EQUITY RESIDENTIAL PROPERTIES TRUST
(a Maryland real estate investment trust)
COMMON SHARES OF BENEFICIAL INTEREST,
PAR VALUE $.01 PER SHARE
TERMS AGREEMENT
---------------
Dated: December 5, 1996
To: Equity Residential Properties Trust
Xxx Xxxxx Xxxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx Xxxxxxx
Ladies and Gentlemen:
We, Xxxxx Xxxxxx Inc. (the "Underwriters"), understand that Equity
Residential Properties Trust ("EQR") proposes to issue and sell 3,600,000 of its
Common Shares of Beneficial Interest, $.01 par value per share, being
collectively hereinafter referred to as the "Initial Underwritten Securities."
In addition, we understand that EQR proposes to grant to the Underwriters an
option to purchase up to an additional 540,000 of its Common Shares of
Beneficial Interest, $.01 par value per share, for the sole purpose of covering
over-allotments in connection with the sale of the Initial Underwritten
Securities (the "Option Securities"). Subject to the terms and conditions set
forth or incorporated by reference herein, the Underwriters offer to purchase
the Initial Underwritten Securities and, to the extent any are purchased, the
Option Securities, at the purchase price set forth below.
The Underwritten Securities shall have the following terms:
Common Shares
Title of Securities: Common Shares of Beneficial Interest
Number of Shares: 3,600,000
Par Value: $.01 per share
Price to Public: $41.25 per share
Purchase price per share: Compensation to the Underwriters equal to $2.17 per
Common Share; provided, that compensation for sales
of 10,000 or more Common Shares to a single purchaser
will be $.83 per Common Share.
Number of Option Securities, if any, that may be purchased by the Underwriters:
540,000
Delayed Delivery Contracts: Not authorized
Additional co-managers, if any: None
Other terms: Payment to be made to EQR by wire transfer of immediately
available funds to the designated accounts of EQR to be delivered
on the closing date set forth below. EQR will not, between the
date hereof and the date which is 30 days from the date hereof,
with respect to the Common Shares covered hereby, without your
prior written consent, offer or sell, grant any option for the
sale of, or enter into any agreement to sell, any Common Shares
(except for Common Shares issued pursuant to transactions exempt
from registration under the 1933 Act, and reservations,
agreements, employee benefit plans, dividend reinvestment plans,
or employee and trustee share options plans); provided, however,
that in the event that the Underwriters exercise the over-
allotment option for the Option Securities, the foregoing
agreement by EQR not to offer or sell, grant any option for the
sale of, or enter into any agreement to sell, any Common Shares
shall be null and void and, provided further, that EQR may offer
to sell, grant any option for the sale of, or enter into any
agreement to sell Common Shares in privately negotiated, non-
underwritten transactions including, without limitation, offers to
sell or agreements to sell Common Shares in exchange for
multifamily properties or securities of another issuer, or any
combination thereof.
Closing date and location: December 11, 1996, Xxxxxxxxx & Xxxxxxxxxxx, P.C.,
Xxx Xxxxx Xxxxxxxxx Xxxxx, Xxxxx 0000, Xxxxxxx,
Xxxxxxxx 00000
All the provisions contained in the document attached as Annex A
hereto entitled "Equity Residential Properties Trust (a Maryland real estate
investment trust) -- Common Shares of Beneficial Interest, Preferred Shares of
Beneficial Interest and Depositary Shares -- Standard Underwriting Provisions"
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 fun herein. Terms defined in such document are
used herein as therein defined.
2
Please accept this offer no later than 5:00 (five o'clock) P.M. (New York City
time) on December 5, 1996 by signing a copy of this Terms Agreement in the space
set forth below and returning the signed copy to us.
Very truly yours,
XXXXX XXXXXX INC.
By: /s/ Xxxx X. Xxxxxxxxx
---------------------------
Name: Xxxx X. Xxxxxxxxx
Title: Managing Director
Acting on behalf of itself
Accepted:
By: EQUITY RESIDENTIAL PROPERTIES TRUST,
for itself and as the general partner of ERP
Operating Limited Partnership
By: /s/ Xxxxx X. Xxxxxxxxxx
--------------------------------------
Name: Xxxxx X. Xxxxxxxxxx
Title: Executive Vice President and
Chief Financial Officer
3
EQUITY RESIDENTIAL PROPERTIES TRUST
(a Maryland real estate investment trust)
Common Shares of Beneficial Interest,
Preferred Shares of Beneficial Interest and Depositary Shares
STANDARD UNDERWRITING PROVISIONS
--------------------------------
December 2, 1996
Equity Residential Properties Trust, a Maryland real estate investment
trust ("EQR") may from time to time issue and sell Common Shares of Beneficial
Interest, $.01 par value (the "Common Shares"), and/or one or more series of its
Preferred Shares of Beneficial Interest, $.01 par value (the "Preferred
Shares"), or Preferred Shares represented by depositary shares (the "Depositary
Shares") represented by depositary receipts (the "Depositary Receipts"), in one
or more offerings on terms to be determined at the time of sale (the Common
Shares, the Preferred Shares, the Depositary Shares and the Depositary Receipts
are collectively referred to herein as the "Securities"). Each series of
Preferred Shares may vary, as to the specific number of shares, title, stated
value, liquidation preference, issuance price, ranking, dividend rate or rates
(or method of calculation), dividend payment dates, any redemption or sinking
fund requirements, any conversion provisions and any other variable terms as set
forth in the applicable articles supplementary to EQR's Declaration of Trust
(the "Articles Supplementary") relating to such Preferred Shares and filed with
the State Department of Assessments and Taxation of Maryland ("SDAT") pursuant
to Title 8 of the Corporations and Associations Article of the Annotated Code of
Maryland (the "Maryland REIT Statute"). As used herein, "you" and "your,"
unless the context otherwise requires, shall mean the parties to whom the
applicable Terms Agreement (as hereinafter defined) is addressed as co-managers
with respect to Underwritten Securities (as hereinafter defined) purchased
pursuant thereto.
Whenever EQR determines to make an offering of Securities through you
or through an underwriting syndicate managed by you, EQR will enter into an
agreement (the "Terms Agreement") providing for the sale of such Securities (the
"Underwritten Securities") to, and the purchase and offering thereof by, you and
such other underwriters, if any, selected by you as have authorized you to enter
into such Terms Agreement on their behalf (the "Underwriters," which term shall
include you whether acting alone in the sale of the Underwritten Securities or
as a member or members of an underwriting syndicate and any Underwriter
substituted pursuant to Section 10 hereof). The Terms Agreement relating to the
offering of
Underwritten Securities shall specify the number of Underwritten Securities of
each class or series to be initially issued (the "Initial Underwritten
Securities"), whether the Initial Underwritten Securities shall be in the form
of Depositary Shares and if so the fractional amount of Preferred Shares
represented by each such Depositary Share, the names of the Underwriters
participating in such offering (subject to substitution as provided in Section
10 hereof), the number of Initial Underwritten Securities which each such
Underwriter severally agrees to purchase, the names of Underwriters acting as
co-managers, if any, in connection with such offering, the price at which the
Initial Underwritten Securities are to be purchased by the Underwriters from
EQR, the initial public offering price, if any, of the Initial Underwritten
Securities, the time and place of delivery and payment, any delayed delivery
arrangements and any other variable terms of the Initial Underwritten Securities
(including, but not limited to, current ratings (in the case of Preferred Shares
and Depositary Shares only), designations, liquidation preferences, conversion
provisions, redemption provisions, and sinking fund requirements applicable to
the Initial Underwritten Securities). In addition, each Terms Agreement shall
specify whether EQR has agreed to grant to the Underwriters an option to
purchase additional Underwritten Securities to cover over-allotments, if any,
and the number of Underwritten Securities subject to such option (the "Option
Securities"). As used herein, the term "Underwritten Securities" shall include
the Initial Underwritten Securities and all or any portion of the Option
Securities agreed to be purchased by the Underwriters as provided herein, if
any. The Terms Agreement, which shall be substantially in the form of Exhibit A
hereto, may take the form of an exchange of any standard form of written
telecommunication between you and EQR. Each offering of Underwritten Securities
through you or through an underwriting syndicate managed by you will be governed
by these Standard Underwriting Provisions as incorporated by reference into, and
supplemented by, the applicable Terms Agreement, and such Terms Agreement shall
inure to the benefit of and be binding upon each Underwriter participating in
the offering of such Underwritten Securities.
If the applicable Terms Agreement so provides, the Preferred Shares
will be deposited by EQR against delivery of Depositary Receipts to be issued by
the depositary (the "Depositary") named in a deposit agreement (the "Deposit
Agreement"), to be entered into by and among EQR, the Depositary and the holders
from time to time of the Depositary Receipts issued thereunder and evidencing
Depositary Shares. If the Preferred Shares are not represented by Depositary
Receipts, then all references herein to Depositary Receipts and Depositary
Shares of any kind, to the Deposit Agreement or the Depositary, and to any
agreements, instruments or persons related thereto shall be disregarded and all
representations, conditions, opinions and other documents relating to the
foregoing shall not apply to this Agreement for purposes of the applicable Terms
Agreement.
