EXHIBIT 1.01
United Dominion Realty Trust, Inc.
2,000,000 Shares
Common Stock
($1.00 par value)
Underwriting Agreement
January 27, 2003
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Inc.
As Representatives of the several Underwriters
▇▇▇▇▇▇▇ ▇▇▇▇▇ Barney Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
United Dominion Realty Trust, Inc., a corporation organized under the
laws of Virginia (the "Company"), proposes to sell to the several underwriters
named in Schedule I hereto (the "Underwriters"), for whom you (the
"Representatives") are acting as representatives, 2,000,000 shares of Common
Stock, $1.00 par value ("Common Stock") of the Company (said shares to be issued
and sold by the Company being hereinafter called the "Underwritten Securities"
or the "Securities"). To the extent there are no additional Underwriters listed
on Schedule I other than you, the term Representatives as used herein shall mean
you, as Underwriters, and the terms Representatives and Underwriters shall mean
either the singular or plural as the context requires. Any reference herein to
the Registration Statement or the Prospectus shall be deemed to refer to and
include the documents incorporated by reference therein pursuant to Item 12 of
Form S-3 which were filed under the Exchange Act on or before the Effective Date
of the Registration Statement or the issue date of the Prospectus, as the case
may be; and any reference herein to the terms "amend", "amendment" or
"supplement" with respect to the Registration Statement or the Prospectus shall
be deemed to refer to and include the filing of any document under the Exchange
Act after the Effective Date of the Registration Statement, or the issue date of
the Prospectus, as the case may be, deemed to be incorporated therein by
reference. Certain terms used herein are defined in Section 17 hereof.
As used herein, the term "subsidiary" means a corporation or a
partnership a majority of the outstanding voting stock, partnership or
membership interests, as the case may be, of which is owned or controlled,
directly or indirectly, by the Company or by one or more other subsidiaries of
the Company, including, without limitation, United Dominion Realty L.P., a
Virginia limited partnership ("UDR Operating Partnership"), and Heritage
Communities L.P., a Delaware limited partnership ("Heritage Operating
Partnership" and, together with UDR Operating Partnership, the "Operating
Partnerships").
1. Representations and Warranties. The Company represents and
warrants to, and agrees with, each Underwriter as set forth below in this
Section 1.
(a) The Company meets the requirements for use of Form S-3
under the Act and has prepared and filed with the Commission a
registration statement (file
number 333-101611) on Form S-3, including a related preliminary
prospectus, for registration under the Act of the offering and sale of
the Shelf Securities. The Company may have filed one or more amendments
thereto, including a related preliminary prospectus, each of which has
previously been made available to you. The Company will next file with
the Commission a final prospectus supplement in accordance with Rule
424(b). The Company has included in such registration statement, as
amended at the Effective Date, all information (other than Rule 430A
Information) required by the Act and the rules thereunder to be
included in such registration statement and the Prospectus. As filed,
such Prospectus Supplement shall contain all Rule 430A Information,
together with all other such required information, and, except to the
extent the Representatives shall agree in writing to a modification,
shall be in all substantive respects in the form furnished to you prior
to the Execution Time or, to the extent not completed at the Execution
Time, shall contain only such specific additional information and other
changes as the Company has advised you, prior to the Execution Time,
will be included or made therein.
(b) On the Effective Date, the Registration Statement did, and
when the Prospectus Supplement is first filed (if required) in
accordance with Rule 424(b) and on the Closing Date (as defined
herein), the Prospectus (and any supplements thereto) will, comply in
all material respects with the applicable requirements of the Act and
the Exchange Act and the respective rules thereunder; on the Effective
Date and at the Execution Time, the Registration Statement did not
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to
make the statements therein not misleading; and, the Prospectus, on the
date of any filing of a Prospectus Supplement pursuant to Rule 424(b)
and on the Closing Date (together with any supplement thereto) will not
include any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading;
provided, however, that the Company makes no representations or
warranties as to the information contained in or omitted from the
Registration Statement, or the Prospectus (or any supplement thereto)
in reliance upon and in conformity with information furnished in
writing to the Company by or on behalf of any Underwriter through the
Representatives specifically for inclusion in the Registration
Statement or the Prospectus (or any supplement thereto) as described in
Section 8(b) hereof.
(c) Each of the Company and its subsidiaries has been duly
incorporated or formed, as applicable, and is validly existing as a
corporation, limited liability company, real estate investment trust or
partnership, as the case may be, in good standing under the laws of the
jurisdiction in which it is chartered or organized with full power and
authority to own or lease, as the case may be, and to operate its
properties and conduct its business as described in the Prospectus, and
is duly qualified to do business as a foreign corporation, limited
liability company, real estate investment trust or partnership, as the
case may be, and is in good standing under the laws of each
jurisdiction which requires such qualification (except in any case in
which the failure to so qualify or to be in good standing would not
have a material adverse effect on the condition (financial or
otherwise), prospects, earnings, business or properties of the Company
and its subsidiaries, taken as a whole, whether or not arising from
transactions in the ordinary
2
course of business, except as set forth in or contemplated in the
Prospectus (exclusive of any supplement thereto)).
(d) All the outstanding shares of capital stock of each
corporate subsidiary and all of the issued and outstanding shares of
beneficial interest of each real estate investment trust subsidiary
have been duly and validly authorized and issued and are fully paid and
nonassessable, and, except as otherwise set forth in the Prospectus,
all outstanding shares of capital stock or other ownership interest of
each of the Company's corporate subsidiaries and all outstanding shares
of beneficial interest of each real estate investment trust subsidiary
are owned by the Company either directly or through wholly owned
subsidiaries free and clear of any perfected security interest or any
other security interests, claims, liens or encumbrances; all
outstanding partnership interests of each partnership subsidiary and
all outstanding limited liability company interests of each limited
liability company subsidiary have been duly authorized and validly
issued, are fully paid and (except in the case of general partnership
interests) non-assessable, and, except as otherwise disclosed in the
Prospectus and except for minority interests in the Operating
Partnerships described in the Prospectus and in Coastal Monterey
Properties, LLC, are owned by the Company either directly or through
wholly owned subsidiaries free and clear of any perfected security
interest or any other security interests, claims, liens or
encumbrances; and the Company and/or one or more subsidiaries of the
Company are the only members or general partners of the Company's
limited liability company or limited partnership subsidiaries, as
applicable, and own the entire membership or general partnership
interest in each such subsidiary free and clear of any perfected
security interest or any other security interests, claims, liens or
encumbrances, except for a minority interest in Coastal Monterey
Properties, LLC.
(e) The Company's authorized equity capitalization is as set
forth in the Prospectus; the capital stock of the Company conforms in
all material respects to the description thereof contained in the
Prospectus; the outstanding shares of Common Stock have been duly and
validly authorized and issued and are fully paid and nonassessable; the
Securities have been duly and validly authorized, and, when issued and
delivered to and paid for by the Underwriters pursuant to this
Agreement, will be fully paid and nonassessable; the Securities are
duly listed, and admitted and authorized for trading, subject to
official notice of issuance, on the New York Stock Exchange; the
certificates for the Securities are in valid and sufficient form; the
holders of outstanding shares of capital stock of the Company are not
entitled to preemptive or other rights to subscribe for the Securities;
and, except as set forth in the Prospectus, no options, warrants or
other rights to purchase, agreements or other obligations to issue, or
rights to convert any obligations into or exchange any securities for,
shares of capital stock of or ownership interests in the Company are
outstanding.
(f) There is no franchise, contract or other document of a
character required to be described in the Registration Statement or
Prospectus, or to be filed as an exhibit thereto, which is not
described or filed as required; and the statements in the Prospectus
Supplement under the heading "Federal Income Tax Considerations" and in
the Prospectus under the headings "Description of Preferred Stock,"
"Description of Common Stock" and "Federal Income Tax Considerations"
(as modified by the
3
Prospectus Supplement) insofar as such information constitutes matters
of law or legal conclusions is correct in all material respects.
(g) Except as described in the Prospectus, there are no
contracts, agreements or understandings between the Company, the
Operating Partnerships or any subsidiaries and any person that would
give rise to a valid claim against the Company or any Underwriter for a
brokerage commission, finder's fee or other like payment in connection
with the offering, issuance and sale of the Securities.
(h) This Agreement has been duly authorized, executed and
delivered by the Company and constitutes a valid and binding obligation
of the Company enforceable in accordance with its terms, subject, as to
enforcement, to bankruptcy, insolvency, reorganization and other laws
of general applicability relating to or affecting creditors' rights and
to general equity principles.
