▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ RESIDENTIAL, L.P.
(a Maryland corporation)
___% Notes due 2004
___% Notes due 2007
PURCHASE AGREEMENT
March ___, 1997
▇▇▇▇▇▇▇ ▇▇▇▇▇ & CO.
▇▇▇▇▇▇▇ Lynch, ▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated
▇▇▇▇▇▇▇, ▇▇▇▇▇ & CO.
▇.▇. ▇▇▇▇▇▇ & CO.
▇.▇. ▇▇▇▇▇▇ Securities Inc.
c/▇ ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated
▇▇▇▇▇▇▇ ▇▇▇▇▇ World Headquarters - North Tower
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Ladies and Gentleman:
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ Residential, L.P., a Delaware limited partnership
(the "Operating Partnership") and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ Residential, Inc., a Maryland
corporation (the "Company") each confirms its respective agreement with ▇▇▇▇▇▇▇
▇▇▇▇▇ & Co., ▇▇▇▇▇▇▇ Lynch, ▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated ("▇▇▇▇▇▇▇
▇▇▇▇▇"), ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co. ("▇▇▇▇▇▇▇ ▇▇▇▇▇"), ▇.▇. ▇▇▇▇▇▇ & Co. and ▇.▇.
▇▇▇▇▇▇ Securities ("▇.▇. ▇▇▇▇▇▇" and together with ▇▇▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇▇▇
▇▇▇▇▇, the "Underwriters," which term shall also include any underwriter
substituted as hereinafter provided in Section 10 hereof), with respect to the
issue and sale by the Operating Partnership and the purchase by the
Underwriters, acting severally and not jointly, of the respective principal
amounts set forth in Schedule A hereto of $75,000,000 aggregate principal amount
of the Operating Partnership's ___% Notes due 2004 (the "2004 Notes"), and ___%
Notes due 2007 (the "2007 Notes" and together with the 2004 Notes, the
"Securities"). The Securities are to be issued pursuant to an indenture, dated
as of March ___, 1997 (the "Indenture"), between the Operating Partnership and
Bank One, Columbus, N.A., as trustee (the "Trustee"). The term "Indenture," as
used herein, includes the Officer's Certificate (as defined in the Indenture)
establishing the form and terms of the Securities pursuant to Section 301 of the
Indenture.
The Operating Partnership and the Company understand that the
Underwriters propose to make a public offering of the Securities as soon as they
deem advisable after this Agreement has been executed and delivered.
A registration statement on Form S-3 (No. 333-19879) and amendments
No. 1 , No. 2 and No. 3 thereto dated March 11, 1997 , March 20, 1997 and
March __, 1997, respectively, with respect to the Securities has (i) been
prepared by the Operating Partnership and the Company in conformity with the
requirements of the Securities Act of 1933, as amended (the "Securities Act" or
the "1933 Act"), and the rules and regulations (the "Rules and Regulations" or
the "1933 Act Regulations") of the Securities and Exchange Commission (the
"Commission") promulgated thereunder for the offering from time to time of the
Operating Partnership's debt securities, including the Securities, and the
Company's equity securities and guarantees of debt securities, in accordance
with Rule 415 of the Rules and Regulations (the "Shelf Securities"), (ii) been
filed with the Commission under the Securities Act and (iii) become effective
under the Securities Act. Copies of such registration statement and
Amendments No. 1, 2 and 3 thereto have been delivered by the Operating
Partnership and the Company to the Underwriters. The Indenture has been
qualified under the Trust Indenture Act of 1939, as amended (the "1939 Act").
In addition, a registration statement on Form 10 (No. 0-22109) and amendments
dated _________________________, thereto (the "Form 10"), has (i) been prepared
by the Operating Partnership in conformity with the requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act" or the (1934
Act") and the rules and regulations of the Commission thereunder (the "1934 Act
Regulations"), (ii) been filed with the Commission under the 1934 Act, and (iii)
become effective under the 1934 Act. Such registration statement on Form S-3,
as amended through the date of this Agreement, is, on the one hand, and the
prospectus constituting a part thereof and each prospectus supplement relating
to the offering of Securities to the Underwriters for use (whether or not such
prospectus supplement is required to be filed by the Company pursuant to Rule
424(b) of the Rules and Regulations) (the "Prospectus Supplement"), on the other
hand, including all documents incorporated therein by reference, including,
but not limited to, the Form 10, as from time to time amended or supplemented
pursuant to the Securities Act, the 1934 Act and the 1934 Act Regulations, or
otherwise, are referred to herein as the "Registration Statement" and the
"Prospectus," respectively; PROVIDED, HOWEVER, that the Prospectus Supplement
shall be deemed to have supplemented the Prospectus only with respect to the
offering of Shelf Securities to which it relates; and PROVIDED FURTHER, that if
any revised prospectus shall be provided to the Underwriters by the Company for
use in connection with the offering of the Securities which differs from the
prospectus on file (whether or not such revised prospectus is required to be
filed by the company pursuant to Rule 424(b) of the 1933 Act Regulations), the
term "Prospectus" shall refer to such revised prospectus from and after the time
it is first provided to the Underwriters for such use. Any registration
statement filed pursuant to Rule 462(b) of the 1933 Act Regulations is herein
referred to as the "Rule 462(b) Registration Statement," and after such filing
the term "Registration Statement" shall include the Rule 462(b) Registration
Statement. For purposes of this Agreement, all references to the Registration
Statement, the Prospectus , the Form 10 or any amendment or supplement to any of
the foregoing shall be deemed to include the copy filed with the Commission
pursuant to its Electronic Data Gathering, Analysis and Retrieval system
("▇▇▇▇▇").
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All references in this Agreement to financial statements and schedules
and other information which is "described," "disclosed," "contained," "included"
or "stated" in the Registration Statement or the Prospectus (and all other
references of like import) shall be deemed to mean and include all such
financial statements and schedules and other information which is or is deemed
to be incorporated by reference in the Registration Statement or the Prospectus,
as the case may be; and all references in this Agreement to amendments or
supplements to the Registration Statement or the Prospectus shall be deemed to
mean and include the filing of any document under the 1934 Act, which is or is
deemed to be incorporated by reference in the Registration Statement or the
Prospectus, as the case may be. If the Operating Partnership elects to rely on
Rule 434 under the 1933 Act Regulations, all references to the Prospectus shall
be deemed to include, without limitation, the form of prospectus and the term
sheet (the "Term Sheet"), taken together, provided to the Underwriters by the
Operating Partnership in reliance on Rule 434 under the 1933 Act (the "Rule 434
Prospectus").
Section 1. REPRESENTATIONS AND WARRANTIES.
(a) REPRESENTATIONS AND WARRANTIES BY THE OPERATING PARTNERSHIP AND
THE COMPANY. The Operating Partnership and the Company jointly and severally
represent and warrant to the Underwriters as of the date hereof and as of the
Closing Time referred to in Section 2(b) hereof, and agree with the
Underwriters, as follows:
(i) COMPLIANCE WITH REGISTRATION REQUIREMENTS. At the
respective times the Registration Statement, the Form 10, any Rule
462(b) Registration Statement and any post-effective amendments
thereto became effective, and at the Closing Time, the Registration
Statement, the Rule 462(b) Registration Statement and any amendments
and supplements thereto complied and will comply in all material
respects with the requirements of the 1933 Act and the 1933 Act
Regulations and did not and will not (taking into account any
applicable prospectus supplement) 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.
Neither the Prospectus nor any amendments or supplements thereto, at
the time the Prospectus or any such amendment or supplement was issued
and at the Closing Time included or will include an untrue statement
of a material fact or omit to state a material fact necessary in order
to make the statements therein, in the light of the circumstances
under which they were made, not misleading. The representations and
warranties in this subsection shall not apply to statements in or
omissions from the Registration Statement or Prospectus or any
amendments or supplements thereto made in reliance upon and in
conformity with information contained in the last paragraph of the
cover page of the Prospectus Supplement, the first paragraph on the
inside cover page of the Prospectus Supplement and the third sentence
of the fourth full paragraph under the heading "Underwriting" in the
Prospectus Supplement and furnished to the Company in writing by any
Underwriter through ▇▇▇▇▇▇▇ ▇▇▇▇▇ expressly for use in the Prospectus
Supplement. The Prospectus filed as part of the Registration
Statement as originally filed or as part of any amendment thereto, or
filed pursuant to Rule 424 under the 1933 Act, complied
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when so filed in all material respects with the 1933 Act
Regulations and, if applicable, the Prospectus delivered to the
Underwriters for use in connection with this offering was identical
to the electronically transmitted copies thereof filed with the
Commission pursuant to ▇▇▇▇▇, except to the extent permitted by
Regulation S-T promulgated by the Commission ("Regulation S-T").
(ii) FORM S-3 REGISTRATION STATEMENT. The Operating Partnership
and the Company each meet the requirements for use of Form S-3 under
the 1933 Act. Each of the Registration Statement, the Form 10 and
any Rule 462(b) Registration Statement has become effective under the
1933 Act and no stop order suspending the effectiveness of the
Registration Statement or any Rule 462(b) Registration Statement or,
in each case, any part thereof has been issued and no proceeding for
that purpose has been instituted or is pending or, to the knowledge of
the Operating Partnership or the Company, is contemplated by the
Commission or the state securities authority of any jurisdiction and
any request on the part of the Commission for additional information
has been complied with. No order preventing or suspending the use of
the Prospectus has been issued and no proceeding for that purpose has
been instituted or is pending before or, to the knowledge of the
Operating Partnership or the Company, is contemplated by, the
Commission or the state securities authority of any jurisdiction.
(iii) INCORPORATED DOCUMENTS. The documents incorporated or
deemed to be incorporated by reference in the Registration Statement
and the Prospectus, including the Form 10, when they became effective
or at the time they were or hereafter are filed with the Commission,
complied and will comply in all material respects with the
requirements of the 1933 Act and the 1933 Act Regulations and the 1934
Act and the 1934 Act Regulations, as applicable, and, when read
together with the other information in the Prospectus, at the date of
the Prospectus and at the Closing Time 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, in
the light of the circumstances under which they were made, not
misleading.
(iv) INDEPENDENT ACCOUNTANTS. Ernst & Young LLP, the accounting
firm that certified the financial statements and supporting schedules
included or incorporated by reference in the Registration Statement
and the Prospectus, are independent public accountants as required by
the 1933 Act and the 1933 Act Regulations.
(v) FINANCIAL STATEMENTS. The financial statements included or
incorporated by reference in the Registration Statement and the
Prospectus, together with the related schedules and notes, present
fairly the financial position of the respective entity or entities
presented therein at the dates indicated, and the results of their
operations for the respective periods specified, and except as
otherwise stated in the Registration Statement, said financial
statements have been prepared in conformity with generally accepted
accounting principles applied on a consistent
4
basis ("GAAP") throughout the periods involved. The supporting
schedules, if any, included or incorporated by reference in the
Registration Statement present fairly in accordance with GAAP the
information required to be stated therein. The financial
information and data included in the Registration Statement and the
Prospectus present fairly the information included therein and have
been prepared on a basis consistent with that of the audited
financial statements incorporated by reference in the Registration
Statement. The pro forma financial information included in the
Registration Statement and the Prospectus presents fairly the
information shown therein, has been prepared in accordance with the
Commission's rules and guidelines with respect to pro forma
financial statements and has been properly compiled on the bases
described 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. Other than the financial information and
statements and supporting schedules included or incorporated
therein, no other historical or pro forma financial information or
supporting schedule is required by the 1933 Act or the 1933 Act
Regulations to be included in the Registration Statement.
