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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
January 22, 1998
Avalon Properties, Inc.
(Exact name of Registrant as specified in its charter)
Maryland 1-12452 06-1379111
(State or other jurisdiction (Commission File (I.R.S. Employer
of incorporation) Number) Identification No.)
15 River Road, Wilton, Connecticut 06897
(Address of principal executive offices and zip code)
Registrant's telephone number, including area code:
203-761-6500
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ITEM 5. OTHER EVENTS.
Avalon Properties, Inc. (the "Company") completed the offering of
$100,000,000 aggregate principal amount of its 6 5/8% Notes due 2005 ("Notes")
on January 22, 1998. The offering of the Notes was made pursuant to a Prospectus
Supplement dated January 16, 1998 relating to the Prospectus dated December 29,
1997 filed with the Company's shelf registration statement on Form S-3 (file no.
333-42519).
The Notes bear interest at 6 5/8% from January 15, 1998, with interest
payable each January 15 and July 15 beginning July 15, 1998. The entire
principal amount of the Notes is due January 15, 2005. The Notes are redeemable
at any time at the option of the Company, in whole or in part, at a redemption
price equal to the principal amount and accrued interest of the Notes being
redeemed, plus, in certain circumstances, a "Make Whole Amount."
The Notes were issued under an Indenture and a First Supplemental Indenture
between the Company and Signet Trust Company, as trustee, and a Second
Supplemental Indenture and Third Supplemental Indenture between the Company and
The Bank of New York, as successor trustee. The offering of the Notes was
underwritten by PaineWebber Incorporated and J.P. Morgan Securities Inc. The
underwriting discount was 0.625% and the price to the public was 99.976% of the
principal amount of the Notes.
The net proceeds to the Company from the sale of the Notes were
approximately $99.2 million. The Company intends to use the net proceeds to
reduce outstanding borrowings under the Company's unsecured credit facilities
incurred for acquisition and development activity, and for general corporate
purposes, including potential future acquisitions and development.
Delivery of the Notes was made on January 22, 1998 through the facilities
of The Depository Trust Company, against payment therefor in immediately
available funds.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND
EXHIBITS.
(a) Financial statements of business acquired:
Not Applicable
(b) Pro Forma financial information:
Not Applicable
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(c) Exhibits:
Exhibit No.
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1.1 Underwriting Agreement dated January 16, 1998.
4.1 Avalon Properties, Inc. 6 5/8% Note due 2005.
4.2 Indenture dated as of September 18, 1995 (Incorporated by reference to
the corresponding exhibit to the Current Report on Form 8-K of Avalon
Properties, Inc. dated as of September 18, 1995).
4.3 First Supplemental Indenture dated as of September 18, 1995
(Incorporated by reference to the corresponding exhibit to the Current
Report on Form 8-K of Avalon Properties, Inc. dated as of September
18, 1995).
4.4 Second Supplemental Indenture dated as of December 16, 1997
(Incorporated by reference to the corresponding exhibit to the Current
Report on Form 8-K of Avalon Properties, Inc. dated as of December 16,
1997).
4.5 Third Supplemental Indenture dated as of January 22, 1998.
5.1 Opinion as to the legality of the Note.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: January 26, 1998 AVALON PROPERTIES, INC.
By: /s/ Thomas J. Sargeant
---------------------------------------
By: Thomas J. Sargeant
Title: Chief Financial Officer and
Treasurer
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EXHIBIT 1.1
$100,000,000 of 6 5/8% Notes due 2005
UNDERWRITING AGREEMENT
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January 16, 1998
PAINEWEBBER INCORPORATED
J.P. MORGAN SECURITIES INC.
c/o PaineWebber Incorporated
1285 Avenue of the Americas
New York, New York 10019
Ladies and Gentlemen:
Avalon Properties, Inc., a Maryland corporation (the "Company), confirms
its agreement with PaineWebber Incorporated and J.P. Morgan Securities Inc., as
underwriters (the "Underwriters"), as follows:
1. Description of Securities. The Company proposes to issue and sell to
you the principal amount of its debt securities identified on Schedule A hereto
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(the "Securities") to be issued under that certain Indenture dated as of
September 18, 1995, as supplemented by the First Supplemental Indenture dated
September 18, 1995, each between the Company and Signet Trust Company, the
Second Supplemental Indenture dated as of December 16, 1997 between the Company
and The Bank of New York (the "Trustee"), as successor Trustee, and the Third
Supplemental Indenture dated January 22, 1998, between the Company and the
Trustee (as so supplemented, the "Indenture").
2. Purchase, Sale and Delivery of Securities.
On the basis of the representations, warranties and agreements
contained herein, but subject to the terms and conditions set forth herein, the
Company agrees to issue and sell the Securities to the Underwriters as
hereinafter provided, and the Underwriters agree to purchase from the Company
the Securities at the purchase price set forth on Schedule A hereto plus accrued
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interest, if any, from the date specified on Schedule A hereto to the date of
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payment and delivery.
The Company understands that the Underwriters intend (i) to make a
public offering of the Securities, and (ii) initially to offer the Securities
upon the terms set forth in the Prospectus.
Payment for the Securities shall be made to the Company or to its
order in immediately available funds in the amount, on the date and at the place
set forth on Schedule A hereto (or at such other time and place on the same date
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or such other date, not later than the third Business Day thereafter, as the
Underwriters and the Company may agree in writing). Such payment will be made
upon delivery to the Underwriters of the Securities registered in such names and
in such denominations as the Underwriters shall request nor less than two full
Business Days prior to the date of delivery, with transfer taxes, if any,
payable in connection with transfer to the Underwriters duly paid by the
Company. As used herein, the term "Business Day" means any day other than a day
on which banks are permitted or required to be closed in New York City. The
time and date of such payment and delivery with respect to the Securities are
referred to herein as the "Closing Date." The Securities will be delivered
through the book entry facilities of The Depository Trust Company ("DTC") and
will be made available for inspection by the Underwriters by 1:00 P.M. New York
City time on the Business Day prior to the Closing Date at such place in New
York City as the Underwriter, DTC and the Company shall agree.
3. Representations and Warranties of the Company. The Company represents,
warrants and covenants to the Underwriters that:
(a) The Company meets the requirements for use of Form S-3 and a
registration statement (Registration No. 333-42519) on Form S-3 with respect to
the Securities being offered by the Company, including a prospectus, has been
prepared by the Company in conformity with the requirements of the Securities
Act of 1933, as amended (the "Act") and the rules and regulations (the "1933 Act
Rules and Regulations") of the Securities and Exchange Commission (the
"Commission") thereunder, and has been filed with the Commission and has been
declared effective. Such registration statement and prospectus may have been
amended or supplemented prior to the date of this Underwriting Agreement; any
such amendment or supplement was so prepared and filed, and any such amendment
filed after the effective date of such registration statement has been declared
effective. No stop order suspending the effectiveness of the registration
statement has been issued and no proceeding for that purpose has been instituted
or, to the Company's knowledge, threatened by the Commission. A prospectus
supplement (the "Prospectus Supplement") setting forth the terms of the
offering, sale and plan of distribution of the Securities being offered by the
Company and additional information concerning the Company and its business has
been or will be so prepared and will be filed pursuant to Rule 424(b) of the
1933 Act Rules and Regulations on or before the second business day after the
date hereof (or such earlier time as may be required by the 1933 Act Rules and
Regulations). Copies of such registration statement and prospectus,
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any such amendments or supplements and all documents incorporated by reference
therein that were filed with the Commission on or prior to the date of this
Underwriting Agreement have been delivered or made available to you and your
counsel. Each form of prospectus, or prospectus and prospectus supplement,
heretofore made available for use in offering the Securities, is referred to
herein as a "preliminary prospectus." Such registration statement, as it may
have heretofore been amended, is referred to herein as the "Registration
Statement," and the final form of prospectus included in the Registration
Statement, as supplemented by the Prospectus Supplement, is referred to herein
as the "Prospectus." Any reference herein to the Registration Statement, the
Prospectus, any preliminary prospectus or any amendment or supplement thereto
shall be deemed to refer to and include the exhibits thereto (or, in the case of
the Prospectus or any preliminary prospectus, the exhibits to the Registration
Statement), the documents incorporated by reference therein, and any reference
herein to the terms "amend," "amendment" or "supplement" with respect to the
Registration Statement, Prospectus or any preliminary prospectus shall be deemed
to refer to and include the filing after the execution hereof of any document
with the Commission deemed to be incorporated by reference therein. For purposes
of this Underwriting Agreement, all references to the Registration Statement,
the Prospectus, any preliminary prospectus or any amendment or supplement
thereto shall be deemed to include any copy filed with the Commission pursuant
to its Electronic Data Gathering Analysis and Retrieval System (EDGAR), and such
copy shall be identical (except to the extent permitted by Regulation S-T) to
any Prospectus delivered to you for use in connection with the offering of the
Securities by the Company.
(b) Each part of the Registration Statement (excluding any
prospectus supplement with respect to an offering of securities other than the
offering of the Securities contemplated hereby), when such part became or
becomes effective, each preliminary prospectus on the date of filing thereof
with the Commission and the Prospectus and any amendment or supplement to such
Registration Statement or such Prospectus, on the date of filing thereof with
the Commission and at the Closing Date (as hereinafter defined) conformed or
will conform in all material respects with the requirements of the Act and the
1933 Act Rules and Regulations; the Indenture, on the date of filing hereof with
the Commission and at the Closing Date (as hereinafter defined) conformed or
will conform in all material respects with the requirements of the Trust
Indenture Act of 1939, as amended, and the rules and regulations of the
Commission thereunder (the "TIA"), each part of the Registration Statement
(excluding any prospectus supplement with respect to an offering of securities
other than the offering of the Securities contemplated hereby), when such part
became or becomes effective did not or 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; each preliminary
prospectus, on the date of filing thereof with the Commission, and the
Prospectus and any amendment or supplement thereto, on the date of filing
thereof with the Commission and at the Closing Date did not or will not include
an untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; except that the foregoing shall not
apply to (i) that part of the Registration Statement which constitutes the
Statement of Eligibility
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and Qualification under the TIA (the "Form T-1") and (ii) statements in, or
omissions from, any such document in reliance upon, and in conformity with,
written information concerning the Underwriters that was furnished to the
Company by the Underwriters specifically for use in the preparation thereof. The
Company acknowledges that the statements set forth under the heading
"Underwriting" in the Registration Statement, the preliminary prospectus and the
Prospectus constitute the only information relating to any Underwriter furnished
in writing to the Company by the Underwriters expressly for inclusion in the
Registration Statement, the preliminary prospectus or the Prospectus. The
Company has not distributed any offering material in connection with the
offering of the Securities other than the preliminary prospectus, the Prospectus
and any other materials, if any, permitted by the Act.
(c) The documents incorporated by reference in the Registration
Statement, the Prospectus and any amendment or supplement to such Registration
Statement or such Prospectus, when they became or become effective under the Act
or were or are filed with the Commission under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), as the case may be, conformed or will
conform in all material respects with the requirements of the Act, the 1933 Act
Rules and Regulations, the Exchange Act and the rules and regulations of the
Commission thereunder (the "Exchange Act Rules and Regulations"), as applicable.
(d) The only subsidiaries (as defined in the 1933 Act Rules and
Regulations) of the Company are the subsidiaries listed on Schedule B hereto
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(the "subsidiaries"). The Company and each of its subsidiaries is, and at the
Closing Date will be, an entity duly organized or formed, as the case may be,
and, in the case of an entity that is not a general partnership, validly
existing and in good standing under the laws of the jurisdiction of its
organization or incorporation. The Company and each of its subsidiaries has,
and at the Closing Date will have, full power and authority to conduct all the
activities conducted by it, to own or lease all the assets owned or leased by it
and to conduct its business as described in the Registration Statement and the
Prospectus. The Company and each of its subsidiaries is, and at the Closing
Date will be, duly licensed or qualified to do business and is and will be in
good standing as a corporation, limited liability company or limited
partnership, as the case may be, in all jurisdictions in which the nature of the
activities conducted by it or the character of the assets owned or leased by it
makes such licensing or qualification necessary except where the failure to be
so qualified does not have a material adverse effect on the business,
properties, financial position or results of the Company and its subsidiaries,
taken as a whole. Except for the stock or other equity interests of the
subsidiaries and as disclosed in the Registration Statement, the Company does
not own, and at the Closing Date will not own, directly or indirectly, any
shares of stock or any other equity or long-term debt securities of any
corporation or have any equity interest in any firm, partnership, joint venture,
association or other entity. Complete and correct copies of the Amended and
Restated Articles of Incorporation and Amended and Restated Bylaws of the
Company and the charter documents of each of its subsidiaries and all amendments
thereto have been delivered to you, and no changes therein will be made
subsequent to the date hereof and prior to the Closing Date.
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(e) The outstanding Common Shares, the outstanding shares of 9%
Series A Cumulative Redeemable Preferred Stock, $.01 par value (the "Series A
Preferred"), and the outstanding shares of 8.96% Series B Cumulative Redeemable
Preferred Stock, $.01 par value (the "Series B Preferred"), of the Company have
been duly authorized, validly issued, fully paid and nonassessable and will not
be subject to any preemptive or similar right. Except as set forth in the
Registration Statement, the Company does not have outstanding, and at the
Closing Date will not have outstanding, any options to purchase, or any rights
or warrants to subscribe for, or any securities or obligations convertible into,
or any contracts or commitments to issue or sell, any Common Shares, Series A
Preferred or Series B Preferred, any shares of capital stock of any subsidiary
or any such warrants, convertible securities or obligations.