(i) The Company is not and, after giving effect to the
offering and sale of the Securities and the application of the proceeds
thereof as described in the Prospectus, will not be an "investment
company" as defined in the Investment Company Act of 1940, as amended.
(j) No consent, approval, authorization, filing with or order
of any court or governmental agency or body is required in connection
with the transactions contemplated herein, except such as have been
obtained under the Act and such as may be required under the blue sky
laws of any jurisdiction in connection with the purchase and
distribution of the Securities by the Underwriters in the manner
contemplated herein and in the Prospectus.
(k) Neither the issue and sale of the Securities nor the
consummation of any other of the transactions herein contemplated nor
the fulfillment of the terms hereof will conflict with, result in a
breach or violation or imposition of any lien, charge or encumbrance
upon any property or assets of the Company or any of its subsidiaries
pursuant to, (i) the charter or by-laws or other organizational
documents of the Company or any of its subsidiaries, (ii) the terms of
any indenture, contract, lease, mortgage, deed of trust, note
agreement, loan agreement or other agreement, obligation, condition,
covenant or instrument to which the Company or any of its subsidiaries
is a party or bound or to which its or their property is subject
(except in any case in which such would not have a material adverse
effect on the condition (financial or otherwise), prospects, earnings,
business or properties of the Company and its subsidiaries, taken as a
whole, whether or not arising from transactions in the ordinary course
of business, except as set forth in or contemplated in the Prospectus
(exclusive of any supplement thereto)), or (iii) any statute, law,
rule, regulation, judgment, order or decree applicable to the Company
or any of its subsidiaries of any court, regulatory body,
administrative agency, governmental body, arbitrator or other authority
having jurisdiction over the Company or any of its subsidiaries or any
of its or their properties (except in any case in which such would not
have a material adverse effect on the condition (financial or
otherwise), prospects, earnings, business or properties of the Company
and its subsidiaries, taken as a
4
whole, whether or not arising from transactions in the ordinary course
of business, except as set forth in or contemplated in the Prospectus
(exclusive of any supplement thereto)).
(l) No holders of securities of the Company have rights to the
registration of such securities under the Registration Statement.
(m) The consolidated historical financial statements and
schedules of the Company and its consolidated subsidiaries included in
the Prospectus and the Registration Statement present fairly in all
material respects the financial condition, results of operations and
cash flows of the Company as of the dates and for the periods
indicated, comply as to form with the applicable accounting
requirements of the Act and have been prepared in conformity with
generally accepted accounting principles applied on a consistent basis
throughout the periods involved (except as otherwise noted therein).
(n) Neither the Company nor any of its subsidiaries has
sustained since the date of the latest audited financial statements
included or incorporated by reference in the Prospectus any material
loss or interference with its business from fire, explosion, flood or
other calamity, whether or not covered by insurance, or from any labor
dispute or court or governmental action, order or degree, otherwise
than as set forth or contemplated in the Prospectus.
(o) Since the respective dates as of which information is
given in the Registration Statement, there has not been any material
change in the capital stock, total assets or long-term debt of the
Company or any of its subsidiaries or any material adverse change, or
any development involving a prospective material adverse change, in or
affecting the general affairs, management, financial position,
shareholders' equity or results of operations of the Company and its
subsidiaries, otherwise than as set forth or contemplated in the
Prospectus.
(p) No action, suit or proceeding by or before any court or
governmental agency, authority or body or any arbitrator involving the
Company or any of its subsidiaries or its or their property is pending
or, to the best knowledge of the Company, threatened that (i) could
reasonably be expected to have a material adverse effect on the
performance of this Agreement or the consummation of any of the
transactions contemplated hereby or (ii) could reasonably be expected
to have a material adverse effect on the condition (financial or
otherwise), prospects, earnings, business or properties of the Company
and its subsidiaries, taken as a whole, whether or not arising from
transactions in the ordinary course of business, except as set forth in
or contemplated in the Prospectus (exclusive of any supplement
thereto).
(q) Each of the Company and each of its subsidiaries owns or
leases all such properties as are necessary to the conduct of its
operations as presently conducted.
(r) Neither the Company nor any subsidiary is in violation or
default of (i) any provision of its charter or bylaws, (ii) the terms
of any indenture, contract, lease, mortgage, deed of trust, note
agreement, loan agreement or other agreement, obligation, condition,
covenant or instrument to which it is a party or bound or to which its
property
5
is subject (except in any case in which such would not have a material
adverse effect on the condition (financial or otherwise), prospects,
earnings, business or properties of the Company and its subsidiaries,
taken as a whole, whether or not arising from transactions in the
ordinary course of business, except as set forth in or contemplated in
the Prospectus (exclusive of any supplement thereto)), or (iii) any
statute, law, rule, regulation, judgment, order or decree of any court,
regulatory body, administrative agency, governmental body, arbitrator
or other authority having jurisdiction over the Company or such
subsidiary or any of its properties (except in any case in which such
would not have a material adverse effect on the condition (financial or
otherwise), prospects, earnings, business or properties of the Company
and its subsidiaries, taken as a whole, whether or not arising from
transactions in the ordinary course of business, except as set forth in
or contemplated in the Prospectus (exclusive of any supplement
thereto)), as applicable.
(s) Ernst & Young LLP, who have certified certain financial
statements of the Company and its consolidated subsidiaries and
delivered their report with respect to the audited consolidated
financial statements and schedules included in the Prospectus, are
independent public accountants with respect to the Company within the
meaning of the Act and the applicable published rules and regulations
thereunder, and to the Company's knowledge, Ernst & Young LLP has not
engaged in any activity with respect to the Company that is prohibited
by any of the subsections (g) through (l) of Section 10A of the
Exchange Act.
(t) There are no transfer taxes or other similar fees or
charges under Federal law or the laws of any state, or any political
subdivision thereof, required to be paid in connection with the
execution and delivery of this Agreement or the issuance by the Company
or sale by the Company of the Securities hereunder.
(u) The Company has filed all foreign, federal, state and
local tax returns that are required to be filed or has requested
extensions thereof (except in any case in which the failure so to file
would not have a material adverse effect on the condition (financial or
otherwise), prospects, earnings, business or properties of the Company
and its subsidiaries, taken as a whole, whether or not arising from
transactions in the ordinary course of business, except as set forth in
or contemplated in the Prospectus (exclusive of any supplement
thereto)) and has paid all taxes required to be paid by it and any
other assessment, fine or penalty levied against it, to the extent that
any of the foregoing is due and payable, except for any such
assessment, fine or penalty that is currently being contested in good
faith or as would not have a material adverse effect on the condition
(financial or otherwise), prospects, earnings, business or properties
of the Company and its subsidiaries, taken as a whole, whether or not
arising from transactions in the ordinary course of business, except as
set forth in or contemplated in the Prospectus (exclusive of any
supplement thereto).
(v) No labor problem or dispute with the employees of the
Company or any of its subsidiaries exists or is threatened or imminent,
and the Company is not aware of any existing or imminent labor
disturbance by the employees of any of its or its subsidiaries'
principal suppliers, contractors or customers, that could have a
material adverse effect on
6
the condition (financial or otherwise), prospects, earnings, business
or properties of the Company and its subsidiaries, taken as a whole,
whether or not arising from transactions in the ordinary course of
business, except as set forth in or contemplated in the Prospectus
(exclusive of any supplement thereto).
(w) The Company and each of its subsidiaries are insured by
insurers of recognized financial responsibility against such losses and
risks and in such amounts as are prudent and customary in the
businesses in which they are engaged; all policies of insurance and
fidelity or surety bonds insuring the Company or any of its
subsidiaries or their respective businesses, assets, employees,
officers and directors are in full force and effect; the Company and
its subsidiaries are in compliance with the terms of such policies and
instruments in all material respects; and there are no claims by the
Company or any of its subsidiaries under any such policy or instrument
as to which any insurance company is denying liability or defending
under a reservation of rights clause (except in any case in which such
would not have a material adverse effect on the condition (financial or
otherwise), prospects, earnings, business or properties of the Company
and its subsidiaries, taken as a whole, whether or not arising from
transactions in the ordinary course of business, except as set forth in
or contemplated in the Prospectus (exclusive of any supplement
thereto)); and neither the Company nor any such subsidiary has any
reason to believe that it will not be able to renew its existing
insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue
its business at a cost that would not have a material adverse effect on
the condition (financial or otherwise), prospects, earnings, business
or properties of the Company and its subsidiaries, taken as a whole,
whether or not arising from transactions in the ordinary course of
business, except as set forth in or contemplated in the Prospectus
(exclusive of any supplement thereto).
