Exhibit 1.2
United Dominion Realty Trust, Inc.
Debt Securities (Including Over-Allotment Option)
Underwriting Agreement
November 10, 1998
Morgan Stanley & Co. Incorporated
A.G. Edwards & Sons, Inc.
PaineWebber Incorporated
NationsBanc Montgomery Securities LLC
Wheat First Securities, Inc.
c/o Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
Ladies and Gentlemen:
From time to time United Dominion Realty Trust, Inc., a Virginia
corporation (the "Company"), United Dominion Realty, L.P., a Virginia limited
partnership (the "Operating Partnership"), UDR Western Residential, Inc., a
Virginia corporation ("Residential"), UDRT of North Carolina, L.L.C., a North
Carolina limited liability company ("North Carolina"), and ASR Investments
Corporation, a Maryland corporation ("Investment"; the Operating Partnership,
Residential, North Carolina and Investment are hereinafter sometimes called,
collectively, the "Operating Entities" and, individually, an "Operating
Entity"), propose to enter into one or more Pricing Agreements (each a "Pricing
Agreement") in the form of Annex I hereto, with such additions and deletions as
the parties thereto may determine, and, subject to the terms and conditions
stated herein and therein, the Company proposes to issue and sell to the firms
named in Schedule I to the applicable Pricing Agreement (such firms constituting
the "Underwriters" with respect to such Pricing Agreement and the securities
specified therein) certain of the Company's debt securities (the "Securities")
specified in Schedule II to such Pricing Agreement (with respect to such Pricing
Agreement, the "Designated Securities"). In the event that any Pricing Agreement
shall grant the Underwriters named therein the right to purchase any additional
Designated Securities to cover over-allotments, then, as used herein, the term
"Firm Securities" shall mean the aggregate principal amount of Designated
Securities specified in Schedule II to such Pricing Agreement under the caption
"Aggregate Principal Amount of Firm Securities", the term "Additional
Securities" shall mean the aggregate principal amount of Designated Securities
specified in Schedule II to such Pricing Agreement under the caption "Aggregate
Principal Amount of Additional Securities", and, unless otherwise expressly
stated or the context otherwise requires, the terms "Securities" and "Designated
Securities" shall be deemed to mean and include both such Firm Securities and
such Additional Securities. The terms and rights of any particular issuance of
Designated Securities shall be as specified in the Pricing Agreement relating
thereto and in or pursuant to the indenture (the "Indenture") identified in such
Pricing Agreement.
All references herein to any "subsidiary" or "subsidiaries" of the
Company shall be deemed to include the Operating Entities unless otherwise
expressly stated.
1. Particular sales of Designated Securities may be made from time to time to
the Underwriters of such Securities, for whom the firms designated as
representatives of the Underwriters of such Securities in the Pricing Agreement
relating thereto will act as representatives (the "Representatives"). The term
"Representatives" also refers to a single firm acting as sole representative of
the Underwriters and to an Underwriter or Underwriters who act without any firm
being designated as its or their representatives. This Underwriting Agreement
shall not be construed as an obligation of the Company to sell any of the
Securities or as an obligation of any of the Underwriters to purchase any of the
Securities. The obligation of the Company to issue and sell any of the
Securities and the obligation of any of the Underwriters to purchase any of the
Securities shall be evidenced by the Pricing Agreement with respect to the
Designated Securities specified therein. Each Pricing Agreement shall specify
the aggregate principal amount of such Designated Securities, the initial public
offering price of such Designated Securities, the purchase price to the
Underwriters of such Designated Securities, the names of the Underwriters of
such Designated Securities, the names of the Representatives of such
Underwriters and the principal amount of such Designated Securities to be
purchased by each Underwriter and shall set forth the date, time and manner of
delivery of such Designated Securities and payment therefor. The Pricing
Agreement shall also specify (to the extent not set forth in the Indenture and
the registration statement and prospectus with respect thereto) the terms of
such Designated Securities. A Pricing Agreement shall be in the form of an
executed writing (which may be in counterparts), and may be evidenced by an
exchange of telegraphic communications or any other rapid transmission device
designed to produce a written record of communications transmitted. The
obligations of the Underwriters under this Agreement and each Pricing Agreement
shall be several and not joint.
2. The Company and the Operating Entities jointly and severally represent and
warrant to, and agree with, each of the Underwriters that:
(a) A registration statement on Form S-3 (File No. 333-27221) and
Amendment No. 1 thereto (as so amended, the "Initial Registration
Statement") in respect of the Securities have been filed with the
Securities and Exchange Commission (the "Commission"); the Initial
Registration Statement and any post-effective amendment thereto, each
in the form heretofore delivered or to be delivered to the
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Representatives and excluding exhibits to such registration
statement but including all documents incorporated by reference in
the prospectus contained therein, has been declared effective by
the Commission in such form; other than a registration statement, if
any, increasing the size of the offering (a "Rule 462(b) Registration
Statement") filed pursuant to Rule 462(b) under the Securities Act of
1933, as amended (the "Act"), which became effective upon filing and
other than exhibits filed as part of documents incorporated by
reference in the Initial Registration Statement, no other document
with respect to the Initial Registration Statement or any document
incorporated by reference therein has heretofore been filed or
transmitted for filing with the Commission (other than prospectuses
filed pursuant to Rule 424(b) of the rules and regulations of the
Commission under the Act each in the form heretofore delivered to the
Representatives); and no stop order suspending the effectiveness of
the Initial Registration Statement, any post-effective amendment
thereto or the Rule 462(b) Registration Statement, if any, has been
issued and no proceeding for that purpose has been initiated or
threatened by the Commission; any preliminary prospectus included in
the Initial Registration Statement or filed with the Commission
pursuant to Rule 424(a) under the Act is hereinafter called a
"Preliminary Prospectus"; the various parts of the Initial
Registration Statement and the Rule 462(b) Registration Statement, if
any, including all exhibits thereto and the documents incorporated by
reference in the prospectus contained in the Initial Registration
Statement at the time such part of the registration statement became
effective but excluding any Form T-1, each as amended at the time
such part of the Initial Registration Statement became effective or
such part of the Rule 462(b) Registration Statement, if any, became
or hereafter becomes effective, are hereinafter collectively called
the "Registration Statement"; the prospectus relating to the
Securities, in the form in which it has most recently been filed, or
transmitted for filing, with the Commission on or prior to the date of
this Agreement, is hereinafter called the "Prospectus"; any
reference herein to any Preliminary Prospectus or the Prospectus
shall be deemed to refer to and include the documents incorporated
by reference therein pursuant to the applicable form under the
Act, as of the date of such Preliminary Prospectus or Prospectus,
as the case may be; 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
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and
incorporated by reference in such Preliminary Prospectus or
Prospectus, as the case may be; 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 Sections 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; any reference to the Prospectus as amended
or supplemented shall be deemed to refer to the Prospectus as
amended or supplemented in relation to the applicable Designated
Securities in the form first used to confirm sales of such
Designated Securities, including any documents incorporated by
reference therein as of the date of such amendment or supplement,
as the case may be; and if the Company elects to rely on Rule 434
under the Act, any reference to the Prospectus shall be deemed to
include, without limitation, the form of prospectus and the
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abbreviated term sheet, taken together, provided to the Underwriters
by the Company in reliance on Rule 434 under the Act (the "Rule 434
Prospectus");
(b) 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
Act or the Exchange Act, as applicable, and the rules and
regulations of the Commission thereunder, and none of such
documents contained an untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary to
make the statements therein not misleading; and any further documents
so filed and incorporated by reference in the Prospectus or any further
amendment or supplement thereto, 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 Act or the
Exchange Act, as applicable, and the rules and regulations of the
Commission thereunder and will not contain an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading;
provided, however, that this representation and warranty shall not
apply to any statements or omissions made in reliance upon and in
conformity with information furnished in writing to the Company by
an Underwriter of Designated Securities through the
Representatives expressly for use in the Prospectus as amended or
supplemented relating to such Designated Securities;
(c) The Registration Statement and the Prospectus conform, and any
further amendments or supplements to the Registration Statement or
the Prospectus will conform, in all material respects to the
requirements of the Act and the Trust Indenture Act of 1939, as
amended (the "Trust Indenture Act"), and the rules and regulations