(vi) NO MATERIAL ADVERSE CHANGE IN BUSINESS. Since the
respective dates as of which information is given in the Registration
Statement and the Prospectus, except as otherwise stated therein, (A)
there has been no material adverse change or, to the knowledge of the
Operating Partnership and the Company, any development involving a
prospective material adverse change, in the condition, financial or
otherwise, or in the earnings, assets or business affairs of the
Operating Partnership, the Company and their respective subsidiaries
considered as one enterprise, whether or not arising in the ordinary
course of business (a "Material Adverse Effect"), (B) there have been
no transactions entered into by the Operating Partnership, the Company
or any of the Subsidiaries (as defined below), other than those in the
ordinary course of business, which are material with respect to the
Operating Partnership, the Company and the Subsidiaries considered as
one enterprise, or would result, upon consummation, in any inaccuracy
in the representations contained in Section 1(a)(v) above, (C) there
has been no casualty, loss or condemnation or other adverse event with
respect to any Community (as defined in the Prospectus), or any site
owned by the Company and intended for development as so defined in the
Prospectus (the "Development Sites"), that is material with respect to
the Operating Partnership, the Company and the Subsidiaries considered
as one enterprise, (D) except for regular quarterly dividends on the
Company's Common Stock, par value $.01 per share ("Common Stock"), in
amounts per share that are consistent with past practice, there has
been no dividend or distribution of any kind declared, paid or made by
the Company on any class of its capital stock and (E) there has been
no material change in the capital stock or the partnership interests,
as applicable, of the Operating Partnership, the Company or any of the
Subsidiaries or any material change in the short-term debt or long-term
debt of the Operating Partnership, the Company or any Subsidiary.
5
(vii) GOOD STANDING OF OPERATING PARTNERSHIP. The Operating
Partnership has been duly organized and is validly existing as a
limited partnership in good standing under the Delaware Revised
Uniform Limited Partnership Act, as amended (the "Delaware Act"), with
full partnership power and authority to own, lease and operate its
properties, to conduct the business in which it is engaged or proposes
to engage as described in the Prospectus and to enter into and perform
its obligations under this Agreement. The Operating Partnership is
duly qualified or registered as a foreign partnership to transact
business and is in good standing in each jurisdiction in which such
qualification or registration is required, whether by reason of the
ownership, leasing or registration of property or the conduct of
business, except where the failure to so qualify or register would not
result in, either singly or in the aggregate, a Material Adverse
Effect. The Operating Partnership and the Subsidiaries are the only
subsidiaries of the Company. Except as described below, neither the
Operating Partnership, the Company nor any of the Subsidiaries own any
shares of stock or any other equity securities of any corporation or
has any equity interest in any firm, partnership, association or other
entity.
(viii) GOOD STANDING OF THE COMPANY. The Company has been
duly organized and is validly existing as a corporation in good
standing under the laws of the State of Maryland and has the corporate
power and authority to own, lease and operate its properties and to
conduct the business in which it is engaged or proposes to engage as
described in the Prospectus and to enter into and perform its
obligations under this Agreement. The Company is duly qualified as a
foreign corporation to transact business and is in good standing in
each jurisdiction in which such qualification is required, whether by
reason of the ownership or leasing of property or the conduct of
business, except where the failure to so qualify would not, either
singly or in the aggregate, result in a Material Adverse Effect.
(ix) GOOD STANDING OF PARTNERSHIPS. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ Finance
Partnership, L.P. (the "Financing Partnership") has been duly
organized and is validly existing as a limited partnership in good
standing under the laws of the State of Delaware, ▇.▇. ▇▇▇▇▇▇▇▇ L.P.
(the "▇▇▇▇▇▇▇▇ Partnership"), has been duly organized and is validly
existing as a limited partnership in good standing under the laws of
the State of Arizona, and ▇▇▇▇▇▇▇▇ ▇▇▇▇ Partners-85, L.P. (the
"▇▇▇▇▇▇▇▇ Partnership") has been duly organized and is validly
existing as a limited partnership in good standing under the laws of
the State of California. Each of the Financing Partnership, the
▇▇▇▇▇▇▇▇ Partnership and the ▇▇▇▇▇▇▇▇ Partnership has full
partnership power and authority to own, lease and operate its
properties and to conduct the business in which it is engaged or
proposes to engage as described in the Prospectus. Each of the
Financing Partnership, the ▇▇▇▇▇▇▇▇ Partnership and the ▇▇▇▇▇▇▇▇
Partnership is duly qualified or registered as a foreign partnership
and is in good standing in each jurisdiction in which such
qualification or registration is required, whether by reason of the
ownership, leasing or registration of property or the conduct of
business, except where the failure to so qualify or register would
not, either singly or in the aggregate, result in a Material Adverse
Effect. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ Finance, Inc., a wholly owned subsidiary of
6
the Company, is the sole general partner of the Financing Partnership
and is the holder of a 1% general partnership interest therein, and
the Operating Partnership is the holder of the remaining 99%
partnership interest therein. The Operating Partnership owns 83.99%
of the limited partnership interests of the ▇▇▇▇▇▇▇▇ Partnership and
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ Management, Inc. (the "Management Company") owns
1.01% of the general partnership interests therein and the remaining
15% limited partnership interest is owned by an individual third party
investor. The Operating Partnership owns 99% of the partnership
interests of the ▇▇▇▇▇▇▇▇ Partnership and the Company is the holder
of the remaining 1% partnership interest therein. All of the
partnership interests of the Financing Partnership, the ▇▇▇▇▇▇▇▇
Partnership and the ▇▇▇▇▇▇▇▇ Partnership are validly issued and
fully paid and are free and clear of any security interest, mortgage,
pledge, lien, encumbrance, claim or equity.
(x) GOOD STANDING OF THE SUBSIDIARIES. Each of the Management
Company (together with ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ Finance, Inc., the ▇▇▇▇▇▇▇▇
Partnership, the ▇▇▇▇▇▇▇▇ Partnership and the Financing Partnership,
the "Subsidiaries"), and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ Finance, Inc. has been duly
organized and is validly existing as a corporation in good standing
under the laws of the state of its incorporation, with corporate power
and authority to own, lease and operate its properties and to conduct
the business in which it is engaged or proposes to engage as described
in the Prospectus. Each of the Management Company and ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ Finance, Inc. is duly qualified as a foreign corporation to
transact business and is in good standing in each jurisdiction in
which such qualification is required, whether by reason of the
ownership or leasing of property or the conduct of business, except
where the failure to so qualify, either singly or in the aggregate,
would not result in a Material Adverse Effect. All of the issued and
outstanding capital stock of each of the Management Company and ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ Finance, Inc. has been duly authorized and validly issued,
is fully paid and nonassessable and is free and clear of any security
interest, mortgage, pledge, lien, encumbrance, claim or equity, and
none of such outstanding shares of capital stock was issued in
violation of preemptive or similar rights of any securityholder of
such Subsidiary. The ownership of the shares of capital stock of each
of the Management Company and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ Finance, Inc. is as
described in the prospectus for the Company's initial public offering
dated August 10, 1994. All of the capital stock of ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Finance, Inc. has been owned by the Company since the formation of
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ Finance, Inc. and such corporation is a "qualified
REIT subsidiary" as defined in Section 856(i)(2) of the Internal
Revenue Code of 1986, as amended (the "Code").
(xi) AUTHORIZATION OF DEBT SECURITIES. The Securities to be
purchased from the Operating Partnership have been duly authorized by
the Operating Partnership for issuance and sale to the Underwriters
pursuant to this Agreement and, at the Closing Time, will have ben
duly executed by the Operating Partnership. Such Securities, when
issued and authenticated in the manner provided for in the Indenture
and delivered by the Operating Partnership
7
pursuant to this Agreement against payment of the consideration set
forth herein, will constitute valid and legally binding obligations
of the Operating Partnership, enforceable against the Operating
Partnership in accordance with their terms, except as the
enforcement thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or
affecting creditors' rights generally or by general equitable
principles and will be in the form contemplated by, and entitled
to the benefits of, the Indenture.
(xii) CAPITALIZATION. All of the issued and outstanding
shares of Common Stock, par value $.01 per share of the Company (the
"Common Shares") have been duly authorized and are validly issued,
fully paid and nonassessable, and have been offered and sold in
compliance with all applicable laws, including, without limitation,
federal and state securities laws. None of the outstanding Common
Shares were issued in violation of the preemptive or other similar
rights of any securityholder of the Company. The ownership thereof is
as set forth in the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1996, which is included in the
Prospectus by reference. No shares of capital stock of the Company
are reserved for any purpose except in connection with (A) the 1994
Stock Option Plan of the Company as described in the Prospectus (B)
the possible issuance of Common Shares upon the redemption of Units of
the Operating Partnership pursuant to the Partnership Agreement of the
Operating Partnership. Except for options under the 1994 Stock Option
Plan and Units of the Operating Partnership, there are no outstanding
options, rights (preemptive or otherwise) or warrants to purchase or
to subscribe for such shares or any other securities of the Company.
(xiii) OPERATING PARTNERSHIP UNITS. The Units issued by the
Operating Partnership, including, without limitation, the Units issued
to the Company, have been duly authorized for issuance by the
Operating Partnership to the holders thereof and are validly issued,
fully paid and nonassessable. Immediately after the Closing Time,
__________ Units will be issued and outstanding, and the Company will
be the sole general partner of the Operating Partnership and will be
the holder of __________ Units representing ____% of the outstanding
Units in the Operating Partnership, including the Company's 1% general
partner interest therein. The _________ Units and any Common Shares
issued upon conversion of Units have been offered and sold in
compliance with all applicable laws, including, without limitation,
federal and state securities laws. The Company has duly reserved a
sufficient number of Common Shares for issuance upon redemption of
outstanding Units and exercise of options under the 1994 Stock Option
Plan, as described in the Partnership Agreement of the Operating
Partnership.
(xiv) DESCRIPTION OF THE SECURITIES AND THE INDENTURE. The
Securities and the Indenture will conform in all material respects to
the respective statements relating thereto contained in the Prospectus
and will be in substantially the respective
8
forms filed or incorporated by reference, as the case may be, as
exhibits to the Registration Statement.
(xv) AUTHORIZATION OF THE INDENTURE. The Indenture has been
duly authorized by the Operating Partnership and has been duly
qualified under the 1939 Act and, when duly executed and delivered by
the Operating Partnership and the Trustee, will constitute a valid and
binding agreement of the Operating Partnership, enforceable against
the Operating Partnership in accordance with its terms, except as the
enforcement thereof may be limited by bankruptcy, insolvency
(including, without limitation, all laws relating to fraudulent
transfers), reorganization, moratorium or similar laws relating to or
affecting creditor's rights generally or by general equitable
principles.
(xvi) AUTHORIZATION OF AGREEMENT. This Agreement has been
duly and validly authorized, executed and delivered by the Operating
Partnership and the Company, and assuming due authorization, execution
and delivery by the Underwriters, is a valid and binding agreement of
each of the Operating Partnership and the Company, enforceable against
each of the Operating Partnership and the Company, in accordance with
its terms; PROVIDED, HOWEVER, that the enforceability of this
Agreement may be limited by bankruptcy, insolvency, reorganization or
other similar laws affecting creditors' rights generally and by
general equitable principles, and the unenforceability under certain
circumstances of provisions providing for the indemnification of or
contribution to a party with respect to a liability where such
indemnification or contribution is contrary to public policy or
prohibited by law.