(x) Except as described in the Prospectus, the Company and its
subsidiaries have good and marketable title to all real properties
owned by them (each, a "Property" and collectively, the "Properties"),
in each case free from liens, encumbrances and defects that would
materially affect the value thereof or materially interfere with the
use made or to be made thereof by them; the Company or its subsidiaries
have obtained an owner's title insurance policy in an amount at least
equal to the cost of acquisition from a title insurance company with
respect to each of its real estate properties; except as disclosed in
the Prospectus, the Company and its subsidiaries hold any leased real
or personal property under valid and enforceable leases, with no
exceptions that would materially interfere with the value thereof or
materially interfere with the use made or to be made thereof by them;
neither the Company or its subsidiaries has knowledge of any pending or
threatened condemnation proceeding, zoning change, or other proceeding
or action that will in any manner affect the size of, use of,
improvements on, construction on or access to any of the Properties.
(y) No subsidiary of the Company is currently prohibited,
directly or indirectly, from paying any dividends to the Company, from
making any other distribution on such subsidiary's capital stock, from
repaying to the Company any loans or advances to such subsidiary from
the Company or from transferring any of such subsidiary's property or
assets to the Company or any other subsidiary of the Company,
7
except as required by the terms of the Company's indebtedness described
in the Prospectus.
(z) The Company and its subsidiaries possess all licenses,
certificates, permits and other authorizations issued by the
appropriate federal, state or foreign regulatory authorities necessary
to conduct their respective businesses (except in any case in which
failure to possess such would not have a material adverse effect on the
condition (financial or otherwise), prospects, earnings, business or
properties of the Company and its subsidiaries, taken as a whole,
whether or not arising from transactions in the ordinary course of
business, except as set forth in or contemplated in the Prospectus
(exclusive of any supplement thereto)), and neither the Company nor any
such subsidiary has received any notice of proceedings relating to the
revocation or modification of any such certificate, authorization or
permit which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would have a material adverse
effect on the condition (financial or otherwise), prospects, earnings,
business or properties of the Company and its subsidiaries, taken as a
whole, whether or not arising from transactions in the ordinary course
of business, except as set forth in or contemplated in the Prospectus
(exclusive of any supplement thereto).
(aa) The Company and each of its subsidiaries maintain a
system of internal accounting controls sufficient to provide reasonable
assurance that (i) transactions are executed in accordance with
management's general or specific authorizations; (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to
maintain asset accountability; (iii) access to assets is permitted only
in accordance with management's general or specific authorization; and
(iv) the recorded accountability for assets is compared with the
existing assets at reasonable intervals and appropriate action is taken
with respect to any differences.
(bb) The Company has not taken, directly or indirectly, any
action designed to or that would constitute or that might reasonably be
expected to cause or result in, under the Exchange Act or otherwise,
stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Securities.
(cc) The Company and its subsidiaries (i) are in compliance
with any and all applicable Environmental Laws, (ii) have received and
are in compliance with all permits, licenses or other approvals
required of them under applicable Environmental Laws to conduct their
respective businesses and all such permits, licenses and approvals
remain in full force and effect, and (iii) have not received and are
not aware of any pending or threatened notice of any actual or
potential liability for the investigation or remediation or any
disposal or release of Hazardous Substances or for any other
non-compliance with Environmental Laws, except where such
non-compliance with Environmental Laws, failure to receive required
permits, licenses or other approvals, or liability would not,
individually or in the aggregate, result in a material adverse change
in the condition (financial or otherwise), prospects, earnings,
business or properties of the Company and its subsidiaries, taken as a
whole, whether or not arising from transactions in the ordinary course
of business, except as set forth in or contemplated in the
8
Prospectus (exclusive of any supplement thereto). Except as set forth
in the Prospectus, (i) neither the Company nor any of its subsidiaries
has been named as a "potentially responsible party" under the
Comprehensive Environmental Response, Compensation, and Liability Act
of 1980, as amended, and (ii) to the Company's knowledge, Hazardous
Substances have not been released or disposed in, on, under or near the
Properties.
(dd) Each of the Company and its subsidiaries has fulfilled
its obligations, if any, under the minimum funding standards of ▇▇▇▇▇▇▇
▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ Employee Retirement Income Security Act of
1974 ("ERISA") and the regulations and published interpretations
thereunder with respect to each "plan" (as defined in Section 3(3) of
ERISA and such regulations and published interpretations) in which
employees of the Company and its subsidiaries are eligible to
participate and each such plan is in compliance in all material
respects with the presently applicable provisions of ERISA and such
regulations and published interpretations (except in any case in which
failure to do such would not have a material adverse effect on the
condition (financial or otherwise), prospects, earnings, business or
properties of the Company and its subsidiaries, taken as a whole,
whether or not arising from transactions in the ordinary course of
business, except as set forth in or contemplated in the Prospectus
(exclusive of any supplement thereto)). The Company and its
subsidiaries have not incurred any unpaid liability to the Pension
Benefit Guaranty Corporation (other than for the payment of premiums in
the ordinary course) or to any such plan under Title IV of ERISA
(except in any case in which such would not have a material adverse
effect on the condition (financial or otherwise), prospects, earnings,
business or properties of the Company and its subsidiaries, taken as a
whole, whether or not arising from transactions in the ordinary course
of business, except as set forth in or contemplated in the Prospectus
(exclusive of any supplement thereto)).
(ee) The subsidiaries listed on Exhibit B attached hereto are
the only significant subsidiaries of the Company as defined by Rule
1-02 of Regulation S-X.
(ff) The Company and its subsidiaries own, possess, license or
have other rights to use, on reasonable terms, all patents, patent
applications, trade and service marks, trade and service ▇▇▇▇
registrations, trade names, copyrights, licenses, inventions, trade
secrets, technology, know-how and other intellectual property
(collectively, the "Intellectual Property") necessary for the conduct
of the Company's business as now conducted or as proposed in the
Prospectus to be conducted. To the Company's knowledge, (a) there is no
material infringement by third parties of any such Intellectual
Property; (b) there is no pending or threatened action, suit,
proceeding or claim by others challenging the Company's rights in or to
any such Intellectual Property, and the Company is unaware of any facts
which would form a reasonable basis for any such claim; (c) there is no
pending or threatened action, suit, proceeding or claim by others
challenging the validity or scope of any such Intellectual Property,
and the Company is unaware of any facts which would form a reasonable
basis for any such claim; and (d) there is no pending or threatened
action, suit, proceeding or claim by others that the Company infringes
or otherwise violates any patent, trademark, copyright, trade secret or
other proprietary rights of others, and the Company is unaware of any
other fact which would form a reasonable basis for any such claim.
9
(gg) Except as disclosed in the Prospectus Supplement, the
Company (i) does not have any material lending or other relationship
with any bank or lending affiliate of ▇▇▇▇▇▇▇ ▇▇▇▇▇ Barney Inc. and
(ii) does not intend to use any of the proceeds from the sale of the
Securities hereunder to repay any outstanding debt owed to any
affiliate of ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Inc.
(hh) The Company has been and is organized and has operated in
conformity with the requirements for qualification and taxation as a
REIT for each of its taxable years beginning with the year ended
December 31, 1999 through December 31, 2002 or any prior year where the
Company's failure to so qualify could cause the Company to have a
liability for taxes (whether in that year or any subsequent year) for
which the Internal Revenue Service is or will be entitled to assert a
claim, and its current organization and current and proposed method of
operation will enable it to continue to meet the requirements for
qualification and taxation as a REIT for the taxable year 2003 and
thereafter. No transaction event has occurred which could cause the
Company not to be able to qualify as a REIT for its current taxable
year or any future taxable year. The Company currently intends to
continue to qualify as a "real estate investment trust" under the Code.
(ii) Each of United Dominion Realty L.P. and Heritage
Communities L.P. (collectively, the "Operating Partnerships") is
properly classified as a partnership, and not as a corporation or an
association taxable as a corporation, for Federal income tax purposes
throughout the period from its formation through the date hereof.
(jj) Each of the subsidiaries that is a partnership or a
limited liability company (other than an entity for which a taxable
REIT subsidiary election has been made) ("Subsidiary Partnerships") is
properly classified either as a disregarded entity or as a partnership,
and not as a corporation or as an association taxable as a corporation,
for Federal income tax purposes throughout the period from its
formation through the date hereof, or, in the case of any Subsidiary
Partnerships that have terminated, through the date of termination of
such Subsidiary Partnerships.