(f) The Securities will be, as of the Closing Date, duly authorized
by the Company for issuance and sale pursuant to this Underwriting Agreement and
the Indenture, and when duly authenticated and delivered by the Trustee in
accordance with the terms of the Indenture (assuming the due authorization,
execution and delivery of the Indenture by the Trustee), and delivered to, and
paid for by, the Underwriters pursuant to this Underwriting Agreement, will be
valid and legally binding obligations of the Company entitled to the benefit of
the Indenture and will be enforceable against the Company in accordance with
their terms, subject to (a) applicable bankruptcy, insolvency, reorganization,
moratorium and similar laws affecting creditors' rights and remedies generally,
(b) general principles of equity (regardless of whether enforcement is sought in
a proceeding in equity or law), (c) the discretion of the court before which any
proceeding therefor may be brought, and (d) applicable Federal and state
securities laws and public policy which may limit the application of provisions
relating to indemnification and contribution with respect to securities law
matters (clauses (a), (b), (c) and (d) are collectively referred to as the
"Enforceability Limitations"); the Indenture has been duly qualified under the
TIA and prior to the issuance of the Securities will be duly authorized,
executed and delivered by the Company, and assuming due authorization, execution
and delivery thereof by the Trustee, will constitute a valid and legally binding
obligation of the Company, enforceable against the Company in accordance with
its terms, subject to the Enforceability Limitations; the Securities and the
Indenture will conform in all material respects to the statements relating
thereto contained in the Prospectus; and the Securities are, in all material
respects, in the form contemplated by the Indenture.
(g) The financial statements and schedules of the Company included
or incorporated by reference in the Registration Statement or the Prospectus
present fairly the consolidated financial condition of the Company as of the
respective dates thereof and the consolidated results of operations and cash
flows of the Company for the respective periods covered thereby, except in the
case of interim unaudited financial statements, for normal recurring year end
adjustments, all in conformity with generally accepted accounting principles
applied on a consistent basis throughout the entire period involved, except as
otherwise disclosed in the Prospectus. No other financial statements or
schedules of the Company are required by the Act, the 1933 Act Rules and
Regulations, the Exchange Act or the Exchange
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Act Rules and Regulations to be included in the Registration Statement or the
Prospectus. Coopers & Lybrand L.L.P., independent public accountants (the
"Accountants"), who have reported on those of such financial statements and
schedules which are audited, are independent accountants with respect to the
Company as required by the Act and the 1933 Act Rules and Regulations. The
statements included in the Registration Statement with respect to the
Accountants pursuant to Rule 509 of Regulation S-K of the Rules and Regulations
are true and correct in all material respects.
(h) The Company maintains a system of internal accountings control
sufficient to provide reasonable assurance that (i) transactions are executed in
accordance with management's general or specific authorization; (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain accountability for assets; (iii) access to assets is permitted only in
accordance with management's general or specific authorization; and (iv) the
recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(i) Subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus and prior to the Closing
Date, except as set forth in or contemplated by the Registration Statement and
the Prospectus, (i) there has not been and will not have been any change in the
capitalization of the Company, or in the business, properties, business
prospects, condition (financial or otherwise) or results of operations of the
Company and its subsidiaries, arising for any reason whatsoever, (ii) neither
the Company nor any of its subsidiaries has incurred nor will it incur any
material liabilities or obligations, direct or contingent, nor has it entered
into nor will it enter into any material transactions other than pursuant to
this Agreement and the transactions referred to herein and (iii) the Company has
not and will not have paid or declared any dividends or other distributions of
any kind on any class of its capital stock.
(j) The Company is not an "investment company" or an "affiliated
person" of, or "promoter" or "principal underwriter" for, an "investment
company," as such terms are defined in the Investment Company Act of 1940, as
amended.
(k) Except as set forth in the Registration Statement and the
Prospectus, there are no actions, suits or proceedings pending or, to the
Company's best knowledge, threatened against or affecting the Company or any of
its subsidiaries or any of their respective officers in their capacity as such,
before or by any Federal or state court, commission, regulatory body,
administrative agency or other governmental body, domestic or foreign, wherein
an unfavorable ruling, decision or finding might materially and adversely affect
the Company or any of its subsidiaries or its business, properties, business
prospects, condition (financial or otherwise) or results of operations.
(l) The Company and each of its subsidiaries has, and at the Closing
Date
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will have, (i) all governmental licenses, permits, consents, orders, approvals
and other authorizations necessary to carry on its business as contemplated in
the Prospectus, (ii) complied in all respects with all laws, regulations and
orders applicable to it or its business and (iii) performed all its obligations
required to be performed by it, and is not, and at the Closing Date will not be,
in default, under any indenture, mortgage, deed of trust, voting trust
agreement, loan agreement, bond, debenture, note agreement, lease, contract or
other agreement or instrument (collectively, a "contract or other agreement") to
which it is a party or by which its property is bound or affected, the violation
of which would have a material adverse effect on the business, properties,
financial position or results of operations of the Company and its subsidiaries,
taken as a whole. To the best knowledge of the Company and each of its
subsidiaries, no other party under any contract or other agreement to which it
is a party is in default in any material respect thereunder. The Company is not,
nor at the Closing Date will be, in violation of any provision of its Amended
and Restated Articles of Incorporation or Amended and Restated Bylaws. No
subsidiary of the Company is, nor at the Closing Date will any of them be, in
violation of any provision in their respective charter documents.
(m) No consent, approval, authorization or order of, or any filing
or declaration with, any court or governmental agency or body is required for
the consummation by the Company of the transactions on its part herein
contemplated, except such as have been obtained under the Act or the 1933 Act
Rules and Regulations and such as may be required under state securities or Blue
Sky laws in connection with the purchase and distribution by you of the
Securities to be sold by the Company.
(n) The Company has full corporate power and corporate authority to
enter into this Agreement and the Indenture. This Agreement has been duly
authorized, executed and delivered by the Company and, subject to the
Enforceability Limitations, constitutes a valid and binding agreement of the
Company, enforceable against the Company in accordance with its terms. The
Indenture has been duly authorized, and upon the execution of the Second
Supplemental Indenture will have been executed and delivered by the Company and,
subject to the Enforceability Limitations, will constitute a valid and binding
agreement of the Company, enforceable against the Company in accordance with its
terms. The execution and performance of this Agreement and the Indenture and
the consummation of the transactions contemplated hereby and thereby will not
result in the creation or imposition of any lien, charge or encumbrance upon any
of the assets of the Company or any of its subsidiaries pursuant to the terms or
provisions of, or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, or give any other party a right to
terminate any of its obligations under, or result in the acceleration of any
obligation under, the Amended and Restated Articles of Incorporation, Amended
and Restated Bylaws of the Company or the charter documents of any of its
subsidiaries, any contract or other agreement to which the Company or any of its
subsidiaries is a party or by which the Company or any of its subsidiaries or
any of its properties is bound or affected, or violate or conflict with any
judgment, ruling, decree, order, statute, rule or regulation of any court or
other governmental agency or body applicable to the
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business or properties of the Company or any of its subsidiaries.
(o) The Company and each of its subsidiaries has good and marketable
title to all properties and assets described in the Prospectus as owned by it,
free and clear of all liens, charges, encumbrances or restrictions, except such
as (i) are described in the Prospectus or (ii) are not material to the business
of the Company or its subsidiaries, taken as a whole. The Company and each of
its subsidiaries has valid, subsisting and enforceable leases for the properties
described in the Prospectus as leased by it, with such exceptions as are not
material and do not materially interfere with the use made and proposed to be
made of such properties by the Company and such subsidiaries; no tenant under
any of the leases pursuant to which the Company leases its properties has an
option or right of first refusal to purchase the premises demised under such
lease; the use and occupancy of each of the properties of the Company complies
in all material respects with all applicable codes and zoning laws and
regulations; the Company has no knowledge of any pending or threatened
condemnation or zoning change that will in any material respect affect the size
of, use of, improvements of, construction on, or access to any of the properties
of the Company; and the Company has no knowledge of any pending or threatened
proceeding or action that will in any manner affect the size of, use of,
improvements on, construction on, or access to any of the properties of the
Company.
(p) Title insurance in favor of the Company is maintained with
respect to (i) each of the Current Communities (as such term is defined in the
Prospectus) in an amount at least equal to the cost of acquisition of such
Current Community and (ii) each of the Development Communities (as such term is
defined in the Prospectus) in an amount at least equal to the total budgeted
cost of such Development Community, except, in each case, where the failure to
maintain such title insurance would not have a material adverse effect on the
condition, financial or otherwise, or the earnings, business affairs or business
prospects of the Company and its subsidiaries taken as a whole. Title insurance
in favor of the mortgagee is maintained in an amount equal to the maximum
commitment of the related loan.
(q) The Company has no knowledge of (i) the unlawful presence of any
hazardous substances, hazardous materials, toxic substances or waste materials
(collectively, "Hazardous Materials") on any of the properties owned by it, or
(ii) any unlawful spills, releases, discharges or disposal of Hazardous
Materials that have occurred or are presently occurring off such properties as a
result of any construction on or operation and use of such properties, which
presence or occurrence would have a material adverse effect on the condition,
financial or otherwise, or the earnings, business affairs or business prospects
of the Company and its subsidiaries taken as a whole. In connection with the
construction or operation and use of the properties owned by the Company, the
Company represents that, as of the date of this Agreement, it has no knowledge
of any failure to comply with all applicable local, state and federal
environmental laws, regulations, ordinances and administrative and judicial
orders relating to the generation, recycling, reuse, sale, storage, handling,
transport and disposal of any Hazardous Materials, which failure would have a
material adverse effect on the condition, financial or otherwise, or the
earnings, business affairs or business prospects
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of the Company and its subsidiaries taken as a whole.
(r) Property and casualty insurance in favor of the Company is
maintained with respect to each of the properties owned by it in an amount and
on such terms as is reasonable and customary for businesses of this type.
(s) There is no document or contract of a character required to be
described in the Registration Statement or the Prospectus or to be filed as an
exhibit to the Registration Statement which is not described or filed as
required. All such contracts and all contracts relating to any tax exempt
financings to which the Company or any subsidiary is a party have been duly
authorized, executed and delivered by the Company or such subsidiary, constitute
valid and binding agreements of the Company or such subsidiary and are
enforceable against the Company or such subsidiary in accordance with the terms
thereof.
(t) No statement, representation, warranty or covenant made by the
Company in this Agreement or made in any certificate or document required by
this Agreement to be delivered to you was or will be, when made, inaccurate,
untrue or incorrect.
(u) Neither the Company nor any of its directors, officers or
controlling persons has taken, directly or indirectly, any action intended, or
which might reasonably be expected, to cause or result, under the Act or
otherwise, in, or which has constituted, stabilization or manipulation of the
price of any security of the Company to facilitate the sale or resale of the
Securities.
(v) No holder of securities of the Company has rights to the
registration of any securities of the Company because of the filing of the
Registration Statement.
(w) Neither the Company nor any of its subsidiaries is involved in
any material labor dispute nor, to the knowledge of the Company, is any such
dispute threatened.
(x) Neither the Company nor any of its subsidiaries nor, to the
Company's knowledge, any employee or agent of the Company or any subsidiary has
made any payment of funds of the Company or any subsidiary or received or
retained any funds in violation of any law, rule or regulation or of a character
required to be disclosed in the Prospectus.
(y) The Company has continuously been organized and operated in
conformity with the requirements for qualification as a real estate investment
trust under the Internal Revenue Code of 1986, as amended (the "Code") for all
taxable years commencing with its taxable year ended December 31, 1993. The
Company has filed an election to be taxable as a real estate investment trust
for its taxable year ended December 31, 1993, and such election has not been
terminated. The Company's method of operation will permit it to continue to
meet the requirements for taxation as a real estate investment trust under the
Code. The Company intends to continue to operate in a manner which would permit
it to qualify as a
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real estate investment trust under the Code.
4. Agreements of the Company. The Company covenants and agrees with the
Underwriters as follows:
(a) The Company will cause the Prospectus Supplement to be filed as
contemplated by Section 3(a) hereof (but only if you have not reasonably
objected thereto by notice to the Company after having been furnished a copy
within a reasonable time prior to filing) and will notify you promptly of such
filing. The Company will not during such period as the Prospectus is required
by law to be delivered in connection with sales of the Securities by any
Underwriter or dealer (the "Prospectus Delivery Period"), file any amendment or
supplement to the Registration Statement or the Prospectus, unless a copy
thereof shall first have been submitted to the Underwriters within a reasonable
period of time prior to the filing thereof and the Underwriters shall not have
objected thereto in good faith.
(b) The Company will notify you promptly, and will confirm such
advice in writing, (i) when any post-effective amendment to the Registration
Statement becomes effective, (ii) of any request by the Commission for
amendments or supplements to the Registration Statement or the Prospectus or for
additional information, (iii) of 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 or the threat thereof, (iv) of
the suspension of the qualification or registration of the Securities for
offering or sale in any jurisdiction, or of the initiation or threat of any
proceeding for any such purpose; (v) of the happening of any event during the
Prospectus Delivery Period that in the judgment of the Company makes any
statement made in the Registration Statement or the Prospectus untrue or that
requires the making of any changes in the Registration Statement or the
Prospectus in order to make the statements therein, in light of the
circumstances in which they are made, not misleading and (vi) of receipt by the
Company or any representative or attorney of the Company of any other
communication from the Commission relating to the Company, the Registration
Statement, any preliminary prospectus or the Prospectus.
(c) If at any time the Commission or any jurisdiction shall threaten
to issue, or shall issue, any order suspending the effectiveness of the
Registration Statement or suspending the qualification or registration of the
Securities for sale in any jurisdiction, the Company will make every reasonable
effort to prevent the issuance of such order and, if such an order should be
issued, to obtain the withdrawal of such order at the earliest possible moment.