(xvii) ABSENCE OF DEFAULTS AND CONFLICTS. (A) None of the
Operating Partnership, the Company or any Subsidiary is in violation
of its charter, bylaws, certificate of limited partnership,
partnership agreement or other governing document, as the case may be,
and none of such entities is or will be in default in the performance
or observance of any obligation, agreement, covenant or condition
contained in any contract, indenture, mortgage, deed of trust, loan or
credit agreement, note, lease or other agreement or instrument to
which such entity is a party or by which such entity may be bound or
affected, or to which any of the property or assets of such entity is
subject (collectively, "Agreements and Instruments"), except for such
violations or defaults that would not result in a Material Adverse
Effect; (B) the execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated herein and in
the Registration Statement (including the issuance and sale of the
Securities and the use of proceeds from the sale of the Securities as
described in the Prospectus Supplement under the caption "Use of
Proceeds") and compliance by each of the Operating Partnership and the
Company with its obligations hereunder have been duly authorized by
all necessary corporate or partnership action on the part of the
Operating Partnership and the Company or any Subsidiary, as the case
may be, and do not and will not, whether with or without the giving of
notice or passage of time or both, conflict with or constitute a
breach of, or default or Repayment Event (as defined below) under, or
result in the creation or imposition of any lien, charge or
9
encumbrance upon any property or assets of the Operating Partnership,
the Company or any of the Subsidiaries pursuant to, any Agreement or
Instrument, nor will such action result in any violation of the
charter, bylaws, certificate of limited partnership, partnership
agreement or other governing document, as the case may be, of such
entity or any applicable law, statute, rule, regulation, judgment,
order, writ or administrative or court decree. As used herein, a
"Repayment Event" means any event or condition which gives the holder
of any note, debenture or other evidence of indebtedness (or any
person acting on such holder's behalf) the right to require the
repurchase, redemption or repayment of all or a portion of such
indebtedness by the Operating Partnership, the Company or any of the
Subsidiaries.
(xviii) ABSENCE OF PROCEEDINGS. There is no action, suit or
proceeding before or by any court or governmental agency or body,
domestic or foreign, now pending, or, to the knowledge of the
Operating Partnership or the Company, threatened, against or
affecting the Operating Partnership, the Company or any Subsidiary, or
of which any of their respective property or assets is the subject,
which is required to be disclosed in the Registration Statement, other
than as disclosed therein, or which might result in a Material Adverse
Effect or which might materially and adversely affect the consummation
of the transactions contemplated by this Agreement or the performance
by the Operating Partnership or the Company of its obligations
hereunder. All pending legal or governmental proceedings to which the
Operating Partnership, the Company or any Subsidiary is a party or of
which any of their respective property or assets is the subject which
are not described in the Registration Statement, including ordinary
routine litigation incidental to the business, are, considered in the
aggregate, not material to the earnings, assets, business affairs or
business prospects of the Operating Partnership, the Company and the
Subsidiaries considered as one enterprise and could not reasonably be
expected to result in a Material Adverse Effect. There are no
contracts, indentures, mortgages, loan agreements, notes, leases or
other instruments or documents of the Operating Partnership, the
Company or any of the Subsidiaries which are required to be described
or referred to in the Registration Statement, the Prospectus or other
documents incorporated by reference therein or to be filed as exhibits
to the Registration Statement by the 1933 Act or by the 1933 Act
Regulations other than those described or referred to therein or filed
as exhibits thereto, and the descriptions thereof or references
thereto in the Registration Statement and the Prospectus are true and
correct in all material respects.
(xix) TAX STATUS OF THE COMPANY. The Company has been and is
organized in conformity with the requirements for qualification as a
real estate investment trust ("REIT") under the Code, and its method
of operation has at all times enabled, and its proposed method of
operation will enable, the Company to satisfy the requirements for
taxation as a REIT under the Code.
(xx) POSSESSION OF INTELLECTUAL PROPERTY. The Operating
Partnership, the Company and the Subsidiaries own or possess, or can
acquire on reasonable terms, the licenses, inventions, copyrights,
know-how (including trade
10
secrets and other unpatented and/or unpatentable proprietary or
confidential information, systems or procedures), trademarks,
service marks and trade names (collectively, the "Proprietary
Rights") presently employed by them or necessary to carry on the
business now operated by them, and neither the Operating
Partnership, the Company nor any of the Subsidiaries has received
any notice or is otherwise aware of any infringement of or conflict
with asserted rights of others with respect to any Proprietary
Rights, or of any facts which would render any Proprietary Rights
invalid or inadequate to protect the interests of the Operating
Partnership, the Company or any of the Subsidiaries therein, and
which infringement or conflict (if the subject of any unfavorable
decision, ruling or finding) or invalidity or inadequacy,
individually or in the aggregate, would result in a Material
Adverse Change.
(xxi) ABSENCE OF FURTHER REQUIREMENTS. No filing with, or
authorization, approval, consent, license, order, registration,
qualification or decree of, any court or governmental authority or
agency is necessary or required for the performance by the Operating
Partnership, the Company or any Subsidiary in connection with the
offering, issuance or sale of the Securities hereunder or the
consummation of the transactions contemplated by this Agreement,
except such as may be required under the 1933 Act or the 1933 Act
Regulations or securities laws of any state or other jurisdiction and
except for such as have been obtained.
(xxii) POSSESSION OF LICENSES AND PERMITS. Each of the
Operating Partnership, the Company and the Subsidiaries possesses, or
can acquire on reasonable terms, such certificates, licenses,
approvals, consents, authorizations or permits ("Governmental
Licenses") issued by the appropriate state, federal or foreign
regulatory agencies or bodies necessary to conduct the business now
operated by them; the Operating Partnership, the Company and the
Subsidiaries are in compliance with the terms and conditions of all
such Governmental Licenses, except where the failure so to comply
would not, singly or in the aggregate, have a Material Adverse Effect;
all of the Governmental Licenses are valid and in full force and
effect, except when the invalidity of such Governmental Licenses or
the failure of such Governmental Licenses to be in full force and
effect would not have a Material Adverse Effect; and none of the
Operating Partnership, the Company or any Subsidiary has received any
notice of proceedings relating to the revocation or modification of
any such certificate, authority or permit which, singly or in the
aggregate, if the subject of an unfavorable decision, ruling or
finding, would result in a Material Adverse Effect.
(xxiii) ABSENCE OF LABOR DISPUTE. No material labor dispute
with the employees of the Operating Partnership, the Company or any of
the Subsidiaries exists or, to the knowledge of the Operating
Partnership, the Company or any of the Subsidiaries, is imminent; and
the Company is not aware of any existing or imminent labor disturbance
by the employees of any of its principal contractors which might be
expected to result in a Material Adverse Effect.
11
(xxiv) INVESTMENT COMPANY ACT. None of the Operating
Partnership, the Company or any Subsidiary is, or upon the issuance
and sale of the Securities as herein contemplated and the application
of the net proceeds therefrom as described in the Prospectus will be,
an "investment company" or an "affiliated person" of, or "promoter" or
"principal underwriter" for, an "investment company," as such terms
are defined under the Investment Company Act of 1940, as amended (the
"1940 Act"), or is or will be required to be registered under the 1940
Act.
(xxv) ENVIRONMENTAL LAWS. (A) Except as has been disclosed
in the Prospectus, the Communities, the properties managed by the
Management Company (the "Managed Properties") and any other real
property owned, occupied or operated by the Operating Partnership, the
Company or any Subsidiary, are presently operated in compliance with
all Environmental Laws (as defined below), except where a failure to
comply would not, either singly or in the aggregate, result in a
Material Adverse Effect.
(B) Except as has been disclosed in the Prospectus, there
are no Environmental Laws requiring any remediation, clean up,
repairs, construction or capital expenditures (other than normal
maintenance) with respect to the Communities, the Development Sites or
the Managed Properties which would have, either singly or in the
aggregate, a Material Adverse Effect.
(C) No notices of any violation or alleged violation of any
Environmental Laws relating to the Communities, the Managed Properties
or the Development Sites or their uses have been received by any of
the Operating Partnership, the Company, any Subsidiary or, to the best
knowledge of the Operating Partnership, and the Company, by any prior
owner, operator or occupant of such properties, except for such
violations which would not, either singly or in the aggregate, result
in a Material Adverse Effect, and (ii) there are no writs,
injunctions, decrees, orders or judgments outstanding, or any actions,
suits, claims, proceedings or investigations pending or, to the best
knowledge of the Operating Partnership and the Company, threatened,
relating to the ownership, use, maintenance or operation of the
Communities, the Managed Properties or the Development Sites.
(D) Except as has been disclosed in the Prospectus, all
material permits and licenses required under any Environmental Laws in
respect of the operations of the Communities or the Managed Properties
have been obtained, and such properties and the owners and operators
thereof are in compliance, in all material respects, with the terms
and conditions of such permits and licenses.
(E) All written reports of environmental surveys, audits,
investigations and assessments in the possession or control of the
Operating Partnership and the Company relating to the Communities and
the Development Sites (the "Environmental Reports") have been
disclosed or made available to the Underwriter or its counsel.
12
(F) Except as set forth in the Environmental Reports, no
Community, Managed Property or Development Site (i) is included or, to
the best knowledge of the Company and the Operating Partnership,
proposed for inclusion on the National Priorities List issued pursuant
to CERCLA (as defined below) by the United States Environmental
Protection Agency (the "EPA") or on the Comprehensive Environmental
Response, Compensation, and Liability Information System database
maintained by the EPA as a potential CERCLA removal, remedial or
response site or (ii) is included or, to the best knowledge of the
Company, proposed for inclusion on any similar list of potentially
contaminated sites pursuant to any other applicable Environmental Law
and none of the Operating Partnership, the Company or any Subsidiary
has received any written notice from the EPA or any other Governmental
Authority proposing the inclusion of any Community or Managed Property
on such list.
(G) Except as disclosed in the Environmental Reports, there
currently are no underground or above-ground storage tanks located on
or in any Community, Managed Property or Development Site.
(H) "Environmental Law" means all applicable statutes,
regulations, rules, ordinances, codes, licenses, permits, orders,
demands, approvals, authorizations and similar items of all
governmental agencies, departments, commissions, boards, bureaus or
instrumentalities of the United States, states and political
subdivisions thereof and all applicable judicial, administrative and
regulatory decrees, judgments and orders relating to the protection of
human health or the environment as in effect as of the date hereof,
including but not limited to those pertaining to reporting, licensing,
permitting, investigation and remediation of emissions, discharges,
releases or threatened releases of "Hazardous Materials," substances,
pollutants, contaminants or hazardous or toxic substances, materials
or wastes whether solid, liquid or gaseous in nature, into the air,
surface water, ground water or land, or relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport
or handling of substances, pollutants, contaminants or hazardous or
toxic substances, materials, or wastes, whether solid, liquid or
gaseous in nature, including by way of illustration and not by way of
limitation, (x) the Comprehensive Environmental Response, Compensation
and Liability Act (42 U.S.C. Sections 9601 ET SEQ.) ("CERCLA"), the
Resource Conservation and Recovery Act (42 U.S.C. Sections 6901 ET
SEQ.), the Clean Air Act (42 U.S.C. Sections 7401 ET SEQ.), the
Federal Water Pollution Control Act (33 U.S.C. Sections 1251), the
Safe Drinking Water Act (42 U.S.C. Sections 300f ET SEQ.), the Toxic
Substances Control Act (15 U.S.C. Sections 2601 ET SEQ.), the
Endangered Species Act (16 U.S.C. Sections 1531 ET SEQ.), the
Emergency Planning and Community Right-to-Know Act of 1986 (42 U.S.C.