of the Commission thereunder and do not and will not, as of the
respective effective dates as to the Registration Statement, any
Rule 462(b) Registration Statement and any amendment thereto and as
of the applicable filing date as to the Prospectus and any amendment
or supplement thereto and as of the Time of Delivery (as defined in
Section 4 hereof) (and if any Additional Securities are purchased, as
of the Option Closing Date (as defined in Section 4 hereof)) with
respect to any Designated Securities, contain an untrue statement
of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading; provided, however, that this representation and
warranty shall not apply to any statements or omissions made in
reliance upon and in conformity with information furnished in
writing to the Company by an Underwriter of Designated Securities
through the Representatives expressly for use in the Prospectus as
amended or supplemented relating to such Designated Securities;
(d) The Company has been duly organized and is validly existing as a
corporation in good standing under the laws of the Commonwealth of
Virginia, with full power and authority to own, lease and operate its
properties and conduct its business as described in the Prospectus; and
the Company is duly qualified to transact business in all jurisdictions
in which the conduct of its business requires such qualification except
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where the failure to so qualify would not have a material adverse
effect on the condition, financial or otherwise, or the earnings,
business affairs or business prospects of the Company;
(e) Each subsidiary of the Company has been duly organized and is validly
existing as a corporation, limited liability company, limited
partnership or real estate investment trust in good standing under
the laws of the jurisdiction of its incorporation or organization,
with power and authority to own, lease and operate its properties
and conduct its business as described in the Prospectus and is
duly qualified to transact business in all jurisdictions in which
the conduct of its business requires such qualification except where
the failure to so be in good standing would not have a material
adverse effect on the condition, financial or otherwise, or the
earnings, business affairs or business prospects of the Company
and its subsidiaries, considered as one enterprise; each such
subsidiary is duly qualified to transact business in all
jurisdictions in which the conduct of its business requires such
qualification, or in which the failure to qualify would have a
materially adverse effect upon the business of such subsidiary; all
of the issued and outstanding shares of capital stock of each such
corporate subsidiary and all of the issued and outstanding shares
of beneficial interest of each such real estate investment trust
subsidiary have been duly authorized and validly issued, are fully
paid and non-assessable and are owned by the Company or a subsidiary
of the Company, free and clear of any security interest, mortgage,
pledge, lien, encumbrance, claim or equity; all of the issued and
outstanding partnership interests of each such partnership subsidiary
and all of the issued and outstanding limited liability company
interests of each such limited liability company subsidiary have
been duly authorized and validly issued, are fully paid and (except in
the case of general partnership interests) non-assessable and,
except as otherwise disclosed in the Prospectus, are owned by the
Company and/or one or more subsidiaries of the Company, free and
clear of any security interest, mortgage, pledge, lien, encumbrance,
claim or equity; and the Company and/or one or more subsidiaries of
the Company are the only members or general partners of the Company's
limited liability company or limited partnership subsidiaries, as
applicable, and own the entire membership or general partnership
interest in each such subsidiary free and clear of any security
interest, mortgage, pledge, lien, encumbrance, claim or equity;
(f) Neither the Company nor any of its subsidiaries has sustained
since the date of the latest audited financial statements included
or incorporated by reference in the Prospectus any material loss or
interference with its business from fire, explosion, flood or other
calamity, whether or not covered by insurance, or from any labor
dispute or court or governmental action, order or decree,
otherwise than as set forth or contemplated in the Prospectus; and,
since the respective dates as of which information is given in the
Registration Statement and the Prospectus, there has not been any
material change in the capital stock, total assets or long-term
debt of the Company or any of its subsidiaries or any material
adverse change, or any development involving a prospective material
adverse change, in or affecting the general affairs, management,
financial position, shareholders' equity or results of operations of
the Company and its subsidiaries, otherwise than as set forth or
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contemplated in the Prospectus as amended prior to the date of the
Pricing Agreement relating to the Designated Securities.
(g) The Company has an authorized capitalization as set forth in the
Prospectus, and all of the issued shares of capital stock of the
Company have been duly and validly authorized and issued and are fully
paid and non-assessable;
(h) The Securities have been duly and validly authorized, and, when
Designated Securities are issued and delivered pursuant to this
Agreement and the Pricing Agreement with respect to such Designated
Securities, such Designated Securities will have been duly executed,
authenticated, issued and delivered and will constitute valid and
legally binding obligations of the Company entitled to the benefits
provided by the Indenture, which will be substantially in the form
filed as an exhibit to the Registration Statement; the Indenture
has been duly authorized and duly qualified under the Trust
Indenture Act and, at the Time of Delivery (and if any Additional
Securities are purchased, at the Option Closing Date) for such
Designated Securities, the Indenture will constitute a valid and
legally binding instrument, enforceable in accordance with its terms,
subject, as to enforcement, to bankruptcy, insolvency, reorganization
and other laws of general applicability relating to or affecting
creditors' rights and to general equity principles; and the Indenture
conforms, and the Designated Securities will conform, to the
descriptions thereof contained in the Prospectus as amended or
supplemented with respect to such Designated Securities;
(i) The issue and sale of the Securities and the compliance by the
Company and the Operating Entities with all of the provisions of the
Securities, the Indenture, this Agreement, and any Pricing
Agreement, and the consummation of the transactions herein and
therein contemplated will not conflict with or result in a breach or
violation of any of the terms or provisions of, or constitute a
default under, any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which the Company or any
of its subsidiaries is a party or by which the Company or any of its
subsidiaries is bound or to which any of the property or assets of the
Company or any of its subsidiaries is subject, nor will such action
result in any violation of the provisions of the Articles of
Incorporation or By-laws of the Company, Residential or Investment,
the certificate of limited partnership or limited partnership
agreement of the Operating Partnership, the operating agreement of
North Carolina or any statute or any order, rule or regulation of any
court or governmental agency or body having jurisdiction over the
Company or any of its subsidiaries or any of their respective
properties; and no consent, approval, authorization, order,
registration or qualification of or with any such court or
governmental agency or body is required for the issue and sale of the
Securities or the consummation by the Company or any of the
Operating Entities of the transactions contemplated by this
Agreement, or any Pricing Agreement or the Indenture, except such as
have been, or will have been prior to the Time of Delivery, obtained
under the Act and the Trust Indenture Act and such consents,
approvals, authorizations, registrations or qualifications as may be
6
required under state securities or Blue Sky laws in connection with the
purchase and distribution of the Securities by the Underwriters;
(j) The statements set forth in the Prospectus as amended or supplemented
with respect to the Designated Securities under the captions
"Description of Debt Securities" and "Description of the Offered
Securities" (or under any similar caption describing the Designated
Securities), insofar as they purport to constitute a summary of the
terms of the Securities, and under the captions "Description of Capital
Stock," "Plan of Distribution" and "Underwriters", insofar as they
purport to describe the provisions of the laws and documents referred
to therein, are accurate, complete and fair;
(k) Neither the Company nor any of its subsidiaries is in violation of its
Articles of Incorporation or By-laws, limited partnership agreement,
limited liability company agreement, operating agreement or other
organizational documents or in default in the performance or observance
of any material obligation, agreement, covenant or condition contained
in any indenture, mortgage, deed of trust, loan agreement, lease or
other agreement or instrument to which it is a party or by which it or
any of its properties may be bound;
(l) Other than as set forth in the Prospectus, there are no legal or
governmental proceedings pending to which the Company or any of its
subsidiaries is a party or of which any property of the Company or any
of its subsidiaries is the subject which, if determined adversely to
the Company or any of its subsidiaries, would individually or in the
aggregate have a material adverse effect on the current or future
consolidated financial position, shareholders' equity or results of
operations of the Company and its subsidiaries; and, to the best of the
Company's knowledge, no such proceedings are threatened or contemplated
by governmental authorities or threatened by others;
(m) The financial statements together with related notes and schedules of
the Company and its subsidiaries and of any companies, other entities
or properties acquired or to be acquired by the Company, in each