(d) The Company will furnish to you without charge two signed copies
of the Registration Statement and of any post-effective amendments thereto,
including financial statements and schedules, and all exhibits thereto
(including any document filed under the Exchange Act and deemed to be
incorporated by reference into the Prospectus). During the Prospectus Delivery
Period the Company will promptly furnish to you, without charge, as
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many copies of each preliminary prospectus, the Prospectus (containing the
Prospectus Supplement) and any amendment or supplement thereto as you may from
time to time reasonably request. The Company consents to the use of the
Prospectus, as amended or supplemented from time to time, by you and by all
dealers to whom the Securities may be sold, both in connection with the offering
or sale of the Securities and, thereafter, during the Prospectus Delivery
Period.
(e) The Company will comply with all requirements imposed upon it by
the Act, the 1933 Act Rules and Regulations, the Exchange Act, the Exchange Act
Rules and Regulations and the TIA, as from time to time in force, so far as
necessary to permit the continuance of sales of, or dealings in, the Securities
as contemplated by the provisions hereof and the Prospectus.
(f) The Company will comply with all the provisions of any
undertakings contained, or incorporated by reference, in the Registration
Statement.
(g) If during the Prospectus Delivery Period any event shall occur
which in the judgment of the Company or your counsel should be set forth in the
Prospectus in order to make any statement therein, in the light of the
circumstances under which it was made, not misleading, or if, in the reasonable
opinion of your counsel, it is necessary to supplement or amend the Prospectus
to comply with law, the Company will forthwith prepare and duly file with the
Commission an appropriate supplement or amendment thereto. The Company shall
not file any document under the Exchange Act before the termination of the
offering of the Securities by you if such document would be deemed to be
incorporated by reference into the Prospectus to which you reasonably object.
(h) Prior to any public offering of the Securities the Company will
cooperate with you and your counsel in connection with the registration or
qualification of the Securities for offer and sale under the securities or Blue
Sky laws of such jurisdictions as you may request including, without limitation,
jurisdictions outside of the United States; provided, that in no event shall the
Company be obligated to qualify to do business in any jurisdiction where it is
not now so qualified or to take any action which would subject it to general
service of process in any jurisdiction where it is not now so subject.
(i) During the period of five years commencing on the date hereof,
the Company will furnish to you copies of such financial statements and other
periodic and special reports as the Company may from time to time distribute
generally to the holders of any class of its capital stock, and will furnish to
you a copy of each annual, quarterly, current or other report it files with the
Commission.
(j) The Company will make generally available to holders of its
securities as soon as may be practicable but in no event later than the last day
of the fifteenth full calendar month following the end of the Company's current
fiscal quarter, an earnings statement (which
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need not be audited but shall be in reasonable detail) for a period of 12 months
beginning after the date upon which the Prospectus Supplement is filed pursuant
to Rule 424 under the Act, and satisfying the provisions of Section 11(a) of the
Act (including Rule 158 of the Rules and Regulations).
(k) Whether or not the transactions contemplated by this Agreement
are consummated or this Agreement is terminated, the Company will pay, or
reimburse if paid by you, all fees, costs and expenses incident to the
performance of the obligations of the Company under this Agreement, including,
but not limited to, fees, costs and expenses of or relating to (i) the
preparation, printing and filing of the Registration Statement and exhibits to
it, each preliminary prospectus, the Prospectus and any amendment or supplement
to the Registration Statement or the Prospectus, (ii) the preparation and
delivery of certificates representing the Securities, (iii) the printing of this
Agreement and any Dealer Agreements, (iv) furnishing (including costs of
shipping and mailing) such copies of the Registration Statement, the Prospectus
and any preliminary prospectus, and all amendments and supplements thereto, as
may be requested for use in connection with the offering and sale of the
Securities by you or by dealers to whom Securities may be sold, (v) filings
required to be made by or on behalf of the Company or you, including without
limitation filings to be made by the Company with the Commission, and the fees,
disbursements and other charges of counsel for the Company in connection
therewith, (vi) the registration or qualification of the Securities for offer
and sale under the securities or Blue Sky laws of such jurisdictions designated
pursuant to Section 4(h), including the reasonable fees, disbursements and other
charges of counsel to you in connection therewith, and the preparation and
printing of preliminary, supplemental and final Blue Sky memoranda, (vii)
counsel to the Company and any surveyors, engineers, appraisers, photographers,
accountants and other professionals engaged by or on behalf of the Company,
(viii) the transfer agent and registrar for the Securities, (ix) the Trustee
under the Indenture, (x) the preparation of slides, overheads and other
presentation material to be used in any "road show" or other presentation to
potential investors and the hotel, travel and other expenses of the Company's
employees in connection with any such "road show" or presentation, (xi) Coopers
& Lybrand L.L.P. or any other accountants engaged by the Company in connection
with the offering of the Securities, (xii) Moody's Investors Service, Inc.
("Moody's") and Standard and Poor's Rating Services ("S&P" and, together with
Moody's, the "Rating Agencies") in connection with the rating of the Securities
at the request of the Company.
(l) If this Agreement shall be terminated by the Company pursuant to
any of the provisions hereof (otherwise than pursuant to Section 8 hereof) or if
for any reason the Company shall be unable to perform its obligations hereunder,
the Company will reimburse the Underwriters for all out-of-pocket expenses
(including the fees, disbursements and other charges of their counsel)
reasonably incurred by the Underwriters in connection herewith.
(m) The Company will not at any time, directly or indirectly, take
any action intended, or which might reasonably be expected, to cause or result
in, or which will constitute, stabilization of the price of the Securities to
facilitate the sale or resale of any of the
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<PAGE>
Securities.
(n) The Company will apply the net proceeds from the offering and
sale of the Securities to be sold by the Company in the manner set forth in the
Prospectus under the caption "Use of Proceeds."
(o) The Company will continue to elect to qualify as a "real estate
investment trust" under the Code, and will use its best efforts to continue to
meet the requirements to qualify as a "real estate investment trust."
(p) The Company will take all reasonable action necessary to enable
the Rating Agencies to provide their respective credit ratings of the
Securities.
(q) The Company will execute the supplemental indenture designating
the Securities as the debt securities to be offered and their terms and
provisions in accordance with the provisions of the Indenture.
5. Conditions of the Underwriters' Obligations. In addition to the
execution and delivery of the Price Determination Agreement, the Underwriters'
obligations hereunder are subject to the following conditions:
(a) The Prospectus shall have been filed by the Company as required
by Section 4(a) hereof and (i) no stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for that
purpose shall be pending or threatened by the Commission, (ii) no order
suspending the effectiveness of the Registration Statement or the qualification
or registration of the Securities under the securities or Blue Sky laws of any
jurisdiction shall be in effect and no proceeding for such purpose shall be
pending before or threatened or contemplated by the Commission or the
authorities of any such jurisdiction, (iii) any request for additional
information on the part of the staff of the Commission or any such authorities
shall have been complied with to the satisfaction of the staff of the Commission
or such authorities, (iv) after the date hereof no amendment or supplement to
the Registration Statement or the Prospectus shall have been filed unless a copy
thereof was first submitted to you and you did not object thereto in good faith,
and (v) you shall have received a certificate, dated the Closing Date and signed
by the Chief Executive Officer or the Chairman of the Board of Directors of the
Company and the Chief Financial Officer of the Company (who may, as to
proceedings threatened, rely upon the best of their information and belief), to
the effect of clauses (i), (ii) and (iii).
(b) You shall not in good faith have advised the Company that the
Registration Statement, or any amendment thereto, contains an untrue statement
of fact that in the reasonable opinion of you or your counsel is material or
omits to state a fact that in the reasonable opinion of you or your counsel is
material and is required to be stated therein or is necessary to make the
statements therein, in the light of the circumstances under which they
13
<PAGE>
were made, not misleading, or that the Prospectus, or any amendment or
supplement thereto, contains an untrue statement of fact that in the reasonable
opinion of you or your counsel is material or omits to state a fact that in the
reasonable opinion of you or your counsel is material and is required to be
stated therein or is necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading and which statement
has not been or is not being corrected to your satisfaction.
(c) Subsequent to the execution and delivery of this Underwriting
Agreement and prior to the Closing Date, there shall not have occurred any
downgrading in the rating accorded the Securities or any other debt securities
of the Company by any Rating Agency nor shall any notice have been given to the
Company of (i) any intended or potential downgrading by any Rating Agency in
such securities, or (ii) any review or possible change by any Rating Agency that
does not indicate a stable, positive or improving rating accorded such
securities.
(d) Since the respective dates as of which information is given in
the Registration Statement and the Prospectus, (i) there shall not have been a
material adverse change in the general affairs, business, business prospects,
properties, management, condition (financial or otherwise) or results of
operations of the Company and its subsidiaries, taken as a whole, whether or not
arising from transactions in the ordinary course of business, in each case other
than as set forth in or contemplated by the Registration Statement and the
Prospectus (ii) there shall not have been any change on a consolidated basis, in
the equity capitalization, short-term debt or long-term debt of the Company, or
any adverse change in the rating assigned to any securities of the Company, in
each case other than as set forth in or contemplated by the Registration
Statement and the Prospectus, and (iii) neither the Company nor any of its
subsidiaries shall have sustained any material loss or interference with its
business or properties from fire, explosion, flood or other casualty, whether or
not covered by insurance, or from any labor dispute or any court or legislative
or other governmental action, order or decree, which is not set forth in the
Registration Statement and the Prospectus, if in your judgment any such
development makes it impracticable or inadvisable to offer or deliver the
Securities on the terms and in the manner contemplated in the Prospectus.
(e) Since the respective dates as of which information is given in
the Registration Statement and the Prospectus, there shall have been no
litigation or other proceeding instituted against the Company or any of its
subsidiaries or any of their respective officers or directors in their
capacities as such, before or by any Federal, state or local court, commission,
regulatory body, administrative agency or other governmental body, domestic or
foreign, in which litigation or proceeding an unfavorable ruling, decision or
finding would materially and adversely affect the business, properties, business
prospects, condition (financial or otherwise) or results of operations of the
Company and its subsidiaries taken as a whole.
(f) Each of the representations and warranties of the Company
contained
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<PAGE>
herein shall be true and correct in all material respects at the Closing Date,
as if made at the Closing Date, and all covenants and agreements contained
herein to be performed on the part of the Company and all conditions contained
herein to be fulfilled or complied with by the Company at or prior to the
Closing Date, shall have been duly performed, fulfilled or complied with.
(g) You shall have received one or more opinions, dated the Closing
Date, satisfactory in form and substance to your counsel, from Goodwin, Procter
& Hoar LLP, counsel to the Company, to the effect set forth in Exhibit A.
---------
(h) You shall have received an opinion, dated the Closing Date, from
O'Melveny & Myers LLP, your counsel, with respect to the Registration Statement,
the Prospectus and this Agreement, which opinion shall be satisfactory in all
respects to you.
(i) Concurrently with the execution and delivery of this Agreement,
the Accountants shall have furnished to you a letter, dated the date of its
delivery, addressed to you and in form and substance satisfactory to you,
confirming that they are independent accountants with respect to the Company as
required by the Act and the 1933 Act Rules and Regulations and with respect to
the financial and other statistical and numerical information contained in the
Registration Statement or incorporated by reference therein. At the Closing
Date, the Accountants shall have furnished to you a letter, dated the date of
its delivery, which shall confirm, on the basis of a review in accordance with
the procedures set forth in the letter from the Accountants, that nothing has
come to their attention during the period from the date of the letter referred
to in the prior sentence to a date (specified in the letter) not more than three
days prior to the Closing Date which would require any change in their letter
dated the date hereof if it were required to be dated and delivered at the
Closing Date.
(j) On the Closing Date there shall have been furnished to you an
accurate certificate, dated the date of its delivery, signed by each of the
Chief Executive Officer and the Chief Financial Officer of the Company, in form
and substance satisfactory to you, to the effect that:
(i) Each signer of such certificate has carefully examined the
Registration Statement and the Prospectus (including any documents filed
under the Exchange Act and deemed to be incorporated by reference into the
Prospectus) and (A) as of the date of such certificate, such documents are
true and correct in all material respects and do not omit to state a
material fact required to be stated therein or necessary in order to make
the statements therein not untrue or misleading and (B) no event has
occurred as a result of which it is necessary to amend or supplement the
Prospectus in order to make the statements therein not untrue or misleading
in any material respect and there has been no document required to be filed
under the Exchange Act and the Exchange Act Rules and Regulations that upon
such filing would be deemed to be incorporated by reference into the
Prospectus that has not been so filed.
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<PAGE>
(ii) Each of the representations and warranties of the Company
contained in this Agreement were, when originally made, and are, at the
time such certificate is delivered, true and correct in all material
respects.
(iii) Each of the covenants required to be performed by the Company
herein on or prior to the delivery of such certificate has been duly,
timely and fully performed and each condition herein required to be
complied with by the Company on or prior to the date of such certificate
has been duly, timely and fully complied with.
(k) The Securities shall be qualified for sale in such states as
you may reasonably request, each such qualification shall be in effect and not
subject to any stop order or other proceeding on the Closing Date.
(l) The Company shall have furnished to you such certificates, in
addition to those specifically mentioned herein, as you may have reasonably
requested as to the accuracy and completeness at the Closing Date of any
statement in the Registration Statement or the Prospectus or any documents filed
under the Exchange Act and deemed to be incorporated by reference into the
Prospectus, as to the accuracy at the Closing Date of the representations and
warranties of the Company herein, as to the performance by the Company of its
obligations hereunder, or as to the fulfillment of the conditions concurrent and
precedent to your obligations hereunder.
