Exhibit 99
RATE HEDGE AGREEMENT
This Agreement is made the 18th of May, 1994, between United Dominion
Realty Trust, a Virginia corporation (the "Customer"), and Goldman, Sachs &
Co., a New York limited partnership ("Goldman Sachs").
WHEREAS, the Customer intends to issue, within the term of this
Agreement, its debt Securities ("Debt"), with a maturity of approximately
1O years, and wishes to enter into a notional principal contract in the
amount of $75MM to hedge itself against the risk that the general level of
interest rates for securities with similar maturities might rise from their
current level during the term of this Agreement; and
WHEREAS, the Customer intends this Agreement to qualify as a hedging
transaction within the meaning of Section 1256(e)(2) of the Internal
Revenue Code of 1986 as amended:
NOW, THEREFORE, THIS AGREEMENT WITNESSETH:
1. Definitions. For the purposes of this Agreement, the following terms
shall have the meanings indicated:
(a) "Adjustment Price": the number determined in accordance with the
formula set forth in paragraph 3 of Schedule A hereto.
(b) "Agreement Date": the date set forth in the first paragraph
hereof.
(c) "Alternate Takedown Price": the price (stated in percent)
determined in accordance with Section 2(c) hereof.
(d) "Base Treasury Price": the price, expressed in percent, set
forth in paragraph 1 of Schedule A hereto.
(e) "Base Treasury Securities": the securities set forth in
paragraph 2 of Schedule A hereto.
(f) "Business Day": each Monday, Tuesday, Wednesday, Thursday, and
Friday which is not a day on which Goldman Sachs, the Customer, or the
Federal Reserve Bank of New York are closed or banking institutions in the
State of New York are authorized or obligated by law or executive order to
close.
(g) "Determination Date": the date on which the Takedown Price shall
be accepted, or deemed to be accepted, by the Customer.
(h) "Price Differential": the amount obtained by multiplying (i) the
difference (stated in percent) between the Base Treasury Price and the
Takedown Price, times (ii) the Base Treasury Securities.
(i) "Readjustment Factor": the number determined in accordance with
the formula set forth in paragraph 3(b) of Schedule A hereto.
(j) "Takedown Price": the price (stated in percent) determined in
accordance with Sections 2 and 3 hereof and Schedule A hereto.
(k) "Termination Date": the date set forth in paragraph 4 of
Schedule A hereto.
2. Selection of a Takedown Price.
(a) On any Business Day, between the hours of 9:00 a.m. and 3:00 p.m.
(New York City time), the Customer may request Goldman Sachs to quote a
Takedown Price. Within one hour of receipt by Goldman Sachs of such a
request, Goldman Sachs shall quote an unadjusted Takedown Price to the
Customer; provided, however, that Goldman Sachs may, but shall not be
obligated to, quote a Takedown Price (i) at any time within one hour before
an expected announcement of money supply data or other economic statistics
by the government of the United States of America or any agency thereof,
(ii) if an event (including an announcement of money supply data or other
economic statistics) shall have occurred that would, in the judgment of
Goldman Sachs, materially affect the quotation of a Takedown Price, or
(iii) if in the opinion of Goldman Sachs there does not at such time exist
an active dealer market for the Base Treasury Securities. Upon receipt by
the Customer of such quotation subject to paragraph (c) of this Section,
the Customer shall immediately accept or reject such unadjusted Takedown
Price. If the Customer shall not have accepted such unadjusted Takedown
Price, the Customer shall be deemed to have rejected such unadjusted
Takedown Price.
(b) If the Customer shall not have accepted a quoted Takedown Price,
and Goldman Sachs and the Customer shall not be deemed to have accepted an
Alternate Takedown Price, prior to 11:30 a.m. (New York City time) on the
Termination Date, Goldman Sachs shall quote an unadjusted Takedown Price to
the Customer at or prior to 4:00 p.m. (New York City time), and except as
provided in paragraph (c) of this Section the Customer shall be deemed to
have accepted such Takedown Price.