EQR has filed with the Securities and Exchange Commission (the
"Commission") registration statements on Form S-3 (No. 33-96792 and No. 333-
-2-
___________) for the registration of the Securities under the Securities Act of
1933, as amended (the "1933 Act"), and the offering thereof from time to time in
accordance with Rule 415 of the rules and regulations of the Commission under
the 1933 Act (the "1933 Act Regulations"), and EQR has filed such amendments
thereto as may have been required prior to the execution of the applicable Terms
Agreement. Such registration statements (as amended, if applicable) have been
declared effective by the Commission. Such registration statements and the
prospectuses constituting parts thereof (including each prospectus supplement
relating to the offering of Underwritten Securities pursuant to Rule 415 of the
1933 Act Regulations (the "Prospectus Supplement")), including all documents
incorporated therein by reference, as from time to time amended or supplemented
pursuant to the 1933 Act, the Securities Exchange Act of 1934, as amended (the
"1934 Act"), or otherwise, are referred to herein as the "Registration
Statement" and the "Prospectus," respectively; provided, that if any revised
prospectus shall be provided to you by EQR for use in connection with the
offering of Underwritten Securities which differs from the Prospectus on file at
the Commission at the time the Registration Statement became effective (whether
or not such revised prospectus is required to be filed by EQR pursuant to Rule
424(b) of the 1933 Act Regulations), the term "Prospectus" shall refer to each
such revised prospectus from and after the time it is first provided to you for
such use; provided, further, that a Prospectus Supplement shall be deemed to
have supplemented the Prospectus only with respect to the offering of
Underwritten Securities to which it relates. All references in this Agreement
to financial statements and schedules and other information which is
"contained," "included" or "stated" in the Registration Statement or the
Prospectus (and all other references of like import) shall be deemed to mean and
include all such financial statements and schedules and other information which
is or is deemed to be incorporated by reference in the Registration Statement or
the Prospectus, as the case may be; and all references in this Agreement to
amendments or supplements to the Registration Statement or the Prospectus shall
be deemed to mean and include the filing of any document under the 1934 Act
which is or is deemed to be incorporated by reference in the Registration
Statement or the Prospectus, as the case may be.
EQR is the sole general partner of ERP Operating Limited Partnership,
a limited partnership organized under the laws of the State of Illinois ("ERP"),
and owns the percentage of ERP's partnership interests specified in the most
recent Prospectus Supplement. ERP owns all of the issued and outstanding shares
of preferred stock of Equity Residential Properties Management Corp., a Delaware
corporation, Equity Residential Properties Management Corp. II, a Delaware
corporation, and Equity Residential Properties Management Corp. III, a Delaware
corporation (collectively, the "Management Corporations"). The term
"subsidiary" or "subsidiaries," when used with respect to EQR, shall include (i)
ERP, (ii) the Management Corporations, and (iii) any entity the operations of
which are included in the consolidated financial statements for EQR for the most
recent fiscal period included in the Prospectus.
-3-
SECTION 1. REPRESENTATIONS AND WARRANTIES.
------------------------------
(a) EQR and ERP, jointly and severally, represent and warrant to you
and each other Underwriter named in the applicable Terms Agreement, as of the
date thereof ("Representation Date"), as follows:
(i) The Registration Statement and the Prospectus, at the
time the Registration Statement became effective, complied, and as of
each Representation Date will comply, in all material respects with
the requirements of the 1933 Act and 1933 Act Regulations; the
Registration Statement, at the time the Registration Statement became
effective, did not, and as of each Representation Date, will not,
contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading; the Prospectus, as of the
Representation Date and Closing Time (as hereinafter defined) will
not, include an untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not
misleading; provided, however, that the representations and warranties
in this subsection shall not apply to statements in or omissions from
the Registration Statement or Prospectus made in reliance upon and in
conformity with information furnished to EQR in writing by any
Underwriter concerning such Underwriter through you expressly for use
in the Registration Statement or Prospectus.
(ii) Each preliminary prospectus, preliminary prospectus
supplement and Prospectus Supplement filed as part of the Registration
Statement as originally filed or as part of any amendment thereto, or
filed pursuant to Rule 424 under the 1933 Act, complied or will comply
when so filed in all material respects with the 1933 Act and the 1933
Act Regulations.
(iii) No stop order suspending the effectiveness of the
Registration Statement or any part thereof has been issued and no
proceeding for that purpose has been instituted or, to the knowledge
of EQR, threatened by the Commission or by the state securities
authority of any jurisdiction. No order preventing or suspending the
use of the Prospectus has been issued and no proceeding for that
purpose has been instituted or, to the knowledge of EQR or ERP,
threatened by the Commission or by the state securities authority of
any jurisdiction.
-4-
(iv) The accountants who certified the financial statements
and supporting schedules included or incorporated by reference in the
Registration Statement and the Prospectus are independent public
accountants as required by the 1933 Act and the 1933 Act Regulations.
(v) The consolidated financial statements and related notes
included in the Registration Statement and the Prospectus present
fairly the financial position of EQR and its consolidated subsidiaries
as at the dates indicated and the results of their operations
specified, and except as may otherwise be stated in the Registration
Statement and Prospectus, have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis
throughout such periods. The supporting schedules included in the
Registration Statement present fairly the information required to be
stated therein. The financial information and statistical data
included in the Registration Statement and the Prospectus present
fairly the information included therein and have been prepared on a
basis consistent with that of the financial statements included in the
Registration Statement and the Prospectus. The pro forma financial
statements included in the Registration Statement and Prospectus
comply in all material respects with the applicable requirements of
Rule 11-02 of Regulation S-X of the Commission and the pro forma
adjustments have been properly applied to the historical amounts in
the compilation of such statements and the assumptions used in the
preparation thereof are, in the opinion of EQR, reasonable.
(vi) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, except as
otherwise stated or contemplated therein, (A) there has been no
material adverse change in the condition, financial or otherwise, or
in the earnings, assets, business affairs or business prospects of EQR
and its subsidiaries, considered as a single enterprise, whether or
not arising in the ordinary course of business, (B) there have been no
material transactions entered into by EQR or any of its subsidiaries,
other than transactions in the ordinary course of business, which are
material with respect to EQR and its subsidiaries considered as a
single enterprise, (C) neither EQR nor any of its subsidiaries has
incurred any material obligation or liability, direct, contingent or
otherwise and (D) except for (i) regular quarterly distributions on
EQR's common shares of beneficial interest, $.01 par value, and
preferred shares of beneficial interest, $.01 par value and (ii) as
disclosed in the Prospectus, there has been no dividend or
distribution of any kind declared, paid or made by EQR on any class of
its shares of beneficial interest.
-5-
(vii) EQR has been duly formed and is validly existing as a
real estate investment trust in good standing under the laws of the
State of Maryland with power and authority to own, lease and operate
its properties and to conduct its business as described in the
Prospectus and to enter into and perform its obligations under this
Agreement.
(viii) EQR is duly qualified or registered as a foreign
organization to transact business and is in good standing in each
jurisdiction in which such qualification is required, whether by the
nature of its business or its ownership or leasing of property, except
where the failure to so qualify would not have a material adverse
effect on the condition, financial or otherwise, or the earnings,
assets, business affairs or business prospects of EQR and its
subsidiaries considered as a single enterprise.
(ix) Each subsidiary of EQR has been duly formed and is
validly existing and in good standing as a partnership, corporation or
limited liability company ("LLC") under the laws of its jurisdiction
of organization, with partnership, corporation or LLC power and
authority to carry on its business and to own or lease its properties
as described in the Prospectus and is duly qualified or registered as
a foreign partnership, corporation or LLC in good standing and
authorized to do business in each jurisdiction in which such
qualification is required whether by the nature of its business or its
ownership or leasing of property, except where the failure to so
qualify would not have a material adverse effect on the condition,
financial or otherwise, or the earnings, assets, business affairs or
business prospects of EQR and its subsidiaries considered as a single
enterprise.
(x) The Common Shares have been duly authorized for
issuance and sale to the Underwriters pursuant to this Agreement and,
when issued and delivered as provided herein and in the applicable
Terms Agreement, the Common Shares will be validly issued, fully paid
and non-assessable; the Preferred Shares have been duly authorized and
classified and when Articles Supplementary setting the terms of the
Preferred Shares are duly executed and filed for record with the SDAT
and the Preferred Shares are duly paid for, sold and issued, and
certificates therefor are duly executed, countersigned and delivered
as provided herein and in the applicable Terms Agreement or any
Delayed Delivery Contract, the Preferred Shares will be validly
issued, fully paid and non-assessable; when Depositary Receipts
evidencing any Depositary Shares are issued and delivered against
deposit of Preferred Shares and against payment for the Depositary
Shares pursuant to this Agreement, the Terms
-6-
Agreement relating to the Depositary Shares and the Deposit Agreement,
the Preferred Shares will be validly issued, fully paid and non-
assessable, and the Depositary Receipts will be legally issued and
will entitle the holders thereof to the rights specified in the
Depositary Receipts and the Deposit Agreement; the Preferred Shares,
if applicable, conform to the Articles Supplementary; the Underwritten
Securities being sold pursuant to the applicable Terms Agreement
conform, in all material respects, to the descriptions thereof
contained in the Prospectus; and the issuance of the Underwritten
Securities is not subject to preemptive or similar rights.
(xi) Before the Closing Time for any Depositary Shares, the
Deposit Agreement will be duly authorized and executed by EQR, and
assuming due authorization, execution and delivery by the Depositary,
the Deposit Agreement will constitute a valid and legally binding
instrument of EQR enforceable against EQR in accordance with its
terms, except as (A) the enforceability thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors' rights generally, (B) the availability of
equitable remedies may be limited by equitable principles of general
applicability, and (C) rights to indemnity and contribution thereunder
may be limited by state or federal securities laws or the public
policy underlying such laws.
(xii) If applicable, the Common Shares issuable upon
conversion of any of the Preferred Shares or the Depositary Shares
have been duly and validly authorized and reserved for issuance upon
such conversion by all necessary action and such shares, when issued
upon such conversion, will be duly and validly issued and will be
fully paid and non-assessable, and the issuance of such shares upon
such conversion will not be subject to preemptive or other similar
rights; the Common Shares issuable upon conversion of any of the
Preferred Shares or the Depositary Shares will conform in all material
respects to the descriptions thereof in the Prospectus.
(xiii) The authorized, issued and outstanding shares of
beneficial interest of EQR are as set forth in the Prospectus (except
for subsequent issuances, if any, pursuant to reservations,
agreements, employee benefit plans, dividend reinvestment plans,
employee and trustee share option plans or the exercise of convertible
securities referred to in the Registration Statement); the issued and
outstanding Common Shares and the Preferred Shares have been duly
authorized and validly issued and are fully paid and non-assessable.
-7-
(xiv) Except for transactions described in the Prospectus,
there are no outstanding rights, warrants or options to acquire, or
instruments convertible into or exchangeable for, or agreements or
understandings with respect to the sale or issuance of, any shares of
beneficial interest or capital stock of, or partnership or other
equity interest in, EQR or any subsidiary of EQR except for
multifamily property acquisition agreements with respect to the sale
or issuance of Common Shares or OP Units which are not material in
amount.