Sections 11001 ET SEQ.), the Hazardous Materials Transportation Act,
as amended (49 U.S.C. Section 1801 ET SEQ.), the Clean Water Act, as
amended (33 U.S.C. Section 1251 ET SEQ.), the Federal Insecticide,
Fungicide and Rodenticide Act (7 U.S.C. Section 136 ET SEQ.), and the
Occupational Safety and Health Act, as amended (29 U.S.C. Section 651
ET SEQ.), and (y) analogous state and local provisions.
13
(I) "Hazardous Material" means any chemical substance:
(i) the presence of which requires investigation or
remediation under any federal, state or local statute,
regulation, ordinance, order, action or policy, administrative
request or civil complaint under any of the foregoing or under
common law; or
(ii) which is defined as a "hazardous waste" or
"hazardous substance" under any federal, state or local statute,
regulation or ordinance or amendments thereto as in effect as of
the date hereof, or as hereafter amended, including, without
limitation, the Comprehensive Environmental Response,
Compensation and Liability Act (42 U.S.C. Section 9601 ET SEQ.)
and or the Resource Conservation and Recovery Act (42 U.S.C.
Section 6901 ET SEQ.); or
(iii) which is toxic, explosive, corrosive,
flammable, infectious, radioactive, carcinogenic, mutagenic or
otherwise hazardous and is regulated by any governmental
authority, agency, department, commission, board, agency or
instrumentality of the United States, or any state or any
political subdivision thereof having or asserting jurisdiction
over any of the Communities, the Managed Properties or the
Development Sites; or
(iv) the presence of which on any of the Communities,
the Managed Properties or the Development Sites causes a nuisance
upon such properties or to adjacent properties or poses a hazard
to the health or safety of persons on or about any of the
Communities, the Managed Properties or the Development Sites; or
(v) the presence of which on adjacent properties
constitutes a trespass by any owner or operator of the
Communities, the Managed Properties, the Development Sites or any
Other Property; or
(vi) which contains gasoline, diesel fuel or other
petroleum hydrocarbons, polychlorinated biphenyls (PCBs) or
asbestos or asbestos-containing materials or urea formaldehyde
foam insulation; or
(vii) radon gas.
(J) "Governmental Authority" shall mean any federal, state
or local governmental office, agency or authority having the duty or
authority to promulgate, implement or enforce any Environmental Law.
14
(xxvi) TITLE TO PROPERTY. The Operating Partnership, the
Financing Partnership or the ▇▇▇▇▇▇▇▇ Partnership or the ▇▇▇▇▇▇▇▇
Partnership has good and marketable fee simple title to the land
underlying each of the Communities and the Development Sites and good
and marketable title to the improvements thereon (in each case with
title insurance thereon in full force and effect and which is adequate
in accordance with industry standards) and all other assets that are
required for the effective operation of such Communities in the manner
in which they are currently operated, subject only to Permitted
Exceptions (as herein defined); (B) all liens, charges or encumbrances
on or affecting any of the Communities or the other property and
assets of the Operating Partnership, the Company or any of the
Subsidiaries which are required to be disclosed in the Prospectus are
disclosed therein; (C) the Operating Partnership or the Financing
Partnership (or the Management Company as agent for the Operating
Partnership or the Financing Partnership) is the lessor of all tenant
leases at each of the Communities; (D) each of the Communities
complies in all material respects with all applicable federal, state
and local codes, laws and regulations (including, without limitation,
building and zoning codes, laws and regulations and laws relating to
handicapped access to the Communities); (E) there are in effect for
the property and assets of the Operating Partnership, the Company and
the Subsidiaries insurance policies covering risks and in amounts that
are commercially reasonable for the types of assets owned by them and
that are consistent with the types and amounts of insurance typically
maintained by prudent owners of similar assets, and none of the
Operating Partnership, the Company or any Subsidiary has received from
any insurance company notice of any material defects or deficiencies
affecting the insurability of any such assets or any notices of
cancellation or intent to cancel any such policies; (F) none of the
Operating Partnership, the Company or any of the Subsidiaries has
knowledge of any pending or threatened condemnation proceedings,
zoning change, or other proceeding or action that will materially
adversely affect the size of, use of, improvements on, construction on
or access to the Communities; and (G) none of the Operating
Partnership, the Company nor any of the Subsidiaries has received from
any governmental authority notice of any violation of any federal,
state or municipal law, rule or regulation (including relating to
environmental matters) concerning the Communities or any part thereof
which has not heretofore been cured, except where a failure to cure
would not result in a Material Adverse Effect. As used in this
Agreement, "Permitted Exceptions" means: (i) real estate taxes and
assessments not yet delinquent; (ii) covenants, restrictions,
easements and other similar agreements, provided that the same are not
violated by existing improvements or the current use and operation of
a Community; (iii) zoning laws, ordinances and regulations, building
codes, rules and other governmental laws, regulations, rules and
orders affecting each Community, provided that the same are not
violated by existing improvements or the current use and operation of
a Community; (iv) any state of facts disclosed by the surveys relating
to the Communities previously provided to the Underwriters;
(v) mortgage financing as described in the Prospectus.
15
(xxvii) RIGHT OF FIRST REFUSAL. No person or entity has any
option or right of first refusal to purchase all or any part of any
Community or Development Site or any interest therein.
(xxviii) TAX RETURNS. Each of the Operating Partnership, the
Company and the Subsidiaries has filed all federal, state, local and
foreign income, franchise, sales and other tax returns which have been
required to be filed and has paid all taxes required to be paid and
any other assessment, fine or penalty levied against it, to the extent
that any of the foregoing is due and payable, except, in all cases,
for any such tax, assessment, fine or penalty that is being contested
in good faith through appropriate proceedings and as to which
appropriate reserves have been established.
(xxix) REGULATION M. None of the Operating Partnership, the
Company, the Subsidiaries or any of their respective directors,
officers or controlling persons, has taken or will take, directly or
indirectly, any action resulting in a violation of Regulation M under
the 1934 Act, or designed to cause or result in, or that has
constituted or that reasonably might be expected to constitute, the
stabilization or manipulation of the price of any security of the
Operating Partnership or the Company to facilitate the sale or resale
of the Securities.
(xxx) REGISTRATION RIGHTS. There are no persons with
registration or other similar rights to have any securities registered
pursuant to the Registration Statement other than AEW Partners, L.P. a
Delaware limited partnership, CIIF Associates II Limited Partnership,
a Delaware limited partnership, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and ▇. ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, who have waived such rights, and there are no other
persons with registration or other similar rights to have any
securities otherwise registered by the Company under the 1933 Act,
except, in the latter case, holders of Units issued in connection with
the Company's purchase of the Ashton Apartments in Corona Hills,
California and Acacia Creek in Scottsdale, Arizona, Messrs. ▇▇▇▇▇ and
▇▇▇▇▇▇▇▇▇▇ and the Continuing Investors (as defined in the Company's
initial public offering prospectus).
(xxxi) BROKER'S FEES. Neither the Operating Partnership nor
the Company has incurred any liability for finder's or broker's fees
or agent's commissions (other than those payable to the Underwriters)
in connection with the execution and delivery of this Agreement, the
offer and sale of the Securities or the transactions contemplated
hereby.
(xxxii) REGISTRATION AS BROKER. Neither the Operating
Partnership, the Company nor any Subsidiary is required to register as
a "broker" or "dealer" in accordance with the provisions of the 1934
Act or the rules and regulations promulgated thereunder.
(xxxiii) COMPLIANCE WITH CUBA ACT. The Operating Partnership
has complied with, and is and will be in compliance with, the
provisions of that certain
16
Florida act relating to disclosure of doing business with Cuba,
codified as Section 517.075 of the Florida statutes, and the rules
and regulations thereunder (collectively, "Cuba Act") or is exempt
therefrom.
(xxxiv) INVESTMENT GRADE RATING. The Company has received an
investment grade rating of BBB- from Standard & Poor's Corporation and
Baa3 from ▇▇▇▇▇'▇ Investors Service, Inc. with respect to the
Securities.
SECTION 2. SALE AND DELIVERY TO THE UNDERWRITER; CLOSING.
(a) SECURITIES. On the basis of the representations and warranties
herein contained and subject to the terms and conditions herein set forth, the
Operating Partnership agrees to sell to each Underwriter, severally and not
jointly, and each Underwriter, severally and not jointly, agrees to purchase
from the Operating Partnership, at the prices set forth in Schedule B hereto
(which is a part hereof), the aggregate principal amount of Securities set forth
in Schedule A hereto, opposite the name of such Underwriter, plus any additional
principal amount of Securities which such Underwriter may become obligated to
purchase pursuant to the provisions of Section 10 hereof. The initial public
offering price, the purchase price to be paid by the Underwriters for the
Securities, and the interest rate on the Securities are set forth on Schedule B
hereto.
(b) PAYMENT. Payment of the purchase price for, and delivery of
certificates for, the Securities shall be made at the offices of ▇▇▇▇▇▇, ▇▇▇▇ &
▇▇▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇; or at such
other place as shall be agreed upon by the Underwriters and the Company, at
7:00 a.m. (Los Angeles time), on the third (fourth, if the pricing occurs after
4:30 p.m. Eastern Time on any given day) business day after the date hereof, or
such other time not later than seven business days after such date as shall be
agreed upon by the Underwriters and the Operating Partnership (such time and
date of payment and delivery being herein called the "Closing Time").
Payment shall be made to the Operating Partnership, by wire transfer
of immediately available funds or similar same day funds payable to the order of
the Operating Partnership against delivery to the Underwriters of certificates
for the Securities to be purchased by them. Certificates for the Securities
shall be in such denominations ($1,000 or integral multiples thereof) and
registered in such names as the Underwriters may request in writing at least one
full business day before the Closing Time. It is understood that each
Underwriter has authorized the other Underwriter, for its account, to accept
delivery of, receipt for, and make payment of the purchase price for Securities
which it has agreed to purchase. ▇▇▇▇▇▇▇ ▇▇▇▇▇, individually and not as
representative of the Underwriters, may (but shall not be obligated to) make
payment of the purchase price for the Securities to be purchased by any
Underwriter whose funds have not been received by the Closing Time, but such
payment shall not relieve such Underwriter from its obligations hereunder. The
certificates for the Securities will be made available for examination and
packaging by the Underwriters in the City of New York not later than 10:00 a.m.
(Eastern time) on the last business day prior to the Closing Time.