(c) Notwithstanding paragraphs (a) and (b) of this Section, if,
following the quotation by Goldman Sachs to the Customer of an unadjusted
Takedown Price pursuant to either such paragraph, the Customer immediately
rejects such unadjusted Takedown Price and notifies Goldman Sachs that the
Customer has received from another leading U.S. Government securities
dealer a firm bona fide offer to sell the Base Treasury Securities to the
Customer at a price (stated in percent) (an "Alternate Takedown Price"),
lower than the price quoted by Goldman Sachs, then Goldman Sachs shall
immediately quote a new unadjusted Takedown Price (which may be the same as
its previously quoted unadjusted Takedown Price) to the Customer, and the
Customer shall immediately accept or reject such new unadjusted Takedown
Price. If the Customer does not immediately accept such new unadjusted
Takedown Price, the Customer and Goldman Sachs shall be deemed to have
accepted the Alternate Takedown Price, provided, that in addition the
Customer shall be deemed to have agreed to sell to Goldman Sachs the Base
Treasury Securities at the Alternate Takedown Price. The settlement date
for such sale to Goldman Sachs shall be the next settlement date that, in
accordance with customary trade practices, would apply if the Base Treasury
Securities had been bought back on the Determination Date. The method of
settlement shall be the method that, in accordance with customary trade
practices, is employed with respect to the Base Treasury Securities.
3. Settlement Price. Upon acceptance pursuant to Section 2 hereof of the
unadjusted Takedown Price by the Customer, or of the Alternate Takedown
Price by Goldman Sachs, the following calculations and payments shall be
made:
(a) The Takedown Price or the Alternate Takedown Price (as the case may
be) established pursuant to Section 2 above shall be adjusted (up or down)
by adding thereto the Adjustment Price (positive or negative) determined in
accordance with paragraph 3(a) of Schedule A hereto, such Adjustment Price
to be modified by the Readjustment Factor determined pursuant to paragraph
3(b) of Schedule A if the Takedown Price (or Alternate Takedown Price) is
determined on a date prior to the Termination Date. The Takedown Price or
Alternate Takedown Price, as adjusted, shall be the "Takedown Price" for
purposes of determining the settlement price below.
(b) If the Takedown Price exceeds the Base Treasury Price, the Customer
shall owe Goldman Sachs the amount of the Price Differential. If the
Takedown Price is less than the Base Treasury Price, Goldman Sachs shall
owe the amount of the Price Differential to the Customer.
(c) The payment of the Price Differential shall be made in immediately
available federal funds by wire transfer on the Business Day immediately
following the Determination Date to the appropriate account of the
receiving party specified in paragraph 5 or 6 of Schedule A hereto.
(d) If the party required to pay the Price Differential hereunder fails to
do so in a timely manner, interest on such amount shall accrue from and
including the Determination Date through the date that such amount plus
interest is paid in full at an annual rate equal to 2% above the prime
brokers' loan rate. The prime brokers' loan rate will be determined by
Goldman Sachs for this purpose, in Goldman Sachs' sole discretion, in
accordance with prevailing money market conditions. It is understood that
in making such determination, Goldman Sachs will consider, among other
things, the rates quoted for brokers' loans by one or more New York banks
which are members of the New York Clearing House Association. Interest
shall be computed daily, using a 360 day base year.
4. Transfer. This Agreement may not be assigned or otherwise transferred
by either party hereto without the prior written consent of the other
party.
5. Representations and Warranties of the Customer. The Customer
represents and warrants to Goldman Sachs as follows:
(a) The Customer is a corporation duly organized, validly existing, and in
good standing under the laws of the jurisdiction in which it has been
incorporated.
(b) The Customer has all requisite power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated
hereby, the persons giving instructions or confirming transactions
hereunder on behalf of the Customer shall be duly authorized to do so, and
this Agreement has been duly authorized, executed, and delivered by the
Customer and is enforceable against the Customer in accordance with its
terms.
(c) The Customer is entering into this Agreement in the ordinary
course of its business in order to hedge its exposure on a proposed debt
securities issuance and not for speculative purposes.
6. Representations and Warranties of Goldman Sachs. Goldman Sachs
represents and warrants to the Customer as follows:
(a) Goldman Sachs has all requisite power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated
hereby, the persons giving instructions or confirming transactions
hereunder on behalf of Goldman Sachs shall be duly authorized to do so,
and this Agreement has been duly authorized, executed, and delivered by
Goldman Sachs and is enforceable against Goldman Sachs in accordance with
its terms.
(b) Goldman Sachs is entering into this Agreement in the ordinary course
of its business and not for speculative purposes.
7. Notices. Any notice hereunder may be given by telephone, telecopy,
telex, or other written instrument, in the case of telephone to be
confirmed in writing, delivered to the parties at their respective
addresses and in accordance with the telecommunications
instructions set forth below.
