated in the Prospectus (exclusive of any
supplement thereto).
(xviii) No labor problem or dispute with the employees of the
Company or any of its Subsidiaries exists or is threatened or imminent,
and the Company is not 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 on the condition (financial or otherwise),
prospects, earnings, business or properties of the Company and its
Subsidiaries, taken as a whole, whether or not arising from
transactions in the ordinary course of business, except as set forth in
or contemplated in the Prospectus (exclusive of any supplement
thereto).
(xix) The Company and each of its Subsidiaries are insured by
insurers of recognized financial responsibility against such losses and
risks and in such amounts as are prudent and customary in the
businesses in which they are engaged; all policies of insurance and
fidelity or surety bonds insuring the Company or any of its
Subsidiaries or their respective businesses, assets, employees,
officers and directors are in full force and effect; the Company and
its Subsidiaries are in compliance with the terms of such policies and
instruments in all material respects; and there are no claims by the
Company or any of its Subsidiaries under any such policy or instrument
as to which any insurance company is denying liability or defending
under a reservation of rights clause (except in any case in which such
would not have a material adverse effect on the condition (financial or
otherwise), prospects, earnings, business or properties of the Company
and its Subsidiaries, taken as a whole, whether or not arising from
transactions in the ordinary course of business, except as set forth in
or contemplated in the Prospectus (exclusive of any supplement
thereto)); and neither the Company nor any such Subsidiary has any
reason to believe that it will not be able to renew its existing
insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue
its business at a cost that would not have a material adverse effect on
the condition (financial or otherwise), prospects, earnings, business
or properties of the Company and its Subsidiaries, taken as a whole,
whether or not arising from transactions in the ordinary course of
business, except as set forth in or contemplated in the Prospectus
(exclusive of any supplement thereto).
5
(xx) 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
required by the terms of the Company's indebtedness described in or
contemplated by the Prospectus.
(xxi) The Company and its Subsidiaries possess all licenses,
certificates, permits and other authorizations issued by the
appropriate federal, state or foreign regulatory authorities necessary
to conduct their respective businesses (except in any case in which
failure to possess such would not have a material adverse effect on the
condition (financial or otherwise), prospects, earnings, business or
properties of the Company and its Subsidiaries, taken as a whole,
whether or not arising from transactions in the ordinary course of
business, except as set forth in or contemplated in the Prospectus
(exclusive of any supplement thereto)), and neither the Company nor any
such Subsidiary has received any notice of proceedings relating to the
revocation or modification of any such certificate, authorization or
permit which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would have a material adverse
effect on the condition (financial or otherwise), prospects, earnings,
business or properties of the Company and its Subsidiaries, taken as a
whole, whether or not arising from transactions in the ordinary course
of business, except as set forth in or contemplated in the Prospectus
(exclusive of any supplement thereto).
(xxii) The Company and each of its Subsidiaries maintain a
system of internal accounting controls sufficient to provide reasonable
assurance that (i) transactions are executed in accordance with
management's general or specific authorizations; (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to
maintain asset accountability; (iii) access to assets is permitted only
in accordance with management's general or specific authorization; and
(iv) the recorded accountability for assets is compared with the
existing assets at reasonable intervals and appropriate action is taken
with respect to any differences.
(xxiii) The Company has not taken, directly or indirectly, any
action designed to or that would constitute or that might reasonably be
expected to cause or result in, under the Exchange Act or otherwise,
stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Securities.
(xxiv) The Company and its Subsidiaries are (i) in compliance
with any and all applicable foreign, federal, state and local laws and
regulations relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants ("Environmental Laws"), (ii) have received and are in
compliance with all permits, licenses or other approvals required of
them under applicable Environmental Laws to conduct their respective
businesses and (iii) have not received notice of any actual or
potential liability for the investigation or remediation of any
disposal or release of hazardous or toxic substances or wastes,
pollutants or contaminants, except where such non-compliance with
Environmental Laws, failure to receive required permits, licenses or
other approvals, or liability would not, individually or in the
aggregate, have a material adverse change in the condition (financial
or otherwise), prospects, earnings, business or properties of the
Company and its Subsidiaries, taken as a whole, whether or not arising
from transactions in the ordinary course of business, except as set
forth in or contemplated in the Prospectus (exclusive of any supplement
thereto). Except as set forth in the Prospectus, neither the Company
nor any of the Subsidiaries has been named as a "potentially
responsible party" under the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended.