(m) All such opinions, certificates, letters and other documents
will be in compliance with the provisions hereof only if they are reasonably
satisfactory in form and substance to you and your counsel. The Company will
furnish you with such conformed copies of such opinions, certificates, letters
and other documents as you shall reasonably request.
6. Indemnification and Contribution.
(a) The Company will indemnify and hold harmless each Underwriter,
each of the directors, officers, employees and agents of each Underwriter and
each person, if any, who controls each Underwriter within the meaning of Section
15 of the Act or Section 20 of the Exchange Act from and against any and all
losses, claims, liabilities, expenses and damages (and actions in respect
thereof) (including, but not limited to, any and all investigative, legal and
other expenses reasonably incurred in connection with, and any and all amounts
paid in settlement of, any action, suit or proceeding between any of the
indemnified parties and any indemnifying parties or between any indemnified
party and any third party, or otherwise, or any claim asserted), as and when
incurred, to which any Underwriter, or any such person, may become subject under
the Act, the Exchange Act or other Federal or state statutory law or regulation,
at common law or otherwise, insofar as such losses, claims, liabilities,
expenses or damages arise out of or are based on a breach of any representation,
warranty, agreement or covenant made by the Company in this Agreement or based
upon (i) an untrue statement or alleged untrue statement of a material fact
contained in any preliminary
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<PAGE>
prospectus, the Registration Statement or the Prospectus or any amendment or
supplement to the Registration Statement or the Prospectus or in any documents
filed under the Exchange Act and deemed to be incorporated by reference into the
Prospectus, (ii) the omission or alleged omission to state in such document a
material fact required to be stated in it or necessary to make the statements in
it not misleading or (iii) any act or failure to act or any alleged act or
failure to act by any Underwriter in connection with, or relating in any manner
to, the Securities or the offering contemplated hereby, and which is included as
part of or referred to in any loss, claim, liability, expense or damage arising
out of or based upon matters covered by clause (i) or (ii) above (provided that
the Company shall not be liable under this clause (iii) to the extent it is
finally judicially determined by a court of competent jurisdiction that such
loss, claim, liability, expense or damage resulted directly from any such acts
or failures to act undertaken or omitted to be taken by such Underwriter through
its gross negligence or willful misconduct); provided that the Company will not
be liable to the extent that such loss, claim, liability, expense or damage (A)
arises from the sale of the Securities in the public offering to any person by
an Underwriter and is based on an untrue statement or omission or alleged untrue
statement or omission made in reliance on and in conformity with information
relating to any Underwriter furnished in writing to the Company by such
Underwriter expressly for inclusion in the Registration Statement, any
preliminary prospectus or the Prospectus or (B) results solely from an untrue
statement of a material fact contained in, or the omission of a material fact
from, such preliminary prospectus, which untrue statement or omission was
completely corrected in the Prospectus (as then amended or supplemented) if the
Company shall sustain the burden of proving that the Underwriters sold
Securities to the person alleging such loss, claim, liability, expense or damage
without sending or giving, at or prior to the written confirmation of such sale,
a copy of the Prospectus (as then amended or supplemented) if the Company had
previously furnished copies thereof to the Underwriters within a reasonable
amount of time prior to such sale or such confirmation, and the Underwriters
failed to deliver the corrected Prospectus, if required by law to have so
delivered it and if delivered would have been a complete defense against the
person asserting such loss, claim, liability, expense or damage. This indemnity
agreement will be in addition to any liability that the Company might otherwise
have.
(b) Each Underwriter will indemnify and hold harmless the Company,
each person, if any, who controls the Company within the meaning of Section 15
of the Act or Section 20 of the Exchange Act, each director of the Company and
each officer of the Company who signs the Registration Statement to the same
extent as the foregoing indemnity from the Company to each Underwriter, but only
insofar as losses, claims, liabilities, expenses or damages (or actions in
respect thereof) arise out of or are based on any untrue statement or omission
or alleged untrue statement or omission made in reliance on and in conformity
with information relating to any Underwriter furnished in writing to the Company
by such Underwriter expressly for use in the Registration Statement, the
preliminary prospectus or the Prospectus. This indemnity will be in addition to
any liability that each Underwriter might otherwise have; provided, however,
that in no case shall any Underwriter be liable or responsible for any amount in
excess of the underwriting discounts and commissions received
17
<PAGE>
by such Underwriter.
(c) Any party that proposes to assert the right to be indemnified
under this Section 6 will, promptly after receipt of notice of commencement of
any action against such party in respect of which a claim is to be made against
an indemnifying party or parties under this Section 6, notify each such
indemnifying party of the commencement of such action, enclosing a copy of all
papers served, but the omission so to notify such indemnifying party will not
relieve it from any liability that it may have to any indemnified party under
the foregoing provisions of this Section 6 unless, and only to the extent that,
such omission results in the forfeiture of substantive rights or defenses by the
indemnifying party. If any such action is brought against any indemnified party
and it notifies the indemnifying party of its commencement, the indemnifying
party will be entitled to participate in and, to the extent that it elects by
delivering written notice to the indemnified party promptly after receiving
notice of the commencement of the action from the indemnified party, jointly
with any other indemnifying party similarly notified, to assume the defense of
the action, with counsel satisfactory to the indemnified party, and after notice
from the indemnifying party to the indemnified party of its election to assume
the defense, the indemnifying party will not be liable to the indemnified party
for any legal or other expenses except as provided below and except for the
reasonable costs of investigation subsequently incurred by the indemnified party
in connection with the defense. The indemnified party will have the right to
employ its own counsel in any such action, but the fees, expenses and other
charges of such counsel will be at the expense of such indemnified party unless
(i) the employment of counsel by the indemnified party has been authorized in
writing by the indemnifying party, (ii) the indemnified party has reasonably
concluded (based on advice of counsel) that there may be legal defenses
available to it or other indemnified parties that are different from or in
addition to those available to the indemnifying party, (iii) a conflict or
potential conflict exists (based on advice of counsel to the indemnified party)
between the indemnified party and the indemnifying party (in which case the
indemnifying party will not have the right to direct the defense of such action
on behalf of the indemnified party) or (iv) the indemnifying party has not in
fact employed counsel to assume the defense of such action within a reasonable
time after receiving notice of the commencement of the action, in each of which
cases the reasonable fees, disbursements and other charges of counsel will be at
the expense of the indemnifying party or parties. It is understood that the
indemnifying party or parties shall not, in connection with any proceeding or
related proceedings in the same jurisdiction, be liable for the reasonable fees,
disbursements and other charges of more than one separate firm admitted to
practice in such jurisdiction at any one time for all such indemnified party or
parties. All such fees, disbursements and other charges will be reimbursed by
the indemnifying party promptly as they are incurred. An indemnifying party
will not be liable for any settlement of any action or claim effected without
its written consent (which consent will not be unreasonably withheld). No
indemnifying party shall, without the prior written consent of each indemnified
party, settle or compromise or consent to the entry of any judgment in any
pending or threatened claim, action or proceeding relating to the matters
contemplated by this Section 6 (whether or not any indemnified party is a party
thereto), unless such settlement, compromise or consent includes an
unconditional
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<PAGE>
release of each indemnified party from all liability arising or that may arise
out of such claim, action or proceeding.
(d) In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in the foregoing
paragraphs of this Section 6 is applicable in accordance with its terms but for
any reason is held to be unavailable from the Company or the Underwriters, the
Company and the Underwriters will contribute to the total losses, claims,
liabilities, expenses and damages (including any investigative, legal and other
expenses reasonably incurred in connection with, and any amount paid in
settlement of, any action, suit or proceeding or any claim asserted, but after
deducting any contribution received by the Company from persons other than the
Underwriters, such as persons who control the Company within the meaning of the
Act, officers of the Company who signed the Registration Statement and directors
of the Company, who also may be liable for contribution) to which the Company
and any one or more of the Underwriters may be subject in such proportion as
shall be appropriate to reflect the relative benefits received by the Company on
the one hand and the Underwriters on the other. The relative benefits received
by the Company on the one hand and the Underwriters on the other shall be deemed
to be in the same proportion as the total net proceeds from the offering (before
deducting expenses) received by the Company bear to the total underwriting
discounts and commissions received by the Underwriters, in each case as set
forth in the table on the cover page of the Prospectus. If, but only if, the
allocation provided by the foregoing sentence is not permitted by applicable
law, the allocation of contribution shall be made in such proportion as is
appropriate to reflect not only the relative benefits referred to in the
foregoing sentence but also the relative fault of the Company, on the one hand,
and the Underwriters, on the other, with respect to the statements or omissions
which resulted in such loss, claim, liability, expense or damage, or action in
respect thereof, as well as any other relevant equitable considerations with
respect to such offering. Such relative fault shall be determined by reference
to whether the untrue or alleged untrue statement of a material fact or omission
or alleged omission to state a material fact relates to information supplied by
the Company or the Underwriters, the intent of the parties and their relative
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Company and the Underwriters agree that it would not
be just and equitable if contributions pursuant to this Section 6(d) were to be
determined by pro rata allocation (even if the Underwriters were treated as one
entity for such purpose) or by any other method of allocation which does not
take into account the equitable considerations referred to herein. The amount
paid or payable by an indemnified party as a result of the loss, claim,
liability, expense or damage, or action in respect thereof, referred to above in
this Section 6(d) shall be deemed to include, for purpose of this Section 6(d),
any legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 6(d), no Underwriter shall be
required to contribute any amount in excess of the underwriting discounts and
commissions received by it and no person found guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) will be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations to contribute as provided
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in this Section 6(d) are several in proportion to their respective underwriting
obligations and not joint. For purposes of this Section 6(d), any person who
controls a party to this Agreement within the meaning of the Act will have the
same rights to contribution as that party, and each officer of the Company who
signed the Registration Statement will have the same rights to contribution as
the Company, subject in each case to the provisions hereof. Any party entitled
to contribution, promptly after receipt of notice of commencement of any action
against such party in respect of which a claim for contribution may be made
under this Section 6(d), will notify any such party or parties from whom
contribution may be sought, but the omission so to notify will not relieve the
party or parties from whom contribution may be sought from any other obligation
it or they may have under this Section 6(d). No party will be liable for
contribution with respect to any action or claim settled without its written
consent (which consent will not be unreasonably withheld).
(e) The indemnity and contribution agreements contained in this
Section 6 and the representations and warranties of the Company contained in
this Agreement shall remain operative and in full force and effect regardless of
(i) any investigation made by or on behalf of the Underwriters, (ii) acceptance
of the Securities and payment therefore or (iii) any termination of this
Agreement.
7. Representations and Agreements to Survive Delivery. All
representations, warranties, agreements and covenants of the Company herein or
in certificates delivered pursuant hereto, and the agreements of the several
Underwriters contained in Section 6 hereof, shall remain operative and in full
force and effect regardless of any investigation made by or on behalf of any
Underwriter or any controlling persons, or the Company or any of its officers,
directors or any controlling persons, and shall survive (i) termination of this
Agreement and (ii) delivery of and payment for the Securities hereunder.
8. Termination. The obligations of the several Underwriters under this
Agreement may be terminated at any time on or prior to the Closing Date, by
notice to the Company from you, without liability on the part of any Underwriter
to the Company, if, prior to delivery and payment for the Securities, in your
sole judgment, (i) trading in any of the debt or equity securities of the
Company shall have been suspended by the Commission, by the NASD or by an
exchange that lists any securities of the Company or by the Nasdaq Stock Market,
(ii) trading in securities generally on the New York Stock Exchange shall have
been suspended or limited or minimum or maximum prices shall have been generally
established on such exchange, or additional material governmental restrictions,
not in force on the date of this Agreement, shall have been imposed upon trading
in securities generally by such exchange or by order of the Commission or any
court or other governmental authority, (iii) a general banking moratorium shall
have been declared by either Federal or New York State authorities or (iv) any
material adverse change in the financial or securities markets in the United
States or in political, financial or economic conditions in the United States or
any outbreak or material escalation of hostilities or declaration by the United
States of a national emergency or war or other calamity or crisis shall have
occurred the effect of any of which is such as to make it, in
20
<PAGE>
your sole judgment, impracticable or inadvisable to market the Securities on the
terms and in the manner contemplated by the Prospectus.
9. Substitution of Underwriters. If any one or more of the Underwriters
shall fail or refuse to purchase any of the Securities which it or they have
agreed to purchase hereunder, and the aggregate amount of Securities which such
defaulting Underwriter or Underwriters agreed but failed or refused to purchase
is not more than one-tenth of the aggregate amount of the Securities, the other
Underwriters shall be obligated, severally, to purchase the Securities which
such defaulting Underwriter or Underwriters agreed but failed or refused to
purchase, in the proportions which the amount of Securities which they have
respectively agreed to purchase pursuant to Section 2 bears to the aggregate
amount of Securities which all such non-defaulting Underwriters have so agreed
to purchase, or in such other proportions as the non-defaulting Underwriters may
specify; provided that in no event shall the maximum amount of Securities which
any Underwriter has become obligated to purchase pursuant to Section 2 be
increased pursuant to this Section 9 by more than one-ninth of the amount of
Securities agreed to be purchased by such Underwriter without the prior written
consent of such Underwriter. If any Underwriter or Underwriters shall fail or
refuse to purchase any Securities and the aggregate amount of Securities which
such defaulting Underwriter or Underwriters agreed but failed or refused to
purchase exceeds one-tenth of the aggregate amount of the Securities and
arrangements satisfactory to the Underwriters and the Company for the purchase
of such Securities are not made within 48 hours after such default, this
Agreement will terminate without liability on the part of any non-defaulting
Underwriter or the Company for the purchase or sale of any Securities under this
Agreement. In any such case either the non-defaulting Underwriters or the
Company shall have the right to postpone the Closing Date, but in no event for
longer than seven days, in order that the required changes, if any, in the
Registration Statement and in the Prospectus or in any other documents or
arrangements may be effected. Any action taken pursuant to this Section 9 shall
not relieve any defaulting Underwriter from liability in respect of any default
of such Underwriter under this Agreement.