(xv) All of the issued and outstanding shares of beneficial
interest or capital stock and partnership interests, as the case may
be, of each subsidiary have been validly issued and fully paid and are
owned by EQR, and/or a subsidiary as described in the Registration
Statement, and/or certain affiliated entities, in each case free and
clear of any security interest, mortgage, pledge, lien, encumbrance,
claim or equity. EQR owns no direct or indirect equity interest in
any entity other than its subsidiaries, except for such interests as,
in the aggregate, are not material to the condition, financial or
otherwise, or the earnings, assets, business affairs or business
prospects of EQR and its subsidiaries considered as a single
enterprise.
(xvi) Each of EQR and ERP has full power and authority to
enter into and to perform its obligations under the applicable Terms
Agreement, the Deposit Agreement, if applicable, and the Delayed
Delivery Contracts (as defined in Section 2 hereof), if any, and as of
each Representation Date, the applicable Terms Agreement, Deposit
Agreement, if applicable, and the Delayed Delivery Contracts, if any,
will have been, duly authorized, executed and delivered by each of EQR
and ERP, and each is or will be a valid and binding obligation of EQR
and ERP, enforceable against EQR and ERP in accordance with its terms,
except as (A) the enforceability thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting
creditors' rights generally, (B) the availability of equitable
remedies may be limited by equitable principles of general
applicability and (C) rights to indemnity and contribution hereunder
may be limited by state or federal securities laws or the public
policy underlying such laws.
(xvii) There is no action, suit or proceeding before or by any
court or governmental agency or body, domestic or foreign, as of any
Representation Date pending, or, to the knowledge of EQR or ERP,
threatened, against or affecting EQR or any of its subsidiaries which
is required to be disclosed in the Prospectus (other than as disclosed
therein) or which might result in any material adverse change in the
condition, financial or otherwise, or in the earnings, assets,
business
-8-
affairs or business prospects of EQR and its subsidiaries considered
as a single enterprise, or which might materially and adversely affect
the properties or assets thereof or which might materially and
adversely affect the consummation of the applicable Terms Agreement or
any Deposit Agreement or the Delayed Delivery Contracts or the
transactions contemplated therein; all pending legal or governmental
proceedings to which EQR or any of its subsidiaries is a party or of
which any of their properties or assets is the subject which are not
described in the Prospectus, including ordinary routine litigation
incidental to the business, are, considered in the aggregate, not
material; and there are no contracts or documents of EQR or any of its
subsidiaries which would be required to be filed as exhibits to the
Registration Statement by the 1933 Act or the 1933 Act Regulations
which have not been filed as exhibits to the Registration Statement,
except for Articles Supplementary, as applicable, which will be filed
on Form 8-K as soon as practicable after the applicable Representation
Date.
(xviii) None of EQR or any of its subsidiaries is required to
own or possess any trademarks, service marks, trade names or
copyrights to conduct the business operated by it as of any
Representation Date, other than those the failure to possess or own
would not have a material adverse effect on the condition, financial
or otherwise, or the earnings, assets, business affairs or business
prospects of EQR and its subsidiaries considered as a single
enterprise.
(xix) No authorization, approval or consent of any court or
governmental authority or agency is required that has not been
obtained in connection with the consummation by EQR of the
transactions contemplated by the applicable Terms Agreement or any
Deposit Agreement, except such as may be required under the 1933 Act,
the 1933 Act Regulations or state securities law.
(xx) Each of EQR and its subsidiaries has all consents,
authorizations, approvals, orders, certificates and permits of and
from, and has made all declarations and filings with, all federal,
state, local and other governmental authorities, all self-regulatory
organizations and all courts and other tribunals required for it to
own, lease, license and use its properties and assets and to conduct
its business in the manner described in the Registration Statement and
the Prospectus, except to the extent that the failure to obtain or
file would not have a material adverse effect on the condition,
financial or otherwise, or the earnings, assets, business affairs or
business prospects of EQR and its subsidiaries, considered as a single
enterprise, and none of EQR or any of its subsidiaries has received
any written notice of proceedings
-9-
relating to the revocation or modification of any such consent,
authorization, approval, order, certificate or permit which, singly or
in the aggregate, if the subject of an unfavorable decision, ruling or
finding, would materially and adversely affect the condition,
financial or otherwise, or the earnings, assets, business affairs or
business prospects of EQR and its subsidiaries, considered as a single
enterprise.
(xxi) The documents incorporated or deemed to be incorporated
by reference in the Prospectus, at the time they were or hereafter are
filed with the Commission, complied and will comply in all material
respects with the requirements of the 1934 Act and the rules and
regulations of the Commission under the 1934 Act (the "1934 Act
Regulations"), and, when read together with the other information in
the Prospectus, at the time the Registration Statement became
effective and as of each Representation Date or during the period
specified in Section 3(f), did not and will not include an untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not
misleading.
(xxii) Each of EQR and its subsidiaries is 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; and neither EQR nor ERP has any reason to
believe that EQR or any of its subsidiaries 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 businesses at a cost that would not materially and
adversely affect the condition, financial or otherwise, or the
earnings, assets, business affairs or business prospects of EQR and
its subsidiaries, considered as a single enterprise, except as
described in or contemplated by the Registration Statement and the
Prospectus.
(xxiii) None of EQR or any of its subsidiaries is in violation
of its charter documents, bylaws, LLC agreements or partnership
agreements, or in default in the performance of any material
obligation, agreement or condition contained in any contract,
indenture, mortgage, loan agreement, note, lease or other instrument
to which it or any of them is a party or by which it or any of them
may be bound, or to which any of their properties or assets is
subject, which default in performance would materially and adversely
affect the condition, financial or otherwise, or the earnings, assets,
business affairs or business prospects of EQR and its subsidiaries,
considered as
-10-
a single enterprise; and the execution, delivery and performance of
the applicable Terms Agreement or any Deposit Agreement and the
consummation of the transactions contemplated therein, including the
issuance, sale and delivery of the Underwritten Securities, will not
conflict with or constitute a breach of, or default under, or result
in the creation or imposition of any lien, charge or encumbrance upon
any property or assets of EQR or any of its subsidiaries, pursuant to
any contract, indenture, mortgage, loan agreement, note, lease or
other instrument to which EQR or any of its subsidiaries is a party or
by which it or any of them may be bound or affected, or to which any
of their properties or assets is subject, nor will such action result
in any violation of the provisions of the partnership agreement, LLC
agreement or charter or bylaws of EQR or any of its subsidiaries, or
any applicable law, regulation, ruling, order, judgment,
administrative regulation or administrative or court decree.
(xxiv) Neither EQR nor ERP has taken or will take, directly or
indirectly, any action prohibited by Rule 10b-6 under the 1934 Act.
(xxv) The assets of EQR do not constitute "plan assets" under
the Employee Retirement Income Security Act of 1974, as amended.
(xxvi) Except as otherwise described in the Prospectus, each
of EQR and its subsidiaries has good and marketable title in fee
simple to all real property and good and marketable title to all
personal property (including mortgage investments) owned by it which
is material to the business of EQR and its subsidiaries, considered as
a single enterprise, in each case free and clear of all liens, claims,
encumbrances and defects except such as are described in general in
the Prospectus or such as do not materially affect the value of such
property and do not interfere with the use made and proposed to be
made of such property by EQR or any of its subsidiaries; and any real
property and buildings held under lease by EQR or any of its
subsidiaries are held by it under valid, subsisting and enforceable
leases with such exceptions as are not material and do not interfere
with the use made and proposed to be made of such property and
buildings by EQR or such subsidiaries, in each case except as
described in or contemplated by the Registration Statement and the
Prospectus.
(xxvii) Each of EQR and its subsidiaries has obtained title
insurance on all of the properties owned by each of them in an amount
at least equal to (A) the cost of acquisition of such property or (B)
the cost of construction of such property, and in each case such title
insurance is in full force and effect.
-11-
(xxviii) The mortgages and deeds of trust encumbering the
properties and assets described in general in the Prospectus are not
convertible and are not cross-defaulted or cross-collateralized to any
property not owned by EQR or any of its subsidiaries; except as
disclosed in the Prospectus, none of EQR or any of its subsidiaries
holds participating interests in such mortgages and deeds of trust.
(xxix) Each of the partnership agreements and LLC agreements
to which EQR or any of its subsidiaries is a party has been duly
authorized, executed and delivered by such party and constitutes the
valid agreement thereof, enforceable in accordance with its terms,
except as (A) the enforceability thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting
creditors' rights generally and (B) the availability of equitable
remedies may be limited by equitable principles of general
applicability; and the execution, delivery and performance of any of
such agreements did not, at the time of execution and delivery, and
does not constitute a breach of, or default under, the partnership
agreement, charter, bylaws or other governing documents of such party
or any material contract, lease or other instrument to which such
party is a party or by which its properties may be bound or any law,
administrative regulation or administrative or court decree.
(xxx) (a) Except as disclosed in the Prospectus, each of EQR
and its subsidiaries has complied and is in compliance in all material
respects with all Environmental Statutes (as hereinafter defined).
(b) None of EQR or any of its subsidiaries intends to
use the properties or assets described in the Prospectus or any other
real property for the purpose of handling, burying, storing,
retaining, refining, transporting, processing, manufacturing,
generating, producing, spilling, seeping, leaking, escaping, leaching,
pumping, pouring, emitting, emptying, discharging, injecting, dumping,
transferring or otherwise disposing of or dealing with Hazardous
Materials, except for materials utilized in the ordinary course of
business of the properties, provided such use would not, in the
ordinary course of business, give rise to liability under any
Environmental Statute.
(c) Except as disclosed in the Prospectus, none of EQR
or any of its subsidiaries knows (after due inquiry) of any release,
seepage, leak, escape, xxxxx, discharge, injection, release, emission,
spill, pumping, pouring, emptying or dumping ("Release") of Hazardous
Materials (i) into waters on, under or adjacent to the properties
described in the Prospectus or (ii) on any other real property
-12-
owned or occupied by any such party, or (iii) onto lands from which
Hazardous Materials are likely to seep, flow or drain into such
waters, except for such Releases as would not, individually or in the
aggregate, have a material adverse effect on the condition, financial
or otherwise, earnings, business affairs or business prospects of any
of such properties.