6
(xxv) Each of the Company and its Subsidiaries has fulfilled
its obligations, if any, under the minimum funding standards of Section
302 of the United States Employee Retirement Income Security Act of
1974 ("ERISA") and the regulations and published interpretations
thereunder with respect to each "plan" (as defined in Section 3(3) of
ERISA and such regulations and published interpretations) in which
employees of the Company and its Subsidiaries are eligible to
participate and each such plan is in compliance in all material
respects with the presently applicable provisions of ERISA and such
regulations and published interpretations (except in any case in which
failure to do such would not have a material adverse effect on the
condition (financial or otherwise), prospects, earnings, business or
properties of the Company and its Subsidiaries, taken as a whole,
whether or not arising from transactions in the ordinary course of
business, except as set forth in or contemplated in the Prospectus
(exclusive of any supplement thereto)). The Company and its
Subsidiaries have not incurred any unpaid liability to the Pension
Benefit Guaranty Corporation (other than for the payment of premiums in
the ordinary course) or to any such plan under Title IV of ERISA
(except in any case in which such would not have a material adverse
effect on the condition (financial or otherwise), prospects, earnings,
business or properties of the Company and its Subsidiaries, taken as a
whole, whether or not arising from transactions in the ordinary course
of business, except as set forth in or contemplated in the Prospectus
(exclusive of any supplement thereto)).
(xxvi) 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
Prospectus to be conducted. To the Company's knowledge, (a) there is no
material infringement by third parties of any such Intellectual
Property; (b) there is no pending or threatened action, suit,
proceeding or claim by others challenging the Company's rights in or to
any such Intellectual Property, and the Company is unaware of any facts
which would form a reasonable basis for any such claim; (c) there is no
pending or threatened action, suit, proceeding or claim by others
challenging the validity or scope of any such Intellectual Property,
and the Company is unaware of any facts which would form a reasonable
basis for any such claim; and (d) there is no pending or threatened
action, suit, proceeding or claim by others that the Company infringes
or otherwise violates any patent, trademark, copyright, trade secret or
other proprietary rights of others, and the Company is unaware of any
other fact which would form a reasonable basis for any such claim.
(xxvii) Except as disclosed in the Registration Statement and
the Prospectus, the Company (i) does not have any material lending or
other relationship with any bank or lending affiliate of the Placement
Agent and (ii) does not intend to use any of the proceeds from the sale
of the Securities hereunder to repay any outstanding debt owed to any
affiliate of the Placement Agent.
(xxviii) The Company has been and is organized and has
operated in conformity with the requirements for qualification and
taxation as a REIT for each of its taxable years beginning with the
earlier of the year ended December 31, 1998, or any prior year where
the Company's failure to so qualify could cause the Company to have a
liability for taxes (whether in that year or any subsequent year) and
its current organization and current and proposed method of operation
will enable it to continue to meet the requirements for qualification
and taxation as a REIT. No transaction event has occurred which could
cause the Company not to be able to qualify as a REIT for its current
taxable year or any future taxable year.
7
(xxix) Each of the Operating Partnerships is properly
classified as a partnership, and not as a corporation or an association
taxable as a corporation, for Federal income tax purposes throughout
the period from its formation through the date hereof.
(xxx) Each of the Subsidiaries that is a partnership or a
limited liability company ("Subsidiary Partnerships") is properly
classified either as a disregarded entity or as a partnership, and not
as a corporation or as an association taxable as a corporation, for
Federal income tax purposes throughout the period from its formation
through the date hereof, or, in the case of any Subsidiary Partnerships
that have terminated, through the date of termination of such
Subsidiary Partnerships.
(xxxi) Each of the Company, the Operating Partnerships and the
Subsidiaries has filed all federal, state, local and foreign income tax
returns which have been required to be filed and has paid all taxes
required to be paid and any other assessment, fine or penalty levied
against it, to the extent that any of the foregoing is due and payable,
except, in all cases, for any such tax, assessment, fine or penalty
that is being contested in good faith. The Company has made adequate
charges, accruals and reserves in the applicable financial statements
referred to in Section 1.(xi) hereof in respect of all federal, state,
local and foreign income and franchise taxes for all periods as to
which the tax liability of the Company or any of the Subsidiaries has
not been finally determined.
Officer's Certificates. Any certificate signed by any officer of the
Company, any authorized representative of the Operating Partnerships or any of
their Subsidiaries delivered to the Placement Agent or to counsel for the
Placement Agent shall be deemed a representation and warranty by such person or
entity, as the case may be, to the Placement Agent as to the matters covered
thereby.
Placement Agent Fees.
--------------------
On the basis of the representations and warranties herein contained and
subject to the terms and conditions herein set forth, the Company agrees to pay
Merrill Lynch a fee (the "Fee"), based upon the aggregate amount of Securities
sold, as calculated in accordance with the provisions of this Section for its
services pursuant to this Agreement. The Fee will equal 5.125% of the purchase
price of all Securities sold to the Purchaser pursuant to this Agreement.
On the date in which the Purchaser purchases the Securities from the
Company in accordance with this Agreement (the "Closing Time"), the Company
shall pay the Fee to the Placement Agent in cash by wire transfer of immediately
available funds to a bank account designated by the Placement Agent.