(kk) Each of the Company and its subsidiaries has filed all
federal, state, local and foreign income tax returns which have been
required to be filed and has paid all taxes required to be paid and any
other assessment, fine or penalty levied against it, to the extent that
any of the foregoing is due and payable, except, in all cases, for any
such tax, assessment, fine or penalty that is being contested in good
faith. The Company has made adequate charges, accruals and reserves in
the applicable financial statements referred to in Section 1.(m) hereof
in respect of all federal, state, local and foreign income and
franchise taxes for all periods as to which the tax liability of the
Company or any of the subsidiaries has not been finally determined.
(ll) Since July 30, 2002, the Company has not, in violation of
the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act, directly or indirectly, including through a
subsidiary, extended or maintained credit, arranged for the extension
of credit, or renewed an extension of credit, in the form of a personal
loan to or for any executive officer or director of the Company.
10
(mm) The Company has filed certifications and statements with
its periodic reports pursuant to Sections 302 and 906 of the
▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act and has made the evaluations of the Company's
disclosure controls and procedures required under Rule 13a-15 under the
Exchange Act.
Any certificate signed by any officer of the Company and delivered to
the Representatives or counsel for the Underwriters in connection with the
offering of the Securities shall be deemed a representation and warranty by the
Company, as to matters covered thereby, to each Underwriter.
2. Purchase and Sale. Subject to the terms and conditions and
in reliance upon the representations and warranties herein set forth, the
Company agrees to sell to each Underwriter, and each Underwriter agrees,
severally and not jointly, to purchase from the Company, at a purchase price of
$15.62 per share, the amount of the Underwritten Securities set forth opposite
such Underwriter's name in Schedule I hereto.
3. Delivery and Payment. Delivery of and payment for the
Underwritten Securities shall be made at 10:00 AM, New York City time, on
January 30, 2003, or at such time on such later date not more than three
Business Days after the foregoing date as the Representatives shall designate,
which date and time may be postponed by agreement between the Representatives
and the Company or as provided in Section 9 hereof (such date and time of
delivery and payment for the Securities being herein called the "Closing Date").
Delivery of the Securities shall be made to the Representatives for the
respective accounts of the several Underwriters against payment by the several
Underwriters through the Representatives of the purchase price thereof to or
upon the order of the Company by wire transfer payable in same-day funds to an
account specified by the Company. Delivery of the Underwritten Securities and
the Option Securities shall be made through the facilities of The Depository
Trust Company unless the Representatives shall otherwise instruct.
4. Offering by Underwriters. It is understood that the several
Underwriters propose to offer the Securities for sale to the public as set forth
in the Prospectus as amended and supplemented by the Prospectus Supplement.
5. Agreements. The Company agrees with the several
Underwriters that:
(a) Prior to the termination of the offering of the
Securities, the Company will not file any amendment of the Registration
Statement or supplement to the Prospectus or any Rule 462(b)
Registration Statement unless the Company has furnished you a copy for
your review prior to filing and will not file any such proposed
amendment or supplement to which you reasonably object. Subject to the
foregoing sentence, if the Registration Statement has become or becomes
effective pursuant to Rule 430A, or filing of the Prospectus is
otherwise required under Rule 424(b), the Company will cause the
Prospectus, properly completed, and any supplement thereto to be filed
with the Commission pursuant to the applicable paragraph of Rule 424(b)
within the time period prescribed and will provide evidence
satisfactory to the Representatives of such timely filing. The Company
will promptly advise the Representatives (1) when the Prospectus, and
any supplement thereto, shall have been filed with the Commission
pursuant to
11
Rule 424(b), (2) during the period in which a prospectus relating to
the Securities is required to be delivered under the Act, any amendment
to the Registration Statement shall have been filed or become
effective, (3) of any request by the Commission or its staff for any
amendment of the Registration Statement, or any Rule 462(b)
Registration Statement, or for any supplement to the Prospectus or for
any additional information, (4) of the issuance by the Commission of
any stop order suspending the effectiveness of the Registration
Statement or the institution or threatening of any proceeding for that
purpose and (5) of the receipt by the Company of any notification with
respect to the suspension of the qualification of the Securities for
sale in any jurisdiction or the institution or threatening of any
proceeding for such purpose. The Company will use its best efforts to
prevent the issuance of any such stop order or the suspension of any
such qualification and, if issued, to obtain as soon as possible the
withdrawal thereof.
(b) If, at any time when a prospectus relating to the
Securities is required to be delivered under the Act (the "Prospectus
Delivery Period"), any event occurs as a result of which the Prospectus
as then supplemented would include any untrue statement of a material
fact or omit to state any material fact necessary to make the
statements therein in the light of the circumstances under which they
were made not misleading, or if it shall be necessary to amend the
Registration Statement or supplement the Prospectus to comply with the
Act or the Exchange Act or the respective rules thereunder, the Company
promptly will (1) notify the Representatives of such event, (2) prepare
and file with the Commission, subject to the second sentence of
paragraph (a) of this Section 5, an amendment or supplement which will
correct such statement or omission or effect such compliance and (3)
supply any supplemented Prospectus to you in such quantities as you may
reasonably request.
(c) As soon as practicable, the Company will make generally
available to its security holders and to the Representatives an
earnings statement or statements of the Company and its subsidiaries
which will satisfy the provisions of Section 11(a) of the Act and Rule
158 under the Act.
(d) The Company will furnish to the Representatives and
counsel for the Underwriters, without charge, copies of the
Registration Statement (including exhibits thereto) and to each other
Underwriter a copy of the Registration Statement (without exhibits
thereto) and, so long as delivery of a prospectus by an Underwriter or
dealer may be required by the Act, as many copies of the Prospectus and
any supplement thereto as the Representatives may reasonably request.
The Company will pay the expenses of printing or other production of
all documents relating to the offering.
(e) The Company will arrange, if necessary, for the
qualification of the Securities for sale under the laws of such
jurisdictions as the Representatives may designate, will maintain such
qualifications in effect so long as required for the distribution of
the Securities and will pay any fee of the National Association of
Securities Dealers, Inc., in connection with its review of the
offering; provided that in no event shall the Company be obligated to
qualify to do business in any jurisdiction where it is not now so
qualified or to take any action that would subject it to service of
process
12
in suits, other than those arising out of the offering or sale of the
Securities, in any jurisdiction where it is not now so subject.
(f) The Company will apply the net proceeds from the sale of
the Securities as set forth under the caption "Use of Proceeds" in the
Prospectus Supplement.
(g) The Company will use its best efforts to maintain the
listing of the Securities on the New York Stock Exchange. In addition,
on or before completion of this offering, the Company shall make all
filings required under applicable securities laws and by the New York
Stock Exchange.
(h) The Company will not, without the prior written consent of
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Inc., offer, sell, contract to sell, pledge, or
otherwise dispose of, (or enter into any transaction which is designed
to, or might reasonably be expected to, result in the disposition
(whether by actual disposition or effective economic disposition due to
cash settlement or otherwise) by the Company or any affiliate of the
Company or any person in privity with the Company or any affiliate of
the Company) directly or indirectly, including the filing (or
participation in the filing) of a registration statement with the
Commission in respect of, or establish or increase a put equivalent
position or liquidate or decrease a call equivalent position within the
meaning of Section 16 of the Exchange Act, any other shares of Common
Stock or any securities convertible into, or exercisable, or
exchangeable for, shares of Common Stock; or publicly announce an
intention to effect any such transaction, for a period of 60 days after
the date of the Underwriting Agreement, provided, however, that the
Company may issue and sell Common Stock pursuant to any employee stock
option plan, stock ownership plan or dividend reinvestment plan of the
Company in effect at the Execution Time and the Company may issue
Common Stock issuable upon the conversion of securities or the exercise
of warrants outstanding at the Execution Time.
(i) The Company will not take, directly or indirectly, any
action designed to or that would constitute or that might reasonably be
expected to cause or result in, under the Exchange Act or otherwise,
stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Securities.
(j) During the Prospectus Delivery Period, the Company will
file all documents required to be filed with the Commission pursuant to
Section 13, 14 or 15 of the Exchange Act in the manner and within the
time periods required by the Exchange Act and in material compliance
with Sections 302 and 906 of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act.
6. Conditions to the Obligations of the Underwriters. The
obligations of the Underwriters to purchase the Underwritten Securities shall be
subject to the accuracy of the representations and warranties on the part of the
Company contained herein as of the Execution Time and the Closing Date, to the
accuracy of the statements of the Company made in any certificates pursuant to
the provisions hereof, to the performance by the Company of its obligations
hereunder and to the following additional conditions:
13
(a) If filing of the Prospectus, or any supplement thereto, is
required pursuant to Rule 424(b), the Prospectus, and any such
supplement, will be filed in the manner and within the time period
required by Rule 424(b) and in no event later than the day prior to the
Closing Date; and no stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for
that purpose shall have been instituted or threatened.