(d) Except as disclosed in the Prospectus, none of EQR
or any of its subsidiaries has received any notice of, or has any
knowledge (after due inquiry) of any occurrence or circumstance which,
with notice or passage of time or both, would give rise to a claim
under or pursuant to any Environmental Statue or under common law,
pertaining to Hazardous Materials on or originating from any
properties or assets described in the Prospectus or any other real
property owned or occupied by any such party or arising out of the
conduct of any such party, except such occurrence or circumstance as
would not, individually or in the aggregate, have a material adverse
effect on the condition, financial or otherwise, earnings, assets,
business affairs or business prospects of any of such properties.
(e) Neither the properties described in the Prospectus
nor any other land owned by EQR or any of its subsidiaries is included
or, to EQR's or ERP's knowledge (after due inquiry), proposed for
inclusion on the National Priorities List issued pursuant to CERCLA
(as hereinafter defined) by the United States Environmental Protection
Agency (the "EPA") or on the inventory of other potential "Problem"
sites issued by the EPA and has not otherwise been publicly identified
by the EPA as a potential CERCLA site or included or, to EQR's or
ERP's knowledge, proposed for inclusion on any list or inventory
issued or maintained pursuant to any other Environmental Statute or
issued or maintained by any other Governmental Authority (as
hereinafter defined).
As used herein, "Hazardous Material" shall include
without limitation any flammable explosives, radioactive materials,
hazardous materials, hazardous wastes, toxic substances, asbestos,
medical waste or any hazardous material as defined by any
Environmental Statute. As used herein, "Environmental Statute" shall
include any federal, state or local environmental law, ordinance, rule
or regulation including without limitation the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as
amended, 42 U.S.C. (S)(S) 9601 et seq. ("CERCLA"), the Hazardous
Materials Transportation Act, as amended 49 U.S.C. (S)(S) 1801 et
seq., the Resource Conservation and Recovery Act, as amended 42 U.S.C.
(S)(S) 9601 et seq., the Emergency Planning and Community Right-to-
-13-
Know Act of 1986, 42 U.S.C. (S)(S) 11001 et seq., the Toxic Substances
Control Act, 15 U.S.C. (S)(S) 2601 et seq., the Federal Insecticide,
Fungicide and Rodenticide Act, 7 U.S.C. (S)(S) 136 et seq., the Clean
Air Act, 42 U.S.C. (S)(S) 7401 et seq., the Clean Water Act (Federal
Water Pollution Control Act), 33 U.S.C. (S)(S) 1251 et seq., the Safe
Drinking Water Act, 42 U.S.C. (S)(S) 300f - 300j-11, and the
Occupational Safety and Health Act, 29 U.S.C. (S)(S) 651 et seq., as
any of the above statutes may be amended from time to time, and the
state analogues to these statutes, and in the regulations adopted and
publications promulgated pursuant to any of the foregoing or by any
federal, state or local governmental authority having jurisdiction
over the properties and assets described in the Prospectus (a
"Governmental Authority").
(xxxi) EQR has operated and intends to continue to operate in
such a manner as to qualify to be taxed as a "real estate investment
trust" under the Internal Revenue Code of 1986, as amended (the
"Code").
(xxxii) Each of EQR and its subsidiaries has filed all federal,
state, local and foreign income tax returns which have been required
to be filed (except in any case in which the failure to file would not
have a material adverse effect on the condition financial or
otherwise, or the earnings, assets, business affairs or business
prospects of such entities considered as one enterprise) 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.
(xxxiii) Neither EQR nor any subsidiary is, or as a result of
the transactions contemplated by the Prospectus would be, required to
make any filing or to register under the Investment Company Act of
1940, as amended, or is or will become a "holding company" or a
"subsidiary company" of a "registered holding company," as defined in
the Public Utility Holding Company Act of 1935, as amended.
(xxxiv) No labor dispute with the employees of EQR, or any of
EQR's subsidiaries exists, or to the knowledge of EQR or ERP, is
imminent.
(b) Any certificate signed by any officer of EQR or of any subsidiary
and delivered to you or to counsel for the Underwriters shall be deemed a
representation and warranty by EQR or such subsidiary to each Underwriter
participating in such offering as to the matters covered thereby on the date of
such
-14-
certificate and, unless subsequently amended or supplemented, at each
Representation Date subsequent thereto.
SECTION 2. PURCHASE AND SALE.
(a) The several commitments of the Underwriters to purchase the
Underwritten Securities pursuant to the applicable Terms Agreement shall be
deemed to have been made on the basis of the representations and warranties
herein contained and shall be subject to the terms and conditions set forth
herein or in the applicable Terms Agreement.
(b) In addition, on the basis of the representations and warranties
herein contained and subject to the terms and conditions herein set forth, EQR
may grant, if so provided in the applicable Terms Agreement relating to the
Initial Underwritten Securities, an option to the Underwriters named in such
Terms Agreement, severally and not jointly, to purchase up to the number of
Option Securities set forth therein at the same price per Option Security as is
applicable to the Initial Underwritten Securities. Such option, if granted,
will expire 30 days or such lesser number of days as may be specified in the
applicable Terms Agreement after the Representation Date relating to the Initial
Underwritten Securities, and may be exercised in whole or in part from time to
time only for the purpose of covering over-allotments which may be made in
connection with the offering and distribution of the Initial Underwritten
Securities upon notice by you to EQR setting forth the number of Option
Securities as to which the several Underwriters are then exercising the option
and the time and date of payment and delivery for such Option Securities. Any
such time and date of delivery (a "Date of Delivery") shall be determined by
you, but shall not be later than seven full business days and not be earlier
than two full business days after the exercise of said option, unless otherwise
agreed upon by you and EQR. If the option is exercised as to all or any portion
of the Option Securities, each of the Underwriters, acting severally and not
jointly, will purchase that proportion of the total number of Option Securities
then being purchased which the number of Initial Underwritten Securities each
such Underwriter has agreed to purchase as set forth in the applicable Terms
Agreement bears to the total number of Initial Underwritten Securities, subject
to such adjustments as you in your discretion shall make to eliminate any sales
or purchases of fractional Initial Underwritten Securities.
(c) Payment of the purchase price for, and delivery of, the
Underwritten Securities to be purchased by the Underwriters shall be made at
such place as shall be agreed upon by you and EQR, at 10:00 A.M., New York City
time, no later than the fourth business day (unless postponed in accordance with
the provisions of Section 10 hereof) following the date of the applicable Terms
Agreement or at such other time as shall be agreed upon by you and EQR (each
such time and date being referred to as a "Closing Time"). In addition, if any
or all of the Option Securities are purchased by the Underwriters, payment of
the
-15-
purchase price for, and delivery of certificates representing, such Option
Securities, shall be made at such place as shall be agreed upon by you and EQR
on each Date of Delivery as specified in the notice from you to EQR. Unless
otherwise specified in the applicable Terms Agreement, payment shall be made to
EQR by wire transfer or by certified or official bank check or checks in Federal
or similar same-day funds payable to the order of EQR against delivery to you
for the respective accounts of the Underwriters of the Underwritten Securities
to be purchased by them. The Underwritten Securities or, if applicable,
Depositary Receipts evidencing the Depositary Shares, shall be in such
authorized denominations and registered in such names as you may request in
writing at least two business days prior to the applicable Closing Time or Date
of Delivery, as the case may be. The Underwritten Securities, which may be in
temporary form, will be made available for examination and packaging by you on
or before the first business day prior to the applicable Closing Time or Date of
Delivery, as the case may be.
If authorized by the applicable Terms Agreement, the Underwriters
named therein may solicit offers to purchase Underwritten Securities from EQR
pursuant to delayed delivery contracts ("Delayed Delivery Contracts")
substantially in the form of Exhibit B hereto with such changes therein as EQR
may approve. As compensation for arranging Delayed Delivery Contracts, EQR will
pay to you at Closing Time, for the respective accounts of the Underwriters, a
fee specified in the applicable Terms Agreement for each of the Underwritten
Securities for which Delayed Delivery Contracts are made at the applicable
Closing Time as is specified in the applicable Terms Agreement. Any Delayed
Delivery Contracts are to be with institutional investors of the types described
in the Prospectus. At the applicable Closing Time, EQR will enter into Delayed
Delivery Contracts (for not less than the minimum number of Underwritten
Securities per Delayed Delivery Contract specified in the applicable Terms
Agreement) with all purchasers proposed by the Underwriters and previously
approved by EQR as provided below, but not for an aggregate number of
Underwritten Securities in excess of that specified in the applicable Terms
Agreement. The Underwriters will not have any responsibility for the validity
or performance of Delayed Delivery Contracts.
You shall submit to EQR, at least three business days prior to the
applicable Closing Time, the names of any institutional investors with which it
is proposed that EQR will enter into Delayed Delivery Contracts and the number
of Underwritten Securities to be purchased by each of them, and EQR will advise
you, at least two business days prior to the applicable Closing Time, of the
names of the institutions with which the making of Delayed Delivery Contracts is
approved by EQR and the number of Underwritten Securities to be covered by each
such Delayed Delivery Contract.
The number of Underwritten Securities agreed to be purchased by the
several Underwriters pursuant to the applicable Terms Agreement shall be reduced
by the number of Underwritten Securities covered by Delayed Delivery Contracts,
-16-
as to each Underwriter as set forth in a written notice delivered by you to EQR;
provided, however, that the total number of Underwritten Securities to be
purchased by all Underwriters shall be the total number of Underwritten
Securities covered by the applicable Terms Agreement, less the number of
Underwritten Securities covered by Delayed Delivery Contracts.
SECTION 3. COVENANTS.
Each of EQR and ERP covenants with you, and with each Underwriter
participating in the offering of Underwritten Securities, as follows.