Covenants of the Company. Each of the Company and the Operating
Partnerships covenants with the Placement Agent as follows:
Compliance with Securities Regulations and Commission Requests. The Company
will comply with the requirements of Rule 430A or Rule 434, as applicable, and
will notify the Placement Agent immediately, and confirm the notice in writing,
(i) when any post-effective amendment to the Registration Statement shall become
effective, or any supplement to the Prospectus or any amended Prospectus shall
have been filed, (ii) of the receipt of any comments from the Commission, (iii)
of any request by the Commission for any amendment to the Registration Statement
or any amendment or supplement to the Prospectus or for additional information,
and (iv) of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or of any order preventing or
suspending the use of any preliminary prospectus, or of the suspension of the
qualification of the Securities for offering or sale in any jurisdiction, or of
the initiation or threatening of any proceedings for any of such purposes. The
Company will promptly effect the filings necessary pursuant to Rule 424(b) and
will take such steps as it deems necessary to ascertain promptly whether the
form of prospectus transmitted for filing under Rule 424(b) was received for
filing by the Commission and, in the event that it was not, it will promptly
file such prospectus. The Company will make every reasonable effort to prevent
the issuance of any stop order and, if any stop order is issued, to obtain the
lifting thereof at the earliest possible moment.
8
Continued Compliance with Securities Laws. The Company will comply with the
1933 Act and the 1933 Act Regulations and the 1934 Act and the 1934 Act
Regulations so as to permit the completion of the distribution of the Securities
as contemplated in this Agreement and in the Prospectus. If at any time when a
prospectus is required by the 1933 Act to be delivered in connection with sales
of the Securities, any event shall occur or condition shall exist as a result of
which it is necessary, in the opinion of counsel for the Placement Agent or for
the Company, to amend the Registration Statement or amend or supplement the
Prospectus in order that the Prospectus will not include any untrue statements
of a material fact or omit to state a material fact necessary in order to make
the statements therein not misleading in the light of the circumstances existing
at the time it is delivered to a purchaser, or if it shall be necessary, in the
opinion of such counsel, at any such time to amend the Registration Statement or
amend or supplement the Prospectus in order to comply with the requirements of
the 1933 Act or the 1933 Act Regulations, the Company will promptly prepare and
file with the Commission such amendment or supplement as may be necessary to
correct such statement or omission or to make the Registration Statement or the
Prospectus comply with such requirements, and the Company will furnish to the
Placement Agent such number of copies of such amendment or supplement as the
Placement Agent may reasonably request.
Blue Sky Qualifications. If required by applicable law, the Company will
use its best efforts, in cooperation with the Placement Agent, to qualify the
Securities for offering and sale under the applicable securities laws and real
estate syndication laws of such states and other jurisdictions (domestic or
foreign) as the Placement Agent may designate and to maintain such
qualifications in effect for a period of not less than one year from the later
of the effective date of the Registration Statement and any Rule 462(b)
Registration Statement; provided, however, that the Company shall not be
obligated to file any general consent to service of process or to qualify as a
foreign corporation or as a dealer in securities in any jurisdiction in which it
is not so qualified or to subject itself to taxation in respect of doing
business in any jurisdiction in which it is not otherwise so subject. In each
jurisdiction in which the Securities have been so qualified, the Company will
file such statements and reports as may be required by the laws of such
jurisdiction to continue such qualification in effect for a period of not less
than one year from the effective date of the Registration Statement and any Rule
462(b) Registration Statement.
Rule 158. The Company will timely file such reports pursuant to the 1934
Act as are necessary in order to make generally available to its securityholders
as soon as practicable an earnings statement for the purposes of, and to provide
the benefits contemplated by, the last paragraph of Section 11(a) of the 1933
Act.
Reporting Requirements. The Company, during the period when the Prospectus
is required to be delivered under the 1933 Act or the 1934 Act, will file all
documents required to be filed with the Commission pursuant to the 1934 Act
within the time periods required by the 1934 Act and the 1934 Act Regulations.
Use of Proceeds. The Company will use the net proceeds received by it from
the sale of the Securities in the manner specified in the Prospectus under "Use
of Proceeds."
REIT Qualification. The Company will use its best efforts to continue to
meet the requirement to qualify as a "real estate investment trust" under the
Code for each of its taxable years for so long as the board of directors deems
it in the best interests of the Company's shareholders to remain so qualified.
Listing. The Company will use its best efforts to maintain the listing of
the Securities on the New York Stock Exchange.
9
No Manipulation of Market for Securities. Except for the authorization of
actions permitted to be taken by the Placement Agent as contemplated herein or
in the Prospectus, none of the Company or the Operating Partnerships will (a)
take, directly or indirectly, any action designed to cause or to result in, or
that might reasonably be expected to constitute, the stabilization or
manipulation of the price of any security of the Company to facilitate the sale
or resale of the Securities, and (b) until the Closing Time, (i) sell, bid for
or purchase the Securities or pay any person any compensation for soliciting
purchases of the Securities or (ii) pay or agree to pay to any person any
compensation for soliciting another to purchase any other securities of the
Company.
Rule 462(b) Registration Statement. If the Company elects to rely upon Rule
462(b), the Company shall file a Rule 462(b) Registration Statement with the
Commission in compliance with Rule 462(b) by 10:00 P.M., Washington, D.C. time,
on the date of this Agreement, and the Company shall at the time of filing
either pay to the Commission the filing fee for the Rule 462(b) Registration
Statement or give irrevocable instructions for the payment of such fee pursuant
to Rule 111(b) under the 1933 Act.