(b) The Company shall have requested and caused ▇▇▇▇▇▇▇▇ and
▇▇▇▇▇▇▇▇ LLP, counsel for the Company, to have furnished to the
Representatives their opinion, dated the Closing Date and addressed to
the Representatives, substantially to the effect that:
(i) each of the Company and the Operating
Partnerships has been duly incorporated or formed, as
applicable and is validly existing as a corporation or limited
partnership, in good standing under the laws of the
jurisdiction in which it is chartered or organized, with full
power and authority to own or lease, as the case may be, and
to operate its properties and conduct its business as
described in the Prospectus, and is duly qualified to do
business and is in good standing under the laws of each
jurisdiction listed on Exhibit (a) to such counsel's opinion;
(ii) the Company owns a general partnership interest
in the Operating Partnerships as set forth or incorporated by
reference in the Prospectus;
(iii) the Company's authorized equity capitalization
is as set forth in the Prospectus; the capital stock of the
Company conforms in all material respects to the description
thereof contained in the Prospectus; the outstanding shares of
Common Stock have been duly and validly authorized and issued
and are fully paid and nonassessable; the Securities have been
duly and validly authorized, and, when issued and delivered to
and paid for by the Underwriters pursuant to this Agreement,
will be fully paid and nonassessable; the Securities are duly
listed, and admitted and authorized for trading, subject to
official notice of issuance, on the New York Stock Exchange;
the certificates for the Securities are in valid and
sufficient form; the holders of outstanding shares of capital
stock of the Company are not entitled to statutory preemptive
or, to such counsel's knowledge, other preemptive or other
rights to subscribe for the Securities; and, except as set
forth in the Prospectus, to such counsel's knowledge no
options, warrants or other rights to purchase, agreements or
other obligations to issue, or rights to convert any
obligations into or exchange any securities for, shares of
capital stock of or ownership interests in the Company are
outstanding;
(iv) to the knowledge of such counsel, there is no
pending or threatened action, suit or proceeding by or before
any court or governmental agency, authority or body or any
arbitrator involving the Company or any of its subsidiaries or
its or their property of a character required to be disclosed
in the Registration Statement which is not adequately
disclosed in the Registration Statement or Prospectus, and
there is no franchise, contract or other document of a
character required to be described in the Registration
Statement or Prospectus,
14
or to be filed as an exhibit thereto, which is not described
or filed as required; and the statements included or
incorporated by reference in the Prospectus Supplement under
the heading "Federal Income Tax Considerations" and in the
Prospectus under the headings "Description of Preferred
Stock," "Description of Common Stock" and "Federal Income Tax
Considerations" (as modified by the Prospectus Supplement)
insofar as such information constitutes matters of law or
legal conclusions, has been reviewed by such counsel and is
correct in all material respects;
(v) the Registration Statement has become effective
under the Act; any required filing of the Prospectus, and any
supplements thereto, pursuant to Rule 424(b) has been made in
the manner and within the time period required by Rule 424(b);
to the knowledge of such counsel, no stop order suspending the
effectiveness of the Registration Statement has been issued,
no proceedings for that purpose have been instituted or
threatened and the Registration Statement and the Prospectus
(other than the financial statements and other financial
information contained therein, as to which such counsel need
express no opinion) as of their respective effective or issue
dates comply as to form in all material respects with the
applicable requirements of the Act and the Exchange Act and
the respective rules thereunder;
(vi) Each document filed pursuant to the Exchange Act
(other than the financial statements and other financial
information contained therein, as to which such counsel need
express no opinion) and incorporated or deemed to be
incorporated by reference in the Prospectus complied when so
filed as to form in all material respects with the Exchange
Act and the rules thereunder.
(vii) this Agreement has been duly authorized,
executed and delivered by the Company;
(viii) the Company is not and, after giving effect to
the offering and sale of the Securities and the application of
the proceeds thereof as described in the Prospectus, will not
be an "investment company" as defined in the Investment
Company Act of 1940, as amended;
(ix) no consent, approval, authorization, filing with
or order of any court or governmental agency or body is
required in connection with the transactions contemplated
herein, except such as have been obtained under the Act and
such as may be required under the blue sky laws of any
jurisdiction in connection with the purchase and distribution
of the Securities by the Underwriters in the manner
contemplated in this Agreement and in the Prospectus and such
other approvals (specified in such opinion) as have been
obtained;
(x) neither the issue and sale of the Securities, nor
the consummation of any other of the transactions herein
contemplated will (i) result in the imposition of any lien,
charge or encumbrance upon any property or assets of the
Company or its subsidiaries, (ii) result in a violation of the
charter or by-laws of
15
the Company or the limited partnership agreements of the
Operating Partnerships, (iii) result in a breach or violation
of the terms of any indenture, contract, lease, mortgage, deed
of trust, note agreement, loan agreement or other agreement,
obligation, condition, covenant or instrument to which the
Company or its subsidiaries is a party or bound or to which
its or their property is subject and which has been filed as
an exhibit to any of the Company's filings made pursuant to
the Exchange Act and incorporated by reference into the
Prospectus, or (iv) to the knowledge of such counsel, violate
any statute, law, rule, regulation, judgment, order or decree
applicable to the Company or its subsidiaries of any court,
regulatory body, administrative agency, governmental body,
arbitrator or other authority of the Commonwealth of Virginia
or the United States of America having jurisdiction over the
Company or its subsidiaries or any of its or their properties;
(xi) to such counsel's knowledge, no holders of
securities of the Company have rights to the registration of
such securities under the Registration Statement;
(xii) The Company has been organized and has operated
in conformity with the requirements for qualification and
taxation as a REIT for each of its taxable years beginning
with the taxable year ended December 31, 1999 through December
31, 2002, and its current organization and proposed method of
operation will enable it to continue to meet the requirements
for qualification and taxation as a REIT for the taxable year
2003 and thereafter; and
(xiii) Each of the Operating Partnerships is and has
been properly treated as a partnership for federal income tax
purposes and not as a corporation or as an association or
publicly traded partnership taxable as a corporation,
throughout the period from the later of its formation or
January 1, 1999 through the date hereof.
In addition, such counsel shall state that it has no reason to
believe that on the Effective Date, the date the Registration
Statement was last deemed amended or the date of this
Agreement, the Registration Statement contained any untrue
statement of a material fact or omitted to state any material
fact required to be stated therein or necessary to make the
statements therein not misleading or that the Prospectus as of
its date or on the Closing Date included or includes any
untrue statement of a material fact or omitted or omits to
state a material fact necessary to make the statements
therein, in the light of the circumstances under which they
were made, not misleading (in each case, other than the
financial statements and other financial and statistical
information contained therein, as to which such counsel need
express no opinion).
In rendering such opinion, such counsel may rely as to matters of fact,
to the extent they deem proper, on certificates of responsible officers
of the Company and public officials. References to the Prospectus in
this paragraph (b) include any supplements thereto at the Closing Date.
16
(c) The Representatives shall have received from Hunton &
▇▇▇▇▇▇▇▇, counsel for the Underwriters, such opinion or opinions, dated
the Closing Date and addressed to the Representatives, with respect to
the issuance and sale of the Securities, the Registration Statement,
the Prospectus (together with any supplement thereto) and other related
matters as the Representatives may reasonably require, and the Company
shall have furnished to such counsel such documents as they request for
the purpose of enabling them to pass upon such matters.
(d) The Company shall have furnished to the Representatives a
certificate of the Company, signed by the Chairman of the Board or the
President and the principal financial or accounting officer of the
Company, dated the Closing Date, to the effect that the signers of such
certificate have carefully examined the Registration Statement, the
Prospectus, any supplements to the Prospectus and this Agreement and
that:
(i) the representations and warranties of the Company
in this Agreement are true and correct on and as of the
Closing Date with the same effect as if made on the Closing
Date and the Company has complied with all the agreements and
satisfied all the conditions on its part to be performed or
satisfied at or prior to the Closing Date;
(ii) no stop order suspending the effectiveness of
the Registration Statement has been issued and no proceedings
for that purpose have been instituted or, to the Company's
knowledge, threatened; and
(iii) since the date of the most recent financial
statements included or incorporated by reference in the
Prospectus (exclusive of any supplement thereto), there has
been no material adverse effect on the condition (financial or
otherwise), prospects, earnings, business or properties of the
Company and its subsidiaries, taken as a whole, whether or not
arising from transactions in the ordinary course of business,
except as set forth in or contemplated in the Prospectus
(exclusive of any supplement thereto).