(a) Immediately following the execution of the applicable Terms
Agreement, EQR will prepare a Prospectus Supplement setting forth the number of
Underwritten Securities covered thereby and their terms not otherwise specified
in the Prospectus pursuant to which the Underwritten Securities are being
issued, the names of the Underwriters participating in the offering and the
number of Underwritten Securities which each severally has agreed to purchase,
the names of the Underwriters acting as co-managers in connection with the
offering, the price at which the Underwritten Securities are to be purchased by
the Underwriters from EQR, the initial public offering price, if any, the
selling concession and reallowance, if any, any delayed delivery arrangements,
and such other information as you and EQR deem appropriate in connection with
the offering of the Underwritten Securities; and EQR will promptly transmit
copies of the Prospectus Supplement to the Commission for filing pursuant to
Rule 424(b) of the 1933 Act Regulations within the time period required by such
Rule and will furnish to the Underwriters named therein as many copies of the
Prospectus and such Prospectus Supplement as you shall reasonably request.
(b) EQR will notify you immediately, and confirm such notice in
writing, of (i) the effectiveness of any amendment to the Registration
Statement, (ii) the transmittal to the Commission for filing of any Prospectus
Supplement or other supplement or amendment to the Prospectus or any document to
be filed pursuant to the 1934 Act, (iii) the receipt of any comments from the
Commission, (iv) any request by the Commission for any amendment to the
Registration Statement or any amendment or supplement to the Prospectus or for
additional information, and (v) the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or the initiation of
any proceedings for that purpose; and EQR will make every reasonable effort to
prevent the issuance of any such stop order and, if any stop order is issued, to
obtain the lifting thereof at the earliest possible moment.
(c) At any time when the Prospectus is required to be delivered under
the 1933 Act or the 1934 Act in connection with sales of the Underwritten
Securities, EQR will give you notice of its intention to file or prepare any
amendment to the Registration Statement or any amendment or supplement to the
-17-
Prospectus (including any revised prospectus which EQR proposes for use by you
in connection with the offering of Underwritten Securities which differs from
the prospectus on file at the Commission at the time the Registration Statement
became effective, whether or not such revised prospectus is required to be filed
pursuant to Rule 424(b) of the 1933 Act Regulations), whether pursuant to the
1933 Act, 1934 Act or otherwise, and will furnish you with copies of any such
amendment or supplement a reasonable amount of time prior to such proposed
filing or preparation, as the case may be, and will not file or prepare any such
amendment or supplement or other documents in a form to which you or counsel for
the Underwriters shall reasonably object.
(d) EQR will deliver to you as many conformed copies of the
Registration Statement as originally filed and of each amendment thereto
(including exhibits filed therewith or incorporated by reference therein and
documents incorporated or deemed to be incorporated by reference therein) as you
reasonably request.
(e) EQR will furnish to each Underwriter, from time to time during
the period when the Prospectus is required to be delivered under the 1933 Act or
the 1934 Act in connection with sales of the Underwritten Securities, such
number of copies of the Prospectus (as amended or supplemented) as such
Underwriter may reasonably request for the purposes contemplated by the 1933
Act, the 1933 Act Regulations, the 1934 Act or the 1934 Act Regulations.
(f) If at any time when the Prospectus is required to be delivered
under the 1933 Act or the 1934 Act in connection with sales of the Underwritten
Securities any event shall occur or condition exist as a result of which it is
necessary, in the opinion of counsel for the Underwriters or counsel for EQR, to
amend or supplement the Prospectus in order that the Prospectus will not include
an untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements therein not misleading in the light of
the circumstances existing at the time it is delivered to a purchaser, or if it
shall be necessary, in the opinion of either such counsel, at any such time to
amend or supplement the Registration Statement or the Prospectus in order to
comply with the requirements of the 1933 Act or the 1933 Act Regulations, then
EQR will promptly prepare and file with the Commission such amendment or
supplement in form and substance reasonably satisfactory to counsel for the
Underwriters, whether by filing documents pursuant to the 1933 Act, the 1934 Act
or otherwise, as may be necessary to correct such untrue statement or omission
or to make the Registration Statement and Prospectus comply with such
requirements.
(g) EQR will endeavor, in cooperation with the Underwriters, to
qualify the Underwritten Securities and the Common Shares issuable upon
conversion of the Preferred Shares or the Depositary Shares, if any, for
offering and sale under the applicable securities laws and real estate
syndication laws of such
-18-
states and other jurisdictions of the United States as you may designate;
provided, however, that EQR shall not be obligated to (i) qualify as a foreign
corporation in any jurisdiction where it is not so qualified, (ii) file any
general consent to service of process or (iii) take any action that would
subject it to income taxation in any such jurisdiction. In each jurisdiction in
which the Underwritten Securities or the Common Shares issuable upon conversion
of the Preferred Shares or the Depositary Shares, if any, have been so
qualified, EQR will file such statements and reports as may be required by the
laws of such jurisdiction to continue such qualification in effect for so long
as may be required for the distribution of the Underwritten Securities.
(h) With respect to each sale of Underwritten Securities, EQR will
make generally available to its security holders as soon as practicable, but not
later than 90 days after the close of the period covered thereby, an earning
statement (in form complying with the provisions of Rule 158 of the 1933 Act
Regulations) covering a 12-month period beginning not later than the first day
of EQR's fiscal quarter next following the "effective date" (as defined in such
Rule 158) of the Registration Statement.
(i) EQR, during the period when the Prospectus is required to be
delivered under the 1933 Act or the 1934 Act in connection with sales of the
Underwritten Securities, will file all documents required to be filed with the
Commission pursuant to Section 13, 14 or 15 of the 1934 Act within the time
periods prescribed by the 1934 Act and the 1934 Act Regulations.
(j) EQR will not, between the date of the applicable Terms Agreement
and the termination of any trading restrictions or the applicable Closing Time,
whichever is later, with respect to the Underwritten Securities covered thereby,
without your prior written consent, offer or sell, grant any option for the sale
of, or enter into any agreement to sell, any securities of the same class or
series or ranking on a parity with such Underwritten Securities (other than the
Underwritten Securities which are to be sold pursuant to such Terms Agreement)
or, if such Terms Agreement relates to Underwritten Securities that are
convertible into Common Shares, any Common Shares or any security convertible
into Common Shares (except for Common Shares issued pursuant to reservations,
agreements, employee benefit plans, dividend reinvestment plans, or employee and
trustee share options plans), except as may otherwise be provided in the
applicable Terms Agreement.
(k) EQR will reserve and keep available at all times, free of
preemptive rights, Common Shares for the purpose of enabling EQR to satisfy any
obligations to issue such shares upon conversion of the Preferred Shares or the
Depositary Shares, as the case may be.
-19-
(l) If requested by you, EQR will use its best efforts to list the
Underwritten Securities and the Common Shares issuable upon conversion of the
Underwritten Securities, if any, on the New York Stock Exchange or such other
national exchange on which the Underwritten Securities or Common Shares, as the
case may be, are then listed.
(m) On or prior to the Closing Time, EQR will cause Articles
Supplementary relating to the Preferred Shares or Preferred Shares represented
by Depositary Shares, if any, to be filed for record with the SDAT in accordance
with the Maryland REIT Statute.
(n) EQR will use its best efforts to meet the requirements to qualify
as a "real estate investment trust" under the Code.
(o) If requested by you, EQR will cause, or have caused, the officers
and trustees of EQR to enter into lock-up agreements in form and substance
satisfactory to the Underwriters.
(p) Except for the authorization of actions permitted to be taken by
the Underwriters as contemplated herein or in the Prospectus, EQR will not (i)
take, directly or indirectly, any action designed to cause or to result in, or
that might reasonably be expected to constitute, the stabilization or
manipulation of the price of any security of EQR to facilitate the sale or
resale of the Underwritten Securities, (ii) sell, bid for or purchase the
Underwritten Securities or pay any person any compensation for soliciting
purchases of the Underwritten Securities or (iii) pay or agree to pay to any
person any compensation for soliciting another to purchase any other securities
of EQR.
SECTION 4. PAYMENT OF EXPENSES.
EQR will pay all expenses incident to the performance of its
obligations under the applicable Terms Agreement or any Deposit Agreement,
including (i) the printing and filing of the Registration Statement as
originally filed and of each amendment thereto, (ii) the printing and filing of
these Standard Underwriting Provisions and the applicable Terms Agreement, (iii)
the preparation, issuance and delivery of the Underwritten Securities to the
Underwriters, (iv) the fees and disbursements of EQR's counsel and accountants,
(v) the qualification of the Underwritten Securities and the Common Shares
issuable upon conversion of the Preferred Shares or the Depositary Shares, if
any, under securities laws and real estate syndication laws in accordance with
the provisions of Section 3(g), including filing fees and the fees and
disbursements of counsel for the Underwriters in connection therewith and in
connection with the preparation of the Blue Sky Survey, (vi) the printing and
delivery to the Underwriters of copies of the Registration Statement as
originally filed and of each amendment thereto, and of the Prospectus and any
amendments or supplements thereto, (vii) the printing and
-20-
delivery to the Underwriters of copies of the applicable Deposit Agreement, if
any, (viii) any fees charged by nationally recognized statistical rating
organizations for the rating of the Underwritten Securities, (ix) the fees and
expenses, if any, incurred with respect to the listing of the Underwritten
Securities and the Common Shares issuable upon conversion of the Preferred
Shares or the Depositary Shares, if any, on any national securities exchange or
quotation system, (x) the fees and expenses, if any, incurred with respect to
any filing with the National Association of Securities Dealers, Inc. ( including
fees and disbursements of counsel for the Underwriters in connection therewith),
(xi) the costs and expenses of the deposit of Preferred Shares under any Deposit
Agreement in exchange for Depositary Receipts, including the charges of the
Depositary in connection therewith; (xii) the fees and expenses of the
Depositary, including the fees and disbursements of counsel for the Depositary,
and (xiii) the costs and charges of any transfer agent or registrar.
If the applicable Terms Agreement is terminated by you in accordance
with the provisions of Section 5 or Section 9(b)(i) or 9(b)(iv), EQR shall
reimburse the Underwriters named in such Terms Agreement for all of their out-
of-pocket expenses, including the reasonable fees and disbursements of counsel
for the Underwriters.
SECTION 5. CONDITIONS OF UNDERWRITERS' OBLIGATIONS.