Payment of Expenses. The Company will pay or cause to be paid all expenses
incident to the performance of its obligations under this Agreement, including
(i) the preparation, printing and filing of the Registration Statement
(including financial statements and exhibits) and each amendment thereto, (ii)
the preparation and delivery to the Placement Agent of this Agreement and such
other documents as may be required in connection with the offering, purchase,
sale, issuance or delivery of the Securities, (iii) the fees and disbursements
of the Company's counsel, accountants and other advisors, (iv) the qualification
of the Securities under securities laws in accordance with the provisions of
Section 3(c) hereof, including filing fees and the reasonable fees and
disbursements of counsel for the Placement Agent in connection therewith and in
connection with the preparation of the Blue Sky Survey and any supplement
thereto, (v) the printing and delivery to the Placement Agent of copies of each
of the preliminary prospectus, Prospectus and any amendments or supplements
thereto, (vi) the fees and expenses of any transfer agent or registrar for the
Securities and (vii) the fees and expenses incurred in connection with the
listing of the Securities on the New York Stock Exchange.
Conditions of Placement Agent's Obligations. The obligations of the
Purchaser to purchase the Securities shall be subject to the accuracy of the
representations and warranties on the part of the Company contained herein as of
the Execution Time and the Closing Time, to the accuracy of the statements of
the Company made in any certificates pursuant to the provisions hereof, to the
performance by the Company of its obligations hereunder and to the following
additional conditions:
Effectiveness of Registration Statement. If filing of the Prospectus, or
any supplement thereto, is required pursuant to Rule 424(b), the Prospectus, and
any such supplement, will be filed in the manner and within the time period
required by Rule 424(b); and no stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for that
purpose shall have been instituted or threatened.
Opinion of Counsel for Company. The Company shall have requested and caused
Hunton & Williams, counsel for the Company, to have furnished to the Placement
Agent their opinion, dated as of Closing Time and addressed to the Placement
Agent, to the effect that:
(i) each of the Company and the Subsidiaries has been duly
incorporated or formed, as applicable and is validly existing as a
corporation or limited partnership in good standing under the laws of
the jurisdiction in which it is chartered or organized, with full
corporate or partnership power and authority to own or lease, as the
case may be, and to operate its properties and conduct its business as
described in the Prospectus, and is duly qualified to do business and
is in good standing under the laws of each jurisdiction which requires
such qualification;
(ii) all the outstanding shares of capital stock of each
Subsidiary have been duly and validly authorized and issued and are
fully paid and nonassessable, and, except as otherwise set forth in the
10
Prospectus, all outstanding shares of capital stock of the Subsidiaries
are owned by the Company either directly or through wholly owned
subsidiaries free and clear of any perfected security interest and, to
the knowledge of such counsel, after due inquiry, any other security
interest, claim, lien or encumbrance;
(iii) the Company's authorized equity capitalization is as set
forth in the Prospectus; the capital stock of the Company conforms in
all material respects to the description thereof contained in the
Prospectus; the outstanding shares of Common Stock have been duly and
validly authorized and issued and are fully paid and nonassessable; the
Securities have been duly and validly authorized, and, when issued and
delivered to and paid for by the Purchaser pursuant to the Purchase
Agreement, will be fully paid and nonassessable; the Securities are
duly listed, and admitted and authorized for trading, subject to
official notice of issuance and evidence of satisfactory distribution,
on the New York Stock Exchange; the certificates for the Securities are
in valid and sufficient form; the holders of outstanding shares of
capital stock of the Company are not entitled to statutory preemptive
or, to such counsel's knowledge, other preemptive or other rights to
subscribe for the Securities; and, except as set forth in the
Prospectus, to such counsel's knowledge no options, warrants or other
rights to purchase, agreements or other obligations to issue, or rights
to convert any obligations into or exchange any securities for, shares
of capital stock of or ownership interests in the Company are
outstanding;
(iv) to the knowledge of such counsel, there is no pending or
threatened action, suit or proceeding by or before any court or
governmental agency, authority or body or any arbitrator involving the
Company or any of its Subsidiaries or its or their property of a
character required to be disclosed in the Registration Statement which
is not adequately disclosed in the Prospectus, and there is no
franchise, contract or other document of a character required to be
described in the Registration Statement or Prospectus, or to be filed
as an exhibit thereto, which is not described or filed as required; and
the statements included or incorporated by reference in the Prospectus
under the headings "Federal Income Tax Consequences of Our Status as a
REIT", "Description of Capital Stock" and "Federal Income Tax
Consequences of United Dominion's Status as a REIT," insofar as such
information constitutes matters of law or legal conclusions, have been
reviewed by such counsel and are correct in all material respects;
(v) the Registration Statement has become effective under the
Act; any required filing of the Prospectus, and any supplements
thereto, pursuant to Rule 424(b) has been made in the manner and within