case as set forth or incorporated by reference in the Prospectus,
present fairly the financial position and the results of operations of
the Company and its subsidiaries and of such companies, entities
and properties, as the case may be, at the indicated dates and for
the indicated periods. Such financial statements have been prepared
in accordance with generally accepted principles of accounting,
consistently applied throughout the periods involved, and all
adjustments necessary for a fair presentation of results for such
periods have been made. The summary financial and statistical data
included in the Prospectus present fairly the information shown
therein and have been compiled on a basis consistent with the financial
statements presented therein; the pro forma financial statements and
related notes thereto included in the Prospectus present fairly the
information shown therein, have been prepared in accordance with the
Commission's rules and guidelines with respect to pro forma financial
statements and have been properly compiled on the bases described
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therein, and the assumptions used in the preparation thereof are
reasonable and the adjustments used therein are appropriate to give
effect to the transactions and circumstances referred to therein;
(n) The Company and its subsidiaries have good and marketable title to, or
valid and enforceable leasehold estates in, all items of real and
personal property referred to in the Prospectus as owned or leased
by them, in each case free and clear of all liens, encumbrances,
claims, security interests and defects, other than those referred to in
the Prospectus or which are not material in amount. Each lease of
real property by the Company or any of its subsidiaries as lessor
requiring annual lease payments in excess of $100,000 is the
legal, valid and binding obligation of the lessee in accordance
with its terms (except that the remedy of specific performance
and injunctive and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before which
any proceeding therefor may be brought and to the Bankruptcy Act)
and the rents which at present have remained due and unpaid for more
than 30 days are not payable under leases such that, were no further
rental payments to be received under such leases, the financial
condition or results of operations of the Company and its subsidiaries
would be materially adversely affected thereby. The Company has no
reason to believe that the lessee under any lease (excluding leases
for which rent payments due for the remainder of such lease are less
than $500,000) calling for annual lease payments in excess of
$500,000 is not financially capable of performing its obligations
thereunder;
(o) The Company has filed all Federal, local and foreign income tax returns
which have been required to be filed or has filed extensions and has
paid all taxes indicated by said returns and all assessments received
by it to the extent that such taxes have become due and are not being
contested in good faith;
(p) The Company and each of its subsidiaries hold all material licenses,
certificates and permits from governmental authorities which are
necessary to the conduct of their respective businesses; and neither
the Company nor any of its subsidiaries has infringed any patents,
patent rights, trade names, trademarks or copyrights, which
infringement is material to the business of the Company or any of its
subsidiaries;
(q) With respect to all tax periods regarding which the Internal Revenue
Service is or will be entitled to assert any claim, the Company has met
the requirements for qualification as a real estate investment trust
under Sections 856 through 860 of the Internal Revenue Code of 1986, as
amended (the "Code"), and the Company's present and contemplated
operations, assets and income continue to meet such requirements;
(r) The conditions for use of registration statements on Form S-3 set forth
in the General Instructions on Form S-3 have been satisfied and the
Company is entitled to use such form for the transaction contemplated
herein;
(s) The Company has no knowledge of (a) the unlawful presence of any
hazardous substances, hazardous materials, toxic substances or waste
materials (collectively, "Hazardous Materials") on any of the
8
properties owned by it or any of its subsidiaries, or of (b) any
unlawful spills, releases, discharges or disposal of Hazardous
Materials that have occurred or are presently occurring off such
properties as a result of any construction on or operation and use of
such properties which presence or occurrence would materially
adversely affect the condition, financial or otherwise, or the
earnings, business affairs or business prospects of the Company or
any of its subsidiaries. In connection with the construction on or
operation and use of the properties owned by the Company or any of
its subsidiaries, the Company represents that it has no knowledge
of any material failure to comply with all applicable local,
state and federal environmental laws, regulations, ordinances and
administrative and judicial orders relating to the generation,
recycling, reuse, sale, storage, handling, transport and disposal
of any Hazardous Materials;
(t) The Company is not and, after giving effect to the offering and sale of
the Securities, will not be an "investment company" or an entity
"controlled" by an "investment company", as such terms are defined in
the Investment Company Act of 1940, as amended (the "Investment Company
Act");
(u) Ernst & Young LLP, who have certified certain financial statements of
the Company and its subsidiaries, and each other accounting firm which
has certified any other financial statements which are included or
incorporated by reference in the Prospectus, are each independent
public accountants as required by the Act and the rules and regulations
of the Commission thereunder;
(v) At the date of the Pricing Agreement with respect to the applicable
Designated Securities, such Pricing Agreement and this Agreement will
have been duly authorized, executed and delivered by the Company and
the Operating Entities;
(w) Nothing has come to the attention of the Company or any of its
subsidiaries as a result of (a) its negotiation of the Agreement and
Plan of Merger dated September 10, 1998 (as the same may be amended or
supplemented from time to time, and including all schedules and
attachments thereto, the "Merger Agreement") between the Company
and American Apartment Communities II, Inc., a Maryland corporation
("AAC", which term includes its subsidiaries), (b) its review of the
AAC Disclosure Letter (as defined in the Merger Agreement) or any
other documents or information provided by AAC, (c) its investigation
of the business and properties of AAC, or (d) otherwise, that would
lead it to believe that any of the representations and warranties of
AAC set forth in the Merger Agreement (including the AAC Disclosure
Letter) are not true, complete and correct; and the failure to
consummate the merger with AAC as contemplated by the Merger
Agreement will not have a material adverse effect on the Company and
its subsidiaries taken as a whole; and such merger, if consummated on
the terms set forth in the Merger Agreement, will qualify as a
tax-free reorganization under Section 368(a) of the Code;
(x) The total real estate owned of the Operating Entities and the Company,
in each case excluding any of their respective subsidiaries other than
9
the Operating Entities, determined on a consolidated basis, are equal
to at least 69% of the total consolidated real estate owned of the
Company; the total net operating income of the Operating Entities and
the Company for the nine months ended September 30, 1998, in each case
excluding any of their respective subsidiaries other than the Operating
Entities, determined on a consolidated basis, were equal to at least
70% of the total consolidated net operating income of the Company for
the nine months ended September 30, 1998.
3. Upon the execution of the Pricing Agreement applicable to any Designated
Securities and authorization by the Representatives of the release of such
Designated Securities, the several Underwriters propose to offer such Designated
Securities for sale upon the terms and conditions set forth in the Prospectus as
amended or supplemented.
4.
(a) Designated Securities to be purchased by each Underwriter pursuant to
the Pricing Agreement relating thereto or, if such Pricing Agreement
grants the Underwriters named therein the right to purchase
Additional Securities, the Firm Securities to be purchased by each
Underwriter pursuant to such Pricing Agreement, in the form
specified in such Pricing Agreement, and in such authorized
denominations and registered in such names as the Representatives may
request upon at least twenty-four hours' prior notice to the
Company, shall be delivered by or on behalf of the Company to the
Representatives for the account of such Underwriter, against payment
by such Underwriter or on its behalf of the purchase price therefor in
the funds specified in such Pricing Agreement, all in the manner and
at the place and time and date specified in such Pricing Agreement or
at such other place and time and date as the Representatives and the
Company may agree upon in writing, such time and date being herein
called the "Time of Delivery" for such Securities.
(b) If the Pricing Agreement grants the Underwriters named therein the
right to purchase Additional Securities and if the Representatives,
on behalf of the Underwriters, shall elect to exercise such right,
then the Additional Securities to be purchased by each Underwriter
pursuant to such Pricing Agreement, in the form specified in such
Pricing Agreement, and in such authorized denominations and
registered in such names as the Representatives may request upon at
least twenty-four hours prior notice to the Company, shall be
delivered by or on behalf of the Company to the Representatives for
the account of such Underwriter against payment by such Underwriter
or on its behalf of the purchase price therefor in the funds specified
in such Pricing Agreement, all in the manner and at the time and
place and date specified in or pursuant to such Pricing Agreement
or at such other place, time and date as the Representatives and the
Company may agree upon in writing, such time and date being
hereinafter called, with respect to such Additional Securities, the
"Option Closing Date".