(e) The Representatives shall have received from Ernst & Young
LLP, at the Execution Time and at the Closing Date, letters, dated
respectively as of the Execution Time and as of the Closing Date, in
form and substance satisfactory to the Representatives, confirming that
they are independent accountants within the meaning of the Act and the
Exchange Act and the respective applicable rules and regulations
adopted by the Commission thereunder and that they have performed a
review of the unaudited interim financial information of the Company
for the three and nine-month periods ended September 30, 2002 and 2001,
and as at September 30, 2002 in accordance with Statement on Auditing
Standards No. 71, and stating in effect that:
(i) in their opinion the audited financial statements
and financial statement schedules included or incorporated by
reference in the Registration Statement and the Prospectus and
reported on by them comply as to form in all material respects
with the applicable accounting requirements of the Act and the
Exchange Act and the related rules and regulations adopted by
the Commission;
17
(ii) on the basis of their limited review, in
accordance with standards established under Statement on
Auditing Standards No. 71, of the unaudited interim financial
information for the three and nine-month periods ended
September 30, 2002 and 2001 and as at September 30, 2002
incorporated by reference in the Registration Statement and
the Prospectus; carrying out certain specified procedures (but
not an examination in accordance with generally accepted
auditing standards) which would not necessarily reveal matters
of significance with respect to the comments set forth in such
letter; a reading of the minutes of the meetings of the
shareholders, directors and executive, audit, compensation,
corporate governance and investment and secured financing
committees of the Company and the subsidiaries; and inquiries
of certain officials of the Company who have responsibility
for financial and accounting matters of the Company and its
subsidiaries as to transactions and events subsequent to
September 30, 2002, nothing came to their attention which
caused them to believe that:
(1) any unaudited financial statements
included or incorporated by reference in the
Registration Statement and the Prospectus do not
comply as to form in all material respects with
applicable accounting requirements of the Act and
with the related rules and regulations adopted by the
Commission with respect to financial statements
included or incorporated by reference in quarterly
reports on Form 10-Q under the Exchange Act; and said
unaudited financial statements are not in conformity
with generally accepted accounting principles applied
on a basis substantially consistent with that of the
audited financial statements included or incorporated
by reference in the Registration Statement and the
Prospectus;
(2) with respect to the period subsequent to
September 30, 2002, there were any changes, at a
specified date not more than five days prior to the
date of the letter, in the capital stock of the
Company or any increases in consolidated secured debt
or consolidated unsecured debt or any decreases in
the total assets or stockholders' equity of the
Company as compared with the amounts shown on the
September 30, 2002 consolidated balance sheet
included or incorporated by reference in the
Registration Statement and the Prospectus, or for the
period from October 1, 2002 to such specified date
there were any decreases, as compared with the
corresponding period in the preceding year in
consolidated rental income or income before gains on
sales of investments, minority interests and
extraordinary items or in total or per share amounts
of net income of the Company and its subsidiaries,
except in all instances for changes or decreases set
forth in such letter, in which case the letter shall
be accompanied by an explanation by the Company as to
the significance thereof unless said explanation is
not deemed necessary by the Representatives; and
18
(3) the information included or incorporated
by reference in the Registration Statement and
Prospectus in response to Regulation S-K, Item 301
(Selected Financial Data), Item 302 (Supplementary
Financial Information), Item 402 (Executive
Compensation) and Item 503(d) (Ratio of Earnings to
Fixed Charges) is not in conformity with the
applicable disclosure requirements of Regulation S-K;
(iii) they have performed certain other specified
procedures as a result of which they determined that certain
information of an accounting, financial or statistical nature
(which is limited to accounting, financial or statistical
information derived from the general accounting records of the
Company and its subsidiaries) set forth in the Registration
Statement and the Prospectus and in Exhibit 12.1 to the
Registration Statement, including without limitation the
information set forth under the caption "Recent Developments,"
"Use of Proceeds" and "Ratio of Earnings to Fixed Charges and
Ratios of Earnings to Fixed Charges and Preferred Stock
Dividends" in the Prospectus, the information included or
incorporated by reference in Items 1, 2, 6, 7 and 11 of the
Company's Annual Report on Form 10-K, incorporated by
reference in the Registration Statement and the Prospectus,
the information included in the "Management's Discussion and
Analysis of Financial Condition and Results of Operations"
included or incorporated by reference in the Company's
Quarterly Reports on Form 10-Q, incorporated by reference in
the Registration Statement and the Prospectus, and the
information included in "Compensation of Executive Officers,"
"Compensation of Directors," "CEO Compensation," "Certain
Business Relationships" and "Audit Fees" included or
incorporated by reference in the Company's Proxy Statement on
Schedule 14A, incorporated by reference in the Registration
Statement and the Prospectus or any such information appearing
in a Current Report on Form 8-K incorporated by reference in
the Registration Statement and the Prospectus, agrees with the
accounting records of the Company and its subsidiaries,
excluding any questions of legal interpretation.
References to the Prospectus in this paragraph (e) include any
supplement thereto at the date of the letter.
(f) Subsequent to the Execution Time or, if earlier, the dates
as of which information is given in the Registration Statement
(exclusive of any amendment thereof) and the Prospectus (exclusive of
any supplement thereto), there shall not have been (i) any change or
decrease specified in the letter or letters referred to in paragraph
(e) of this Section 6 or (ii) any change, or any development involving
a prospective change, in or affecting the condition (financial or
otherwise), earnings, business or properties of the Company and its
subsidiaries, taken as a whole, whether or not arising from
transactions in the ordinary course of business, except as set forth in
or contemplated in the Prospectus (exclusive of any supplement thereto)
the effect of which, in any case referred to in clause (i) or (ii)
above, is, in the sole judgment of the Representatives, so material and
adverse as to make it impractical or inadvisable to proceed with the
offering or delivery of the Securities as contemplated by the
Registration Statement (exclusive of any amendment thereof) and the
Prospectus (exclusive of any supplement thereto).
19
(g) Prior to the Closing Date, the Company shall have
furnished to the Representatives such further information, certificates
and documents as the Representatives may reasonably request.
(h) Subsequent to the Execution Time, there shall not have
been any decrease in the rating of any of the Company's debt securities
by any "nationally recognized statistical rating organization" (as
defined for purposes of Rule 436(g) under the Act) or any notice given
of any intended or potential decrease in any such rating or of a
possible change in any such rating that does not indicate the direction
of the possible change.
(i) The Securities shall have been listed and admitted and
authorized for trading on the New York Stock Exchange, and satisfactory
evidence of such actions shall have been provided to the
Representatives.
(j) At the Execution Time, the Company shall have furnished to
the Representatives a letter substantially in the form of Exhibit A
hereto from each officer, director and significant shareholder of the
Company listed on Exhibit C, addressed to the Representatives.
If any of the conditions specified in this Section 6 shall not
have been fulfilled in all material respects when and as provided in this
Agreement, or if any of the opinions and certificates mentioned above or
elsewhere in this Agreement shall not be in all material respects reasonably
satisfactory in form and substance to the Representatives and counsel for the
Underwriters, this Agreement and all obligations of the Underwriters hereunder
may be canceled at, or at any time prior to, the Closing Date by the
Representatives. Notice of such cancelation shall be given to the Company in
writing or by telephone or facsimile confirmed in writing.
The documents required to be delivered by this Section 6 shall
be delivered at the office of Hunton & ▇▇▇▇▇▇▇▇, counsel for the Underwriters,
at ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, on the Closing Date.
7. Reimbursement of Underwriters' Expenses. If the sale of the
Securities provided for herein is not consummated because any condition to the
obligations of the Underwriters set forth in Section 6 hereof is not satisfied
because of any refusal, inability or failure on the part of the Company to
perform any agreement herein or comply with any provision hereof other than by
reason of a default by any of the Underwriters, the Company will reimburse the
Underwriters severally through ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Inc. on demand for all
reasonable documented out-of-pocket expenses (including reasonable fees and
disbursements of counsel) that shall have been incurred by them in connection
with the proposed purchase and sale of the Securities.