the time period required by Rule 424(b); to the knowledge of such
counsel, no stop order suspending the effectiveness of the Registration
Statement has been issued, no proceedings for that purpose have been
instituted or threatened and the Registration Statement and the
Prospectus (other than the financial statements and other financial
information contained therein, as to which such counsel need express no
opinion) as of their respective effective or issue dates comply as to
form in all material respects with the applicable requirements of the
Act and the Exchange Act and the respective rules thereunder; and such
counsel has no reason to believe that on the Effective Date, the date
the Registration Statement was last deemed amended or the date of this
Agreement, the Registration Statement contained any untrue statement of
a material fact or omitted to state any material fact required to be
stated therein or necessary to make the statements therein not
misleading or that the Prospectus as of its date or as of Closing Time
included or includes any untrue statement of a material fact or omitted
or omits to state a material fact necessary to make the statements
therein, in the light of the circumstances under which they were made,
not misleading (in each case, other than the financial statements and
other financial and statistical information derived therefrom, as to
which such counsel need express no opinion);
(vi) each document filed pursuant to the Exchange Act (other
than the financial statements and other financial information contained
therein, as to which such counsel need express no opinion) and
11
incorporated or deemed to be incorporated by reference in the
Prospectus complied when so filed as to form in all material respects
with the Exchange Act and the rules thereunder;
(vii) this Agreement has been duly authorized, executed and
delivered by the Company;
(viii) the Company is not and, after giving effect to the
offering and sale of the Securities and the application of the proceeds
thereof as described in the Prospectus, will not be an "investment
company" as defined in the Investment Company Act of 1940, as amended;
(ix) no consent, approval, authorization, filing with or order
of any court or governmental agency or body is required in connection
with the transactions contemplated herein, except such as have been
obtained under the Act and such as may be required under the blue sky
laws of any jurisdiction in connection with the purchase of the
Securities by the Purchaser in the manner contemplated in this
Agreement and in the Prospectus and such other approvals (specified in
such opinion) as have been obtained;
(x) neither the issue and sale of the Securities, nor the
consummation of any other of the transactions herein contemplated nor
the fulfillment of the terms hereof will conflict with, result in a
breach or violation of or imposition of any lien, charge or encumbrance
upon any property or assets of the Company or its Subsidiaries pursuant
to, (i) the charter or by-laws of the Company or its Subsidiaries, (ii)
the terms of any indenture, contract, lease, mortgage, deed of trust,
note agreement, loan agreement or other agreement, obligation,
condition, covenant or instrument to which the Company or its
Subsidiaries is a party or bound or to which its or their property is
subject and which has been filed as an exhibit to any of the Company's
filings made pursuant to the Exchange Act and incorporated by reference
into the Prospectus, or (iii) any statute, law, rule, regulation,
judgment, order or decree applicable to the Company or its Subsidiaries
of any court, regulatory body, administrative agency, governmental
body, arbitrator or other authority of the Commonwealth of Virginia or
the United States of America having jurisdiction over the Company or
its Subsidiaries or any of its or their properties;
(xi) to such counsel's knowledge, no holders of securities of
the Company have rights to the registration of such securities under
the Registration Statement;
(xii) The Company has been organized and has operated in
conformity with the requirements for qualification and taxation as a
REIT for each of its taxable years beginning with the taxable year
ended December 31, 1998 through December 31, 2001, and its current
organization and proposed method of operation will enable it to
continue to meet the requirements for qualification and taxation as a
REIT for the taxable year 2002 and thereafter; and
(xiii) Each of the Operating Partnerships is and has been
properly treated as a partnership for federal income tax purposes and
not as a corporation or as an association or publicly traded
partnership taxable as a corporation, throughout the period from the
later of its formation or January 1, 1998 through the date hereof.
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws of any jurisdiction other than the
Commonwealth of Virginia or the Federal laws of the United States, to
the extent they deem proper and specified in such opinion, upon the
opinion of other counsel of good standing whom they believe to be
reliable and who are satisfactory to counsel for the Placement Agent
and (B) as to matters of fact, to the extent they deem proper, on
certificates of responsible officers of the Company and public
officials. References to the Prospectus in this paragraph (b) include
any supplements thereto at Closing Time.
12
Opinion of Designated Placement Agent's Counsel. The Placement Agent shall
have received from Hogan & Hartson L.L.P., counsel for the Placement Agent, such
opinion or opinions, dated as of Closing Time and addressed to the Placement
Agent, with respect to the issuance and sale of the Securities, the Registration
Statement, the Prospectus (together with any supplement thereto) and other
related matters as the Placement Agent may reasonably require, and the Company
shall have furnished to such counsel such documents as they reasonably request
for the purpose of enabling them to pass upon such matters.