5. The Company and the Operating Entities, jointly and severally, agree with
each of the Underwriters of any Designated Securities that:
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(a) If the Company does not elect to rely on Rule 434 under the Act,
immediately following execution and delivery of the applicable
Pricing Agreement, the Company will prepare the Prospectus as amended
or supplemented in relation to the applicable Designated Securities
in a form approved by the Representatives and will file such
Prospectus pursuant to Rule 424(b) under the Act not later than the
Commission's close of business on the business day following the
execution and delivery of the Pricing Agreement relating to the
applicable Designated Securities or, if applicable, such earlier
time as may be required by Rule 424(b), or if the Company elects to
rely on Rule 434 under the Act, immediately following execution and
delivery of the applicable Pricing Agreement, the Company will prepare
an abbreviated term sheet relating to the Designated Securities in a
form approved by the Representatives that complies with the
requirements of Rule 434 under the Act and will file such form of
Rule 434 Prospectus complying with Rule 434(c)(2) of the Act
pursuant to Rule 424(b) under the Act not later than the Commission's
close of business on the business day following the execution and
delivery of the Pricing Agreement relating to the applicable
Designated Securities or if applicable, such earlier time as may be
required by Rule 424(b); the Company will make no further amendment
or any supplement to the Registration Statement or Prospectus as
amended or supplemented after the date of the Pricing Agreement
relating to such Securities and prior to the Time of Delivery for such
Securities (or, if the applicable Pricing Agreement grants the
Underwriters the right to purchase any Additional Securities, the
Company will make no such further amendment or any such supplement
after the date of such Pricing Agreement and prior to the Option
Closing Date for such Additional Securities unless the
Representatives shall have failed to exercise such right on or
prior to the 30th day after the date of such Pricing Agreement, in
which case the Company will make no such further amendment or any such
supplement after the date of such Pricing Agreement and prior to the
31st day following the date of such Pricing Agreement) which shall be
disapproved by the Representatives for such Securities promptly
after reasonable notice thereof; the Company will advise the
Representatives promptly of any such amendment or supplement after
such Time of Delivery (and if any Additional Securities are purchased,
after the Option Closing Date) and will furnish the Representatives
with copies thereof; the Company will file promptly all reports and
any definitive proxy or information statements required to be
filed by the Company with the Commission pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act for so long as the
delivery of a prospectus is required in connection with the offering
or sale of such Securities, and during such same period will advise
the Representatives, promptly after it receives notice thereof, of
the time when any amendment to the Registration Statement has been
filed or becomes effective or any supplement to the Prospectus or any
amended Prospectus has been filed with the Commission, of the
issuance by the Commission of any stop order or of any order
preventing or suspending the use of any prospectus relating to the
Securities, of the suspension of the qualification of such Securities
for offering or sale in any jurisdiction, of the initiation or
threatening of any proceeding for any such purpose, or of any request
by the Commission for the amending or supplementing of the
Registration Statement or Prospectus or for additional information;
and, in the event of the issuance of any such stop order or of
any such order preventing or suspending the use of any prospectus
11
relating to the Securities or suspending any such qualification, the
Company will promptly use its best efforts to obtain the withdrawal of
such order;
(b) If necessary, promptly from time to time the Company will take such
action as the Representatives may reasonably request to qualify such
Securities for offering and sale under the securities laws of such
jurisdictions as the Representatives may request and will comply with
such laws so as to permit the continuance of sales and dealings therein
in such jurisdictions for as long as may be necessary to complete the
distribution of such Securities, provided that in connection therewith
the Company shall not be required to qualify as a foreign corporation
or to file a general consent to service of process in any jurisdiction;
(c) Prior to 10:00 a.m. New York City time on the New York business day
next succeeding the date of the applicable Pricing Agreement and
from time to time, the Company will furnish the Underwriters with
copies of the Prospectus as amended or supplemented in New York City in
such quantities as the Representatives may reasonably request, and,
if the delivery of a prospectus is required at any time in connection
with the offering or sale of the Securities and if at such time any
event shall have occurred as a result of which the Prospectus
as then amended or supplemented would include an 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 or when such Prospectus is
delivered, not misleading, or, if for any other reason it shall be
necessary during such same period to amend or supplement the
Prospectus or to file under the Exchange Act any document incorporated
by reference in the Prospectus in order to comply with the Act, the
Exchange Act or the Trust Indenture Act, the Company will notify the
Representatives and upon their request will file such document and
will prepare and furnish without charge to each Underwriter and to
any dealer in securities as many copies as the Representatives may
from time to time reasonably request of an amended Prospectus or a
supplement to the Prospectus which will correct such statement or
omission or effect such compliance;
(d) The Company will make generally available to its securityholders as
soon as practicable, but in any event not later than eighteen months
after the effective date of the Registration Statement (as defined in
Rule 158(c) under the Act), an earnings statement of the Company and
its subsidiaries (which need not be audited) complying with Section
11(a) of the Act and the rules and regulations of the Commission
thereunder (including, at the option of the Company, Rule 158);
(e) The Company will not, without the prior written consent of Morgan
Stanley & Co. Incorporated on behalf of the Underwriters, during the
period ending 30 days after the date of the Pricing Agreement for
such Designated Securities (a) offer, issue, pledge, sell, contract
to sell, sell any option or contract to purchase, purchase any option
or contract to sell, grant any option, right or warrant to purchase,
12
lend or otherwise transfer or dispose of, directly or indirectly,
any Designated Securities or any other debt securities of the
Company that are substantially similar to the Designated Securities
(other than the Designated Securities to be sold to the
Underwriters) or (b) enter into any swap or other arrangement that
transfers to another, in whole or in part, any of the economic
consequences of ownership of any Designated Securities or any other
debt securities of the Company which are substantially similar to the
Designated Securities, whether any such transaction described in
clause (a) or (b) of this sentence is to be settled by delivery of
Designated Securities, other securities, in cash or otherwise;
(f) The Company will use the net proceeds received by it from the sale of
the Securities in the manner specified in the Prospectus under the
caption "Use of Proceeds"; and
(g) The Company will continue to elect to qualify as a "real estate
investment trust" under the Code, and will use its best efforts to
continue to meet the requirements to qualify as a "real estate
investment trust".
6. The Company and the Operating Entities, jointly and severally, covenant and
agree with the several Underwriters that they will pay or cause to be paid the
following: (i) the reasonable fees, disbursements and expenses of the Company's
counsel and accountants in connection with the registration of the Securities
under the Act and all other expenses in connection with the preparation,
printing and filing of the Registration Statement, any Preliminary Prospectus
and the Prospectus and amendments and supplements thereto (including each
abbreviated term sheet delivered by the Company pursuant to Rule 434 under the
Act) and the mailing and delivering of copies thereof to the Underwriters and
dealers; (ii) the cost of printing or producing any Agreement among
Underwriters, this Agreement, any Pricing Agreement, any Indenture, any Blue Sky
and Legal Investment Surveys, closing documents (including any compilation
thereof) and any other documents in connection with the offering, purchase, sale
and delivery of the Securities; (iii) all expenses, if any, in connection with
the qualification of the Securities for offering and sale under state securities
laws as provided in Section 5(b) hereof, including the fees and disbursements of
counsel for the Underwriters in connection with such qualification and in
connection with the Blue Sky and Legal Investment Surveys; (iv) any fees charged
by securities rating services for rating the Securities; (v) any filing fees
incident to, and the fees and disbursements of counsel for the Underwriters in
connection with, any required review by the National Association of Securities
Dealers, Inc. of the terms of the sale of the Securities; (vi) the cost of
preparing the Securities; (vii) the fees and expenses of any Trustee and any
agent of any Trustee and the fees and disbursements of counsel for any Trustee
in connection with any Indenture and the Securities; and (viii) all other costs
and reasonable expenses incident to the performance of its obligations hereunder
which are not otherwise specifically provided for in this Section. It is
understood, however, that, except as provided in this Section, and Sections 8
and 10 hereof, the Underwriters will pay all of their own costs and expenses,
including the fees of their counsel, transfer taxes on resale of any of the
Securities by them, and any advertising expenses connected with any offers they
may make.