17
SECTION 3. COVENANTS OF THE OPERATING PARTNERSHIP. Each of the
Operating Partnership and the Company, jointly and severally, covenants with
each Underwriter as follows:
(a) COMPLIANCE WITH SECURITIES REGULATIONS AND COMMISSION
REQUESTS. Subject to Section 3(b), the Operating Partnership or the Company
will notify the Underwriters immediately, and confirm the notice in writing,
(i) when any post-effective amendment to the Registration Statement or Form
10 becomes effective, or any supplement to the Prospectus or any amended
Prospectus shall have been filed, (ii) of the receipt of any comments from
the Commission, (iii) of any request by the Commission for any amendment to
the Registration Statement, the Form 10 or any amendment or supplement to the
Prospectus or for additional information and (iv) of the issuance by the
Commission of any stop order suspending the effectiveness of the Registration
Statement or of any order preventing or suspending the use of the Prospectus,
or of the suspension of the qualification of the Securities for offering or
sale in any jurisdiction, or the initiation or threatening of any proceedings
for any of such purposes. The Operating Partnership or the Company, as
applicable, will promptly effect the filings necessary pursuant to Rule
424(b) and will take such steps as it deems necessary to ascertain promptly
whether the form of prospectus transmitted for filing under Rule 424(b) was
received for filing by the Commission and, in the event that it was not, it
will promptly file such prospectus. The Operating Partnership or the Company
will make every reasonable effort to prevent the issuance of any stop order
and, if any stop order is issued, to obtain the lifting thereof at the
earliest possible moment. If the Operating Partnership or the Company elects
to rely on Rule 434, the Company will provide the Underwriters with copies of
the form of Rule 434 Prospectus, in such number as the Underwriters may
reasonably request, and file or transmit for filing with the Commission the
form of Prospectus complying with Rule 434 of the 1933 Act in accordance with
Rule 424(b) of the 1933 Act Regulations by the close of business in New York
on the business day immediately succeeding the date of this Agreement.
(b) FILING OF AMENDMENTS. The Operating Partnership and the Company,
as applicable, will give the Underwriter notice of its intention to file or
prepare any amendment to the Registration Statement (including any filing under
Rule 462(b)), the Form 10, any Term Sheet or any amendment, supplement or
revision to either the prospectus included in the Registration Statement at the
time it became effective or to the Prospectus, whether pursuant to the 1933 Act,
the 1934 Act or otherwise, will furnish the Underwriters with copies of any such
documents a reasonable amount of time prior to such proposed filing or use, as
the case may be, and will not file any such documents to which the Underwriters
or counsel for the Underwriters shall reasonably object.
(c) RULE 434. If the Operating Partnership uses Rule 434, it will
comply with the requirements of Rule 434.
(d) DELIVERY OF REGISTRATION STATEMENT. The Operating Partnership
and the Company will deliver to the Underwriters and counsel for the
Underwriters, without charge, signed copies of the Registration Statement as
originally filed and of each amendment thereto (including exhibits filed
therewith or incorporated by reference therein and documents
18
incorporated or deemed to be incorporated by reference therein) and signed
copies of all consents and certificates of experts, and will also deliver to
the Underwriters, without charge, conformed copies of the Registration
Statement as originally filed and of each amendment thereto (excluding
exhibits). The copies of the Registration Statement and each amendment
thereto furnished to the Underwriters will be identical to the electronically
transmitted copies thereof filed with the Commission pursuant to ▇▇▇▇▇,
except to the extent permitted by Regulation S-T.
(e) DELIVERY OF PROSPECTUSES. The Operating Partnership has
delivered to the Underwriters, without charge, as many copies of the Prospectus
as the Underwriters reasonably requested, and the Operating Partnership hereby
consents to the use of such copies for purposes permitted by the 1933 Act. The
Operating Partnership will furnish to the Underwriters, without charge, during
the period when the Prospectus is required to be delivered under the 1933 Act or
the 1934 Act, such number of copies of the Prospectus (as amended or
supplemented) as the Underwriters may reasonably request. The Prospectus and
any amendments or supplements thereto furnished to the Underwriters will be
identical to the electronically transmitted copies thereof filed with the
Commission pursuant to ▇▇▇▇▇, except to the extent permitted by Regulation S-T.
(f) CONTINUED COMPLIANCE WITH SECURITIES LAWS. The Operating
Partnership will comply with the 1933 Act and the 1933 Act Regulations, the 1934
Act and the 1934 Act Regulations so as to permit the completion of the
distribution of the Securities as contemplated in this Agreement and in the
Prospectus. If at any time when a prospectus is required by the 1933 Act to be
delivered in connection with sales of the Securities, any event shall occur or
condition shall exist as a result of which it is necessary, in the opinion of
counsel for the Underwriters or for the Operating Partnership and the Company,
to amend the Registration Statement or amend or supplement the Prospectus in
order that the Prospectus will not include any untrue statement of a material
fact or omit to state a material fact necessary in order to make the statements
therein not misleading in the light of the circumstances existing at the time it
is delivered to a purchaser, or if it shall be necessary, in the opinion of such
counsel, at any such time to amend the Registration Statement or amend or
supplement the Prospectus in order to comply with the requirements of the 1933
Act or the 1933 Act Regulations, the Operating Partnership or the Company, as
applicable, will promptly prepare and file with the Commission, subject to
Section 3(b), such amendment or supplement as may be necessary to correct such
statement or omission or to make the Registration Statement or the Prospectus
comply with such requirements, and the Operating Partnership or the Company will
furnish to the Underwriters such number of copies of such amendment or
supplement as the Underwriters may reasonably request.
(g) BLUE SKY QUALIFICATIONS. The Operating Partnership will use its
best efforts, in cooperation with the Underwriters, to qualify the Securities
for offering and sale under the applicable securities laws of such states and
other jurisdictions of the United States as the Underwriters may designate;
PROVIDED, HOWEVER, that the Operating Partnership shall not be obligated to
qualify as a foreign corporation in any jurisdiction in which it is not so
qualified, to file any general consent to service of process or to subject
itself to taxation. In each jurisdiction in which the Securities have been so
qualified, the Operating Partnership
19
will file such statements and reports as may be required by the laws of such
jurisdiction to continue such qualification in effect for a period of not
less than one year from the effective date of the Registration Statement and
any Rule 462(b) Registration Statement.
(h) RULE 158. The Operating Partnership will make generally
available to its security holders as soon as practicable, but not later than 90
days after the close of the period covered thereby, an earnings statement (in
form complying with the provisions of Rule 158 of the 1933 Act Regulations)
covering a twelve-month period beginning not later than the first day of the
Operating Partnership's fiscal quarter next following the "effective date" (as
defined in said Rule 158) of the Registration Statement.
(i) USE OF PROCEEDS. The Operating Partnership will use the net
proceeds received by it from the sale of the Securities in the manner specified
in the Prospectus under the heading "USE OF PROCEEDS."
(j) REIT QUALIFICATION. The Company has, since its formation,
operated in such a manner, and will continue to operate in such a manner, as to
qualify for taxation as a "real estate investment trust" under the Code.
(k) ACTION BY THE OPERATING PARTNERSHIP REGARDING PRICE OF
SECURITIES. Except for the authorization of actions permitted to be taken by
the Underwriters as contemplated herein or in the Prospectus, neither the
Operating Partnership nor the Company will (i) take, directly or indirectly, any
action designed to cause or to result in, or that might reasonably be expected
to constitute, the stabilization or manipulation of the price of any security of
the Operating Partnership or the Company to facilitate the sale or resale of the
Securities, (ii) sell, bid for or purchase the Securities or pay any person any
compensation for soliciting purchases of the Securities or (iii) pay or agree to
pay to any person any compensation for soliciting another to purchase any other
securities of the Operating Partnership or the Company.
(l) CUBA ACT. In accordance with the Cuba Act and without limitation
to the provisions of Sections 6 and 7 hereof, the Operating Partnership agrees
to indemnify and hold harmless the Underwriters from and against any and all
loss, liability, claim, damage and expense whatsoever (including fees and
disbursements of counsel), as incurred, arising out of any violation by the
Operating Partnership of the Cuba Act.
(m) REPORTING REQUIREMENTS. The Operating Partnership and the
Company, during the period when the Prospectus is required to be delivered under
the 1933 Act or the 1934 Act, will file all documents required to be filed with
the Commission pursuant to the 1934 Act within the time periods required by the
1934 Act and the 1934 Act Regulations.
(n) REPRESENTATIONS AND WARRANTIES. Prior to the Closing Time, the
Operating Partnership and the Company will notify the Underwriters in writing
immediately if (i) any event occurs that renders any of the representations and
warranties of the Operating Partnership and the Company contained herein
inaccurate or incomplete in any material respect or (ii) with respect to the
representations and warranties of the Operating Partnership
20
and the Company contained herein that are limited to materiality of the
Operating Partnership and the Company, and the Subsidiaries considered as one
enterprise, any matter or event occurs that would render such representation
or warranty inaccurate or incomplete if given with respect to the Operating
Partnership, the Company or any Subsidiary on an individual basis.
SECTION 4. PAYMENT OF EXPENSES.
(a) EXPENSES. The Operating Partnership will pay all expenses
incident to the performance of its obligations under this Agreement, including
(i) the printing (or reproduction) and filing of the Registration Statement as
originally filed and of each amendment thereto, (ii) the preparation, issuance
and delivery of the certificates for the Securities to the Underwriters,
including any transfer taxes or duties payable upon the sale of the Securities
to the Underwriters, (iii) the fees and other charges of the Operating
Partnership's counsel, accountants and other advisors, (iv) the qualification of
the Securities under securities laws in accordance with the provisions of
Section 3(g) hereof, including filing fees and the reasonable fees and
disbursements of counsel for the Underwriters in connection therewith and in
connection with the preparation of the Blue Sky Survey and any supplement
thereto, (v) the printing (or reproduction) and delivery to the Underwriters of
copies of the Registration Statement as originally filed and of each amendment
thereto and of the Prospectus and any amendments or supplements thereto,
(vi) the printing (or reproduction) and delivery to the Underwriters of copies
of the Blue Sky Survey, (vii) the fees of the National Association of Securities
Dealers, Inc. ("NASD"), if any, including the reasonable fees and other charges
of counsel for the Underwriter in connection with the NASD's review of the terms
of the proposed public offering of the Securities, if applicable and (viii) the
fees and expenses of any transfer agent or registrar for the Securities.
(b) TERMINATION OF AGREEMENT. If this Agreement is terminated by the
Underwriters in accordance with the provisions of Section 5 or Section 9(a)(i)
hereof, the Operating Partnership shall reimburse the Underwriters for all of
their out-of-pocket expenses, including the reasonable fees and other charges of
counsel for the Underwriters.
SECTION 5. CONDITIONS OF THE UNDERWRITERS' OBLIGATIONS. The
obligations of the Underwriters hereunder are subject to the accuracy of the
representations and warranties of the Operating Partnership and the Company
contained in Section 1 hereof or in certificates of any partner of the Operating
Partnership or any officer of the Company or any Subsidiary delivered pursuant
to the provisions hereof, to the performance by the Operating Partnership and
the Company of their respective obligations hereunder, and to the following
further conditions:
(a) EFFECTIVENESS OF REGISTRATION STATEMENT. The Registration
Statement, including any Rule 462(b) Registration Statement, shall have become
effective, and at the Closing Time no stop order suspending the effectiveness of
the Registration Statement shall have been issued under the 1933 Act or
proceedings therefor initiated or threatened by the Commission, and any request
on the part of the Commission for additional information shall have been
complied with to the reasonable satisfaction of counsel to the Underwriters.