Officers' Certificate. The Company, on its own behalf and in its capacity
as general partner of UDR Operating Partnership, and ASR Investments Corporation
("ASR"), a Maryland corporation and general partner of Heritage Operating
Partnership, shall have furnished to the Placement Agent a certificate of the
Company and ASR, signed by the Chairman of the Board or the President and the
principal financial or accounting officer of the Company and ASR, dated as of
Closing Time, to the effect that the signers of such certificate have carefully
examined the Registration Statement, the Prospectus, any supplements to the
Prospectus and this Agreement and that:
(i) the representations and warranties of the Company and the
Operating Partnerships in this Agreement are true and correct at and as
of Closing Time with the same effect as if made as of Closing Time and
the Company and the Operating Partnerships have complied with all the
agreements and satisfied all the conditions on their part to be
performed or satisfied at or prior to Closing Time;
(ii) no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that
purpose have been instituted or, to the Company's knowledge,
threatened; and
(iii) since the date of the most recent financial statements
included or incorporated by reference in the Prospectus (exclusive of
any supplement thereto), there has been no material adverse effect on
the condition (financial or otherwise), prospects, earnings, business
or properties of the Company and its Subsidiaries, taken as a whole,
whether or not arising from transactions in the ordinary course of
business, except as set forth in or contemplated in the Prospectus
(exclusive of any supplement thereto).
Accountant's Comfort Letter. At the time of the execution of this
Agreement, the Placement Agent shall have received from Ernst & Young LLP a
letter dated such date, in form and substance satisfactory to the Placement
Agent, containing statements and information of the type ordinarily included in
accountants' "comfort letters" to underwriters with respect to the financial
statements and certain financial information contained in the Registration
Statement and the Prospectus.
Bring-down Comfort Letter. At Closing Time, the Placement Agent shall have
received from Ernst & Young LLP a letter, dated as of Closing Time, to the
effect that they reaffirm the statements made in the letter furnished pursuant
to subsection (e) of this Section, except that the specified date referred to
shall be a date not more than three business days prior to Closing Time.
Ratings of Debt Securities. Subsequent to the Execution Time, there shall
not have been any decrease in the rating of any of the Company's debt securities
by any "nationally recognized statistical rating organization" (as defined for
purposes of Rule 436(g) under the Act) or any notice given of any intended or
potential decrease in any such rating or of a possible change in any such rating
that does not indicate the direction of the possible change.
Approval of Listing. At Closing Time, the Securities shall have been listed
and admitted and authorized for trading on the New York Stock Exchange, and
satisfactory evidence of such actions shall have been provided to the Placement
Agent.
13
Additional Documents. Prior to Closing Time, the Company shall have
furnished to the Placement Agent such further information, certificates and
documents as the Placement Agent may reasonably request.
Termination of Agreement. If any condition specified in this Section 5
shall not have been fulfilled when and as required to be fulfilled, this
Agreement may be terminated by the Placement Agent by notice to the Company at
any time at or prior to Closing Time and such termination shall be without
liability of any party to any other party except as provided in Section 4 and
except that Sections 1, 6, 7, 8 and 12 shall survive any such termination and
remain in full force and effect.
Indemnification.
---------------
Indemnification of Placement Agent. Each of the Company and the Operating
Partnerships agrees, jointly and severally, to indemnify and hold harmless the
Placement Agent and each person, if any, who controls the Placement Agent within
the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act, and any
director, officer, employee or affiliate thereof as follows:
against any and all loss, liability, claim, damage and expense whatsoever,
as incurred, arising out of any untrue statement or alleged untrue statement of
a material fact contained in the Registration Statement (or any amendment
thereto), including the Rule 430A Information and the Rule 434 Information, if
applicable, or the omission or alleged omission therefrom of a material fact
required to be stated therein or necessary to make the statements therein not
misleading or arising out of any untrue statement or alleged untrue statement of
a material fact included in any preliminary prospectus or the Prospectus (or any
amendment or supplement thereto), or the omission or alleged omission therefrom
of a material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading; provided,
however, that neither the Company nor either Operating Partnership shall be
required under this subsection (a)(i) to indemnify the Placement Agent with
respect to any preliminary prospectus to the extent that any loss, claim, damage
or expense of the Placement Agent results solely from an untrue statement of a
material fact contained in, or the omission of a material fact from, such
preliminary prospectus which untrue statement or omission was corrected in the
Prospectus and which corrected Prospectus was furnished by the Company to the
Placement Agent but was not sent or given by the Placement Agent to the
purchaser of the Securities at or prior to the written confirmation of such
sale.
against any and all loss, liability, claim, damage and expense whatsoever,
as incurred, to the extent of the aggregate amount paid in settlement of any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or of any claim whatsoever based upon any such
untrue statement or omission, or any such alleged untrue statement or omission;
provided any such settlement is effected with the written consent of the
Company; and
against any and all expense whatsoever (including the fees and
disbursements of counsel chosen by the Placement Agent), reasonably incurred in
investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue statement or
omission, or any such alleged untrue statement or omission, to the extent that
any such expense is not paid under (i) or (ii) above;
provided, however, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company by the
Placement Agent expressly for use in the Registration Statement (or any
amendment thereto), including the Rule 430A Information and the Rule 434
Information, if applicable, or any preliminary prospectus or the Prospectus (or
any amendment or supplement thereto).
