EXHIBIT 1
ERP OPERATING LIMITED PARTNERSHIP
(an Illinois limited partnership)
$100,000,000 Remarketed Reset Notes
TERMS AGREEMENT
Dated: August 18, 1998
To: ERP Operating Limited Partnership
c/o Equity Residential Properties Trust
Xxx Xxxxx Xxxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Ladies and Gentlemen:
We understand that ERP Operating Limited Partnership, an Illinois
limited partnership ("ERP"), proposes to issue and sell $100,000,000
aggregate principal amount of Remarketed Reset Notes due August 21, 2003 (the
"Notes") (such Notes being hereinafter also referred to as the "Underwritten
Securities"). Subject to the terms and conditions set forth or incorporated
by reference herein, the Underwriters named below (the "Underwriters")
severally, and not jointly, agree to purchase the respective amounts of the
Underwritten Securities set forth below opposite their respective names, to
the extent any are purchased, at 99.65% of the principal amount thereof.
Principal Amount of
Underwriter Underwritten Securities
----------- -----------------------
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated .............................. $ 75,000,000
Xxxxxxx, Sachs & Co. ..................................... 25,000,000
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Total ........................................... $100,000,000
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The Underwritten Securities shall have the following terms
(capitalized terms used but not defined herein or in the attached
Purchase Agreement shall have the meanings given them
in the form of Note attached hereto as Annex B):
Title: Remarked Reset Notes due August 21, 2003
Principal Amount to be Issued: $100,000,000
Current Ratings: A3 by Xxxxx'x Investors Services, Inc.
BBB+ by Standard & Poor's Ratings Services
Form: Registered book-entry form
Initial Price to Public: At varying prices related to the prevailing market prices at the
time of the sale
Purchase Price: 99.65% of the principal amount of the Underwritten Securities
Remarketing Underwriter: Xxxxxxx Xxxxx & Co., Merrill, Lynch, Xxxxxx, Xxxxxx & Xxxxx
Incorporated
Settlement Date, Time and August 21, 1998, at 9:00 a.m. New York City time at the offices of
Place: Xxxxxxxxx & Xxxxxxxxxxx, P.C., Xxx Xxxxx Xxxxxxxxx Xxxxx, Xxxxx
0000, Xxxxxxx, Xxxxxxxx 00000 for the delivery of documents; delivery
of funds on August 21, 1998 in accordance with DTC procedures for
the Underwritten Securities
Stated Maturity Date: August 21, 2003
Initial Index / Spread: 3 Month LIBOR + 45 basis points
Initial Spread Period: The one-year period from and including August 21, 1998 to but
excluding August 23, 1999 during which the interest rate will be
reset quarterly
Initial Interest Payment Dates: During the Initial Spread Period, interest on the Notes will be
payable quarterly in arrears, on November 23, 1998, February 23,
1999, May 24, 1999, and August 23, 1999. During the Initial
Spread Period, the interest rate on the Notes will be reset
quarterly. After the Initial Spread Period, interest on the Notes
will be payable, unless otherwise specified on the applicable
Duration/Determination Date, in arrears (i) quarterly on each
February 23, May 23, August 23, and November 23 during the
applicable Subsequent Spread Period in the case of Notes in the
Floating Rate Mode or (ii) semi-annually on each February 23
and August 23 during the applicable Subsequent Spread Period
in the case of Notes in the Fixed Rate Mode.
Subsequent Spread Index: Determined by Issuer as floating rate (LIBOR) or fixed rate
(Treasury)
Subsequent Spread Periods: Determined by agreement between the Remarketing Underwriter
and ERP on the applicable Duration/Mode Determination Date.
Subsequent Spreads Period will be one or more periods of at
least six months and not more than four years (or any
integral-multiple of six months therein).
Subsequent Spread: Determined by agreement between Remarketing Underwriter
and ERP to result in a rate which will enable tendered Notes to
be remarketed at par.
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Duration/Mode Determination Unless notice of redemption of the Notes as a whole has been
Date: given, the duration, redemption dates, redemption type (i.e., par,
premium or make-whole), redemption prices (if applicable),
Commencement Date, Interest Payment Dates, Interest Rate Mode
and any other relevant terms for each Subsequent Spread Period
will be established by 3:00 p.m., New York City time, on the
tenth Business Day prior to the Commencement Date of each
Subsequent Spread Period.
Spread Determination The Spread for each Subsequent Spread Period will be
Date: established by 1:00 p.m., New York City time, on the fifth
Business Day prior to the Commencement Date of such
Subsequent Spread Period.
Alternate Spread/Duration: If the Remarketing Underwriter and ERP do not agree on the
Spread for any Subsequent Spread Period, (i) the Subsequent
Spread Period will be one year, (ii) the Notes will be reset to the
Floating Rate Mode and (iii) the Spread for such Subsequent
Spread Period will be the Alternate Spread. The Alternate
Spread will be the percentage equal to LIBOR for the Quarterly
Period beginning on the Commencement Date for such
Subsequent Spread Period.
Rate Agent: Pursuant to the Remarketing Agreement, Xxxxxxx Lynch, Pierce,
Xxxxxx & Xxxxx Incorporated has agreed to act as Remarketing
Underwriter and as Rate Agent. The Rate Agent will determine
(i) LIBOR and the interest rate on the Notes for any Quarterly
Period and/or (ii) the yield to maturity on the applicable United
States Treasury security that is used in connection with the
determination of the applicable Fixed Rate, and the ensuing
applicable Fixed Rate. ERP, in its sole discretion, may change
the Remarketing Underwriter and the Rate Agent for any
Subsequent Spread Period at any time on or prior to 3:00 p.m.,
New York City time, on the Duration/Mode Determination Date
relating thereto.