8. Governing Law and Jurisdiction. This Agreement shall be governed by
and construed in accordance with the law of the State of New York. The
Customer hereby irrevocably submits to the jurisdiction of the Supreme
Court of the State of New York and the United States District Court for
the Southern District of New York, in either case in the Borough
of Manhattan, The City of New York, in connection with any claim, suit,
action, or proceeding arising out of or relating to this Agreement.
9. Counterparts. This Agreement may be executed in counterparts, each
of which shall constitute an original, but all of which, when taken
together, shall constitute one and the same instrument.
10. Amendments. This Agreement may be amended only by a written
instrument signed by each of the parties hereto.
11. No Waiver. No failure on the part of either party hereto to
exercise, and no delay in exercise of, any contractual right hereunder
shall operate as a waiver thereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized representatives.
United Dominion Realty Trust
Signature by: James Dolphin
Address: 10 South Sixth Street
Suite 203
Richmond, Virginia 23219
Attention: James Dolphin
Telecopy No.:(804) 644-4829
Telephone No.:(804) 780-2691
Goldman, Sachs & Co..
Signature By:
Address: 85 Broad Street
New York, NY 10004
Attention: James O. Rhodes
Telecopy No.: 212 902-0659
Telephone No.: 212-902-8376
Schedule A
1. Base Treasury Price (initial spot price): 101.59375%.
2. Base Treasury Securities: UST 7.25% of 5/15/2004.
3. Adjustment of Takedown Price:
(a) The Adjustment Price ("AP") shall be determined on the Agreement
Date as follows:
"AP" = (Coupon x a) (Principal x RP x a) = 1.245732%
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where:
"Coupon" = Coupon rate of interest payable on Base Treasury
Security, expressed in percent= 7.25%.
"Principal" = BTP+I, where:
"BTP" = Base Treasury Price (expressed as a decimal)=1.0159375.
"I" = Accrued coupon interest (expressed as a decimal) on the
Base Treasury Security computed as of the Business Day
following the Agreement Date =.00078804.
"RP" = Term repurchase rate quoted by Goldman Sachs for
the Base Treasury Securities for the number of days
from and including the Business Day following the date
of this Agreement to the Business Day following the
Termination Date (stated in percent)=3.30%
"a" = The actual number of days in the period from the
Business Day following the Agreement Date, or the
Settlement Date of the Base Treasury Issue whichever
is later to the Business Day following the Termination
Date if the Base Treasury Security coupon date does not
fall in such period; otherwise, "a" means the actual
number of days in the period from the Business Day
following the Agreement Date to the Base Treasury
Security coupon date falling within such period =
120 Days.
"c" = The actual number of days in the period from and
including the last Base Treasury Security coupon date
falling before the period to but excluding the next
following Base Treasury Security coupon date = 184
Days.
(b) If the Determination Date occurs on a date other than the
Termination Date, the Adjustment Price shall be adjusted (up or down) by
subtracting from the Adjustment Price (not rounded up) a "Readjustment
Factor" ("RF") (positive or negative) determined as follows:
"RF" = (Coupon x f) - (P2 x RV x f)
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where:
"P2"=TP+ I2
"TP" = Takedown Price or Alternate Takedown Price, expressed as
a decimal.
"I2" = Accrued coupon interest on the Base Treasury Security on the
Business Day following the Determination Date.
"RV" = The term reverse repurchase rate quoted by Goldman Sachs for
the Base Treasury Security for the period from and including the Business
Day following the Determination Date to but excluding the Business Day
following the Termination Date, stated in percent. Goldman Sachs shall
quote a bid/ask spread in determining RV equal to no more than 50 basis
points.
"f" = The actual number of days in the period from the Business Day
following the Determination Date to the Business Day following the
Termination Date if the Base Treasury Security coupon date does not fall in
such period; otherwise "f" means the actual number of days in the period
from the Business Day following the Determination Date to the Base Treasury
Security coupon date falling within such period.
4. Termination Date: September 15, 1984
5. Payments to the Customer (unless the Customer notifies Goldman Sachs
otherwise in writing):
Institution: Signet Bank
ABA#: 051006778
Attention: United Dominion Realty Trust, Inc.
Account Number: # 5527629892
Location: Richmond, Virginia
6. Payments to Goldman Sachs (unless Goldman Sachs notifies the Customer
otherwise in writing):
Institution: The Chase Manhattan Bank
ABA #: 021-000021
Account: Goldman, Sachs & Co.
Account#: 930-1-011483
Location: One Chase Manhattan Plaza
New York, New York
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