Indemnification of Company, Directors and Officers. The Placement Agent
severally agrees to indemnify and hold harmless the Company and the Operating
14
Partnerships, each person, if any, who controls the Company or an Operating
Partnership within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act, and any officer, director, trustee, employee or affiliate thereof,
against any and all loss, liability, claim, damage and expense described in the
indemnity contained in subsection (a) of this Section, as incurred, but only
with respect to untrue statements or omissions, or alleged untrue statements or
omissions, made in the Registration Statement (or any amendment thereto),
including the Rule 430A Information and the Rule 434 Information, if applicable,
or any preliminary prospectus or the Prospectus (or any amendment or supplement
thereto) in reliance upon and in conformity with written information furnished
to the Company by the Placement Agent expressly for use in the Registration
Statement (or any amendment thereto) or such preliminary prospectus or the
Prospectus (or any amendment or supplement thereto).
Actions against Parties; Notification. Each indemnified party shall give
notice as promptly as reasonably practicable to each indemnifying party of any
action commenced against it in respect of which indemnity may be sought
hereunder, but failure to so notify an indemnifying party shall not relieve such
indemnifying party from any liability hereunder to the extent it is not
materially prejudiced as a result thereof and in any event shall not relieve it
from any liability which it may have otherwise than on account of this indemnity
agreement. In the case of parties indemnified pursuant to Section 6(a) above,
counsel to the indemnified parties shall be selected by the Placement Agent,
and, in the case of parties indemnified pursuant to Section 6(b) above, counsel
to the indemnified parties shall be selected by the Company. An indemnifying
party may participate at its own expense in the defense of any such action;
provided, however, that counsel to the indemnifying party shall not (except with
the consent of the indemnified party) also be counsel to the indemnified party.
In no event shall the indemnifying parties be liable for fees and expenses of
more than one counsel (in addition to any local counsel) separate from their own
counsel for all indemnified parties in connection with any one action or
separate but similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances. No indemnifying party shall,
without the prior written consent of the indemnified parties, settle or
compromise or consent to the entry of any judgment with respect to any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever in respect of which
indemnification or contribution could be sought under this Section 6 or Section
7 hereof (whether or not the indemnified parties are actual or potential parties
thereto), unless such settlement, compromise or consent (i) includes an
unconditional release of each indemnified party from all liability arising out
of such litigation, investigation, proceeding or claim and (ii) does not include
a statement as to or an admission of fault, culpability or a failure to act by
or on behalf of any indemnified party.
Contribution. If the indemnification provided for in Section 6 hereof is
for any reason unavailable to or insufficient to hold harmless an indemnified
party in respect of any losses, liabilities, claims, damages or expenses
referred to therein, then each indemnifying party shall contribute to the
aggregate amount of such losses, liabilities, claims, damages and expenses
incurred by such indemnified party, as incurred, (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company and the
Operating Partnerships on the one hand and the Placement Agent on the other hand
from the offering of the Securities pursuant to this Agreement or (ii) if the
allocation provided by clause (i) is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of the Company and the
Operating Partnerships on the one hand and of the Placement Agent on the other
hand in connection with the statements or omissions which resulted in such
losses, liabilities, claims, damages or expenses, as well as any other relevant
equitable considerations.
The relative benefits received by the Company and the Operating Partnerships on
the one hand and the Placement Agent on the other hand in connection with the
offering of the Securities pursuant to this Agreement shall be deemed to be in
the same respective proportions as the total net proceeds from the offering of
the Securities pursuant to this Agreement (before deducting expenses) received
by the Company and the Fee received by the Placement Agent.
15
The relative fault of the Company and the Operating Partnerships on the one hand
and the Placement Agent on the other hand shall be determined by reference to,
among other things, whether any such untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact relates
to information supplied by the Company or an Operating Partnership or by the
Placement Agent and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company, the Operating Partnerships and the Placement Agent agree that it
would not be just and equitable if contribution pursuant to this Section 7 were
determined by pro rata allocation or by any other method of allocation which
does not take account of the equitable considerations referred to above in this
Section 7. The aggregate amount of losses, liabilities, claims, damages and
expenses incurred by an indemnified party and referred to above in this Section
7 shall be deemed to include any legal or other expenses reasonably incurred by
such indemnified party in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever based upon any such
untrue or alleged untrue statement or omission or alleged omission.
Notwithstanding the provisions of this Section 7, the Placement Agent shall not
be required to contribute any amount in excess of the amount by which the total
price at which the Securities placed by it exceeds the amount of any damages
which the Placement Agent has otherwise been required to pay by reason of any
such untrue or alleged untrue statement or omission or alleged omission.
No person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the 1933 Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation.
For purposes of this Section 7, each person, if any, who controls the Placement
Agent within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934
Act shall have the same rights to contribution as the Placement Agent, and each
director of the Company, each officer of the Company who signed the Registration
Statement, and each person, if any, who controls the Company within the meaning
of Section 15 of the 1933 Act or Section 20 of the 1934 Act shall have the same
rights to contribution as the Company or the Operating Partnership. For purposes
of this Section 7, the Company and the Operating Partnerships shall be deemed
one party, jointly and severally liable for any obligations hereunder.