The several obligations of the Underwriters to purchase Underwritten
Securities pursuant to the applicable Terms Agreement are subject to the
accuracy of the representations and warranties of EQR and ERP herein contained,
to the accuracy of the statements of officers of EQR and ERP made in any
certificate pursuant to the provisions hereof, to the performance by EQR and ERP
of all of its covenants and other obligations hereunder, and to the following
further conditions:
(a) At the applicable Closing Time, (i) no stop order suspending the
effectiveness of the Registration Statement shall have been issued under the
1933 Act or proceedings therefor initiated or threatened by the Commission, (ii)
the rating assigned by any nationally recognized statistical rating organization
to any Preferred Shares of EQR or debt securities of ERP as of the date of the
applicable Terms Agreement shall not have been lowered since such date nor shall
any such rating organization have publicly announced that it has placed any
Preferred Shares of EQR or debt securities of ERP on what is commonly termed a
"watch list" for possible downgrading, and (iii) there shall not have come to
your attention any facts that would cause you to believe that the Prospectus,
together with the applicable Prospectus Supplement, at the time it was required
to be delivered to purchasers of the Underwritten Securities, included an untrue
statement of a material fact or omitted to state a material fact necessary in
order to make the statements therein, in light of the circumstances existing at
such time, not misleading.
-21-
(b) At the applicable Closing Time, you shall have received:
(1) The favorable opinion, dated as of the applicable Closing
Time, of Xxxxxxxxx & Xxxxxxxxxxx, P.C., counsel for EQR and its subsidiaries, in
form and substance satisfactory to counsel for the Underwriters, to the effect
that:
(i) EQR is a real estate investment trust duly formed
and existing under and by virtue of the laws of the State of Maryland
and is in good standing with the SDAT; EQR has the power and authority
to own, lease and operate its properties and conduct its business as
described in the Prospectus; and, to counsel's knowledge, is duly
qualified and in good standing and authorized to transact business in
any jurisdiction in which the conduct of its business or its ownership
or leasing of property requires such qualification, except where the
failure to be so qualified or in good standing will not have a
material adverse effect on EQR's condition, financial or otherwise,
earnings, assets, business affairs or business prospects.
(ii) Each of EQR's subsidiaries has been duly formed
and is validly existing and in good standing under the laws of the
jurisdiction of its formation, has the power and authority to own,
lease and operate its properties and to conduct its business as
described in the Prospectus, and, to counsel's knowledge, is duly
qualified and in good standing and authorized to transact business in
any jurisdiction in which the conduct of its business or its ownership
or leasing of property requires such qualification, except where the
failure to be so qualified or in good standing will not have a
material adverse effect on such subsidiary's condition, financial or
otherwise, earnings, assets, business affairs or business prospects;
all of the issued and outstanding shares of beneficial interest,
capital stock, LLC interests and partnership interests of each
subsidiary have been duly authorized and validly issued, are fully
paid and with respect to the shares of capital stock, LLC interests
and partnership interests owned by EQR, are owned by EQR or another
subsidiary, to such counsel's knowledge, directly, free and clear of
any security interest, mortgage, pledge, lien, encumbrance, claim or
equity.
(iii) The authorized, issued and outstanding shares of
beneficial interest of EQR are as set forth in the Prospectus (except
for subsequent issuances, if any, pursuant to reservations,
agreements, employee benefit plans, dividend reinvestment plans,
employee and trustee share option plans or the exercise of convertible
securities referred to in the Registration Statement) and such shares
of beneficial
-22-
interest are duly authorized validly issued, fully paid and non-
assessable.
(iv) The Underwritten Securities and, if applicable,
the deposit of the Preferred Shares in accordance with the provisions
of a Deposit Agreement, have been duly authorized for issuance and
sale pursuant to this Agreement and such Underwritten Securities, when
issued and delivered by EQR pursuant to this Agreement against payment
of the consideration set forth in the applicable Terms Agreement or
the Delayed Delivery Contracts, if any, will be validly issued, fully
paid and non-assessable; the terms of the Underwritten Securities
being sold pursuant to the applicable Terms Agreement conform in all
material respects to the description of the Underwritten Securities
set forth under "Description of Shares of Beneficial Interest" in the
Prospectus and under "Description of Common Shares of Beneficial
Interest," "Description of Preferred Shares of Beneficial Interest" or
"Description of Depositary Shares," or other similar caption, as the
case may be, in the Prospectus Supplement; and the issuance of the
Underwritten Securities is not subject to any statutory preemptive
rights or, to counsel's knowledge, any contractual rights to subscribe
for more shares. If applicable, the form of certificate used to
evidence the Underwritten Securities complies with all applicable
statutory requirements.
(v) If applicable, the Common Shares issuable upon
conversion of any of the Preferred Shares or Depositary Shares have
been duly authorized and reserved for issuance upon such conversion by
all necessary action and such shares, when issued upon such conversion
will be validly issued and will be fully paid and non-assessable, and
the issuance of such shares upon such conversion will not be subject
to any statutory preemptive rights or, to counsel's knowledge, any
contractual rights to subscribe for more shares; and the Common Shares
issuable upon conversion of the Preferred Shares or the Depositary
Shares conform in all material respects to the descriptions thereof in
the Prospectus.
(vi) The applicable Deposit Agreement, if any, has been
duly authorized, executed and delivered by EQR and (assuming due
authorization, execution and delivery of the Deposit Agreement by the
Depositary) constitutes a valid and binding obligation of EQR
enforceable in accordance with its terms except as (A) the
enforceability thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights
generally, (B) the availability of equitable remedies may be limited
by equitable principles of general applicability, and (C) rights to
-23-
indemnity and contribution thereunder may be limited by state or
federal securities laws or the public policy underlying such laws; and
the Deposit Agreement, if any, conforms in all material respects to
all statements relating thereto contained in the Prospectus.
(vii) Each of the applicable Terms Agreement and the
Delayed Delivery Contracts, if any, has been duly authorized, executed
and delivered by EQR and ERP, and each of EQR and ERP has the power
and authority to perform its obligations hereunder and thereunder.
(viii) The execution and delivery of the applicable Terms
Agreement by each of EQR and ERP, and the performance by each of EQR
and ERP of its obligations thereunder and the consummation of the
transactions contemplated hereby and thereby, do not result in a
violation of any provision of the Declaration of Trust, bylaws or
partnership agreement of EQR or ERP or of the Maryland REIT statute
or, to counsel's knowledge, any other applicable law, administrative
regulation or administrative or court decree, and will not, to
counsel's knowledge, conflict with or constitute a breach of, or
default under, or result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of EQR or any of its
subsidiaries pursuant to any agreement or other instrument that is
binding upon EQR or any subsidiary, or to which any of their
properties or assets is subject.
(ix) The Registration Statement is effective under the
1933 Act and, to counsel's knowledge, no stop order suspending the
effectiveness of the Registration Statement has been issued under the
1933 Act and no proceedings for that purpose have been initiated or
threatened by the Commission.
(x) No consent, approval, authorization or order of,
or qualification with, any governmental body or agency and no consent,
approval, or authorization of any person other than EQR and ERP is
required for the performance by each of EQR and ERP of its obligations
under this Agreement and the applicable Terms Agreement, except such
as may be required under the federal securities laws and the
securities or Blue Sky laws of various states in connection with the
offer and sale of the Underwritten Securities.
(xi) There are no (A) legal or governmental proceedings
pending or, to the knowledge of such counsel, threatened which are
required to be disclosed in the Registration Statement, other than
those disclosed therein, and all pending legal or governmental
-24-
proceedings to which EQR or any of its subsidiaries is a party or to
which any of their property is subject which are not described in the
Registration Statement, including ordinary routine litigation
incidental to the business, are, considered in the aggregate, not
material or (B) to counsel's knowledge, statutes, regulations,
contracts, indentures, mortgages, loan agreements, notes, leases,
instruments or other documents that are required to be described in
the Prospectus or to be filed as exhibits to the Registration
Statement that are not described or filed as required, except for the
Articles Supplementary which will be filed on Form 8-K as soon as
practicable after the applicable Representation Date.
(xii) None of EQR or any of its subsidiaries is required
to be registered under the 1940 Act.
(xiii) The information (A) in the Prospectus under the
heading "Description of Shares of Beneficial Interest" and (B) in
EQR's Annual Report on Form 10-K for the most recent fiscal year then
ended under the caption "Legal Proceedings," to the extent that it
constitutes matters of law, summaries of legal matters, documents or
proceedings, or legal conclusions, has been reviewed by such counsel
and is correct in all material respects.
(xiv) The Registration Statement and Prospectus (except
for financial statements and schedules included therein, as to which
such counsel need not express any opinion), excluding the documents
incorporated by reference therein, as of their respective effective or
issue dates comply as to form in all material respects with the
requirements for registration statements on Form S-3 under the 1933
Act and the 1933 Act Regulations.
(xv) To their knowledge, EQR and each of its
subsidiaries has consents, authorizations, approvals, orders,
certificates and permits of and from, and has made all declarations
and filings with, all federal, state, local, and other governmental
authorities, all self-regulatory organizations, and all courts and
other tribunals, necessary to own, lease, license and use its
properties and assets and to conduct its business in the manner
described in the Registration Statement and the Prospectus, except to
the extent that the failure to obtain or file would not have a
material adverse effect on the condition, financial or otherwise, or
the earnings, assets, business affairs or business prospects of EQR
and its subsidiaries considered as a single enterprise.
-25-
(xvi) To their knowledge, except as described in the
Prospectus, there are no outstanding rights, warrants or options to
acquire, or instruments convertible into or exchangeable for, or
agreements or understandings with respect to the sale or issuance of
any shares of beneficial interest or capital stock of or other equity
interest in EQR or any subsidiary of EQR except for multifamily
property acquisition agreements with respect to the sale or issuance
of Common Shares or OP Units which are not material in amount.
(xvii) Each document filed pursuant to the 1934 Act
(other than the financial statements, schedules and other financial
and statistical data, as to which no opinion need be rendered) 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 1934 Act and the 1934 Act Regulations.
(xviii) The Articles Supplementary relating to the
Preferred Shares and the Depositary Shares, if any, have been filed
for record with the SDAT pursuant to the Maryland REIT Statute and the
number of Preferred Shares and the title, par value, liquidation
preference, ranking, dividend rate or rates (or method of
calculation), dividend payment dates, redemption or sinking fund
requirements, conversion provisions and other terms of the Preferred
Shares have been set forth therein.
