EXHIBIT 1
EXECUTION COPY
EQUITY RESIDENTIAL
(a Maryland real estate investment trust)
Depositary Shares Each Representing 1/10 of a 6.48%
Series N Cumulative Redeemable Preferred Share of Beneficial Interest
(Liquidation Preference Equivalent to $25.00 Per Depositary Share)
TERMS AGREEMENT
Dated: May 20, 2003
To: Equity Residential
ERP Operating Limited Partnership
Two North Riverside Plaza
Chicago, Illinois 60606
Ladies and Gentlemen:
We (the "Representatives") understand that Equity Residential ("EQR" or
the "Company") proposes to issue and sell interests in 6.48% Series N Cumulative
Redeemable Preferred Shares of Beneficial Interest ("Series N Preferred Shares")
in the form of depositary shares (the "Depositary Shares") represented by
depositary receipts (the "Depositary Receipts") (the Depositary Shares and
Depositary Receipts collectively hereinafter referred to as the "Underwritten
Securities"). Subject to the terms and conditions set forth or incorporated by
reference herein, the underwriters named below (the "Underwriters") offer to
purchase, severally and not jointly, the respective numbers of Initial
Underwritten Securities (as defined in the Standard Underwriting Provisions
referred to below) set forth below opposite their respective names at the
purchase price per Depositary Share set forth below.
NUMBER OF
INITIAL
UNDERWRITTEN
UNDERWRITER SECURITIES
----------- ------------
Merrill Lynch, Pierce, Fenner & Smith
Incorporated....................... 1,275,000
Citigroup Global Markets, Inc....................... 1,275,000
Morgan Stanley & Co. Incorporated................... 1,275,000
Wachovia Securities Inc............................. 1,275,000
Bear, Stearns & Co. Incorporated.................... 180,000
McDonald Investments Inc............................ 180,000
Prudential Securities Incorporated.................. 180,000
Raymond James & Associates, Inc..................... 180,000
Wells Fargo Investments Services, LLC............... 180,000
---------
Total...................................... 6,000,000
=========
The Underwritten Securities shall have the following terms:
TITLE OF SECURITIES: Depositary Shares, each representing 1/10 of a Series N Preferred Share.
NUMBER OF DEPOSITARY SHARES: 6,000,000 (or 600,000 Series N Preferred Shares)
FRACTIONAL AMOUNT OF PREFERRED SHARES 1/10 of a Series N Preferred Share deposited with EquiServe Trust
REPRESENTED BY EACH DEPOSITARY SHARE: Company, N.A., as Depositary, entitling the holder to all proportional
rights and preferences of the Series N Preferred Shares (including
distribution, voting, redemption and liquidation rights and preferences).
CURRENT RATINGS: Moody's: "Baa2"
S&P: "BBB"
Fitch: "BBB+"
DISTRIBUTION RATE: $1.62 per annum, (representing 6.48% of the public offering price per
Depositary Share per year) payable quarterly on or about the 15th day of
January, April, July and October of each year, commencing on October 15,
2003.
PAR VALUE: $.01 per Series N Preferred Share
LIQUIDATION PREFERENCE: $250.00 per Series N Preferred Share (equivalent to $25.00 per Depositary
Share), plus accrued and unpaid distributions.
RANKING: With respect to the payment of distributions and amounts upon liquidation, the
Series N Preferred Shares will rank pari passu with any other preferred shares and
will rank senior to the Common Shares and any other shares of beneficial interest of
the Company ranking junior to the Series N Preferred Shares.
PUBLIC OFFERING PRICE PER DEPOSITARY SHARE: $25.00, plus accumulated distributions, if any, from June 19, 2003.
UNDERWRITING DISCOUNT: $0.7875 (or 3.15% of the public offering price per Depositary Share)
PROCEEDS TO THE COMPANY: $24.2125 per Depositary Share
CONVERSION: None
OPTIONAL REDEMPTION: EQR may not redeem the Series N Preferred Shares prior to June 19, 2008.
On and after June 19, 2008, EQR may, at its option, redeem the Series N Preferred
Shares represented by Depositary Shares, in whole or in part, by payment of $25.00
per Depositary Share, plus accrued and unpaid dividends to and including the date of
redemption. Any partial redemption will be on a pro rata basis. Notwithstanding the
foregoing, EQR may redeem Series N Preferred Shares at any time in certain
circumstances relating to the maintenance of its ability to qualify as a REIT for
Federal income tax purposes.
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NUMBER OF OPTION SECURITIES, IF ANY, THAT None.
MAY BE PURCHASED BY THE UNDERWRITERS:
VOTING RIGHTS: If distributions on the Series N Preferred Shares are in arrears for six
or more quarterly periods, holders of the Depositary Shares, voting
separately as a class with all other series of preferred shares upon
which like voting rights have been conferred and are exercisable, will be
entitled to vote for the election of two additional Trustees to serve on
the Board of Trustees of EQR until all distribution arrearages are
eliminated.