10. Miscellaneous.
(a) Notice given pursuant to any of the provisions of this Agreement
shall be in writing and, unless otherwise specified, shall be mailed or
delivered (a) if to the Company, at the office of the Company, 15 River Road,
Suite 210, Wilton, Connecticut 06897, Attention: Thomas J. Sargeant, or (b) if
to the Underwriters, care of PaineWebber Incorporated, at the offices of
PaineWebber Incorporated, 1285 Avenue of the Americas, New York, New York 10019,
Attention: Corporate Real Estate Department. Any such notice shall be effective
only upon receipt. Any notice under Section 8 hereof may be made by telex or
telephone, but if so made shall be subsequently confirmed in writing.
(b) This Agreement has been and is made solely for the benefit of
the several Underwriters and the Company and of the controlling persons,
directors and officers referred
21
<PAGE>
to in Section 6, and their respective successors and assigns, and no other
person shall acquire or have any right under or by virtue of this Agreement. The
term "successors and assigns" as used in this Agreement shall not include a
purchaser, as such purchaser, of Securities from any of the several
Underwriters.
(c) Any action required or permitted to be taken by the Underwriters
under this Agreement may be taken by them jointly or by PaineWebber
Incorporated.
(d) THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE CONFLICT OF LAWS
PRINCIPLES OF SUCH STATE.
(e) This Agreement may be signed in two or more counterparts with the
same effect as if the signatures thereto and hereto were upon the same
instrument.
(f) In case any provision in this Agreement shall be invalid, illegal
or unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
(g) The Company and the Underwriters each hereby irrevocably waive
any right they may have to a trial by jury in respect of any claim based upon or
arising out of this Agreement or the transactions contemplated hereby.
(h) This Agreement may not be amended or otherwise modified or any
provision hereof waived except by an instrument in writing signed by the
Underwriters and the Company.
[signature page follows]
22
<PAGE>
Please confirm that the foregoing correctly sets forth the agreement
among the Company and you.
Very truly yours,
AVALON PROPERTIES, INC.
By: /s/ Thomas J. Sargeant
------------------------------------------
Thomas J. Sargeant
Chief Financial Officer
Confirmed as of the date first
above mentioned:
PAINEWEBBER INCORPORATED
J.P. MORGAN SECURITIES INC.
By: PAINEWEBBER INCORPORATED
By: /s/ Frederick T. Caven, Jr.
---------------------------------------
Frederick T. Caven, Jr.
Managing Director
S-1
<PAGE>
SCHEDULE A
Underwriters
- ------------
<TABLE>
<CAPTION>
Aggregate Principal Amount
of Securities to be Purchased
-----------------------------
<S> <C> <C>
PaineWebber Incorporated.......................... $ 60,000,000
J.P. Morgan Securities Inc........................ $ 40,000,000
-----------------------------
Total........................................ $100,000,000
===========
Title of Securities: 6 5/8% Notes due 2005
- -------------------
Aggregate principal amount: $100,000,000
- --------------------------
Maturity Date: January 5, 2005
- -------------
Interest Rate: 6 5/8% per annum from January 15, 1998
- -------------
Coupon Payment Dates: January 15 and July 15
- --------------------
Price to Public: 99.976% plus accrued interest from January 15, 1998
- ---------------
Underwriting Discount: 0.625%
- ---------------------
Net Price to Company: 99.351% plus accrued interest from January 15, 1998
- --------------------
Accrued Interest from
- ---------------------
January 15, 1998: $121,527.78
----------------
Gross Proceeds to be paid
- -------------------------
</TABLE>
Schedule A - 1
<PAGE>
to the Company: $99,472,527.78
--------------
Closing Date and Time: January 22, 1998, 10:00 a.m. (New York City time)
- ---------------------
Closing Location: Goodwin, Procter & Hoar LLP
- ----------------
Exchange Place, Boston MA 02109
Schedule A - 2
<PAGE>
SCHEDULE B
Subsidiaries of the Company
---------------------------
Avalon Town Green II, Inc.
Avalon Chase Ridge, Inc.
Avalon Chase Glen, Inc.
Avalon Chase Grove, Inc.
Avalon Chase Hampton II, Inc.
Avalon Chase Heritage, Inc.
Avalon Chase Lea, Inc.
Lexington Ridge-Avalon, Inc.
Avalon Town Meadows, Inc.
Avalon Town View, Inc.
Avalon 4100 Massachusetts Avenue, Inc.
Town Cove Jersey City Urban Renewal, Inc.
Town Cove Jersey City Urban Renewal II, Inc.
Avalon Transactions, Inc.
Avalon Decoverly, Inc.
Avalon Lake Arbor, Inc.
Avalon Commons, Inc.
Avalon Fairway II, Inc.
Avalon Collateral, Inc.
Avalon Ballston II, Inc.
4100 Massachusetts Avenue Associates, L.P.
Avalon Lake Arbor Associates L.P.
Avalon Decoverly Associates L.P.
Bronxville West L.L.C.
Town Grove L.L.C.
Town Close Associates L.P.
Smithtown Galleria Associates Limited Partnership
Avalon Ballston II Limited Partnership
Avalon Oaks, Inc.
Avalon DownREIT V, Inc.
Avalon DownREIT V, L.P.
Schedule B - 1
<PAGE>
EXHIBIT A
Form of Opinion of
Counsel to the Company
----------------------
In rendering the following opinion, counsel may rely, to the extent
they deem such reliance proper, on the opinions (in form and substance
reasonably satisfactory to Underwriters' counsel) of other counsel reasonably
acceptable to Underwriters' counsel as to matters governed by the laws of
jurisdictions other than the United States, and as to matters of fact, upon
certificates of officers of the Company and of government officials; provided
that such counsel shall state that the opinion of any other counsel is in form
satisfactory to such counsel and, in such counsel's opinion, such counsel and
the Underwriters are justified in relying on such opinions of other counsel.
Copies of all such opinions and certificates shall be furnished to counsel to
the Underwriters on the Closing Date.
* * * *
Whenever our opinion is indicated to be based on "our knowledge," it
should be understood that during the course of our representation of the Company
we have not undertaken any independent investigation to determine the existence
or absence of facts. The words "our knowledge" and similar language used in
certain of the opinions expressed below are limited to the knowledge of the
lawyers within our firm who have had responsibility for our work on the
transactions contemplated by the Underwriting Agreement or who have had
responsibility for matters covered by the opinions enumerated below.
The opinions expressed below are qualified to the extent that (i) the
validity or enforceability of any provision of any agreement, instrument or
document or any rights granted thereunder may be subject to or affected by any
bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium or
similar law relating to or affecting the rights of creditors generally, (ii) the
remedy of specific performance or any other equitable remedy may be unavailable
in any jurisdiction or may be withheld as a matter of judicial discretion, (iii)
equitable principles may be applied in construing or enforcing the provisions of
any agreement, instrument or document (regardless of whether enforcement is
sought in a proceeding in equity or at law) and (iv) applicable federal and
state securities laws and public policy may limit the application of provisions
relating to indemnification and contribution with respect to securities laws
matters.
You have not asked us to pass in this opinion upon the power and
authority of
A - 1
<PAGE>
the Underwriters to enter into the Underwriting Agreement or the Pricing
Agreement or to effect the transactions contemplated thereby or as to the
disclosure in the Prospectus or Registration Statement of information relating
to the Underwriters. Accordingly, for the purposes of this opinion, we have
assumed that the Underwriters have all requisite power and authority and have
taken all necessary corporate and other action to enter into the Underwriting
Agreement and the Pricing Agreement and to effect such transactions, and we do
not express any opinion herein as to the disclosure or non-disclosure in the
Prospectus, the Registration Statement or any other document of any information
relating to the Underwriters.
In rendering the opinions expressed in the first sentence of numbered
paragraph 1 below as to valid existence of the Company, we have relied solely
upon certificates of public officials and of the Company and our review of the
corporate records of the actions of the board of directors and the stockholders
of the Company. In rendering the opinions expressed in the second sentence of
numbered paragraph 1 below as to the due qualification or registration of the
Company, we have relied solely upon certificates of public officials and of the
Company.
In rendering the opinions expressed in the first sentence of numbered
paragraph 2 below as to the valid existence of the Subsidiaries, we have relied
solely upon certificates of public officials and of the Company and our review
of the corporate or partnership records of the Subsidiaries, as applicable. In
rendering the opinions expressed in the second sentence of numbered paragraph 2
below as to the due qualification or registration of the Subsidiaries, we have
relied solely upon certificates of public officials and of the Company.
In rendering our opinions expressed in numbered paragraph 7 below as
to the effectiveness of the Registration Statement and the absence of a stop
order or proceedings instituted or threatened by the Commission with respect
thereto, we have relied solely upon oral telephonic advice from members of the
Commission's staff.
In rendering the opinions expressed below, we express no opinion other
than as to the laws of the United States and the Commonwealth of Massachusetts
and the General Corporation Law of the State of Maryland. To the extent that
any other laws govern any of the matters as to which we express an opinion
herein, we have assumed, without independent investigation, that the laws of
such jurisdiction are identical to those of the Commonwealth of Massachusetts,
and we express no opinion as to whether such assumption is reasonable or
correct.
Based on and subject to the foregoing, we are of the opinion that:
1. The Company has been duly organized and is validly existing as a
corporation in good standing under the laws of the State of Maryland. The
Company is duly qualified or
A - 2
<PAGE>
registered as a foreign corporation to transact business and is in good standing
in the States of Connecticut, Illinois, Indiana, Michigan, Minnesota, Missouri,
New Jersey, New York and Rhode Island, and the Commonwealths of Massachusetts,
Pennsylvania and Virginia and the District of Columbia. The Company has full
corporate power and authority to own, lease and operate its properties, to
conduct the business in which it is engaged or proposes to engage as described
in the Registration Statement and Prospectus and to enter into and perform its
obligations under the Underwriting Agreement and the Pricing Agreement.
2. Each Subsidiary is a corporation validly existing as a limited
partnership, corporation or limited liability company, as the case may be, in
good standing under the laws of its state of organization or formation as set
forth on Exhibit A hereto. Each Subsidiary is duly qualified or registered as a
---------
foreign corporation, foreign limited liability company or foreign partnership,
as the case may be, to transact business and is in good standing in each
jurisdiction listed in Exhibit A hereto opposite such Subsidiary's name. Each
---------
Subsidiary has corporate or partnership power, as the case may be, and authority
to own, lease and operate its properties and to conduct its business as
described in the Registration Statement and Prospectus. Except as disclosed in
the Registration Statement with respect to the Subsidiaries and other
partnerships and joint ventures of the Company, the Company owns no capital
stock or other beneficial interest in any corporation, partnership, joint
venture or other business entity.
3. The authorized and outstanding capital stock of the Company is as set
forth in the Registration Statement and Prospectus, and all of the issued and
outstanding shares of common stock, par value $.01 per share, Series A
Cumulative Redeemable Preferred Stock, par value $.01 per share, and Series B
Cumulative Redeemable Preferred Stock, par value $.01 per share, of the Company
have been duly authorized and are validly issued, fully paid and nonassessable.
4. (i) The Securities have been duly authorized, executed and delivered
by the Company and, when duly authenticated in accordance with the terms of the
Indenture and delivered to and paid for by the Underwriters in accordance with
the terms of the Underwriting Agreement, will constitute valid and binding
obligations of the Company entitled to the benefits provided by the Indenture
and enforceable against the Company in accordance with their terms; and the form
of the Securities and the terms thereof have been established in conformity with
the provisions of the Indenture;
(ii) the Indenture has been duly authorized, executed and delivered
by the Company and constitutes a valid and binding agreement of the Company
enforceable against the Company in accordance with its terms;
(iii) the Indenture has been duly qualified under the TIA;
A - 3
<PAGE>
(iv) the Indenture and the Securities conform in all material
respects to the descriptions thereof in the Registration Statement and the
Prospectus.
5. The Underwriting Agreement has been duly authorized, executed and
delivered by the Company.
6. The execution and delivery of the Underwriting Agreement and the
Indenture, the performance by the Company of its obligations set forth therein
and the consummation of the transactions therein contemplated, (i) do not and
will not result in the creation of any lien, charge or encumbrance upon any
assets of the Company or any Subsidiary and (ii) do not and will not conflict
with or result in a breach or violation of any of the terms or provisions of, or
constitute a default or result in the acceleration of any obligation under: (a)
the Restated Articles or Restated By-Laws; (b) the organizational documents of
any Subsidiary; (c) any agreement or instrument filed as an exhibit to the
Registration Statement or incorporated therein by reference to which the Company
or any Subsidiary is a party or by which any of them or any of their respective
assets are bound; or (d) any law, rule, regulation, or to our knowledge, any
judgment, order or administrative decree of any court or other governmental body
applicable to the business or properties of the Company or any Subsidiary,
except that we express no opinion under this paragraph 6 as to the Underwriting
Agreement or with respect to the securities or blue sky laws of any jurisdiction
other than the United States, it being understood that our opinion with respect
to the federal securities laws of the United States in this paragraph 6 is
limited to the performance by the Company of its contractual obligations under
the Underwriting Agreement and excludes any matters covered by the statements
herein following numbered paragraph 14 below.
7. The Registration Statement as filed on December 17, 1997, was declared
effective under the 1933 Act, and the post-effective amendment to the
Registration Statement filed under Rule 462(b) became effective in accordance
with the provisions of Rule 462(b); the Prospectus has been filed as required by
Section 4(a) of the Underwriting Agreement; and, to the best of our knowledge
and information, no stop order suspending the effectiveness of the Registration
Statement has been issued under the 1933 Act or proceedings therefor initiated
or threatened by the Commission.