(2) The favorable opinion, dated as of the applicable Closing
Time, of Xxxxx & Xxxxxxx L.L.P., counsel for the Underwriters and Maryland and
special tax counsel to EQR, substantially to the effect specified in
subparagraphs (i) first two clauses only, as to applicable Maryland law, (iv),
(v), (vi), (vii), (viii), as to applicable Maryland law and administrative
regulations (other than Maryland securities laws and regulations), (ix), (x) as
to any Maryland governmental body or agency, (xiv), and (xviii) of Section
5(b)(1), and to the effect that (A) EQR was organized and has operated in
conformity with the requirements for qualification and taxation as a real estate
investment trust under the Internal Revenue Code of 1986, as amended, for each
of its taxable years ended since December 31, 1993, and EQR's current
organization and method of operations should enable it to continue to meet the
requirements for qualification and taxation as a real estate investment trust
and (B) the discussion in the Prospectus under the heading "Federal Income Tax
Considerations" and in the Prospectus Supplement under the heading "Taxation of
Holders of Common Shares of Beneficial Interest," or "Taxation of Holders of
Preferred Shares of Beneficial Interest," or "Taxation of Holders of Depositary
Shares," or other similar caption, as the case may be, to the extent that it
constitutes matters of federal income tax law or legal conclusions related
thereto, is correct in all material respects.
-26-
(3) In rendering their opinions required by subsections (b)(1)
and (b)(2), respectively, of this Xxxxxxx 0, Xxxxxxxxx & Xxxxxxxxxxx, X.X. and
Xxxxx & Xxxxxxx L.L.P. shall each additionally state (which shall not constitute
an opinion) that no facts have come to the attention of such counsel which cause
them to believe that the Registration Statement or any amendment thereto (except
for financial statements and supporting schedules and other financial and
statistical information and data included therein or omitted therefrom, as to
which such counsel need not express any view), as of the time it became
effective under the 1933 Act or at the time an Annual Report on Form 10-K was
filed by EQR with the Commission (whichever is later), or at the date of the
applicable Terms Agreement, contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements therein not misleading, or that the Prospectus or any
amendment or supplement thereto (except as aforesaid) as of the date of the
applicable Terms Agreement or at the applicable Closing Time, contained an
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading.
In giving their opinions required by this Section 5(b), such counsel
(A) may rely as to all matters of fact, upon certificates and written statements
of officers and employees of and accountants for EQR and (B) may rely as to the
qualification and good standing of each of EQR or any of its subsidiaries to do
business in any state or jurisdiction, upon certificates of appropriate
government officials or opinions of counsel in such jurisdictions, which
opinions shall be in form and substance satisfactory to counsel for the
Underwriters. In giving their belief required in Section 5(b)(3), such counsel
may state that their belief is based upon their participation in the preparation
of the Registration Statement and Prospectus and any amendments and supplements
thereto and review and discussion of the contents thereof, but are without
independent check or verification except as specified.
(c) At the applicable Closing Time, there shall not have been, since
the date of the applicable Terms Agreement or since the respective dates as of
which information is given in the Prospectus, any material adverse change in the
condition, financial or otherwise, or in the earnings, assets, business affairs
or business prospects of EQR and its subsidiaries considered as a single
enterprise, whether or not arising in the ordinary course of business; and you
shall have received a certificate of the Chief Executive Officer, the President
or the Chief Financial Officer of EQR, dated as of such Closing Time, on behalf
of EQR and ERP, to the effect that (i) there has been no such material adverse
change, (ii) the representations and warranties in Section 1 are true and
correct with the same force and effect as though such Closing Time were a
Representation Date and (iii) EQR has complied with all agreements and satisfied
all conditions on its part to be performed or satisfied at or prior to Closing
Time. As used in this Section 5(c),
-27-
the term "Prospectus" means the Prospectus in the form first used to confirm
sales of the Underwritten Securities.
(d) At the time of execution of the applicable Terms Agreement, you
shall have received from EQR's independent public accountants, a letter dated
such date, in form and substance satisfactory to you, to the effect that (i)
they are independent accountants with respect to EQR and its subsidiaries within
the meaning of the 1933 Act and the 1933 Act Regulations; (ii) it is their
opinion that the consolidated financial statements and supporting schedules
included or incorporated by reference in the Registration Statement and the
Prospectus and covered by their opinions therein comply in form in all material
respects with the applicable accounting requirements of the 1933 Act and the
1933 Act Regulations; (iii) based upon limited procedures set forth in detail in
such letter, and except as otherwise set forth in such letter, nothing has come
to their attention which causes them to believe that at a specified date not
more than five days prior to the date of the applicable Terms Agreement, there
has been any change in the shares of beneficial interest of EQR or in the
consolidated long term debt of EQR or any decrease in the net assets of EQR, as
compared with the amounts shown in the most recent consolidated balance sheet
included or incorporated by reference in the Registration Statement and the
Prospectus or, during the period from the date of the most recent consolidated
statement of operations included or incorporated by reference in the
Registration Statement and the Prospectus to a specified date not more than five
days prior to the date of the applicable Terms Agreement, there were any
decreases, as compared with the corresponding period in the preceding year, in
consolidated revenues, or decrease in net income or net income per share of
beneficial interest of EQR, except in all instances for changes, increases or
decreases which the Registration Statement and the Prospectus disclose have
occurred or may occur; and (iv) in addition to the audit referred to in their
opinions and the limited procedures referred to in clause (iii) above, they have
carried out certain specified procedures with respect to certain amounts,
percentages and financial information which are included in the Registration
Statement and the Prospectus and which are specified by you, and have found such
amounts, percentages and financial information to be in agreement with relevant
accounting, financial and other records of EQR and its subsidiaries identified
in such letter.
(e) At the applicable Closing Time, you shall have received from EQR's
independent public accountants, a letter dated as of the applicable Closing Time
to the effect that they reaffirm the statements made in the letter furnished
pursuant to subsection (d) of this Section, except that the "specified date"
referred to shall be a date not more than five days prior to the applicable
Closing Time.
(f) At the applicable Closing Time, counsel for the Underwriters shall
have been furnished with such documents and opinions as they may reasonably
require for the purpose of enabling them to pass upon the issuance and sale of
the Underwritten Securities as herein contemplated and related proceedings,
-28-
or in order to evidence the accuracy of any of the representations or
warranties, or the fulfillment of any of the conditions, herein contained; and
all proceedings taken by EQR in connection with the issuance and sale of the
Underwritten Securities as herein contemplated shall be reasonably satisfactory
in form and substance to you and counsel for the Underwriters.
(g) If the Underwriters exercise their option provided in a Terms
Agreement as set forth in Section 2(b) hereof to purchase all or any portion of
the Option Securities, the representations and warranties of EQR and ERP
contained herein and the statements in any certificates furnished by EQR or ERP
hereunder shall be true and correct as of each Date of Delivery, and you shall
have received:
(1) A certificate, dated such Date of Delivery, of the Chief
Executive Officer, the President or the Chief Financial Officer of EQR, in their
capacities as such, on behalf of EQR and ERP, confirming that the certificate
delivered at Closing Time pursuant to Section 5(c) hereof remains true and
correct as of such Date of Delivery.
(2) The favorable opinion of Xxxxxxxxx & Xxxxxxxxxxx, P.C.,
counsel for EQR, in form and substance satisfactory to counsel for the
Underwriters, dated such Date of Delivery, relating to the Option Securities and
otherwise substantially to the same effect as the opinions required of them by
Section 5(b)(1) and the belief required by Section 5(b)(3) hereof.
(3) The favorable opinion of Xxxxx & Xxxxxxx L.L.P., counsel for
the Underwriters and Maryland and special tax counsel for EQR, dated such Date
of Delivery, relating to the Option Securities and otherwise to the same effect
as the opinion required by Section 5(b)(2) and the belief required by Section
5(b)(3) hereof.
(4) A letter from EQR's independent public accountants, in form
and substance satisfactory to you and dated such Date of Delivery, substantially
the same in scope and substance as the letter furnished to you pursuant to
Section 5(d) hereof, except that the "specified date" in the letter furnished
pursuant to this Section 5(g)(4) shall be a date not more than five days prior
to such Date of Delivery.
If any condition specified in this Section shall not have been
fulfilled when and as required to be fulfilled, the applicable Terms Agreement
may be terminated by you by notice to EQR at any time at or prior to the
applicable Closing Time, and such termination shall be without liability of any
party to any other party except as provided in Section 4 hereof.
-29-
SECTION 6. INDEMNIFICATION.
---------------
(a) Each of EQR and ERP hereby agrees, jointly and severally, to
indemnify and hold harmless each Underwriter and each person, if any, who
controls any Underwriter within the meaning of Section 15 of the 1933 Act, and
any director, officer, employee or affiliate thereof, as follows:
(i) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement (or
any amendment thereto), or the omission or alleged omission therefrom of a
material fact required to be stated therein or necessary to make the statements
therein not misleading or arising out of any untrue statement or alleged untrue
statement of a material fact contained in the Prospectus (or any amendment or
supplement thereto), or the omission, or alleged omission therefrom of a
material fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading; provided, however,
that neither EQR nor ERP shall be required under this subsection (i) to
indemnify the Underwriter with respect to any loss, liability, claim, damage or
expense to the extent such loss, liability, claim, damage or expense arises out
of any untrue statement or omission or alleged untrue statement or omission made
in reliance upon and in conformity with written information furnished to EQR by
any Underwriter concerning such Underwriter through you expressly for use in the
Registration Statement (or any amendment thereto) and the Prospectus (or any
amendment or supplement thereto);
(ii) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation or of any investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim whatsoever
for which indemnification is provided under subsection (i) above, if such
settlement is effected with the written consent of EQR and ERP; and
(iii) against any and all expense whatsoever (including, without
limitation, the fees and other charges of counsel chosen by you) reasonably
incurred in investigating, preparing or defending against any litigation, or any
investigation or proceedings by any governmental agency or body, commenced or
threatened, or any claim whatsoever for which indemnification is provided under
subsection (i)
-30-
above, to the extent that any such expense is not paid under (i) or
(ii) above.