CLOSING DATE AND LOCATION: June 19, 2003 at the offices of Piper Rudnick, 203 North LaSalle Street,
Suite 1800, Chicago. IL 60601
Solely for the purpose of this offering, the Standard Underwriting
Provisions are modified as follows:
A. The name of the Company is hereby amended from "Equity Residential
Properties Trust" to "Equity Residential."
B. The words "Rosenberg & Liebentritt" contained in Sections 5(b)(1),
5(b)(3) and 5(j)(2) are replaced by the words "Piper Rudnick LLP."
C. The words "Hogan & Hartson L.L.P, counsel for the Underwriters and
Maryland and special tax counsel to EQR" contained in Sections 5(b)(2) and
5(j)(3) are replaced by the words "Piper Rudnick LLP, tax counsel for EQR."
D. The words "December 31, 1993" contained in Section 5(b)(2)(A) are
replaced by the words "December 31, 1992."
E. Section 9 is restated in its entirety as follows:
"You may terminate the applicable Terms Agreement, by notice to EQR, at
any time at or prior to the applicable Closing Time (i) if there has been, since
the date of such Terms Agreement or since the respective dates as of which
information is given in the Prospectus, any Material Adverse Change, or (ii) if
there has occurred any material adverse change in the financial markets in the
United States or the international financial markets, any outbreak of
hostilities or escalation thereof or other calamity or crisis or any change or
development involving a prospective change in national or international
political, financial or economic conditions, in each case the effect of which is
such as to make it, in your judgment, impracticable or inadvisable to market the
Underwritten Securities or to enforce contracts for the sale of the Underwritten
Securities, or (iii) if trading in any
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of the securities of EQR has been suspended or materially limited by the
Commission or any exchange or any over-the-counter market, or if trading
generally on the American Stock Exchange or the New York Stock Exchange or in
the Nasdaq National Market has been suspended or materially limited, or minimum
or maximum prices for trading have been fixed, or maximum ranges for prices have
been required, by any of said exchanges or by such system or by order of the
Commission, the National Association of Securities Dealers, Inc. or any other
governmental authority, or (iv) a material disruption has occurred in commercial
banking or securities settlement or clearance services in the United States, or
(v) if a banking moratorium has been declared by Federal or New York
authorities, or (vii) the rating assigned by any nationally recognized
statistical rating organization to any Preferred Shares of EQR as of the date of
the applicable Terms Agreement shall have been lowered since such date or if any
such rating organization shall have publicly announced that it has placed any
Preferred Shares of EQR on what is commonly termed a "watch list" for possible
downgrading. As used in this Section 9(a), the term "Prospectus" means the
Prospectus in the form first used to confirm sales of the Underwritten
Securities."
F. Section 11 is restated in its entirety as follows:
"All notices and other communications hereunder shall be in writing and
shall be deemed to have been duly given if mailed or transmitted by any standard
form of telecommunication. Notices to the Underwriters shall be directed to c/o
Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated, at 4
World Financial Center, New York, NY, 10080, attention of Shawn Cepada; notices
to EQR and ERP shall be directed to them at Two North Riverside Plaza, Suite
400, Chicago, Illinois 60606, attention of General Counsel, with a copy to
William C. Hermann, Esq., Piper Rudnick, 203 North LaSalle Street, Suite 1800,
Chicago, IL 60601."
All the provisions contained in the document attached as Annex A hereto
entitled "Equity Residential Properties Trust (a Maryland real estate investment
trust)--Common Shares of Beneficial Interest, Preferred Shares of Beneficial
Interest and Depositary Shares--Standard Underwriting Provisions" (the "Standard
Underwriting Provisions"), as amended by the amendments set forth above, are
hereby incorporated by reference in their entirety herein and shall be deemed to
be a part of this Terms Agreement to the same extent as if such provisions had
been set forth in full herein. Terms defined in such document are used herein as
therein defined.
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Please accept this offer no later than 4:00 p.m. (New York City time)
on May 20, 2003 by signing a copy of this Terms Agreement in the space set forth
below and returning the signed copy to us.
Very truly yours,
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
CITIGROUP GLOBAL MARKETS, INC.
MORGAN STANLEY & CO. INCORPORATED
WACHOVIA SECURITIES INC.
For themselves and as Representatives
of the several Underwriters named above
By: /s/ SCOTT EISEN
-----------------------------------
Name: Scott Eisen
Title: Vice President
Accepted:
EQUITY RESIDENTIAL,
for itself and as the general partner of ERP Operating
Limited Partnership
By: /s/ BRUCE C. STROHM
-------------------------------------------
Name: Bruce C. Strohm
Title: Executive Vice President and
General Counsel