Redemption: The Notes may not be redeemed by ERP prior to August 23, 1999
(the final payment date of the Initial Spread Period). On that
date, on each Commencement Date and on those Interest
Payment Dates specified as redemption dates agreed to by ERP
and the Remarketing Underwriter, as the Remarketing
Underwriter, the Notes may be redeemed at the option of ERP, in
whole or in part, upon notice given at any time during the 30
calendar day period ending on the tenth Business Day prior to
the redemption date. The Notes may also be redeemed at the
option of ERP, in whole or in part, at the end of each Subsequent
Spread Period or immediately after the Spread Determination
Date, whenever the Alternate Spread is invoked. The redemption
price is equal to 100% of the principal amount together with
accrued interest to the redemption date.
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Tender at Option of Beneficial Once the Remarketing Underwriter and ERP agree on the Spread
Owners: with respect to any Subsequent Spread Period, the Remarketing
Underwriter and ERP will enter into a Remarketing Agreement on
such Spread Determination Date. On the first day of such
Subsequent Spread Period (the "Tender Date"), each beneficial
owner of a Note may, at such owner's option, upon giving notice
as provided below (the "Tender Notice"), tender such Note for
remarketing by the Remarketing Underwriter on the Tender Date at
100% of the principal amount thereof (the "Purchase Price"). The
Tender Notice must be received by the Remarketing Underwriter
during the period commencing at 3:00 p.m., New York City time,
on the Spread Determination Date and ending at 12:00 noon, New
York City time, on the second Business Day following the Spread
Determination Date. If a Tender Notice is not received, then the
beneficial owner shall be deemed to have elected to continue
ownership of the Notes.
If the Remarketing Underwriter does not purchase all tendered
Notes on the relevant Tender Date, (i) all Tender Notices
relating thereto will be null and void, (ii) none of the
tendered Notes will be purchased by the Remarketing Underwriter,
(iii) the Notes will be reset to the Alternate Spread/Duration
which shall be deemed to have commenced upon the applicable
Commencement Date and (iv) the Notes will be redeemable at the
option of ERP, in whole or in part, upon at least ten Business
Days' notice given by no later than the fifth Business Day
following the relevant Tender Date.
Other: The Remarketing Underwriter will attempt, on a reasonable
basis, to remarket the tendered Notes at a price equal to
100% of the aggregate principal amount so tendered. There is
no assurance that the Remarketing Underwriter will be able
to remarket the entire principal amount of the Notes
tendered in a remarketing.
All the provisions contained in the document attached as Annex A
hereto entitled "ERP Operating Limited Partnership--Debt Securities--Purchase
Agreement" (the "Purchase Agreement"), dated December 13, 1994 are hereby
incorporated by reference in their entirety herein and shall be deemed to be
a part of this Terms Agreement to the same extent as if such provisions had
been set forth in full herein. In addition, the amendments to the Purchase
Agreement set forth in the Terms Agreement dated August 8, 1996, between ERP
and the underwriters named therein are incorporated herein by reference to
the same extent as if such provisions had been set forth in full herein. In
addition, the Purchase Agreement is hereby further amended to refer to the
Registration Statement on Form S-3 as number 333-45557 rather than number
33-84892. Defined terms used herein have the same meaning as defined in the
Purchase Agreement and the prospectus supplement, dated August 18, 1998 (the
"Prospectus Supplement"), to the prospectus dated April 6, 1998 (together
with the Prospectus Supplement, the "Prospectus").
ERP is required to maintain Total Unencumbered Assets of not less
than 150% of the aggregate outstanding principal amount of the Unsecured Debt
of ERP.
In addition to the closing documents required pursuant to the Purchase
Agreement, ERP's counsel shall also deliver the following legal opinion:
"The Remarketing Agreement has been duly authorized, executed and
delivered by ERP and, assuming due authorization, execution and
delivery thereof by the Remarketing Underwriter,
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constitutes a legal, valid and binding agreement of ERP,
enforceable against ERP in accordance with its terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent transfer, or similar laws affecting creditors' rights
generally from time to time in effect and general principles of
equity (regardless of whether such enforceability is considered in a
proceeding at law or in equity) and except that a waiver of rights
under any usury law may be unenforceable."
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Please accept this offer by signing a copy of this Terms Agreement in the space
set forth below and returning the signed copy to us no later than 6:00 p.m. (New
York City time) on August 18, 1998 by signing a copy of this Terms Agreement in
the space set forth below and returning the signed copy to us.
Very truly yours
XXXXXXX XXXXX & CO.
XXXXXXX LYNCH, PIERCE, XXXXXX & XXXXX
INCORPORATED
By: /s/ Xxxx Xxxxxx
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Name: Xxxx Xxxxxx
Title: Managing Director
Acting on behalf of itself and the other named
Underwriters.
Accepted:
ERP OPERATING LIMITED PARTNERSHIP
By: EQUITY RESIDENTIAL PROPERTIES TRUST,
not individually but as General Partner
By: /s/ Xxxxx X. Xxxxxxxxxx
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Name: Xxxxx X. Xxxxxxxxxx
Title: Executive Vice President and
Chief Financial Officer