(b) Each Underwriter severally agrees to indemnify and hold harmless
EQR and ERP, and each person, if any, who controls EQR or ERP within the meaning
of Section 15 of the 1933 Act, and any trustee, officer, employee or affiliate
thereof, against any and all loss, liability, claim, damage and expense
described in the indemnity contained in subsection (a) of this Section 6, as
incurred, but only with respect to untrue statements or omissions, or alleged
untrue statements or omissions, made in the Registration Statement (or any
amendment thereto) or the Prospectus (or any amendment or supplement thereto) in
reliance upon and in conformity with written information furnished to EQR by any
Underwriter concerning such Underwriter through you expressly for use in the
Registration Statement (or any amendment thereto) and the Prospectus (or any
amendment or supplement thereto).
(c) Each indemnified party shall give notice as promptly as
reasonably practicable to each indemnifying party of any action commenced
against it in respect of which indemnity may be sought hereunder, but failure to
so notify an indemnifying party shall not relieve such indemnifying party from
any liability which it may have otherwise than on account of this indemnity
agreement to the extent such indemnifying party was not materially prejudiced by
such failure or otherwise than on account of this indemnity agreement. An
indemnifying party may participate at its own expense in the defense of such
action. If it so elects within a reasonable time after receipt of such notice,
an indemnifying party, jointly with any other indemnifying parties receiving
such notice, may assume the defense of such action with counsel chosen by it and
approved by the indemnified parties defendant in such action, unless such
indemnified parties reasonably object to such assumption on the ground that the
named parties to any such action (including any impleaded parties) include both
such indemnified parties and an indemnifying party, and such indemnified parties
reasonably believe that there may be legal defenses available to them which are
different from or in addition to those available to such indemnifying party. If
an indemnifying party assumes the defense of such action, the indemnifying
parties shall not be liable for any fees and expenses of counsel for the
indemnified parties incurred thereafter in connection with such action. In no
event shall the indemnifying parties be liable for fees and expenses of more
than one counsel (in addition to any local counsel) separate from their own
counsel for all indemnified parties in connection with any one action or
separate but similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances.
SECTION 7. CONTRIBUTION.
In order to provide for just and equitable contribution in
circumstances in which the indemnity agreement provided for in Section 6 hereof
is for any reason
-31-
held to be unenforceable by the indemnified parties although applicable in
accordance with its terms, EQR and ERP, on the one hand, and the Underwriters,
on the other, with respect to the offering of the Underwritten Securities shall
contribute to the aggregate losses, liabilities, claims, damages and expenses of
the nature contemplated by said indemnity agreement incurred by EQR and ERP and
one or more of the Underwriters in respect of such offering, as incurred, in
such proportions that the Underwriters are responsible for that portion
represented by the percentage that the underwriting discount appearing on the
cover page of the applicable Prospectus Supplement in respect of such offering
bears to the initial public offering price appearing thereon and EQR and ERP are
jointly and severally responsible for the balance; provided, however, that no
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the 0000 Xxx) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation. Notwithstanding the provisions
of this Section 7, no Underwriter shall be required to contribute any amount in
excess of the amount by which the total price at which the Underwritten
Securities purchased by it pursuant to the applicable Terms Agreement and
distributed to the public were offered to the public exceeds the amount of any
damages such Underwriter has otherwise been required to pay in respect of such
losses, liabilities, claims, damages and expenses. For purposes of this Section
7, each person, if any, who controls an Underwriter within the meaning of
Section 15 of the 1933 Act shall have the same rights to contribution as such
Underwriter, and each trustee and each officer of EQR who signed the
Registration Statement, and each person, if any, who controls EQR or ERP within
the meaning of Section 15 of the 1933 Act and each trustee, officer, employee or
affiliate thereof shall have the same rights to contribution as EQR and ERP.
SECTION 8. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE
DELIVERY.
All representations, warranties and agreements included in the
applicable Terms Agreement, or included in certificates of officers of EQR or
ERP submitted pursuant thereto, shall remain operative and in full force and
effect, regardless of any termination of the applicable Terms Agreement or
investigation made by or on behalf of any Underwriter or any controlling person,
or by or on behalf of EQR or ERP, and shall survive delivery of and payment for
the Underwritten Securities until the obligations relating to all Underwritten
Securities have been fully satisfied in accordance with their terms.
SECTION 9. TERMINATION OF TERMS AGREEMENT.
(a) You may terminate the applicable Terms Agreement, by notice to
EQR, at any time at or prior to the applicable Closing Time (i) if there has
been, since the date of such Terms Agreement or since the respective dates as of
which information is given in the Prospectus, any material adverse change in the
-32-
condition, financial or otherwise, or in the earnings, assets, business affairs
or business prospects of EQR and its subsidiaries considered as a single
enterprise, whether or not arising in the ordinary course of business, or (ii)
if there has occurred any material adverse change in the financial markets in
the United States or any outbreak of hostilities or other calamity or crisis or
escalation of any existing hostilities, the effect of which is such as to make
it, in your judgment, impracticable to market the Underwritten Securities or
enforce contracts for the sale of the Underwritten Securities, or (iii) if
trading in any of the securities of EQR has been suspended by the Commission on
any exchange or any over-the-counter market, or if trading generally on either
the New York Stock Exchange, the American Stock Exchange or Nasdaq National
Market has been suspended, or minimum or maximum prices for trading have been
fixed, or maximum ranges for prices for securities have been required, by either
of said exchanges or by order of the Commission or any other governmental
authority, or if a banking moratorium has been declared by Federal or New York
authorities, or (iv) if the rating assigned by any nationally recognized
statistical rating organization to any Preferred Shares of EQR as of the date of
the applicable Terms Agreement shall have been lowered since such date or if any
such rating organization shall have publicly announced that it has placed any
Preferred Shares of EQR on what is commonly termed a "watch list" for possible
downgrading. As used in this Section 9(b), the term "Prospectus" means the
Prospectus in the form first used to confirm sales of the Underwritten
Securities.
(c) In the event of any such termination, (x) the covenants set forth
in Section 3 with respect to any offering of Underwritten Securities shall
remain in effect so long as any Underwriter owns any such Underwritten
Securities purchased from EQR pursuant to the applicable Terms Agreement and (y)
the covenant set forth in Section 3(h) hereof, the provisions of Section 4
hereof, the indemnity and contribution agreements set forth in Section 6 and 7
hereof, and the provisions of Sections 8 and 13 hereof shall remain in effect.
SECTION 10. DEFAULT BY ONE OR MORE OF THE UNDERWRITERS.
If one or more of the Underwriters shall fail at the applicable
Closing Time to purchase the Underwritten Securities which it or they are
obligated to purchase under the applicable Terms Agreement (the "Defaulted
Securities"), then you shall have the right, within 24 hours thereafter, to make
arrangements for one or more of the non-defaulting Underwriters, or any other
underwriters, to purchase all, but not less than all, of the Defaulted
Securities in such amounts as may be agreed upon and upon the terms herein set
forth; if, however, you shall not have completed such arrangements within such
24-hour period, then:
(a) If the total number of Defaulted Securities does not exceed 10% of
the total number of Underwritten Securities to be purchased pursuant to such
Terms Agreement, the non-defaulting Underwriters named in such Terms
-33-
Agreement shall be obligated to purchase the full amount thereof in the
proportions that their respective underwriting obligations hereunder bear to the
underwriting obligations of all non-defaulting Underwriters, or
(b) If the total number of Defaulted Securities exceeds 10% of the
total number of Underwritten Securities to be purchased pursuant to such Terms
Agreement, the applicable Terms Agreement shall terminate without liability on
the part of any non-defaulting Underwriter.
No action taken pursuant to this Section shall relieve any defaulting
Underwriter from liability in respect of its default under this Agreement and
the applicable Terms Agreement.
In the event of any such default which does not result in a
termination of the applicable Terms Agreement, either you or EQR shall have the
right to postpone the applicable Closing Time for a period not exceeding seven
days in order to effect any required changes in the Registration Statement or
the Prospectus or in any other documents or arrangements.
SECTION 11. NOTICES.
All notices and other communications hereunder shall be in writing and
shall be deemed to have been duly given if mailed or transmitted by any standard
form of telecommunication. Notices to the Underwriters shall be directed as set
forth in the applicable Terms Agreement; notices to EQR and ERP shall be
directed to them at Xxx Xxxxx Xxxxxxxxx Xxxxx, Xxxxx 000, Xxxxxxx, Xxxxxxxx
00000, attention of Xxxxxxx Xxxxxxx XX, with a copy to Xxxx Xxxxxxx Xxxxxx,
Esq., Xxxxxxxxx & Xxxxxxxxxxx, P.C., Xxx Xxxxx Xxxxxxxxx Xxxxx, Xxxxx 0000,
Xxxxxxx, Xxxxxxxx 00000.
SECTION 12. PARTIES.
The applicable Terms Agreement shall inure to the benefit of and be
binding upon you and EQR and ERP and any Underwriter who becomes a party to such
Terms Agreement, and their respective successors. Nothing expressed or
mentioned in the applicable Terms Agreement is intended or shall be construed to
give any person, firm or corporation, other than those referred to in Sections 6
and 7 and their heirs and legal representatives, any legal or equitable right,
remedy or claim under or in respect of such Terms Agreement or any provision
therein contained. The applicable Terms Agreement and all conditions and
provisions thereof are intended to be for the sole and exclusive benefit of the
parties hereto and thereto and their respective successors and said controlling
persons and officers and directors and their heirs and legal representatives,
and for the benefit of no other person, firm or corporation. No purchaser of
Underwritten Securities from any Underwriter shall be deemed to be a successor
by reason merely of such purchase.
-34-
SECTION 13. GOVERNING LAW AND TIME.
The applicable Terms Agreement shall be governed by and construed in
accordance with the laws of the State of New York applicable to agreements made
and to be performed in said State. Specified times of day refer to New York
City time.
SECTION 14. COUNTERPARTS.
The applicable Terms Agreement may be executed in one or more
counterparts, and if executed in more than one counterpart the executed
counterparts shall constitute a single instrument.
-35-