8. Indemnification and Contribution.
(a) The Company agrees to indemnify and hold harmless each
Underwriter, the directors, officers, employees and agents of each
Underwriter and each person who controls any Underwriter within the
meaning of either the Act or the Exchange Act against any and all
losses, claims, damages or liabilities, joint or several, to which they
or any of them may become subject under the Act, the Exchange Act or
other Federal or
20
state statutory law or regulation, at common law or otherwise, insofar
as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of a material fact contained in the registration
statement for the registration of the Securities as originally filed or
in any amendment thereof, or in the Prospectus, or in any amendment
thereof or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not
misleading, and agrees to reimburse each such indemnified party, as
incurred, for any legal or other expenses reasonably incurred by them
in connection with investigating or defending any such loss, claim,
damage, liability or action; provided, however, that the Company will
not be liable in any such case to the extent that any such loss, claim,
damage or liability arises out of or is based upon any such untrue
statement or alleged untrue statement made therein in reliance upon and
in conformity with written information furnished to the Company by or
on behalf of any Underwriter through the Representatives specifically
for inclusion therein as described in Section 8(b) hereof. This
indemnity agreement will be in addition to any liability which the
Company may otherwise have.
(b) Each Underwriter severally and not jointly agrees to
indemnify and hold harmless the Company, each of its directors, each of
its officers who signs the Registration Statement, and each person who
controls the Company within the meaning of either the Act or the
Exchange Act, to the same extent as the foregoing indemnity from the
Company to each Underwriter, but only with reference to written
information relating to such Underwriter furnished to the Company by or
on behalf of such Underwriter through the Representatives specifically
for inclusion in the documents referred to in the foregoing indemnity.
This indemnity agreement will be in addition to any liability which any
Underwriter may otherwise have. The Company acknowledges that the
statements set forth in the first two sentences of the sixth paragraph
under the heading "Underwriting," in the Prospectus constitute the only
information furnished in writing by or on behalf of the several
Underwriters for inclusion in the Prospectus.
(c) Promptly after receipt by an indemnified party under this
Section 8 of notice of the commencement of any action, such indemnified
party will, if a claim in respect thereof is to be made against the
indemnifying party under this Section 8, notify the indemnifying party
in writing of the commencement thereof; but the failure so to notify
the indemnifying party (i) will not relieve it from liability under
paragraph (a) or (b) above unless and to the extent it did not
otherwise learn of such action and such failure results in the
forfeiture by the indemnifying party of substantial rights and defenses
and (ii) will not, in any event, relieve the indemnifying party from
any obligations to any indemnified party other than the indemnification
obligation provided in paragraph (a) or (b) above. The indemnifying
party shall be entitled to appoint counsel of the indemnifying party's
choice at the indemnifying party's expense to represent the indemnified
party in any action for which indemnification is sought (in which case
the indemnifying party shall not thereafter be responsible for the fees
and expenses of any separate counsel retained by the indemnified party
or parties except as set forth below); provided, however, that such
counsel shall be satisfactory to the indemnified party. Notwithstanding
the indemnifying party's election to appoint counsel to represent the
21
indemnified party in an action, the indemnified party shall have the
right to employ separate counsel (including local counsel), and the
indemnifying party shall bear the reasonable fees, costs and expenses
of such separate counsel if (i) the use of counsel chosen by the
indemnifying party to represent the indemnified party would present
such counsel with a conflict of interest, (ii) the actual or potential
defendants in, or targets of, any such action include both the
indemnified party and the indemnifying party and the indemnified party
shall have reasonably concluded that there may be legal defenses
available to it and/or other indemnified parties which are different
from or additional to those available to the indemnifying party, (iii)
the indemnifying party shall not have employed counsel satisfactory to
the indemnified party to represent the indemnified party within a
reasonable time after notice of the institution of such action or (iv)
the indemnifying party shall authorize the indemnified party to employ
separate counsel at the expense of the indemnifying party. It is
understood, however, that the indemnifying party shall, in connection
with any one such action or separate but substantially similar or
related actions in the same jurisdiction arising out of the same
general allegations or circumstances, be liable for the fees and
expenses of only one separate firm of attorneys (in addition to any
local counsel) at any time for all such indemnified parties, which firm
shall be designated in writing by such indemnified parties. An
indemnifying party will not, without the prior written consent of the
indemnified parties, settle or compromise or consent to the entry of
any judgment with respect to any pending or threatened claim, action,
suit or proceeding in respect of which indemnification or contribution
may be sought hereunder (whether or not the indemnified parties are
actual or potential parties to such claim or action) unless such
settlement, compromise or consent includes an unconditional release of
each indemnified party from all liability arising out of such claim,
action, suit or proceeding.
(d) In the event that the indemnity provided in paragraph (a)
or (b) of this Section 8 is unavailable to or insufficient to hold
harmless an indemnified party for any reason, the Company and the
Underwriters severally agree to contribute to the aggregate losses,
claims, damages and liabilities (including legal or other expenses
reasonably incurred in connection with investigating or defending same)
(collectively "Losses") to which the Company and one or more of the
Underwriters may be subject in such proportion as is appropriate to
reflect the relative benefits received by the Company on the one hand
and by the Underwriters on the other from the offering of the
Securities; provided, however, that in no case shall any Underwriter
(except as may be provided in any agreement among underwriters relating
to the offering of the Securities) be responsible for any amount in
excess of the underwriting discount or commission applicable to the
Securities purchased by such Underwriter hereunder. If the allocation
provided by the immediately preceding sentence is unavailable for any
reason, the Company and the Underwriters severally shall contribute in
such proportion as is appropriate to reflect not only such relative
benefits but also the relative fault of the Company on the one hand and
of the Underwriters on the other in connection with the statements or
omissions which resulted in such Losses as well as any other relevant
equitable considerations. Benefits received by the Company shall be
deemed to be equal to the total net proceeds from the offering (before
deducting expenses) received by it, and benefits received by the
Underwriters shall be deemed to be equal to the total underwriting
discounts and commissions, in each case as set forth on the cover page
of
22
the Prospectus. Relative fault shall be determined by reference to,
among other things, whether any untrue or any alleged untrue statement
of a material fact or the omission or alleged omission to state a
material fact relates to information provided by the Company on the one
hand or the Underwriters on the other, the intent of the parties and
their relative knowledge, access to information and opportunity to
correct or prevent such untrue statement or omission. The Company and
the Underwriters agree that it would not be just and equitable if
contribution were determined by pro rata allocation or any other method
of allocation which does not take account of the equitable
considerations referred to above. Notwithstanding the provisions of
this paragraph (d), no person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section 8, each person who
controls an Underwriter within the meaning of either the Act or the
Exchange Act and each director, officer, employee and agent of an
Underwriter shall have the same rights to contribution as such
Underwriter, and each person who controls the Company within the
meaning of either the Act or the Exchange Act, each officer of the
Company who shall have signed the Registration Statement and each
director of the Company shall have the same rights to contribution as
the Company, subject in each case to the applicable terms and
conditions of this paragraph (d).
9. Default by an Underwriter. If any one or more Underwriters
shall fail to purchase and pay for any of the Securities agreed to be purchased
by such Underwriter or Underwriters hereunder and such failure to purchase shall
constitute a default in the performance of its or their obligations under this
Agreement, the remaining Underwriters shall be obligated severally to take up
and pay for (in the respective proportions which the amount of Securities set
forth opposite their names in Schedule I hereto bears to the aggregate amount of
Securities set forth opposite the names of all the remaining Underwriters) the
Securities which the defaulting Underwriter or Underwriters agreed but failed to
purchase; provided, however, that in the event that the aggregate amount of
Securities which the defaulting Underwriter or Underwriters agreed but failed to
purchase shall exceed 10% of the aggregate amount of Securities set forth in
Schedule I hereto, the remaining Underwriters shall have the right to purchase
all, but shall not be under any obligation to purchase any, of the Securities,
and if such nondefaulting Underwriters do not purchase all the Securities, this
Agreement will terminate without liability to any nondefaulting Underwriter or
the Company. In the event of a default by any Underwriter as set forth in this
Section 9, the Closing Date shall be postponed for such period, not exceeding
five Business Days, as the Representatives shall determine in order that the
required changes in the Registration Statement and the Prospectus or in any
other documents or arrangements may be effected. Nothing contained in this
Agreement shall relieve any defaulting Underwriter of its liability, if any, to
the Company and any nondefaulting Underwriter for damages occasioned by its
default hereunder.
10. Termination. This Agreement shall be subject to
termination in the absolute discretion of the Representatives, by notice given
to the Company prior to delivery of and payment for the Securities, if at any
time prior to such time (i) trading in the Company's Common Stock shall have
been suspended by the Commission or the New York Stock Exchange or trading in
securities generally on the New York Stock Exchange shall have been suspended or
limited or minimum prices shall have been established on such Exchange, (ii) a
banking
23
moratorium shall have been declared either by Federal or New York State
authorities or a material disruption in commercial banking or securities
settlement or clearance services in the United States or (iii) there shall have
occurred any outbreak or escalation of hostilities, declaration by the United
States of a national emergency or war, or other calamity or crisis the effect of
which on financial markets is such as to make it, in the sole judgment of the
Representatives, impractical or inadvisable to proceed with the offering or
delivery of the Securities as contemplated by the Prospectus (exclusive of any
supplement thereto).