The
21
Prospectus shall have been filed with the Commission pursuant to Rule 424(b)
of the 1933 Act Regulations within the prescribed time period, and prior to
the Closing Time the Operating Partnership and the Company shall have
provided evidence satisfactory to the Underwriters of such timely filing, or
a post-effective amendment providing such information shall have been
promptly filed and declared effective in accordance with the requirements of
the 1933 Act Regulations. If the Operating Partnership or the Company has
elected to rely upon Rule 434, a Term Sheet shall have been filed with the
Commission in accordance with Rule 424(b).
(b) OPINION OF COUNSEL FOR THE OPERATING PARTNERSHIP. At the Closing
Time, the Underwriters shall have received:
(i) The favorable opinion, dated as of the Closing Time, of
▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, counsel for the Operating Partnership and
the Company, in form and substance reasonably satisfactory to counsel
for the Underwriters, to the effect that:
(A) The Operating Partnership has been duly organized and
is validly existing as a limited partnership in good standing
under the Delaware Act. The Operating Partnership has full
partnership power and authority to own, lease and operate its
properties, to conduct the business in which it is engaged or
proposes to engage as described in the Prospectus and to enter
into and perform its obligations under this Agreement.
(B) The Operating Partnership is duly qualified as a
foreign partnership to transact business and is in good standing
in each jurisdiction in which such qualification is required,
whether by reason of the ownership or leasing of property or the
conduct of business, except where the failure to so qualify would
not have a Material Adverse Effect.
(C) The outstanding Units were duly authorized for issuance
by the Operating Partnership to the holders thereof and are
validly issued. The Company is the sole general partner of the
Operating Partnership and, immediately prior to the sale of the
Securities, is the holder of ________________ of the ____________
issued and outstanding Units.
(D) The Company is duly qualified as a foreign corporation
to transact business and is in good standing in each jurisdiction
in which such qualification is required, whether by reason of the
ownership or leasing of property or the conduct of business
except where the failure to so qualify would not result in a
Material Adverse Effect.
22
(E) Each of ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ Finance, Inc. and the
Financing Partnership has been duly organized and is validly
existing as a corporation or partnership in good standing under
the laws of the State of Delaware and the ▇▇▇▇▇▇▇▇ Partnership
is validly existing as a partnership in good standing under the
laws of the State of California. Each of ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Finance, Inc., the Financing Partnership, the ▇▇▇▇▇▇▇▇
Partnership and the ▇▇▇▇▇▇▇▇ Partnership has full corporate or
partnership power and authority to own, lease and operate its
properties and to conduct the business in which it is engaged or
proposes to engage as described in the Prospectus. Each of ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ Finance, Inc., the Financing Partnership, the ▇▇▇▇▇▇▇▇
Partnership and the ▇▇▇▇▇▇▇▇ Partnership is duly qualified or
registered as a foreign corporation or partnership to transact
business and is in good standing in each jurisdiction in which
qualification to transact business is required, whether by reason
of the ownership or leasing of property or the conduct of
business, except where the failure to so qualify would not result
in a Material Adverse Effect. All of the issued shares of
capital stock of ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ Finance, Inc. have been duly
authorized and are validly issued, fully paid and nonassessable
and are owned of record by the Company to the best knowledge of
such counsel, free and clear of all liens, charges and
encumbrances. The partnership units of the Financing Partnership
have been authorized for issuance to ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ Finance,
Inc. and the Operating Partnership and are validly issued and
fully paid, to the knowledge of such counsel, free and clear of
all liens, charges and encumbrances. To the best knowledge of
such counsel, with the exception of the 15% limited partnership
interest in the ▇▇▇▇▇▇▇▇ Partnership held by ▇▇▇▇▇▇▇ an
individual third party investor, all of the partnership interests
of the ▇▇▇▇▇▇▇▇ Partnership and the ▇▇▇▇▇▇▇▇ Partnership are
owned by the Operating Partnership and the Company, free and
clear of all liens, charges and encumbrances.
(F) This Agreement has been duly authorized, executed and
delivered by the Operating Partnership.
(G) To the knowledge of such counsel, there is no action,
suit or proceeding before or by any court or governmental agency
or body, domestic or foreign, now pending or threatened against
the Operating Partnership, the Company or any Subsidiary that is
required to be disclosed in the Registration Statement which is
not disclosed therein. To the knowledge of such counsel, there
are no contracts, indentures, mortgages, loan agreements, notes,
lease or other instruments of a character which are required to
be described or referred to in the Registration Statement or to
be filed as exhibits thereto by the 1933 Act or by the 1933 Act
Regulations, other than
23
those described or referred to therein or filed as exhibits
thereto, and the descriptions thereof or references thereto
in the Registration Statement are correct and accurate in all
material respects.
(H) No consent, approval, authorization of any governmental
agency or authority or, to the knowledge of such counsel, no
order of any court, is required to be obtained by the Operating
Partnership, the Company or any Subsidiary in connection with the
offering, issuance or sale of the Securities under this
Agreement, except such as may be required under the 1933 Act or
the 1933 Act Regulations or state securities laws of any state or
other jurisdiction and except for such as have been obtained.
(I) The execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated
herein by the Operating Partnership and the Company do not and
will not contravene any provision of the Delaware Act, the
Delaware General Corporation Law, California law or federal laws,
do not and will not conflict with or constitute a breach of, or
default under, or result in the creation or imposition of any
lien, charge or encumbrance upon any of the Communities or any
other property or assets of the Operating Partnership, the
Company or any Subsidiary pursuant to any agreement or instrument
filed as an exhibit to the Registration Statement or to the
documents incorporated by reference into the Prospectus, nor has
any such action resulted or will such action result in any
violation of the charter, bylaws, certificate of limited
partnership, partnership agreement or other governing document,
as the case may be, of the Operating Partnership, the Financing
Partnership or ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ Finance, Inc. or, to such
counsel's knowledge, any judgment, ruling, order, regulation or
administrative or court decree applicable to the business or
properties of such entities.
(J) The Indenture has been duly qualified under the 1939
Act;
(K) The Indenture has been duly authorized, executed and
delivered by the Operating Partnership and (assuming the due
authorization, execution and delivery thereof by the Trustee)
24
constitutes a valid and binding agreement of the Operating
Partnership, enforceable against the Operating Partnership in
accordance with its terms, except as the enforcement thereof may
be limited by bankruptcy, insolvency (including, without
limitation, all laws relating to fraudulent transfers),
reorganization, moratorium or similar laws affecting enforcement
of creditors' rights generally and except as enforcement thereof
is subject to general principles of equity (regardless of whether
enforcement is considered in a proceeding in equity or at law).
(L) The Securities are in the form contemplated by the
Indenture and, assuming that the Securities have been duly
authenticated by the Trustee in the manner described in its
certificate delivered to the Operating Partnership at the Closing
Time, the Securities have been duly executed, issued and
delivered by the Operating Partnership and constitute valid and
binding obligations of the Operating Partnership, enforceable
against the Operating Partnership in accordance with their terms,
except as the enforcement thereof may be limited by bankruptcy,
insolvency (including, without limitation, all laws relating to
fraudulent transfers), reorganization, moratorium or similar laws
affecting enforcement of creditors' rights generally and except
as enforcement thereof is subject to general principles of equity
(regardless of whether enforcement is considered in a proceeding
in equity or at law), and will be entitled to the benefits of the
Indenture.
(M) The Securities and the Indenture conform in all
material respects to the descriptions thereof contained in the
Prospectus.
(N) Each of the Registration Statement, including any Rule
462(b) Registration Statement and the Form 10, has been declared
effective under the 1933 Act; any required filing of the
Prospectus pursuant to Rule 424(b) has been made in the manner
and within the time period required by Rule 424(b); and, to the
best knowledge of such counsel, no stop order suspending the
effectiveness of the Registration Statement has been issued under
the 1933 Act or proceedings therefor initiated before or
threatened by the Commission.
(O) The Registration Statement, including any Rule 462(b)
Registration Statement and the Term Sheet, as applicable, the
Form 10, the Prospectus, excluding the documents incorporated by
reference therein, and each amendment or supplement to the
Registration Statement and Prospectus, excluding the documents
incorporated by reference therein, as of their respective
effective or issue dates (other than the financial statements and
supporting schedules
25
and other financial and related statistical data included
therein or omitted therefrom, as to which no opinion need
be rendered) complied as to form in all material respects
with the requirements of the 1933 Act and the 1933 Act
Regulations.
(P) The documents incorporated by reference in the
Prospectus (other than the financial statements and supporting
schedules and other financial and related statistical data
included therein or omitted therefrom, as to which no opinion
need be rendered), 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 1933 Act or the
1934 Act, as applicable, and the rules and regulations of the
Commission thereunder.
(Q) The information in the Prospectus under "FEDERAL INCOME
TAX CONSIDERATIONS," to the extent that it constitutes matters of
law, summaries of legal matters, documents, proceedings or legal
conclusions, has been reviewed by such counsel and is correct in
all material respects.
(R) The Company has been and is organized in conformity
with the requirements for qualification as a REIT under the Code,
and its method of operation has at all times enabled, and its
proposed method of operation as described in the Prospectus and
as represented by management will enable, it to meet the
requirements for taxation as a REIT under the Code.
(S) None of the Operating Partnership, the Company or any
Subsidiary is an "investment company" or an "affiliated person"
of, or "promoter" or "principal underwriter" for, an "investment
company," as such terms are defined under the 1940 Act, or is or
will be required to be registered under the 1940 Act.
(T) Each of the Operating Partnership and the Financing
Partnership has at all times been treated, and, since its
acquisition by the Company, each of the ▇▇▇▇▇▇▇▇ Partnership
and the ▇▇▇▇▇▇▇▇ Partnership has been treated, and each of them
will be treated, for federal income tax purposes as a partnership
and not as an association taxable as a corporation or publicly
traded partnership.
(U) ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ Finance, Inc. has at all times been
treated, and will be treated, as a "qualified REIT subsidiary"
under Section 856(i) of the Code.
26
(V) To the best knowledge of such counsel, there are no
persons with registration or other similar rights to have any
securities of the Company registered pursuant to the Registration
Statement other than AEW Partners, L.P. a Delaware limited
partnership, CIIF Associates II Limited Partnership, a Delaware
limited partnership, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and ▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇,
who, to such counsel's knowledge, have waived such rights.
(ii) The favorable opinion, dated as of the Closing Time, of
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, counsel for the Operating Partnership
and the Company with respect to matters of Maryland law, in form and
substance reasonably satisfactory to counsel for the Underwriters, to the
effect that:
(A) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the
State of Maryland.
(B) The Company has the full corporate power and corporate
authority to own, lease and operate its properties, to conduct
the business in which it is engaged or proposes to engage as
described in the Prospectus and to enter into and perform its
obligations under this Agreement.
(C) All of the issued and outstanding Common Shares have
been duly authorized and validly issued and are fully paid and
nonassessable and none of the outstanding shares of capital stock
of the Company was issued in violation of the preemptive or other
similar rights of any securityholder of the Company arising under
the Maryland General Corporation Law, the charter or bylaws of
the Company or, to such counsel's knowledge, otherwise.
(D) The authorized capital stock of the Company conforms to
the description thereof incorporated by reference into the
Prospectus. Except for options under the 1994 Stock Option Plan
and Units of the Operating Partnership, there are (i) to such
counsel's knowledge no outstanding securities convertible into or
exchangeable for any shares of capital stock of the Company and
(ii) no outstanding options, rights (preemptive or otherwise) or
warrants to purchase or to subscribe for such shares or any other
securities of the Company pursuant to the Company's charter or
bylaws, or to such counsel's knowledge, any agreement or other
instrument to which the Company is a party or by which it is
bound.