8. The Registration Statement and the Prospectus, as of their respective
effective or issue dates, complied as to form in all material respects with the
requirements of the 1933 Act and the rules and regulations promulgated
thereunder, it being understood, however, that no opinion is rendered with
respect to the financial statements, schedules and other financial or
statistical data included or incorporated by reference in the Registration
Statement or the Prospectus.
9. Each document filed pursuant to the Securities Exchange Act of 1934,
as amended (the "1934 Act"), and incorporated or deemed to be incorporated by
reference in the
A - 4
<PAGE>
Registration Statement and Prospectus complied when so filed as to form in all
material respects with the requirements of the 1934 Act and the rules and
regulations promulgated thereunder, it being understood, however, that no
opinion is rendered with respect to the financial statements, schedules and
other financial or statistical data included or incorporated by reference
therein.
10. To our knowledge, no authorization, approval, consent or order of, or
filing with, any court or governmental authority or agency is required for the
consummation of the transactions contemplated by the Underwriting Agreement in
connection with the issuance and sale of the Securities by the Company, except
such as have been obtained under the 1933 Act and the 1934 Act, and such as may
be required under state securities laws or New York real estate syndication law,
or the by-laws of the National Association of Securities Dealers, Inc. in
connection with the purchase and distribution of the Securities by the
Underwriters.
11. Neither the Company nor any Subsidiary is an investment company within
the meaning of the Investment Company Act of 1940, as amended.
12. The descriptions in the Registration Statement and Prospectus of
statutes, legal and governmental proceedings, contracts and other documents are
accurate in all material respects and fairly present the information required to
be shown therein; and we do not know of any statutes or legal or governmental
proceedings required to be described in the Prospectus that are not described as
required, or of any contracts or documents of a character required to be
described in the Registration Statement or Prospectus or to be filed as exhibits
to the Registration Statement that are not described and filed as required.
13. The information in the Prospectus under the headings "Description of
Debt Securities" and "Description of Notes," to the extent that it constitutes
matters of law or legal conclusions (other than with respect to the laws of any
state other than the Commonwealth of Massachusetts and the Maryland General
Corporation Law, as to which we express no opinion), has been reviewed by us and
is correct in all material respects.
14. Since the commencement of its taxable year ended December 31, 1993,
the Company has been organized and operated in conformity with the requirements
for qualification as a real estate investment trust (a "REIT") pursuant to
Sections 856 through 860 of the Internal Revenue Code of 1986, as amended (the
"Code"). The form of organization of the Company, its current operation and its
contemplated operations as described in the Prospectus will enable the Company
to continue to meet the requirements for qualification as a REIT under the Code.
The description of law and legal conclusions contained in the Prospectus under
the captions "Federal Income Tax Considerations" and "Certain Federal Income Tax
Considerations" are correct in all material respects, and the discussion therein
fairly summarizes the federal income tax considerations that are material to a
holder of the Securities.
A - 5
<PAGE>
The limitations inherent in the independent verification of factual
matters and the character of determinations involved in the registration process
are such that we are not passing upon and do not assume any responsibility for
the accuracy, completeness or fairness of the statements contained in the
Registration Statement, the Prospectus or the documents incorporated therein by
reference and we make no representation that we have independently verified the
accuracy, completeness or fairness of such statements. Without limiting the
foregoing, we assume no responsibility for, and have not independently verified,
the accuracy, completeness or fairness of the financial statements or notes
thereto, financial schedules and other financial or statistical data included or
incorporated by reference in the Registration Statement and the Prospectus, and
we have not examined the accounting, financial or statistical records from which
such statements and notes, schedules and data are derived. However, in the
course of our acting as counsel to the Company in connection with the
preparation of the Registration Statement and the Prospectus and the public
offering of the Securities we participated in conferences and telephone
conversations with representatives of the Company, Coopers and Lybrand LLP,
accountants for the Company, your representatives and representatives of
O'Melveny & Myers LLP, your counsel, during which conferences and conversations
the contents of the Registration Statement and the Prospectus and related
matters were discussed.
Based on our participation in the above-mentioned conferences and
conversations, our understanding of applicable law and the experience we have
gained in our practice thereunder, we advise you that:
(a) No facts have come to our attention which cause us to believe
that the Registration Statement (excluding the financial statements or
notes thereto, financial schedules and other financial or statistical data
contained or incorporated by reference therein and the Trustee's Statement
of Eligibility and Qualification on Form T-1 (the "T-1"), as to which we
make no statement), at the time it became effective, contained an untrue
statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading; and
(b) No facts have come to our attention which cause us to believe
that the Prospectus (excluding the financial statements or notes thereto,
financial schedules and other financial or statistical data contained or
incorporated by reference therein and the T-1, as to which we make no
statement), as of its date or the date hereof, contained or contains an
untrue statement of a material fact or omitted or omits to state a material
fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
This opinion is based upon currently existing statutes, rules and
regulations and judicial decisions and is rendered as of the date hereof, and we
disclaim any obligation to
A - 6
<PAGE>
advise you of any change in any of the foregoing sources of law or subsequent
developments in law or changes in facts or circumstances which might affect any
matters or opinions set forth herein.
A - 7
<PAGE>
EXHIBIT A to EXHIBIT A
Subsidiaries of the Company
---------------------------
<TABLE>
<CAPTION>
Jurisdiction Foreign
of Organization -------
Name or Formation Qualification
---- ------------ -------------
<S> <C> <C>
Avalon Town Green II, Inc. MD NY
Avalon Chase Ridge, Inc. MD
Avalon Chase Glen, Inc. MD
Avalon Chase Grove, Inc. MD
Avalon Chase Hampton II, Inc. MD VA
Avalon Chase Heritage, Inc. MD VA
Avalon Chase Lea, Inc. MD
Lexington Ridge-Avalon, Inc. MD MA
Avalon Town Meadows, Inc. MD MA
Avalon Town View, Inc. MD NY
Avalon 4100 Massachusetts Avenue, Inc. MD DC
Town Cove Jersey City Urban Renewal, Inc. NJ
Town Cove Jersey City Urban Renewal II, Inc. NJ
Avalon Transactions, Inc. CT
Avalon Decoverly, Inc. MD
Avalon Lake Arbor, Inc. MD
Avalon Commons, Inc. MD NY
Avalon Fairway II, Inc. MD
Avalon Collateral, Inc. MD VA
Avalon Ballston II, Inc. MD VA
4100 Massachusetts Avenue Associates, L.P. DC
Avalon Lake Arbor Associates L.P. MD
Avalon Decoverly Associates L.P. VA MD
Bronxville West L.L.C. CT
Town Grove L.L.C. CT
Town Close Associates L.P. CT
Smithtown Galleria Associates Limited
Partnership CT NY
Avalon Ballston II Limited Partnership DE
Avalon Oaks, Inc. MD MA
Avalon DownREIT V, Inc. MD IL
Avalon DownREIT V, L.P. DE IL
</TABLE>
Exhibit A to Exhibit A
<PAGE>
EXHIBIT 4.1
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITORY OR A
NOMINEE THEREOF. THIS SECURITY MAY NOT BE TRANSFERRED TO, OR REGISTERED OR
EXCHANGED FOR SECURITIES REGISTERED IN THE NAME OF, ANY PERSON OTHER THAN THE
DEPOSITORY OR A NOMINEE THEREOF AND NO SUCH TRANSFER MAY BE REGISTERED, EXCEPT
IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND MAY NOT BE
TRANSFERRED EXCEPT AS A WHOLE BY DTC TO A NOMINEE OF DTC OR ANOTHER NOMINEE OF
DTC OR BY DTC OR ITS NOMINEE TO A SUCCESSOR DEPOSITORY OR ITS NOMINEE.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE COMPANY (AS
DEFINED BELOW) OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT,
AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH
OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY
PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
AVALON PROPERTIES, INC.
6 5/8% NOTE DUE 2005
REGISTERED PRINCIPAL AMOUNT
No.: R-001 $100,000,000
CUSIP No.: 053469 AD 4
AVALON PROPERTIES, INC., a corporation organized and existing under the
laws of the State of Maryland (hereinafter called the "Company," which term
includes any successor corporation under the Indenture hereinafter referred to),
for value received, hereby promises to pay to CEDE & Co., or registered assigns,
upon presentation, the principal sum of One Hundred Million Dollars
($100,000,000) on January 15, 2005 at the office or agency of the Company
referred to below, and to pay interest thereon from January 15, 1998, or from
the most recent Interest Payment Date to which interest has been paid or duly
provided for, semi-annually in arrears on January 15 and July 15 in each year,
commencing July 15, 1998,
<PAGE>
at the rate of 6 5/8% per annum, until the entire principal hereof is paid or
made available for payment. The interest so payable, and punctually paid or duly
provided for on any Interest Payment Date will, as provided for in the
Indenture, be paid to the person in whose name this Security (or one or more
Predecessor Securities) is registered at the close of business on the Regular
Record Date for such interest which shall be the December 31 or June 30 (whether
or not a Business Day), as the case may be, next preceding such Interest Payment
Date. Any such interest not so punctually paid or duly provided for shall
forthwith cease to be payable to the Holder on such Regular Record Date, and may
either be paid to the Person in whose name this Security (or one or more
Predecessor Securities) is registered at the close of business on a Special
Record Date for the payment of such Defaulted Interest to be fixed by the
Trustee, notice whereof shall be given to Holders of Securities of this series
not more than 15 days and not less than 10 days prior to such Special Record
Date, or may be paid at any time in any other lawful manner not inconsistent
with the requirements of any securities exchange on which the Securities of this
Series may be listed, and upon such notice as may be required by such exchange,
all as more fully provided in the Indenture.
Payment of the principal of, or Make-Whole Amount, if any, and interest on,
the Securities will be made to The Depository Trust Company or its nominee in
such coin or currency of the United States of America as at the time of payment
is legal tender for payment of public and private debts; provided, however, that
at the option of the Company payment of interest may be made by (i) check mailed
to the address of the Person entitled thereto as such address shall appear in
the Security Register or (ii) by wire transfer of funds to an account of the
Person entitled thereto maintained within the United States. The Company is not
required to maintain an office or agency for such payment in the City of New
York.
Securities of this series may be redeemed at any time at the option of the
Company, in whole or in part, upon notice of not more than 60 nor less than 30
days prior to the Redemption Date, at a redemption price equal to the sum of (i)
the principal amount of the Securities being redeemed plus accrued interest
thereon to the Redemption Date and (ii) the Make-Whole Amount, if any, with
respect to such Securities.
REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS SECURITY SET
FORTH ON THE REVERSE HEREOF, WHICH FURTHER PROVISIONS SHALL FOR ALL PURPOSES
HAVE THE SAME EFFECT AS IF SET FORTH IN THIS PLACE.
Unless the Certificate of Authentication hereon has been executed by or on
behalf of the Trustee by manual signature, this Security shall not be entitled
to any benefit under the Indenture or be valid or obligatory for any purpose.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
2
<PAGE>
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
AVALON PROPERTIES, INC.
Dated: January 22, 1998 By: /s/ Charles H. Berman
-----------------------
Name: Charles H. Berman
Title: President
Attest:
By: /s/ Joanne M. Lockridge
-------------------------------------
Name: Joanne M. Lockridge
Title: Assistant Secretary
[SEAL]
TRUSTEE'S CERTIFICATE OF AUTHENTICATION:
This is one of the Securities of the series designated therein referred to
in the within-mentioned Indenture.
THE BANK OF NEW YORK,
as Trustee
By: /s/ MaryBeth Lewicki Dated: January 22, 1998
-----------------------------
Authorized Officer
3
<PAGE>
AVALON PROPERTIES, INC.
6 5/8% NOTE DUE 2005
This Security is one of a duly authorized issue of securities of the Company
(herein called the "Securities"), issued and to be issued in one or more series
under an Indenture, dated as of September 18, 1995, as supplemented by the First
Supplemental Indenture, dated as of September 18, 1995, each between the Company
and Signet Trust Company, and the Second Supplemental Indenture, dated as of
December 16, 1997, and Third Supplemental Indenture, dated as of January 22,
1998 (as so supplemented, herein called the "Indenture"), each between the
Company and The Bank of New York, a banking association organized under the laws
of the State of New York, as successor trustee (herein called the "Trustee,"
which term includes any successor trustee under the Indenture with respect to
the series of which this Security is a part), to which Indenture and all
indentures supplemental thereto reference is hereby made for a statement of the
respective rights, limitations of rights, duties and immunities thereunder of
the Company, the Trustee and the Holders of the Securities and of the terms upon
which the Securities are, and are to be, authenticated and delivered. This
Security is one of the series designated on the first page hereof, limited in
aggregate principal amount to $100,000,000.
"Make-Whole Amount" means, in connection with any optional redemption or
accelerated payment of any Security, the excess, if any, of (i) the aggregate
present value as of the date of such redemption or accelerated payment of each
dollar of principal being redeemed or paid and the amount of interest (exclusive
of interest accrued to the date of redemption or accelerated payment) that would
have been payable in respect of such dollar if such redemption or accelerated
payment had not been made, determined by discounting, on a semi-annual basis,
such principal and interest at the Reinvestment Rate (determined on the third
Business Day preceding the date such notice of redemption is given or
declaration of acceleration is made) from the respective dates on which such
principal and interest would have been payable if such redemption or accelerated
payment had not been made, over (ii) the aggregate principal amount of the
Securities being redeemed or paid.