13
7. The obligations of the Underwriters of any Designated Securities under the
Pricing Agreement relating to such Designated Securities shall be subject, in
the discretion of the Representatives, to the condition that all representations
and warranties and other statements of the Company and the Operating Entities in
or incorporated by reference in the Pricing Agreement relating to such
Designated Securities are, at and as of the Time of Delivery for such Designated
Securities, true and correct, the condition that the Company and the Operating
Entities shall have performed all of their obligations hereunder theretofore to
be performed, and the following additional conditions:
(a) The Prospectus as amended or supplemented in relation to the applicable
Designated Securities shall have been filed with the Commission
pursuant to Rule 424(b) within the applicable time period prescribed
for such filing by the rules and regulations under the Act and in
accordance with Section 5(a) hereof; no stop order suspending the
effectiveness of the Registration Statement or any part thereof shall
have been issued and no proceeding for that purpose shall have been
initiated or threatened by the Commission; and all requests for
additional information on the part of the Commission shall have been
complied with to the Representatives' reasonable satisfaction;
(b) Brown & Wood llp, counsel for the Underwriters, shall have
furnished to the Representatives such opinion or opinions, dated
the Time of Delivery for such Designated Securities, with respect
to the matters covered in paragraphs (i), (vi), (vii), (viii), (xi)
and (xiv) of subsection (c) below as well as such other related matters
as the Representatives may reasonably request, and such counsel shall
have received such papers and information as they may reasonably
request to enable them to pass upon such matters. In rendering their
opinion, Brown & Wood llp may rely, as to all matters governed by
or arising under the laws of the Commonwealth of Virginia and the
States of Maryland and North Carolina, on the opinion of Hunton &
Williams delivered pursuant to Section 7(c) below;
(c) Hunton & Williams, counsel for the Company, shall have furnished to the
Representatives their written opinion, dated the Time of Delivery for
such Designated Securities, in form and substance satisfactory to the
Representatives, to the effect set forth below (such opinion shall be
rendered to the Underwriters at the request of the Company and shall so
state therein and shall further state that Brown & Wood llp, in
rendering this opinion pursuant to Section 7(b) above, may rely on such
opinion of Hunton & Williams as to all matters governed by or arising
under the laws of the Commonwealth of Virginia and the States of
Maryland and North Carolina):
(i) The Company has been duly organized and is validly existing as
a corporation in good standing under the laws of the
Commonwealth of Virginia, with corporate power and authority
to own its properties and conduct its business as described in
the Prospectus as amended or supplemented;
(ii) The Company has an authorized capitalization as set forth in
the Prospectus as amended or supplemented and all of the
14
issued shares of capital stock of the Company have been duly
and validly authorized and issued and are fully paid and
non-assessable;
(iii) The Company is duly qualified to transact business in all
jurisdictions in which the conduct of its business requires
such qualification, or in which the failure to qualify would
have a materially adverse effect upon the business of the
Company;
(iv) Each subsidiary of the Company has been duly organized and is
validly existing as a corporation, limited liability
company, limited partnership or real estate investment
trust in good standing under the laws of the jurisdiction of
its incorporation or organization, with power and authority
to own, lease and operate its properties and conduct its
business as described in the Prospectus as amended or
supplemented, and is duly qualified to transact business in
all jurisdictions in which the conduct of its business
requires such qualification except where the failure to so
be in good standing would not have a material adverse effect
on the condition, financial or otherwise, or the earnings,
business affairs or business prospects of the Company and its
subsidiaries, considered as one enterprise; each such
subsidiary is duly qualified to transact business in all
jurisdictions in which the conduct of its business requires
such qualification, or in which the failure to qualify would
have a materially adverse effect upon the business of
such subsidiary; all of the issued and outstanding shares
of capital stock of each such corporate subsidiary and all of
the issued and outstanding shares of beneficial interest of
each such real estate investment trust subsidiary have been
duly authorized and validly issued, are fully paid and
non-assessable and are owned by the Company or by a
subsidiary of the Company, free and clear of any security
interest, mortgage, pledge, lien, encumbrance, claim or
equity; all of the issued and outstanding partnership
interests of each such partnership subsidiary and all of the
issued and outstanding limited liability company interests of
each such limited liability company subsidiary have been duly
authorized and validly issued, are fully paid and (except in
the case of general partnership interests) non-assessable
and, except as otherwise disclosed in the Prospectus, are
owned by the Company and/or one or more subsidiaries of the
Company, free and clear of any security interest, mortgage,
pledge, lien, encumbrance, claim or equity; and the Company,
and/or such subsidiaries of the Company are the only members
or general partners of the Company's limited liability
company or limited partnership subsidiaries, as applicable,
and own the entire membership or general partnership interest
in each such subsidiary free and clear of any security
interest, mortgage, pledge, lien, encumbrance, claim or
equity;
(v) To the best of such counsel's knowledge and other than as set
forth in the Prospectus as amended or supplemented, there
are no legal or governmental proceedings pending to which
the Company or any of its subsidiaries is a party or of which
15
any property of the Company or any of its subsidiaries is
the subject which, if determined adversely to the Company
or any of its subsidiaries, would individually or in the
aggregate have a material adverse effect on the current or
future consolidated financial position, shareholders'
equity or results of operations of the Company and its
subsidiaries; and, to the best of such counsel's knowledge,
no such proceedings are threatened or contemplated by
governmental authorities or threatened by others;
(vi) This Agreement and the Pricing Agreement with respect to the
Designated Securities have been duly authorized, executed and
delivered by the Company and the Operating Entities;
(vii) The Designated Securities have been duly authorized and
executed by the Company and, when duly authenticated by the
Trustee in accordance with the Indenture and delivered to the
Underwriters against payment of the consideration therefor in
accordance with the Pricing Agreement, will constitute valid
and binding obligations of the Company, enforceable against
the Company in accordance with their terms, subject, as to
enforcement, to bankruptcy, insolvency, reorganization and
other laws of general applicability relating to or affecting
creditors' rights and to general equity principles, whether
considered at law or in equity, and will be entitled to the
benefits of the Indenture;
(viii) The Indenture has been duly authorized, executed and delivered
by the Company and constitutes a valid and binding agreement
of the Company, enforceable against the Company in accordance
with its terms, subject, as to enforcement, to bankruptcy,
insolvency, reorganization and other laws of general
applicability relating to or affecting creditors' rights and
to general equity principles, whether considered at law or in
equity; and the Indenture has been duly qualified under the
Trust Indenture Act;
(ix) The issue and sale of the Designated Securities being
delivered on the date of such opinion and the compliance by
the Company and the Operating Entities with all of the
provisions of the Designated Securities, the Indenture,
this Agreement and the Pricing Agreement with respect to
the Designated Securities and the consummation of the
transactions herein and therein contemplated will not
conflict with or result in a breach or violation of any of the
terms or provisions of, or constitute a default under, any
indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument known to such counsel to which the
Company or any of its subsidiaries is a party or by which
the Company or any of its subsidiaries is bound or to which
any of the property or assets of the Company or any of its
subsidiaries is subject, nor will such actions result in any
violation of the provisions of the Articles of Incorporation
or By-laws of the Company, Residential or Investment or the
certificate of limited partnership or limited partnership
agreement of the Operating Partnership or the operating
agreement of North Carolina or any statute or any order, rule
16
or regulation known to such counsel of any court or
governmental agency or body having jurisdiction over the
Company or any of its subsidiaries or any of their properties;
(x) No consent, approval, authorization, order, registration or
qualification of or with any such court or governmental agency
or body is required for the issue and sale of the Designated
Securities being delivered on the date of such opinion or the
consummation by the Company or the Operating Entities of the
transactions contemplated by this Agreement, or the Pricing
Agreement or the Indenture, except such as have been obtained
under the Act and the Trust Indenture Act and such consents,
approvals, authorizations, orders, registrations or
qualifications as may be required under state securities or
Blue Sky laws in connection with the purchase and distribution
of the Designated Securities by the Underwriters;
(xi) The statements set forth in the Prospectus under the captions
"Description of Debt Securities" and "Description of the
Offered Securities" (or under any similar caption), insofar as
they constitute a summary of the Indenture, the Designated
Securities, or any other documents referred to therein or
matters of law are accurate summaries and fairly and correctly
present the information called for with respect to such
documents and matters;
(xii) The Company is not required to be registered under the
Investment Company Act;
(xiii) The documents incorporated by reference in the Prospectus
as amended or supplemented (other than the financial
statements and related schedules therein, as to which such
counsel need express no opinion), when they became effective
or were filed with the Commission, as the case may be,
complied as to form in all material respects with the
requirements of the Act or the Exchange Act, as applicable,
and the rules and regulations of the Commission thereunder;
and although they do not assume any responsibility for the
accuracy, completeness or fairness of the statements
therein, nothing has come to their attention which leads them
to believe that any documents incorporated by reference
in the Prospectus as amended or supplemented (other than
the financial statements and related schedules therein, as to
which such counsel need express no opinion), when they became