11. Representations and Indemnities to Survive. The respective
agreements, representations, warranties, indemnities and other statements of the
Company or its officers and of the Underwriters set forth in or made pursuant to
this Agreement will remain in full force and effect, regardless of any
investigation made by or on behalf of any Underwriter or the Company or any of
the officers, directors, employees, agents or controlling persons referred to in
Section 8 hereof, and will survive delivery of and payment for the Securities.
The provisions of Sections 7 and 8 hereof shall survive the termination or
cancelation of this Agreement.
12. Notices. All communications hereunder will be in writing
and effective only on receipt, and, if sent to the Representatives, will be
telefaxed to ▇▇▇▇▇▇▇ ▇▇▇▇▇ Barney Inc. General Counsel (fax no.: (▇▇▇) ▇▇▇-▇▇▇▇)
and confirmed to ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Inc., ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇ ▇▇▇▇▇, Attention: General Counsel (with a copy to Hunton & ▇▇▇▇▇▇▇▇, ▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇), or, if
sent to the Company, will be mailed, delivered or telefaxed to (▇▇▇) ▇▇▇-▇▇▇▇
and confirmed to it at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇
▇▇▇▇▇, Attention: President (with a copy to ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇).
13. Successors. This Agreement will inure to the benefit of
and be binding upon the parties hereto and their respective successors and the
officers, directors, employees, agents and controlling persons referred to in
Section 8 hereof, and no other person will have any right or obligation
hereunder.
14. Applicable Law. This Agreement will be governed by and
construed in accordance with the laws of the State of New York applicable to
contracts made and to be performed within the State of New York.
15. Counterparts. This Agreement may be signed in one or more
counterparts, each of which shall constitute an original and all of which
together shall constitute one and the same agreement.
16. Headings. The section headings used herein are for
convenience only and shall not affect the construction hereof.
17. Definitions. The terms which follow, when used in this
Agreement, shall have the meanings indicated.
"Act" shall mean the Securities Act of 1933, as amended, and
the rules and regulations of the Commission promulgated thereunder.
24
"Base Prospectus" shall mean the prospectus covering the Shelf
Securities in the form first used by the Underwriter to confirm sales
of Securities.
"Business Day" shall mean any day other than a Saturday, a
Sunday or a legal holiday or a day on which banking institutions or
trust companies are authorized or obligated by law to close in New York
City.
"Commission" shall mean the Securities and Exchange
Commission.
"Effective Date" shall mean each date and time that the
Registration Statement, any post-effective amendment or amendments
thereto and any Rule 462(b) Registration Statement became or become
effective.
"Environmental Laws" shall mean any and all federal, state,
local or municipal laws, rules, orders, regulations, statutes,
ordinances, codes, decrees or requirements of any Governmental
Authority regulating, relating to or imposing liability or standards of
conduct concerning any Hazardous Substances, public health or
environmental protection, together with any amendment or a
re-authorization thereof or thereto.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended, and the rules and regulations of the Commission promulgated
thereunder.
"Execution Time" shall mean the date and time that this
Agreement is executed and delivered by the parties hereto.
"Governmental Authority" shall mean any federal, state, local
or municipal governmental body, department, agency or subdivision
responsible for the due administration and/or enforcement of any
Environmental Law.
"Hazardous Substances" shall mean any pollutant, contaminant,
hazardous material, hazardous waste, infectious medical waste,
hazardous or toxic substance defined or regulated as such in or under
any Environmental Law.
"Prospectus" shall mean the Base Prospectus as supplemented by
the Prospectus Supplement.
"Prospectus Supplement" shall mean the prospectus supplement
to the Base Prospectus specifically relating to the Securities in the
form first used by the Underwriter to confirm sales.
"Registration Statement" shall mean the registration statement
referred to in paragraph 1(a) above, including exhibits and financial
statements, as amended at the Execution Time (or, if not effective at
the Execution Time, in the form in which it shall become effective)
and, in the event any post-effective amendment thereto or any Rule
462(b) Registration Statement becomes effective prior to the Closing
Date, shall also mean such registration statement as so amended or such
Rule 462(b) Registration Statement, as the case may be. Such term shall
include any Rule 430A Information deemed to be included therein at the
Effective Date as provided by Rule 430A.
25
"Rule 424", "Rule 430A" and "Rule 462" refer to such rules
under the Act.
"Rule 430A Information" shall mean information with respect to
the Securities and the offering thereof permitted to be omitted from
the Registration Statement when it becomes effective pursuant to Rule
430A.
"Rule 462(b) Registration Statement" shall mean a registration
statement and any amendments thereto filed pursuant to Rule 462(b)
relating to the offering covered by the registration statement referred
to in Section 1(a) hereof.
"Shelf Securities" shall mean certain securities to be issued
from time to time by the Company pursuant to the Registration
Statement.
If the foregoing is in accordance with your understanding of
our agreement, please sign and return to us the enclosed duplicate hereof,
whereupon this letter and your acceptance shall represent a binding agreement
among the Company and the several Underwriters.
Very truly yours,
United Dominion Realty Trust, Inc.
By: /s/ ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------
Name: ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Executive Vice President
and Chief Financial Officer
26
The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Inc.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Managing Director
For itself and the other
several Underwriters named in
Schedule I to the foregoing
Agreement.
27
EXHIBIT A
United Dominion Realty Trust, Inc.
Public Offering of Common Stock
January ___, 2003
▇▇▇▇▇▇▇ ▇▇▇▇▇ Barney Inc.
As Representatives of the several Underwriters
c/o ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
This letter is being delivered to you in connection with the
proposed Underwriting Agreement (the "Underwriting Agreement"), between United
Dominion Realty Trust, Inc., a Virginia corporation (the "Company"), and you as
representative of a group of Underwriters named therein, relating to an
underwritten public offering of Common Stock, $1.00 par value (the "Common
Stock"), of the Company.
In order to induce you and the other Underwriters to enter
into the Underwriting Agreement, the undersigned will not, without the prior
written consent of ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Inc., offer, sell, contract to sell,
pledge or otherwise dispose of, (or enter into any transaction which is designed
to, or might reasonably be expected to, result in the disposition (whether by
actual disposition or effective economic disposition due to cash settlement or
otherwise) by the undersigned or any affiliate of the undersigned or any person
in privity with the undersigned or any affiliate of the undersigned), directly
or indirectly, including the filing (or participation in the filing) of a
registration statement with the Securities and Exchange Commission in respect
of, or establish or increase a put equivalent position or liquidate or decrease
a call equivalent position within the meaning of Section 16 of the Securities
Exchange Act of 1934, as amended, and the rules and regulations of the
Securities and Exchange Commission promulgated thereunder with respect to, any
shares of capital stock of the Company or any securities convertible into or
exercisable or exchangeable for such capital stock, or publicly announce an
intention to effect any such transaction, for a period of 30 days after the date
of the Underwriting Agreement. Notwithstanding the foregoing, the undersigned
may transfer any or all of the shares of Common Stock or any securities
convertible into or exchangeable or exercisable for Common Stock owned by the
undersigned: either during his or her lifetime or on death, by gift, will or
intestate succession to his or her immediate family or to a trust the
beneficiaries of which are exclusively the undersigned and/or a member or
members of his or her immediate family; provided, however, that in any such
transfer, it shall be a condition to such transfer that the transferee execute
an agreement stating that the transferee is receiving and holding the shares of
Common Stock subject to, and the transferee agrees to be bound by, the
provisions of this letter agreement,
and there shall be no further transfer of such shares of Common Stock except in
accordance with this letter agreement.
If for any reason the Underwriting Agreement shall be
terminated prior to the Closing Date (as defined in the Underwriting Agreement),
the agreement set forth above shall likewise be terminated.
Yours very truly,
[SIGNATURE OF OFFICER OR DIRECTOR]
[NAME AND ADDRESS OF OFFICER OR DIRECTOR]
2
EXHIBIT B
SIGNIFICANT SUBSIDIARIES
United Dominion Realty L.P.
Heritage Communities L.P.
EXHIBIT C
OFFICERS AND DIRECTORS PROVIDING LOCK-UP LETTERS
▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇. ▇▇▇▇ ▇▇▇▇▇▇, Jr.
W. ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
SCHEDULE I
NUMBER OF UNDERWRITTEN
UNDERWRITERS SECURITIES TO BE PURCHASED
------------ --------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇ Barney Inc. 2,000,000
---------
Total 2,000,000
=========