"Reinvestment Rate" means .25% (twenty-five one hundredths of one percent)
plus the arithmetic mean of the yields under the respective headings "This Week"
and "Last Week" published in the Statistical Release under the caption "Treasury
Constant Maturities" for the maturity (rounded to the nearest month)
corresponding to the remaining life to maturity, as of the payment date of the
principal being redeemed or paid. If no maturity exactly corresponds to such
maturity, yields for the two published maturities most closely corresponding to
such maturity shall be calculated pursuant to the immediately preceding sentence
and the Reinvestment Rate shall be interpolated or extrapolated from such yields
on a straight-line basis, rounding in each of such relevant periods to the
nearest month. For purposes of calculating the Reinvestment Rate, the most
recent Statistical Release published prior to the
4
<PAGE>
date of determination of the Make-Whole Amount shall be used.
"Statistical Release" means the statistical release designated "H.15(519)" or
any successor publication which is published weekly by the Federal Reserve
System and which establishes yields on actively traded United States government
securities adjusted to constant maturities or, if such statistical release is
not published at the time of any determination under the Indenture, then such
other reasonably comparable index which shall be designated by the Company.
The Indenture contains provisions for defeasance at any time of (a) the entire
indebtedness of the Company on this Security and (b) certain restrictive
covenants and the related defaults and Events of Default applicable to the
Company, in each case, upon compliance by the Company with certain conditions
set forth in the Indenture, which provisions apply to this Security.
If any Event of Default with respect to Securities of this series shall occur
and be continuing, the principal of, and the Make-Whole Amount, if any, on, the
Securities of this series may be declared due and payable in the manner and with
the effect provided in the Indenture.
As provided in and subject to the provisions of the Indenture, the Holder of
this Security shall not have the right to institute any proceeding with respect
to the Indenture or for the appointment of a receiver or trustee or for any
other remedy thereunder, unless such Holder shall have previously given the
Trustee written notice of a continuing Event of Default with respect to the
Securities of this series, the Holders of not less than 25% in principal amount
of the Securities of this series at the time Outstanding shall have made written
request to the Trustee to institute proceedings in respect of such Event of
Default as Trustee, offered the Trustee reasonable indemnity, and the Trustee
shall not have received from the Holders of a majority in principal amount of
Securities of this series at the time Outstanding a direction inconsistent with
such request, and the Trustee shall have failed to institute any such
proceeding, for 60 days after receipt of such notice, request and offer of
indemnity. The foregoing shall not apply to any suit instituted by the Holder
of this Security for the enforcement of any payment of principal hereof (and
premium or Make-Whole Amount, if any) or any interest on and any Additional
Amounts in respect thereof on or after the respective due dates expressed
herein.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Securities of each series to be
affected under the Indenture at any time by the Company and the Trustee with the
consent of the Holders of not less than a majority in principal amount of the
Securities of each series at the time Outstanding affected thereby. The
Indenture also contains provisions permitting the Holders of specified
percentages in principal amount of the Securities of each series at the time
Outstanding, on behalf of the Holders of all Securities of such series, to waive
compliance by the Company with certain provisions of the Indenture and
5
<PAGE>
certain past defaults under the Indenture and their consequences. Any such
consent or waiver by the Holder of this Security shall be conclusive and binding
upon such Holder and upon all future Holders of this Security and of any
Security issued upon the registration of transfer hereof or in exchange herefor
or in lieu hereof, whether or not notation of such consent or waiver is made
upon this Security.
No reference herein to the Indenture and no provision of this Security or of
the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of, Make-Whole Amount, if any,
on, and interest on this Security at the times, place and rate, and in the coin
or currency, herein prescribed.
As provided in the Indenture and subject to certain limitations therein set
forth, the transfer of this Security is registrable in the Security Register,
upon surrender of this Security for registration of transfer at the office or
agency of the Company in any Place of Payment where the principal of, Make-Whole
Amount, if any, on, and interest on this Security are payable, duly endorsed by,
or accompanied by a written instrument of transfer in form satisfactory to the
Company and the Security Registrar duly executed by, the Holder hereof or his
attorney duly authorized in writing, and thereupon one or more new Securities of
this series, of authorized denominations and for the same aggregate principal
amount, will be issued to the designated transferee or transferees.
The Securities of this series are issuable only in registered form without
coupons in denominations of $1,000 and any integral multiple thereof. As
provided in the Indenture and subject to certain limitations therein set forth,
Securities of this series are exchangeable for a like aggregate principal amount
of Securities of this series of a different authorized denomination, as
requested by the Holder surrendering the same.
No service charge shall be made for any such registration of transfer or
exchange, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Security for registration of transfer, the
Company, the Trustee and any agent of the Company or the Trustee may treat the
Person in whose name this Security is registered as the owner hereof for all
purposes, whether or not this Security be overdue, and neither the Company, the
Trustee nor any such agent shall be affected by notice to the contrary.
No recourse under or upon any obligation, covenant or agreement contained in
the Indenture or in this Security, or because of any indebtedness evidenced
thereby, shall be had against any promoter, as such or, against any past,
present or future stockholder, officer or director, as such, of the Company or
of any successor, either directly or through the Company or any successor, under
any rule of law, statute or constitutional provision or by the enforcement of
any assessment or by any legal or equitable proceeding or otherwise, all such
6
<PAGE>
liability being expressly waived and released by the acceptance of this Security
by the Holder thereof and as part of the consideration for the issue of the
Securities of this series.
All terms used in this security which are defined in the Indenture shall have
the meanings assigned to them in the Indenture.
THE INDENTURE AND THE SECURITIES, INCLUDING THIS SECURITY, SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
Pursuant to a recommendation promulgated by the Committee on Uniform Security
Identification Procedures, the Company has caused "CUSIP" numbers to be printed
on the Securities of this series as convenience to the Holders of such
Securities. No representation is made as to the correctness or accuracy of such
CUSIP numbers as printed on the Securities, and reliance may be placed only on
the other identification numbers printed hereon.
[REMAINDER OF PAGE INTENTIONALLY BLANK]
7
<PAGE>
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of this
instrument, shall be construed as though they were written out in full according
to applicable laws or regulations:
<TABLE>
<S> <C> <C>
TEN COMM -- as tenants in common UNIF GIFT MIN ACT --
TEN ENT -- as tenants by the entireties ___________ Custodian _________
JT TEN -- as joint tenants with right of (Cust) (Minor)
survivorship and not as tenants in Under Uniform Gifts to Minors Act__________________
common (State)
</TABLE>
Additional abbreviations may also be used though not in the above list.
---------------------------------------------------
Social Security or taxpayer I.D. or other identifying number of assignee:
-------
- ------------------------------------------------------------
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto
- --------------------------------------------------------------------------------
(name and address of assignee)
- -------------------------
the within Note and all rights thereunder, hereby irrevocably constituting and
appointing_____________________________________, attorney to transfer said Note
on the books kept for registration thereof, with full power of substitution in
the premises.
Dated:
---------------------------------
-------------------------------------
8
<PAGE>
EXHIBIT 4.5
AVALON PROPERTIES, INC.
AND
THE BANK OF NEW YORK
------------------------------
Third Supplemental Indenture
Dated as of January 22, 1998
------------------------------
Supplemental to Indenture dated as of
September 18, 1995
<PAGE>
THIRD SUPPLEMENTAL INDENTURE
THIRD SUPPLEMENTAL INDENTURE, dated as of January 22, 1998, between Avalon
Properties, Inc., a Maryland corporation (hereinafter called the "Company"),
having its principal office at 15 River Road, Wilton, Connecticut 06897, and The
Bank of New York, a New York banking corporation, as successor to Signet Trust
Company (hereinafter called the "Trustee"), having a Corporate Trust Office at
101 Barclay Street, Floor 21 West, New York, New York 10286, as Trustee under
the Indenture (as hereinafter defined).
RECITALS
The Company and Signet Trust Company, as trustee, have heretofore entered
into an Indenture and First Supplemental Indenture, each dated as of September
18, 1995, and the Company and The Bank of New York, as successor trustee, have
heretofore entered into a Second Supplemental Indenture, dated as of December
16, 1997 (hereinafter called the "Indenture"), providing for the issuance by the
Company from time to time of its senior debt securities evidencing its unsecured
and unsubordinated indebtedness (the "Securities");
The Company desires to issue senior debt securities under the Indenture in
the form of, and having the terms set forth in, Exhibit A to this Third
---------
Supplemental Indenture, the terms of which are incorporated herein and made a
part hereof, and has duly authorized the execution and delivery of this Third
Supplemental Indenture to modify the Indenture as hereinafter described.
NOW, THEREFORE, THIS THIRD SUPPLEMENTAL INDENTURE WITNESSETH:
For and in consideration of the premises, the Company and the Trustee
covenant and agree, for the equal and proportionate benefit of all Holders of
the Securities, as follows:
ARTICLE ONE
Section 1.01. A series of the Registered Securities shall be substantially in
the form of Exhibit A hereto.
---------
ARTICLE TWO
Section 2.01. All capitalized terms which are used herein and not otherwise
defined herein are defined in the Indenture and are used herein with the same
meanings as in the Indenture.
Section 2.02. This Third Supplemental Indenture shall be effective as of the
date first above written and upon the execution and delivery hereof by each of
the parties hereto.
Section 2.03. This Third Supplemental Indenture shall be governed by, and
construed in accordance with, the laws of the State of New York.
<PAGE>
Section 2.04. This Third Supplemental Indenture may be executed in any number
of counterparts, each of which so executed shall be deemed to be an original,
but all such counterparts shall together constitute but one and the same
instrument.
[Remainder of Page Intentionally Left Blank]
2
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Third Supplemental
Indenture to be duly executed by their respective officers hereunto duly
authorized, all as of the day and year first above written.
AVALON PROPERTIES, INC.
By: /s/ Thomas J. Sargeant Dated: January 22, 1998
--------------------------------
Name: Thomas J. Sargeant
Title: Chief Financial Officer and Treasurer
Attest:
THE BANK OF NEW YORK, as Trustee
By: /s/ MaryBeth Lewicki Dated: January 22, 1998
--------------------------------
Name: MaryBeth Lewicki
Title: Assistant Vice President
<PAGE>
ACKNOWLEDGMENT
STATE OF CONNECTICUT)
) ss:
COUNTY OF FAIRFIELD)
On January 22, 1998, before me personally came Thomas J. Sargeant, to me known,
who, being by me duly sworn, did depose and say that he is the Chief Financial
Officer and Treasurer of AVALON PROPERTIES, INC., one of the parties described
in and which executed the foregoing instrument, and that he signed his name
thereto by authority of the Board of Directors.
[Notarial Seal]
/s/ Beth Meryl Deitz
- --------------------------------------
Notary Public
Commission Expires
[BETH MERYL DEITZ
NOTARY PUBLIC
MY COMMISSION EXPIRES APRIL 30, 1999]
<PAGE>
EXHIBIT A
---------
[Form of Face of Note]
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITORY OR A
NOMINEE THEREOF. THIS SECURITY MAY NOT BE TRANSFERRED TO, OR REGISTERED OR
EXCHANGED FOR SECURITIES REGISTERED IN THE NAME OF, ANY PERSON OTHER THAN THE
DEPOSITORY OR A NOMINEE THEREOF AND NO SUCH TRANSFER MAY BE REGISTERED, EXCEPT
IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND MAY NOT BE
TRANSFERRED EXCEPT AS A WHOLE BY DTC TO A NOMINEE OF DTC OR ANOTHER NOMINEE OF
DTC OR BY DTC OR ITS NOMINEE TO A SUCCESSOR DEPOSITORY OR ITS NOMINEE.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE COMPANY (AS
DEFINED BELOW) OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT,
AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH
OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY
PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
AVALON PROPERTIES, INC.
6 5/8% NOTE DUE 2005
REGISTERED PRINCIPAL AMOUNT
No.: R-001 $100,000,000
CUSIP No.: 053469 AD 4
AVALON PROPERTIES, INC., a corporation organized and existing under the
laws of
<PAGE>
the State of Maryland (hereinafter called the "Company," which term includes any
successor corporation under the Indenture hereinafter referred to), for value
received, hereby promises to pay to CEDE & Co., or registered assigns, upon
presentation, the principal sum of One Hundred Million Dollars ($100,000,000) on
January 15, 2005 at the office or agency of the Company referred to below, and
to pay interest thereon from January 15, 1998, or from the most recent Interest
Payment Date to which interest has been paid or duly provided for, semi-annually
in arrears on January 15 and July 15 in each year, commencing July 15, 1998, at
the rate of 6 5/8% per annum, until the entire principal hereof is paid or made
available for payment. The interest so payable, and punctually paid or duly
provided for on any Interest Payment Date will, as provided for in the
Indenture, be paid to the person in whose name this Security (or one or more
Predecessor Securities) is registered at the close of business on the Regular
Record Date for such interest which shall be the December 31 or June 30 (whether
or not a Business Day), as the case may be, next preceding such Interest Payment
Date. Any such interest not so punctually paid or duly provided for shall
forthwith cease to be payable to the Holder on such Regular Record Date, and may
either be paid to the Person in whose name this Security (or one or more
Predecessor Securities) is registered at the close of business on a Special
Record Date for the payment of such Defaulted Interest to be fixed by the
Trustee, notice whereof shall be given to Holders of Securities of this series
not more than 15 days and not less than 10 days prior to such Special Record
Date, or may be paid at any time in any other lawful manner not inconsistent
with the requirements of any securities exchange on which the Securities of this
Series may be listed, and upon such notice as may be required by such exchange,
all as more fully provided in the Indenture.