(E) The Company has duly authorized and reserved a
sufficient number of Common Shares for issuance upon redemption
of outstanding Units issued by the Operating Partnership as
contemplated by
27
the Partnership Agreement and for issuance upon
the exercise of options under the 1994 Stock Option Plan.
(F) This Agreement has been duly authorized, executed and
delivered by the Company, in its individual capacity and in its
capacity as the general partner of the Operating Partnership.
(G) No consent, approval, authorization, order of or
qualification with any court or governmental agency or authority
or other entity is required to be obtained by the Operating
Partnership, the Company or any Subsidiary under the Maryland
General Corporation Law in connection with the offering, issuance
or sale of the Securities under this Agreement except for such as
have been obtained.
(H) The execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated
herein do not and will not contravene any provision of the
Maryland General Corporation Law, nor has any such action
resulted or will such action result in any violation of the
charter or bylaws of the Company, or, to such counsel's
knowledge, any judgment, ruling, order, regulation or
administrative or court decree issued under or pursuant to the
Maryland General Corporation Law and applicable to the business
or properties of the Company.
(iii) The favorable opinion, dated as of the Closing Time, of
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, counsel for the Underwriters, with respect to such
matters as the Underwriters may reasonably request.
(iv) In giving their opinions required by subsections (b)(i) and
(b)(iii), respectively, of this Section 5, ▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP and
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ shall each additionally state that nothing has come to
their attention that would lead them to believe that the Registration
Statement (except for financial statements and schedules and other
financial and related statistical data included or incorporated by
reference therein, as to which counsel need make no statement), at the time
it became effective, 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 the Prospectus
(except for financial statements and schedules and other financial and
related statistical data included or incorporated by reference therein, as
to which counsel need make no statement), at the time the Prospectus was
issued (unless the term "Prospectus" refers to a prospectus which has been
provided to the Underwriters by the Operating Partnership and the Company
for use in connection with the offering of Securities which differs from
the Prospectus on file at the Commission at the time the Registration
Statement becomes effective, in which case at the date of such prospectus),
or at the Closing Time, included or includes an untrue statement of a
material fact or omitted or omits to state a material fact necessary in
order to make the statements therein, in the light of the
28
circumstances under which they were made, not misleading. In giving its
opinion, ▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP and ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ may rely as to
matters of Maryland law upon the opinion of ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇▇, which opinions shall be in form and substance reasonably
satisfactory to counsel for the Underwriters. Each such opinion
required by subsections (b)(i) and (b)(iii) shall not state that it is
to be governed or qualified by, or that it is otherwise subject to, any
treatise, written policy or other document relating to legal opinions,
including, without limitation, the Legal Opinion Accord of the ABA
Section of Business Law (1991).
(c) CLOSING MATTERS. At the Closing Time, (i) the Registration
Statement and the Prospectus shall contain all statements that are required to
be stated therein in accordance with the 1933 Act and the 1933 Act Regulations
and in all material respects shall conform to the requirements of the 1933 Act
and the 1933 Act Regulations, and neither the Registration Statement nor the
Prospectus shall contain an untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein (in the case of the Prospectus, in light of the circumstances
under which they were made) not misleading, (ii) the representations and
warranties in Section 1 hereof shall be true and correct with the same force and
effect as though expressly made at and as of the Closing Time, (iii) there shall
not have been, since the date hereof or since the respective dates as of which
information is given in the Prospectus, any Material Adverse Effect, whether or
not arising in the ordinary course of business, (iv) no action, suit or
proceedings at law or in equity shall be pending or, to the knowledge of the
Operating Partnership or the Company, threatened against such entity or any
Subsidiary before or by any court or governmental agency wherein an unfavorable
decision, ruling or finding might result in any Material Adverse Effect other
than as set forth in the Prospectus, (v) no stop order suspending the
effectiveness of the Registration Statement or any part thereof has been issued
and no proceedings for that purpose have been instituted or, to the knowledge of
the Operating Partnership or the Company, threatened by the Commission or by the
state securities authority of any jurisdiction and (vi) the Underwriters shall
have received, at the Closing Time, a Certificate of the Chairman of the Board
and Chief Executive Officer and the chief financial or chief accounting officer
of the Company, in its individual capacity and as the general partner of the
Operating Partnership, dated as of the Closing Time, stating its compliance with
subparagraphs (i) through (v) of this subsection (c), and stating that each of
the Operating Partnership and the Company has complied with all agreements and
satisfied all conditions on its part to be performed or satisfied at or prior to
Closing Time. As used in this Section 5(d) the term "Prospectus" means the
Prospectus in the form first used by the Underwriters to confirm sales of the
Securities.
(d) ACCOUNTANT'S COMFORT LETTER. At the time of the execution of
this Agreement, the Underwriters shall have received from Ernst & Young LLP a
letter dated such date, in form and substance reasonably satisfactory to the
Underwriters, containing statements and information of the type ordinarily
included in accountants' "comfort letters" to underwriters with respect to the
financial statements, pro forma financial statements and pro forma and adjusted
financial statements and information of the Company and its affiliates and
certain financial information contained in the Registration Statement and the
Prospectus.
29
(e) BRING-DOWN COMFORT LETTER. At the Closing Time, the Underwriters
shall have received from Ernst & Young LLP a letter, dated as of the Closing
Time, to the effect that they reaffirm the statements made in the letter
furnished pursuant to subsection (d) of this Section 5, except that the
specified date referred to shall be a date not more than five days prior to the
Closing Time.
(f) NO OBJECTION. The NASD shall not have raised any objection with
respect to the fairness and reasonableness of the underwriting terms and
arrangements.
(g) ADDITIONAL DOCUMENTS. At the Closing Time, counsel for the
Underwriters shall have been furnished with such documents and opinions as they
may reasonably request for the purpose of enabling them to pass upon the
issuance and sale of the Securities as herein contemplated and related
proceedings, or in order to evidence the accuracy of any of the representations
or warranties, or the fulfillment of any of the conditions, herein contained;
and all proceedings taken by Operating Partnership and the Company in connection
with the issuance and sale of the Securities as herein contemplated shall be
reasonably satisfactory in form and substance to the Underwriters and counsel
for the Underwriters.
SECTION 6. INDEMNIFICATION.
(a) Each of the Operating Partnership and the Company agrees, jointly
and severally, to indemnify and hold harmless the Underwriters and each person,
if any, who controls the Underwriters within the meaning of Section 15 of the
1933 Act or Section 20 of the 1934 Act, as follows:
(i) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of any untrue statement
or alleged untrue statement of a material fact contained in the
Registration Statement (or any amendment thereto), or the omission or
alleged omission therefrom of a material fact required to be stated
therein or necessary to make the statements therein not misleading or
arising out of any untrue statement or alleged untrue statement of a
material fact contained in any preliminary prospectus or the
Prospectus (or any amendment or supplement thereto) or the omission or
alleged omission therefrom of a material fact necessary in order to
make the statements therein, in the light of the circumstances under
which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the aggregate amount
paid in settlement of any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or
threatened, or of any claim whatsoever for which indemnification is
provided under subsection (i) above, if (subject to Section 6(d)
below) such settlement is effected with the written consent of the
Operating Partnership and the Company; and
30
(iii) against any and all expense whatsoever (including, the
fees and charges of counsel chosen by ▇▇▇▇▇▇▇ ▇▇▇▇▇), reasonably
incurred in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any governmental
agency or body, commenced or threatened, or any claim whatsoever for
which indemnification is provided under subsection (i) above, to the
extent that any such expense is not paid under subsection (i) or (ii)
above;
PROVIDED, HOWEVER, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in
reliance upon and in conformity with written information contained in the
last paragraph on the front cover page, the first paragraph on the inside
front cover page and the third sentence of the fourth full paragraph in the
section of the Prospectus Supplement under the heading "UNDERWRITING" and
furnished to the Operating Partnership by any Underwriter expressly for use
in the Registration Statement (or any amendment thereto) or any preliminary
prospectus or the Prospectus (or any amendment or supplement thereto); and
PROVIDED FURTHER, that this indemnity agreement with respect to any
preliminary prospectus shall not inure to the benefit of any Underwriter from
whom the person asserting any such losses, liabilities, claims, damages or
expenses purchased Securities, or any person controlling any Underwriter, if
a copy of the Prospectus (as then amended or supplemented if the Operating
Partnership shall have furnished any such amendments or supplements thereto,
but excluding documents incorporated or deemed to be incorporated by
reference therein) was not sent or given by or on behalf of any Underwriter
to such person, if such is required by law, at or prior to the written
confirmation of the sale of such Securities to such person and if the
Prospectus (as so amended or supplemented, if applicable) would have
completely corrected the defect giving rise to such loss, liability, claim,
damage or expense, except that this proviso shall not be applicable if such
defect shall have been corrected in a document which is incorporated or
deemed to be incorporated by reference in the Prospectus.
(b) Each Underwriter severally agrees to indemnify and hold harmless
the Operating Partnership, the Company, the Company's directors, each of the
officers of the Company who signed the Registration Statement, and each person,
if any, who controls the Operating Partnership or the Company within the meaning
of Section 15 of the 1933 Act or Section 20 of the 1934 Act, against any and all
loss, liability, claim, damage and expense described in the indemnity contained
in subsection (a) of this Section 6, as incurred, but only with respect to
untrue statements or omissions, or alleged untrue statements or omissions, made
in the Registration Statement (or any amendment thereto) or any preliminary
prospectus or the Prospectus (or any amendment or supplement thereto) in
reliance upon and in conformity with written information contained in the last
paragraph on the front cover page, the first paragraph on the inside front cover
page and the third sentence of the fourth full paragraph in the section of the
Prospectus Supplement under the heading "UNDERWRITING" and furnished to the
Operating Partnership by such Underwriter expressly for use in the Registration
Statement (or any amendment thereto) or such preliminary prospectus or the
Prospectus (or any amendment or supplement thereto).
31
(c) Each indemnified party shall give notice as promptly as
reasonably practicable to each indemnifying party of any action commenced
against it in respect of which indemnity may be sought hereunder, but failure to
so notify an indemnifying party shall not relieve such indemnifying party from
any liability which it may have to the extent it is not materially prejudiced as
a result thereof and in any event shall not relieve it from any liability which
it may have otherwise than on account of this indemnity agreement. In the case
of parties indemnified pursuant to Section 6(a) above, counsel to the
indemnified parties shall be selected by the Underwriters and shall be
reasonably satisfactory to the indemnifying person(s), and, in the case of
parties indemnified pursuant to Section 6(b) above, counsel to the indemnified
parties shall be selected by the Operating Partnership and shall be reasonably
satisfactory to the Underwriters. An indemnifying party may participate at its
own expense in the defense of any such action; provided, however, that counsel
to the indemnifying party shall not (except with the consent of the indemnified
party) also be counsel to the indemnified party. In no event shall the
indemnifying parties be liable for fees and expenses of more than one counsel
(in addition to any local counsel) separate from their own counsel for all
indemnified parties in connection with any one action or separate but similar or
related actions in the same jurisdiction arising out of the same general
allegations or circumstances. No indemnifying party shall, without the prior
consent of the indemnified parties (which consent shall not be unreasonably
withheld), settle or compromise or consent to the entry of any judgment with
respect to any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim whatsoever in
respect of which indemnification or contribution could be sought under this
Section 6 or Section 7 hereof (whether or not the indemnified parties are actual
or potential parties thereto), unless such settlement, compromise or consent (i)
includes an unconditional release of each indemnified party from all liability
arising out of such litigation, investigation, proceeding or claim and (ii) does
not include a statement as to or an admission of fault, culpability or a failure
to act by or on behalf of any indemnified party.