effective or were so filed, as the case may be, contained,
in the case of a registration statement which became
effective under the Act, an untrue statement of a material
fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein
not misleading, or, in the case of other documents which
were filed under the Act or the Exchange Act with the
Commission, an untrue statement of a material fact or
omitted to state a material fact necessary in order to make
the statements therein, in the light of the circumstances
under which they were made when such documents were so filed,
not misleading; and
17
(xiv) The Registration Statement and the Prospectus as amended
or supplemented and any further amendments and
supplements thereto made by the Company on or prior to the
date of such opinion (other than the financial statements and
related schedules therein, as to which such counsel need
express no opinion) comply as to form in all material respects
with the requirements of the Act and the Trust Indenture Act
and the rules and regulations thereunder; if applicable,
the Rule 434 Prospectus complies as to form in all material
respects with the requirements of Rule 434 under the Act;
although they do not assume any responsibility for the
accuracy, completeness or fairness of the statements
contained in the Registration Statement or the Prospectus,
except for those referred to in the opinion in subsection
(xi) of this Section 7(c), nothing has come to their
attention which leads them to believe that, as of its
effective date the Registration Statement or any further
amendment thereto made by the Company on or prior to the
date of such opinion (other than the financial statements and
related schedules therein, as to which such counsel need
express no opinion) contained an untrue statement of a
material fact or omitted to state a material fact required to
be stated therein or necessary to make the statements
therein not misleading or that, as of the date of the
applicable Pricing Agreement, the Prospectus as amended or
supplemented or any further amendment or supplement thereto
made by the Company on or prior to the date of such opinion
(other than the financial statements and related schedules
therein, as to which such counsel need express no opinion)
contained an untrue statement of a material fact or omitted
to state a material fact necessary to make the statements
therein, in the light of the circumstances under which they
were made, not misleading or that, as of the date of such
opinion, either the Registration Statement or the
Prospectus as amended or supplemented or any further
amendment or supplement thereto made by the Company on or
prior to the date of such opinion (other than the financial
statements and related schedules therein, as to which such
counsel need express no opinion) contains an untrue statement
of a material fact 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; and
they do not know of any amendment to the Registration
Statement required to be filed or of any contracts or other
documents of a character required to be filed as an
exhibit to the Registration Statement or required to be
incorporated by reference into the Prospectus as amended
or supplemented or required to be described in the
Registration Statement or the Prospectus as amended or
supplemented which are not filed or incorporated by reference
or described as required;
(d) Hunton & Williams, counsel for the Company, shall have furnished to the
Representatives their written opinion (which shall be rendered to the
Underwriters at the request of the Company and shall so state therein),
dated the Time of Delivery for such Designated Securities, in form and
substance satisfactory to the Representatives, to the effect that the
Company has qualified to be taxed as a real estate investment trust
pursuant to Sections 856 through 860 of the Code for its most recently
ended fiscal year and for the four fiscal years immediately preceding
18
such year, and the Company's organization and contemplated method of
operation are such as to enable it to continue to so qualify for its
current fiscal year;
(e) On the date of the Pricing Agreement for such Designated Securities and
at the Time of Delivery for such Designated Securities, the
Underwriters shall have received, a letter dated the date hereof and
the Time of Delivery, respectively, in form and substance satisfactory
to the Underwriters, from each of Ernst & Young LLP and Arthur Andersen
LLP, independent public accountants, 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 as amended or supplemented.
(f) (i) Neither the Company nor any of its subsidiaries shall have
sustained since the date of the latest audited financial statements
included or incorporated by reference in the Prospectus as amended
prior to the date of the Pricing Agreement relating to the Designated
Securities any loss or interference with its business from fire,
explosion, flood or other calamity, whether or not covered by
insurance, or from any labor dispute or court or governmental action,
order or decree, otherwise than as set forth or contemplated in the
Prospectus as amended prior to the date of the Pricing Agreement
relating to the Designated Securities, and (ii) since the respective
dates as of which information is given in the Prospectus as amended
prior to the date of the Pricing Agreement relating to the Designated
Securities there shall not have been any change in the capital stock,
total assets or long-term debt of the Company or any of its
subsidiaries or any change, or any development involving a
prospective change, in or affecting the general affairs, management,
financial position, shareholders' equity or results of operations of
the Company and its subsidiaries, otherwise than as set forth or
contemplated in the Prospectus as amended prior to the date of the
Pricing Agreement relating to the Designated Securities, the effect
of which, in any such case described in Clause (i) or (ii), is in the
judgment of the Representatives so material and adverse as to make it
impracticable or inadvisable to proceed with the public offering or
the delivery of the Designated Securities on the terms and in the
manner contemplated in the Prospectus as first amended or supplemented
relating to the Designated Securities;
(g) On or after the date of the Pricing Agreement relating to the
Designated Securities (i) no downgrading shall have occurred in the
rating accorded the Company's debt securities or preferred stock by any
"nationally recognized statistical rating organization", as that term
is defined by the Commission for purposes of Rule 436(g)(2) under the
Act, and (ii) no such organization shall have publicly announced that
it has under surveillance or review, with possible negative
implications, its rating of any of the Company's debt securities or
preferred stock;
(h) On or after the date of the Pricing Agreement relating to the
Designated Securities there shall not have occurred any of the
19
following: (i) a suspension or material limitation in trading in
securities generally on the New York Stock Exchange; (ii) a
suspension or material limitation in trading in the Company's
securities on the New York Stock Exchange; (iii) a general moratorium
on commercial banking activities in New York declared by either Federal
or New York State authorities; or (iv) the outbreak or escalation of
hostilities, the occurrence of any change in financial markets or,
the occurrence of any calamity or crisis or the declaration by
the United States of a national emergency or war, if the effect of
any such event specified in this Clause (iv) in the judgment of Morgan
Stanley & Co. Incorporated makes it impracticable or inadvisable
to proceed with the public offering or the delivery of the
Designated Securities on the terms and in the manner contemplated in
the Prospectus as amended or supplemented;
(i) The Company and the Operating Entities shall have complied with the
provisions of Section 5(c) hereof with respect to the furnishing of
prospectuses on the New York business day next succeeding the date of
the applicable Pricing Agreement; and
(j) The Company and the Operating Entities shall have furnished or
caused to be furnished to the Representatives at the Time of Delivery
for the Designated Securities a certificate or certificates of
officers of the Company, Residential and Investment and of the general
partner of the Operating Partnership and of the sole member of North
Carolina satisfactory to the Representatives as to the accuracy of
the representations and warranties of the Company and the Operating
Entities herein at and as of such Time of Delivery, as to the
performance by the Company and the Operating Entities of all of
their obligations hereunder to be performed at or prior to such
Time of Delivery, as to the matters set forth in subsections (a) and
(f) of this Section and as to such other matters as the
Representatives may reasonably request.
(k) In the event that the applicable Pricing Agreement shall grant
the Underwriters named therein the right to purchase Additional
Securities and if the Representatives, on behalf of the Underwriters,
shall elect to exercise such right, then the obligations of the
Underwriters of any such Additional Securities shall be subject, in
the discretion of the Representatives, to the condition that all
representations and warranties and other statements of the Company and
the Operating Entities in or incorporated by reference in such Pricing
Agreement are, at and as of the Option Closing Date for such Additional
Securities, true and correct, to the condition that the Company and
the Operating Entities shall have performed all of their obligations
hereunder theretofore to be performed, to the condition that the
conditions set forth in Sections 7(a), 7(f), 7(g), 7(h) and 7(i)
hereof shall have been satisfied at and as of the time of delivery of
and payment for such Additional Securities on such Option Closing
Date, and to the further condition that, on such Option Closing Date,
the Representatives shall have received:
(i) The favorable opinion of Brown & Wood LLP, counsel for the
Underwriters, dated such Option Closing Date, relating to the
20
Additional Securities to be purchased on such Option Closing
Date and otherwise to the same effect as the opinion required
by Section 7(b) hereof;
(ii) The favorable opinion of Hunton & Williams, counsel for the
Company, in form and substance satisfactory to the
Representatives, dated such Option Closing Date, relating to
the Additional Securities to be purchased on such Option
Closing Date and otherwise to the same effect as the opinions
required by Section 7(c) and 7(d) hereof;
(iii) A letter from each of Ernst & Young llp and Arthur Andersen
llp, in form and substance satisfactory to the Representatives
and dated such Option Closing Date, substantially in the same
form and substance as the letters furnished to the
Representatives pursuant to Section 7(e) hereof at the Time of
Delivery, except that the "specified date" in the letters
furnished pursuant to this paragraph shall be a date not more
than five days prior to such Option Closing Date; and
(iv) A certificate or certificates of officers of the Company,
Residential and Investment and of the general partner of the
Operating Partnership and of the sole member of North Carolina
satisfactory to the Representatives, dated the Option Closing
Date to the same effect as the certificate or certificates, as
the case may be, delivered at the Time of Delivery pursuant to
Section 7(j) hereof.