Payment of the principal of, or Make-Whole Amount, if any, and interest on,
the Securities will be made to The Depository Trust Company or its nominee in
such coin or currency of the United States of America as at the time of payment
is legal tender for payment of public and private debts; provided, however, that
at the option of the Company payment of interest may be made by (i) check mailed
to the address of the Person entitled thereto as such address shall appear in
the Security Register or (ii) by wire transfer of funds to an account of the
Person entitled thereto maintained within the United States. The Company is not
required to maintain an office or agency for such payment in the City of New
York.
Securities of this series may be redeemed at any time at the option of the
Company, in whole or in part, upon notice of not more than 60 nor less than 30
days prior to the Redemption Date, at a redemption price equal to the sum of (i)
the principal amount of the Securities being redeemed plus accrued interest
thereon to the Redemption Date and (ii) the Make-Whole Amount, if any, with
respect to such Securities.
REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS SECURITY SET
FORTH ON THE REVERSE HEREOF, WHICH FURTHER PROVISIONS SHALL FOR ALL PURPOSES
HAVE THE SAME EFFECT AS IF SET FORTH IN THIS
2
<PAGE>
PLACE.
Unless the Certificate of Authentication hereon has been executed by or on
behalf of the Trustee by manual signature, this Security shall not be entitled
to any benefit under the Indenture or be valid or obligatory for any purpose.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
3
<PAGE>
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
AVALON PROPERTIES, INC.
Dated: January 22, 1998 By:
----------------------------------
Name:
Title:
Attest:
By:
--------------------------------------
Name:
Title:
[SEAL]
TRUSTEE'S CERTIFICATE OF AUTHENTICATION:
This is one of the Securities of the series designated therein referred to
in the within-mentioned Indenture.
THE BANK OF NEW YORK,
as Trustee
By: Dated: January 22, 1998
------------------------------
Authorized Officer
4
<PAGE>
[Form of Reverse of Note]
AVALON PROPERTIES, INC.
6 5/8% NOTE DUE 2005
This Security is one of a duly authorized issue of securities of the
Company (herein called the "Securities"), issued and to be issued in one or more
series under an Indenture, dated as of September 18, 1995, as supplemented by
the First Supplemental Indenture, dated as of September 18, 1995, each between
the Company and Signet Trust Company, and the Second Supplemental Indenture,
dated as of December 16, 1997, and Third Supplemental Indenture, dated as of
January 22, 1998 (as so supplemented, herein called the "Indenture"), each
between the Company and The Bank of New York, a New York banking corporation, as
successor trustee (herein called the "Trustee," which term includes any
successor trustee under the Indenture with respect to the series of which this
Security is a part), to which Indenture and all indentures supplemental thereto
reference is hereby made for a statement of the respective rights, limitations
of rights, duties and immunities thereunder of the Company, the Trustee and the
Holders of the Securities and of the terms upon which the Securities are, and
are to be, authenticated and delivered. This Security is one of the series
designated on the first page hereof, limited in aggregate principal amount to
$100,000,000.
"Make-Whole Amount" means, in connection with any optional redemption or
accelerated payment of any Security, the excess, if any, of (i) the aggregate
present value as of the date of such redemption or accelerated payment of each
dollar of principal being redeemed or paid and the amount of interest (exclusive
of interest accrued to the date of redemption or accelerated payment) that would
have been payable in respect of such dollar if such redemption or accelerated
payment had not been made, determined by discounting, on a semi-annual basis,
such principal and interest at the Reinvestment Rate (determined on the third
Business Day preceding the date such notice of redemption is given or
declaration of acceleration is made) from the respective dates on which such
principal and interest would have been payable if such redemption or accelerated
payment had not been made, over (ii) the aggregate principal amount of the
Securities being redeemed or paid.
"Reinvestment Rate" means .25% (twenty-five one hundredths of one percent)
plus the arithmetic mean of the yields under the respective headings "This Week"
and "Last Week" published in the Statistical Release under the caption "Treasury
Constant Maturities" for the maturity (rounded to the nearest month)
corresponding to the remaining life to maturity, as of the payment date of the
principal being redeemed or paid. If no maturity exactly corresponds to such
maturity, yields for the two published maturities most closely corresponding to
such
5
<PAGE>
maturity shall be calculated pursuant to the immediately preceding sentence
and the Reinvestment Rate shall be interpolated or extrapolated from such yields
on a straight-line basis, rounding in each of such relevant periods to the
nearest month. For purposes of calculating the Reinvestment Rate, the most
recent Statistical Release published prior to the date of determination of the
Make-Whole Amount shall be used.
"Statistical Release" means the statistical release designated "H.15(519)"
or any successor publication which is published weekly by the Federal Reserve
System and which establishes yields on actively traded United States government
securities adjusted to constant maturities or, if such statistical release is
not published at the time of any determination under the Indenture, then such
other reasonably comparable index which shall be designated by the Company.
The Indenture contains provisions for defeasance at any time of (a) the
entire indebtedness of the Company on this Security and (b) certain restrictive
covenants and the related defaults and Events of Default applicable to the
Company, in each case, upon compliance by the Company with certain conditions
set forth in the Indenture, which provisions apply to this Security.
If any Event of Default with respect to Securities of this series shall
occur and be continuing, the principal of, and the Make-Whole Amount, if any,
on, the Securities of this series may be declared due and payable in the manner
and with the effect provided in the Indenture.
As provided in and subject to the provisions of the Indenture, the Holder
of this Security shall not have the right to institute any proceeding with
respect to the Indenture or for the appointment of a receiver or trustee or for
any other remedy thereunder, unless such Holder shall have previously given the
Trustee written notice of a continuing Event of Default with respect to the
Securities of this series, the Holders of not less than 25% in principal amount
of the Securities of this series at the time Outstanding shall have made written
request to the Trustee to institute proceedings in respect of such Event of
Default as Trustee, offered the Trustee reasonable indemnity, and the Trustee
shall not have received from the Holders of a majority in principal amount of
Securities of this series at the time Outstanding a direction inconsistent with
such request, and the Trustee shall have failed to institute any such
proceeding, for 60 days after receipt of such notice, request and offer of
indemnity. The foregoing shall not apply to any suit instituted by the Holder of
this Security for the enforcement of any payment of principal hereof (and
premium or Make-Whole Amount, if any) or any interest on and any Additional
Amounts in respect thereof on or after the respective due dates expressed
herein.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders
6
<PAGE>
of the Securities of each series to be affected under the Indenture at any time
by the Company and the Trustee with the consent of the Holders of not less than
a majority in principal amount of the Securities of each series at the time
Outstanding affected thereby. The Indenture also contains provisions permitting
the Holders of specified percentages in principal amount of the Securities of
each series at the time Outstanding, on behalf of the Holders of all Securities
of such series, to waive compliance by the Company with certain provisions of
the Indenture and certain past defaults under the Indenture and their
consequences. Any such consent or waiver by the Holder of this Security shall be
conclusive and binding upon such Holder and upon all future Holders of this
Security and of any Security issued upon the registration of transfer hereof or
in exchange herefor or in lieu hereof, whether or not notation of such consent
or waiver is made upon this Security.
No reference herein to the Indenture and no provision of this Security or
of the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of, Make-Whole Amount, if any,
on, and interest on this Security at the times, place and rate, and in the coin
or currency, herein prescribed.
As provided in the Indenture and subject to certain limitations therein set
forth, the transfer of this Security is registrable in the Security Register,
upon surrender of this Security for registration of transfer at the office or
agency of the Company in any Place of Payment where the principal of, Make-Whole
Amount, if any, on, and interest on this Security are payable, duly endorsed by,
or accompanied by a written instrument of transfer in form satisfactory to the
Company and the Security Registrar duly executed by, the Holder hereof or his
attorney duly authorized in writing, and thereupon one or more new Securities of
this series, of authorized denominations and for the same aggregate principal
amount, will be issued to the designated transferee or transferees.
The Securities of this series are issuable only in registered form without
coupons in denominations of $1,000 and any integral multiple thereof. As
provided in the Indenture and subject to certain limitations therein set forth,
Securities of this series are exchangeable for a like aggregate principal amount
of Securities of this series of a different authorized denomination, as
requested by the Holder surrendering the same.
No service charge shall be made for any such registration of transfer or
exchange, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Security for registration of transfer, the
Company, the Trustee and any agent of the Company or the Trustee may treat the
Person in whose name this Security is registered as the owner hereof for all
purposes, whether or not this Security be overdue, and neither the Company, the
Trustee nor any such agent shall be affected by notice
7
<PAGE>
to the contrary.
No recourse under or upon any obligation, covenant or agreement contained
in the Indenture or in this Security, or because of any indebtedness evidenced
thereby, shall be had against any promoter, as such or, against any past,
present or future stockholder, officer or director, as such, of the Company or
of any successor, either directly or through the Company or any successor, under
any rule of law, statute or constitutional provision or by the enforcement of
any assessment or by any legal or equitable proceeding or otherwise, all such
liability being expressly waived and released by the acceptance of this Security
by the Holder thereof and as part of the consideration for the issue of the
Securities of this series.
All terms used in this security which are defined in the Indenture shall
have the meanings assigned to them in the Indenture.
THE INDENTURE AND THE SECURITIES, INCLUDING THIS SECURITY, SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Company has caused "CUSIP" numbers to be
printed on the Securities of this series as convenience to the Holders of such
Securities. No representation is made as to the correctness or accuracy of such
CUSIP numbers as printed on the Securities, and reliance may be placed only on
the other identification numbers printed hereon.
[REMAINDER OF PAGE INTENTIONALLY BLANK]
8
<PAGE>
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of
this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:
<TABLE>
<CAPTION>
<S> <C>
TEN COMM -- as tenants in common UNIF GIFT MIN ACT --
TEN ENT -- as tenants by the entireties ________ Custodian ________
(Cust) (Minor)
JT TEN -- as joint tenants with right of Under Uniform Gifts to Minors Act
---------------
survivorship and not as tenants in (State)
common
</TABLE>
Additional abbreviations may also be used though not in the above list.
------------------------------
Social Security or taxpayer I.D. or other identifying number of assignee
- -------------------------------------------------------
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(name and address of assignee)
the within Note and all rights thereunder, hereby irrevocably constituting and
appointing , attorney to transfer said
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Note on the books kept for registration thereof, with full power of substitution
in the premises.
Dated:
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<PAGE>
EXHIBIT 5.1
[Letterhead of Goodwin, Procter & Hoar LLP]
January 26, 1998
Avalon Properties, Inc.
15 River Road
Wilton, Connecticut 06897
Re: Legality of $100,000,000 Aggregate Principal Amount of
6 5/8% Notes due 2005 registered pursuant to
Registration Statement on Form S-3 (File No. 333-42519)
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Ladies and Gentlemen:
This opinion is delivered in our capacity as counsel to Avalon Properties,
Inc., a Maryland corporation (the "Company"), in connection with the Company's
registration statement on Form S-3, as amended (the "Registration Statement"),
filed with the Securities and Exchange Commission under the Securities Act of
1933 (the "Securities Act"), relating to an indeterminate amount of Debt
Securities, Preferred Shares, Common Shares and Warrants (as such terms are
defined in the Registration Statement, and collectively, the "Securities")
authorized for issuance under the Company's Amended and Restated Articles of
Incorporation, with an aggregate public offering price of up to $397,243,562.
The Company has filed a Prospectus Supplement dated January 16, 1998 to the
Prospectus dated December 29, 1997 contained in the Registration Statement with
respect to the issuance and sale of $100,000,000 aggregate principal amount of
its 6 5/8% Notes due 2005 (the "Notes").
In connection with rendering this opinion, we have examined the Amended and
Restated Articles of Incorporation of the Company, as amended to the date hereof
and on file with the Maryland State Department of Assessments and Taxation; the
Amended and Restated Bylaws of the Company; such records of corporate
proceedings of the Company as we deem appropriate for the purposes of this
opinion; the Indenture and the First Supplemental Indenture, each dated as of
September 18, 1995, between the Company and Signet Trust Company, as trustee,
and the Second Supplemental Indenture, dated as of December 16, 1997, and the
Third Supplemental Indenture, dated as of January 22, 1998, each between the
Company and The Bank of New York, as successor trustee (collectively, the
"Indenture"); and the Registration Statement and the Prospectus contained
therein, the Prospectus Supplement and the exhibits to the Registration
Statement.
The opinions expressed below are qualified to the extent that (i) the
validity or
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Avalon Properties, Inc.
January 26, 1998
Page 2
enforceability of any provision of the Notes and the Indenture or any rights
granted thereunder may be subject to or affected by any bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium or similar law relating to or
affecting the rights of creditors generally, (ii) the remedy of specific
performance or any other equitable remedy may be unavailable in any jurisdiction
or may be withheld as a matter of judicial discretion, and (iii) general
principles of equity, including without limitation, concepts of materiality,
reasonableness, good faith and fair dealing, may applied in the exercise of
judicial discretion in construing or enforcing the provisions of any instrument
or document (regardless of whether enforcement is sought in a proceeding in
equity or at law).
We express no opinion concerning the laws of any jurisdictions other than
the laws of the United States of America, The Commonwealth of Massachusetts and
the Maryland General Corporation Law.
Based upon the foregoing, we are of the opinion that the Notes have been
duly authorized, executed and delivered by the Company and, assuming the due
authentication of the Notes in accordance with the terms of the Indenture, when
delivered to and paid for by the several underwriters, will constitute valid and
binding obligations of the Company, entitled to the benefits of the Indenture
and enforceable against the Company in accordance with their terms.
The foregoing assumes that all requisite steps will be taken to comply with
applicable requirements of state laws regulating the offer and sale of
securities.
We hereby consent to the inclusion of this opinion as an exhibit to the
Company's Current Report on Form 8-K, which is incorporated by reference into
the Registration Statement.
Very truly yours,
/s/ Goodwin, Procter & Hoar LLP
GOODWIN, PROCTER & HOAR LLP