(d) If at any time an indemnified party shall have requested an
indemnifying party to reimburse the indemnified party for the reasonable fees
and expenses of counsel, such indemnifying party agrees that it shall be liable
for any settlement of the nature contemplated by Section 6(a)(ii) effected
without its written consent if (i) such settlement is entered into more than 45
days after receipt by such indemnifying party of the aforesaid request, (ii)
such indemnifying party shall have received notice of the terms of such
settlement at least 30 days prior to such settlement being entered into and
(iii) such indemnifying party shall not have reimbursed such indemnified party
in accordance with such request prior to the date of such settlement.
SECTION 7. CONTRIBUTION. If the indemnification provided for in
Section 6 hereof is for any reason unavailable to or insufficient (other than by
reason of the indemnified party not being entitled to indemnification in
accordance with the specific terms of Section 6 hereof) to hold harmless an
indemnified party in respect of any losses, liabilities, claims, damages or
expenses referred to therein, then each indemnifying party shall contribute to
the aggregate amount of such losses, liabilities, claims, damages and expenses
incurred by such indemnified party, as incurred, (i) in such proportion as is
appropriate to reflect the relative benefits received by the Operating
Partnership
32
on the one hand and the Underwriters on the other hand from the offering of
the Securities pursuant to this Agreement or (ii) if the allocation provided
by clause (i) is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause
(i) above but also the relative fault of the Operating Partnership on the
one hand and of the Underwriters on the other hand in connection with the
statements or omissions which resulted in such losses, liabilities, claims,
damages or expenses, as well as any other relevant equitable considerations.
The relative benefits received by the Operating Partnership on the
one hand and the Underwriters on the other hand in connection with the offering
of the Securities pursuant to this Agreement shall be deemed to be in the same
respective proportions as the total net proceeds from the offering of the
Securities pursuant to this Agreement (before deducting expenses but including
any expenses reimbursed by the Underwriters) received by the Operating
Partnership and the total underwriting discount received by the Underwriters,
bear to the aggregate initial public offering price of the Securities.
The relative fault of the Operating Partnership 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 Operating Partnership or the Company or by the
Underwriters and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission.
The Operating Partnership and the Underwriters agree that it would not
be just and equitable if contribution pursuant to this Section 7 were determined
by pro rata allocation or by any other method of allocation which does not take
account of the equitable considerations referred to above in this Section 7.
The aggregate amount of losses, liabilities, claims, damages and expenses
incurred by an indemnified party and referred to above in this Section 7 shall
be deemed to include any legal or other expenses reasonably incurred by such
indemnified party in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever based upon any such
untrue or alleged untrue statement or omission or alleged omission.
Notwithstanding the provisions of this Section 7, no Underwriter shall
be required to contribute any amount in excess of the amount by which the total
discount received by it exceeds the amount of any damages which it 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 1933 Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation.
33
For purposes of this Section 7, each person, if any, who controls an
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act shall have the same rights to contribution as such Underwriter, and
each director of the Company, each officer of the Company who signed the
Registration Statement, and each person, if any, who controls the Operating
Partnership or the Company within the meaning of Section 15 of the 1933 Act or
Section 20 of the 1934 Act, shall have the same rights to contribution as the
Operating Partnership .
SECTION 8. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE
DELIVERY. All representations, warranties and agreements contained in this
Agreement, or contained in certificates of the general partner of the Operating
Partnership or the officers of the Company submitted pursuant hereto, shall
remain operative and in full force and effect, regardless of any investigation
made by or on behalf of the Underwriters or controlling person, or by or on
behalf of the Operating Partnership or the Company and shall survive delivery
of the Securities to the Underwriters.
SECTION 9. TERMINATION OF AGREEMENT.
(a) The Underwriters may terminate this Agreement, by notice to the
Operating Partnership and the Company, at any time at or prior to the Closing
Time (i) if there has been, since the date of this Agreement or since the
respective dates as of which information is given in the Registration Statement,
any Material Adverse Effect, or (ii) if there has occurred any material adverse
change in the financial markets in the United States or elsewhere or any
outbreak of hostilities or escalation thereof or other calamity or crisis the
effect of which is such as to make it, in the judgment of the Underwriters,
impracticable to market the Securities or to enforce contracts for the sale of
the Securities, or (iii) if trading in any securities of the Operating
Partnership or the Company has been suspended by the Commission or if trading
generally on either the New York Stock Exchange or the American Stock Exchange
has been suspended, or minimum or maximum prices for trading have been fixed, or
maximum ranges for prices for securities have been required, by either of said
Exchanges or by order of the Commission or any other governmental authority, or
if a banking moratorium has been declared by either federal, New York or Arizona
authorities.
(b) If this Agreement is terminated pursuant to this Section 9, such
termination shall be without liability of any party to any other party except as
provided in Section 4 hereof, and provided further that Sections 1, 6 and 7
shall survive such termination and remain in full force and effect.
SECTION 10. DEFAULT BY ONE OR MORE OF THE UNDERWRITERS. If one
or more of the Underwriters shall fail at the Closing Time to purchase the
Securities which it is obligated to purchase under this Agreement (the
"Defaulted Securities"), the other Underwriters shall have the right, within 24
hours thereafter, to make arrangements for one or more of the non-defaulting
Underwriters, or any other underwriters, to purchase all, but not less than all,
of the Defaulted Securities in such amounts as may be agreed upon and upon the
terms herein set forth; if, however, such arrangements have not been completed
within such 24-hour period, then:
34
(a) If the number of Defaulted Securities does not exceed 10% of the
aggregate principal amount of the Securities to be purchased hereunder, each
of the non-defaulting Underwriters shall be obligated, severally and not
jointly, to purchase the full amount thereof in the proportions that their
respective underwriting obligations hereunder bear to the underwriting
obligations of all non-defaulting Underwriters, or
(b) If the number of Defaulted Securities exceeds 10% of the
aggregate principal amount of the Securities to be purchased hereunder, this
Agreement shall terminate without liability on the part of any non-defaulting
Underwriter.
No action taken pursuant to this Section 10 shall relieve any
defaulting Underwriter from liability in respect of its default.
In the event of any such default which does not result in a
termination of this Agreement, the Underwriters or the Operating Partnership
shall have the right to postpone the Closing Time for a period not exceeding
seven days in order to effect any required changes in the Registration Statement
or Prospectus or in any other documents or arrangements. As used herein, the
term "Underwriter" includes any person substituted for an Underwriter under this
Section 10.
SECTION 11. NOTICES. All notices and other communications
hereunder shall be in writing and shall be deemed to have been duly given if
mailed or transmitted by any standard form of telecommunication. Notices to the
Underwriters shall be directed to the Underwriters c/▇ ▇▇▇▇▇▇▇ Lynch, Pierce,
▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated at ▇▇▇▇▇▇▇ ▇▇▇▇▇ World Headquarters, North Tower,
World Financial Center, New York, New York 10281-1201, attention of Equity
Capital Markets and notices to either the Operating Partnership or the Company
shall be directed to it at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇-▇▇▇, ▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇, attention of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Chairman of the Board and Chief
Executive Officer.
SECTION 12. PARTIES. This Agreement shall inure to the benefit of
and be binding upon the Underwriters, the Operating Partnership and the
Company and their respective successors. Nothing expressed or mentioned in this
Agreement is intended or shall be construed to give any person, firm or
corporation, other than the Underwriters, the Operating Partnership, the Company
and their respective successors and the controlling persons and officers and
directors referred to in Sections 6 and 7 hereof and their successors, heirs and
legal representatives, any legal or equitable right, remedy or claim under or in
35
respect of this Agreement or any provision herein contained. This Agreement and
all conditions and provisions hereof and thereof are intended to be for the sole
and exclusive benefit of the Underwriters, the Operating Partnership, the
Company and their respective successors, and said controlling persons and
officers and directors and their heirs and legal representatives, and for the
benefit of no other person, firm or corporation. No purchaser of Securities
from the Underwriters shall be deemed to be a successor by reason merely of such
purchase.
SECTION 13. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
AGREEMENTS MADE AND TO BE PERFORMED IN THE STATE OF NEW YORK. EXCEPT AS
OTHERWISE SET FORTH HEREIN, SPECIFIED TIMES OF DAY REFER TO NEW YORK CITY TIME.
SECTION 14. EFFECT OF HEADINGS. The Article and Section headings
herein are for convenience only and shall not affect the construction hereof.
36
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Operating Partnership a counterpart
hereof, whereupon this instrument, along with all counterparts, will become a
binding agreement among the Underwriters, the Operating Partnership and the
Company in accordance with its terms.
Very truly yours,
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ RESIDENTIAL, L.P.
By: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ Residential, Inc.,
General Partner
By
---------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇,
Chairman of the Board and
Chief Executive Officer
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ RESIDENTIAL, INC.
By
---------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇,
Chairman of the Board and Chief Executive
Officer
37
CONFIRMED AND ACCEPTED,
as of the date first above written:
▇▇▇▇▇▇▇ ▇▇▇▇▇ & CO.
▇▇▇▇▇▇▇ Lynch, ▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
▇▇▇▇▇▇▇, ▇▇▇▇▇ & CO.
▇.▇. ▇▇▇▇▇▇ & CO.
▇.▇. ▇▇▇▇▇▇ Securities Inc.
By: ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
By
---------------------------------------
Name:
Title:
SCHEDULE A
2004 NOTES
PRINCIPAL AMOUNT
NAME OF UNDERWRITER OF 2004 NOTES
------------------- ----------------
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇ &
▇▇▇▇▇ Incorporated . . . . . . . . . . . . . . . . . $
-----------
▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co. . . . . . . . . . . . . . . . . .
-----------
▇.▇. ▇▇▇▇▇▇ Securities Inc. . . . . . . . . . . . . .
-----------
Total . . . . . . . . . . . . . . . . . . . . . . . . $75,000,000
-----------
-----------
2007 NOTES
PRINCIPAL AMOUNT
NAME OF UNDERWRITER OF 2007 NOTES
------------------- ----------------
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇ &
▇▇▇▇▇ Incorporated . . . . . . . . . . . . . . . . $
-------------
▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co. . . . . . . . . . . . . . . . .
-------------
▇.▇. ▇▇▇▇▇▇ Securities Inc. . . . . . . . . . . . .
-------------
Total . . . . . . . . . . . . . . . . . . . . . . . $50,000,000
-------------
-------------
SCHEDULE A-1
SCHEDULE B
1. The initial public offering price of the 2004 Notes and the 2007 Notes
shall be ______% and ______% of the principal amounts thereof,
respectively, plus accrued interest, if any, from the date of
issuance.
2. The purchase price to be paid by the Underwriters for the 2004 Notes
and the 2007 Notes shall be _____% and _____% of the principal amounts
thereof, respectively.
3. The interest rate on the 2004 Notes and 2007 Notes shall be ____% and
____% per annum, respectively.
SCHEDULE B-1
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SCHEDULE A-1
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SCHEDULE B-#
SCHEDULE B-2