Representations, Warranties and Agreements to Survive Delivery. All
representations, warranties and agreements contained in this Agreement or in
certificates of officers of the Company or either Operating Partnership
submitted pursuant hereto, shall remain operative and in full force and effect,
regardless of any investigation made by or on behalf of the Placement Agent or
controlling person, or by or on behalf of the Company or either Operating
Partnership, and shall survive delivery of the Securities to the Purchaser.
Termination of Agreement.
------------------------
Termination; General. The Placement Agent may terminate this Agreement, by
notice to the Company, at any time at or prior to Closing Time (i) if there has
been, since the time of execution of this Agreement or since the respective
dates as of which information is given in the Prospectus, any material adverse
change in the condition, financial or otherwise, or in the earnings, business
affairs or business prospects of the Company, the Operating Partnerships and any
of the Subsidiaries considered as one enterprise, whether or not arising in the
ordinary course of business, or (ii) if there has occurred any material adverse
change in the financial markets in the United States, any outbreak of
hostilities or escalation thereof or other calamity or crisis or any change or
development involving a prospective change in national or international
political, financial or economic conditions, in each case the effect of which is
such as to make it, in the judgment of the Placement Agent, impracticable or
inadvisable to market the Securities or to enforce contracts for the sale of the
Securities, or (iii) if trading in any securities of the Company has been
suspended or materially limited by the Commission or the American Stock
Exchange, or if trading generally on the American Stock Exchange or the New York
16
Stock Exchange or in the Nasdaq National Market has been suspended or materially
limited, or minimum or maximum prices for trading have been fixed, or maximum
ranges for prices have been required, by any of said exchanges or by such system
or by order of the Commission, the National Association of Securities Dealers,
Inc. or any other governmental authority, or a material disruption has occurred
in commercial banking or securities settlement or clearance services in the
United States, or (iv) if a banking moratorium has been declared by either
Federal or New York authorities.
Liabilities. If this Agreement is terminated pursuant to this Section, such
termination shall be without liability of any party to any other party except as
provided in Section 4 hereof, and provided further that Sections 1, 6, 7, 8 and
12 shall survive such termination and remain in full force and effect.
Notices. All notices and other communications hereunder shall be in writing
and shall be deemed to have been duly given if mailed or transmitted by any
standard form of telecommunication. Notices to the Placement Agent shall be
directed to the Placement Agent at North Tower, World Financial Center, New
York, New York 10281-1201, Attention: Conrad Rubin; notices to the Company and
the Operating Partnerships shall be directed to it at telefax number (720)
283-2452 with a confirmation copy sent to it at 1745 Shea Center Drive, Suite
200, Highlands Ranch, CO 80129, Attention: President.
Parties. This Agreement shall each inure to the benefit of and be binding
upon the Placement Agent, the Company and the Operating Partnerships and their
respective successors. Nothing expressed or mentioned in this Agreement is
intended or shall be construed to give any person, firm or corporation, other
than the Placement Agent, the Company and the Operating Partnerships and their
respective successors and the controlling persons and officers and directors
referred to in Sections 6 and 7 and their heirs and legal representatives, any
legal or equitable right, remedy or claim under or in respect of this Agreement
or any provision herein contained. This Agreement and all conditions and
provisions hereof are intended to be for the sole and exclusive benefit of the
Placement Agent and the Company and their respective successors, and said
controlling persons and officers and directors and their heirs and legal
representatives, and for the benefit of no other person, firm or corporation. No
purchaser of Securities from the Placement Agent shall be deemed to be a
successor merely by reason of such purchase.
GOVERNING LAW AND TIME. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS
MADE AND TO BE PERFORMED IN SAID STATE. UNLESS OTHERWISE EXPLICITLY PROVIDED,
SPECIFIED TIMES OF DAY REFER TO NEW YORK CITY TIME.
Effect of Headings. The Article and Section headings herein and the Table
of Contents are for convenience only and shall not affect the construction
hereof.
17
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company a counterpart hereof, whereupon
this instrument, along with all counterparts, will become a binding agreement
among the Placement Agent, the Company and the Operating Partnerships in
accordance with its terms.
Very truly yours,
UNITED DOMINION REALTY TRUST, INC.
By: /s/ Christopher D. Genry
--------------------------------------
Name: Christopher D. Genry
Title: Executive Vice President
and Chief Financial Officer
UNITED DOMINION REALTY L.P.
By: United Dominion Realty Trust, Inc.,
its General Partner
By: /s/ Christopher D. Genry
--------------------------------------
Name: Christopher D. Genry
Title: Executive Vice President
and Chief Financial Officer
HERITAGE COMMUNITIES L.P.
By: ASR Investments Corporation,
its General Partner
By: /s/ Christopher D. Genry
--------------------------------------
Name: Christopher D. Genry
Title: Executive Vice President
and Chief Financial Officer
CONFIRMED AND ACCEPTED,
as of the date first above written:
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By: /s/ John c. Brady
--------------------------------------------------
Authorized Signatory
18