(l) Termination of Agreement. If any condition specified in this Section
shall not have been fulfilled when and as required to be fulfilled,
this Agreement, or, in the case of any condition to the purchase of
Additional Securities on an Option Closing Date which is after the Time
of Delivery for the related Firm Securities, the obligations of the
several Underwriters to purchase such Additional Securities, may be
terminated by the Representatives by notice to the Company at any time
at or prior to the Time of Delivery or such Option Closing Date, as the
case may be, and such termination shall be without liability of any
party to any other party except that Sections 2, 6, 8 and 10 shall
survive any such termination and remain in full force and effect.
8.
(a) The Company and the Operating Entities, jointly and severally,
agree to indemnify and hold harmless each Underwriter and each
person, if any, who controls any Underwriter within the meaning of
either Section 15 of the Act or Section 20 of the Exchange Act from
and against any and all losses, claims, damages and liabilities
(including, without limitation, any legal or other expenses
reasonably incurred by any Underwriter or any such controlling person
in connection with defending or investigating any such action or
claim) caused by any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement, any
Preliminary Prospectus, any preliminary prospectus supplement, the
Prospectus as amended or supplemented or any other prospectus
relating to the Securities, or any amendment or supplement to any of
21
the foregoing, or caused by any omission or alleged omission to
state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, except
insofar as such losses, claims, damages or liabilities are caused by
any such untrue statement or omission or alleged untrue statement or
omission based upon information relating to any Underwriter furnished
to the Company in writing by such Underwriter through the
Representatives expressly for use therein in connection with the
offering of the Designated Securities.
(b) Each Underwriter agrees, severally and not jointly, to indemnify and
hold harmless the Company, its directors, its officers who sign the
Registration Statement and each person, if any, who controls the
Company within the meaning of either Section 15 of the Act or Section
20 of the Exchange Act to the same extent as the foregoing
indemnity from the Company to such Underwriter, but only with
reference to information relating to such Underwriter furnished to
the Company in writing by such Underwriter through the
Representatives in connection with the offering of the Designated
Securities expressly for use in the Registration Statement, any
Preliminary Prospectus, any preliminary prospectus supplement, the
Prospectus as amended or supplemented or any other prospectus relating
to the Designated Securities or any amendment or supplement to any of
the foregoing.
(c) In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity
may be sought pursuant to either paragraph (a) or (b) of this
Section 8, such person (the "indemnified party") shall promptly
notify the person against whom such indemnity may be sought (the
"indemnifying party") in writing and the indemnifying party, upon
request of the indemnified party, shall retain counsel reasonably
satisfactory to the indemnified party to represent the indemnified
party and any others the indemnifying party may designate in such
proceeding and shall pay the fees and disbursements of such counsel
related to such proceeding. In any such proceeding, any indemnified
party shall have the right to retain its own counsel, but the fees and
expenses of such counsel shall be at the expense of such indemnified
party unless (i) the indemnifying party and the indemnified party
shall have mutually agreed to the retention of such counsel or (ii)
the named parties to any such proceeding (including any impleaded
parties) include both the indemnifying party and the indemnified
party and representation of both parties by the same counsel would be
inappropriate due to actual or potential differing interests between
them. It is understood that the indemnifying party shall not, in
respect of the legal expenses of any indemnified party in connection
with any proceeding or related proceedings in the same jurisdiction,
be liable for the fees and expenses of more than one separate firm
(in addition to any local counsel) for all such indemnified parties
and that all such fees and expenses shall be reimbursed as they are
incurred. Such firm shall be designated in writing by Morgan
Stanley & Co. Incorporated, in the case of parties indemnified
pursuant to paragraph (a) above, and by the Company, in the case
of parties indemnified pursuant to paragraph (b) above. The
indemnifying party shall not be liable for any settlement of any
proceeding effected without its written consent, but if settled with
such consent or if there be a final judgment for the plaintiff, the
indemnifying party agrees to indemnify the indemnified party from and
against any loss or liability by reason of such settlement or
judgment. Notwithstanding the foregoing sentence, if at any time an
indemnified party shall have requested an indemnifying party to
reimburse the indemnified party for fees and expenses of counsel as
22
contemplated by the second and third sentences of this paragraph, the
indemnifying party agrees that it shall be liable for any settlement
of any proceeding effected without its written consent if (i) such
settlement is entered into more than 30 days after receipt by such
indemnifying party of the aforesaid request and (ii) such
indemnifying party shall not have reimbursed the indemnified party
in accordance with such request prior to the date of such settlement.
No indemnifying party shall, without the prior written consent of the
indemnified party, effect any settlement of any pending or threatened
proceeding in respect of which any indemnified party is or could
have been a party and indemnity could have been sought hereunder by
such indemnified party, unless such settlement includes an
unconditional release of such indemnified party from all liability
on claims that are the subject matter of such proceeding. The
obligations of the Company and the Operating Entities under this
paragraph (c) are joint and several.
(d) To the extent the indemnification provided for in paragraph (a) or
(b) of this Section 8 is unavailable to an indemnified party or
insufficient in respect of any losses, claims, damages or
liabilities referred to therein, then each indemnifying party under
such paragraph, in lieu of indemnifying such indemnified party
thereunder, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or
liabilities (i) in such proportion as is appropriate to reflect the
relative benefits received by the Company and the Operating Entities
on the one hand and the Underwriters of the Designated Securities on
the other hand from the offering of the Designated Securities or (ii)
if the allocation provided by clause (i) above 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 Entities
on the one hand and of the Underwriters of the Designated Securities
on the other hand in connection with the statements or omissions that
resulted in such losses, claims, damages or liabilities, as well as
any other relevant equitable considerations. The relative benefits
received by the Company and the Operating Entities on the one hand and
the Underwriters of the Designated Securities on the other hand in
connection with the offering of the Designated Securities shall be
deemed to be in the same respective proportions as the net proceeds
from the offering of such Designated Securities (before deducting
expenses) received by the Company and the total underwriting discounts
and commissions received by the Underwriters of the Designated
Securities, in each case as set forth in the table on the cover of the
Prospectus as amended or supplemented with respect to the
Designated Securities, bear to the aggregate public offering price
of the Designated Securities. The relative fault of the Company and
the Operating Entities on the one hand and the Underwriters on the
other hand shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or
the omission or alleged omission to state a material fact relates to
information supplied by the Company or the Operating Entities on the
one hand or by the Underwriters on the other hand and the parties'
relative intent, knowledge, access to information and opportunity
23
to correct or prevent such statement or omission. The
Underwriters' respective obligations to contribute pursuant to this
Section 8 are several in proportion to the respective principal
amounts of Designated Securities they have purchased hereunder, and
not joint. The obligations of the Company and the Operating
Entities to contribute pursuant to this Section 8 are joint and
several.
(e) The Company, the Operating Entities and the Underwriters agree
that it would not be just or equitable if contribution pursuant to
this Section 8 were determined by pro rata allocation (even if the
Underwriters were treated as one entity for such purpose) or by any
other method of allocation that does not take account of the
equitable considerations referred to in paragraph (d) of this
Section 8. The amount paid or payable by an indemnified party as
a result of the losses, claims, damages and liabilities referred
to in the immediately preceding paragraph shall be deemed to
include, subject to the limitations set forth above, any legal or
other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 8, no Underwriter
shall be required to contribute any amount in excess of the amount by
which the total price at which the Designated Securities underwritten
by it and distributed to the public were offered to the public
exceeds the amount of any damages that such Underwriter has otherwise
been required to pay by reason of 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 Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The remedies provided
for in this Section 8 are not exclusive and shall not limit any rights
or remedies which may otherwise be available to any indemnified party
at law or in equity.
(f) The indemnity and contribution provisions contained in this Section 8
and the representations, warranties and other statements of the Company
and the Operating Entities contained in this Agreement shall remain
operative and in full force and effect regardless of (i) any
termination of this Agreement, (ii) any investigation made by or on
behalf of any Underwriter or any person controlling any Underwriter or
the Company, its officers or directors or any person controlling the
Company or any Operating Entity, its officers or directors (if any) or
any person controlling any of the Operating Entities and (iii)
acceptance of and payment for any of the Designated Securities.
9.
(a) If, at the applicable Time of Delivery or any Option Closing Date,
as the case may be, any Underwriter shall default in its obligation
to purchase the Designated Securities which it has agreed to purchase
on such date under the Pricing Agreement relating to such Designated
Securities, the Representatives may in their discretion arrange for
themselves or another party or other parties to purchase such
24
Designated Securities on the terms contained herein. If within
thirty-six hours after such default by any Underwriter the
Representatives do not arrange for the purchase of such Designated
Securities, then the Company shall be entitled to a further period of
thirty-six hours within which to procure another party or other parties
satisfactory to the Representatives to purchase such Designated
Securities on such terms. In the event that, within the
respective prescribed period, the Representatives notify the
Company that they have so arranged for the purchase of such Designated
Securities, or the Company notifies the Representatives that it has
so arranged for the purchase of such Designated Securities, the
Representatives or the Company shall have the right to postpone the
Time of Delivery or the Option Closing Date, as the case may be, for
such Designated Securities for a period of not more than seven
days, in order to effect whatever changes may thereby be made
necessary in the Registration Statement or the Prospectus as amended
or supplemented, or in any other documents or arrangements, and
the Company agrees to file promptly any amendments or supplements
to the Registration Statement or the Prospectus which in the
opinion of the Representatives may thereby be made necessary. The
term "Underwriter" as used in this Agreement shall include any person
substituted under this Section with like effect as if such person
had originally been a party to the Pricing Agreement with respect to
such Designated Securities.
(b) If, after giving effect to any arrangements for the purchase of
the Designated Securities of a defaulting Underwriter or
Underwriters by the Representatives and the Company as provided in
subsection (a) above, the aggregate principal amount of such
Designated Securities which remains unpurchased at the Time of
Delivery or the Option Closing Date, as the case may be, does not
exceed one-eleventh of the aggregate principal amount of the
Designated Securities to be purchased on such date, then the
Company shall have the right to require each non-defaulting
Underwriter to purchase the principal amount of Designated Securities
which such Underwriter agreed to purchase on such date under the
Pricing Agreement relating to such Designated Securities and, in
addition, to require each non-defaulting Underwriter to purchase
its pro rata share (based on the principal amount of Designated
Securities set forth opposite the name of such Underwriter in Schedule
I to such Pricing Agreement) of the Designated Securities of such
defaulting Underwriter or Underwriters for which such arrangements
have not been made; but nothing herein shall relieve a defaulting
Underwriter from liability for its default.
(c) If, after giving effect to any arrangements for the purchase of
the Designated Securities of a defaulting Underwriter or
Underwriters by the Representatives and the Company as provided in
subsection (a) above, the aggregate principal amount of Designated
Securities which remains unpurchased at the Time of Delivery or the
Option Closing Date, as the case may be, exceeds one-eleventh of the
aggregate principal amount of the Designated Securities to be
purchased on such date, as referred to in subsection (b) above, or
if the Company shall not exercise the right described in subsection
(b) above to require non-defaulting Underwriters to purchase
25
Designated Securities of a defaulting Underwriter or Underwriters,
then the Pricing Agreement relating to such Designated Securities
or, in the case of a default which occurs on an Option Closing Date
which is after the related Time of Delivery, the obligation of the
several Underwriters to purchase and the Company to sell the Option
Securities to be purchased and sold on such Option Closing Date, shall
thereupon terminate, without liability on the part of any
non-defaulting Underwriter, the Company or the Operating Entities,
except for the expenses to be borne by the Company, the Operating
Entities and the Underwriters as provided in Section 6 hereof and
the indemnity and contribution agreements in Section 8 hereof and
the provisions of Section 10 hereof; but nothing herein shall
relieve a defaulting Underwriter from liability for its default.
10. If any Pricing Agreement shall be terminated pursuant to Section 9 hereof,
or if the obligations of the several Underwriters to purchase and the Company to
sell any Additional Securities shall be terminated pursuant to Section 9 hereof,
the Company and the Operating Entities shall not then be under any liability to
any Underwriter with respect to the Designated Securities covered by such
Pricing Agreement or such Additional Securities, as the case may be, except as
provided in Section 6 and Section 8 hereof; but, if for any other reason
Designated Securities (including, without limitation, any Additional Securities)
are not delivered by or on behalf of the Company as provided herein, the Company
and the Operating Entities will, jointly and severally, reimburse the
Underwriters through the Representatives for all out-of-pocket expenses approved
in writing by the Representatives, including fees and disbursements of counsel,
reasonably incurred by the Underwriters in making preparations for the purchase,
sale and delivery of such Designated Securities, but the Company and the
Operating Entities shall then be under no further liability to any Underwriter
with respect to such Designated Securities except as provided in Sections 6 and
8 hereof.
11. In all dealings hereunder, the Representatives of the Underwriters of
Designated Securities shall act on behalf of each of such Underwriters, and the
parties hereto shall be entitled to act and rely upon any statement, request,
notice or agreement on behalf of any Underwriter made or given by such
Representatives jointly or by such of the Representatives, if any, as may be
designated for such purpose in the Pricing Agreement.
All statements, requests, notices and agreements hereunder shall be in
writing, and if to the Underwriters shall be delivered or sent by mail, telex or
facsimile transmission to the address of the Representatives as set forth in the
Pricing Agreement; and if to the Company or the Operating Entities shall be
delivered or sent by mail, telex or facsimile transmission to the address of the
Company set forth in the Registration Statement: Attention: Secretary; provided,
however, that any notice to an Underwriter pursuant to Section 8(c) hereof shall
be delivered or sent by mail, telex or facsimile transmission to such
Underwriter at its address set forth in its Underwriters' Questionnaire, or
telex constituting such Questionnaire, which address will be supplied to the
Company by the Representatives upon request. Any such statements, requests,
notices or agreements shall take effect upon receipt thereof.
12. This Agreement and each Pricing Agreement shall be binding upon, and inure
solely to the benefit of, the Underwriters, the Company, the Operating Entities
and, to the extent provided in Section 8 hereof, the officers and directors of
26
the Company and each person who controls the Company, any of the Operating
Entities or any Underwriter, and their respective heirs, executors,
administrators, successors and assigns, and no other person shall acquire or
have any right under or by virtue of this Agreement or any such Pricing
Agreement. No purchaser of any of the Securities from any Underwriter shall be
deemed a successor or assign by reason merely of such purchase.
13. Time shall be of the essence of each Pricing Agreement. As used herein,
"business day" shall mean any day when the Commission's office in Washington,
D.C. is open for business.
14. This Agreement and each Pricing Agreement shall be governed by and construed
in accordance with the laws of the State of New York.
15. This Agreement and each Pricing Agreement may be executed by any one or more
of the parties hereto and thereto in any number of counterparts, each of which
shall be deemed to be an original, but all such respective counterparts shall
together constitute one and the same instrument.
27
If the foregoing is in accordance with your understanding, please sign
and return to us six counterparts hereof.
Very truly yours,
United Dominion Realty Trust, Inc.
By: /s/ James Dolphin
------------------------------------
Name: James Dolphin
Title: Executive Vice President
United Dominion Realty, L.P.
By: United Dominion Realty Trust, Inc.,
its General Partner
By: /s/ James Dolphin
------------------------------------
Name: James Dolphin
Title: Executive Vice President
UDR Western Residential, Inc.
By: /s/ James Dolphin
------------------------------------
Name: James Dolphin
Title: Executive Vice President
UDRT of North Carolina, L.L.C.
By: United Dominion Realty Trust, Inc.,
its sole member
By: /s/ James Dolphin
------------------------------------
Name: James Dolphin
Title: Executive Vice President
28
ASR Investments Corporation
By: /s/ James Dolphin
------------------------------------
Name: James Dolphin
Title: Executive Vice President
Accepted as of the date hereof:
Morgan Stanley & Co. Incorporated
A.G. Edwards & Sons, Inc.
PaineWebber Incorporated
NationsBanc Montgomery Securities LLC
Wheat First Securities, Inc.
Acting severally on behalf of themselves and the other several
Underwriters
By: Morgan Stanley & Co. Incorporated
By: /s/ Mike Fusco
-----------------------------------
Name: Mike Fusco
Title: Vice President