<PAGE> 1
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): August 21, 1996
WALDEN RESIDENTIAL PROPERTIES, INC.
(Exact name of registrant as specified in charter)
MARYLAND 1-12592 75-2506197
(State or other jurisdiction (Commission (IRS Employer
of incorporation or organization) File Number) Identification No.)
One Lincoln Centre
5400 LBJ Freeway, Suite 400
Dallas, Texas 75240
(Address of principal executive offices) (Zip Code)
(Registrant's telephone number, including area code): (214) 788-0510
<PAGE> 2
ITEM 5. OTHER EVENTS
Walden Residential Properties, Inc. (the "Company") is filing this
Current Report on Form 8-K for purposes of incorporating by reference the
exhibit attached hereto into Part II of the Company's registration statement on
Form S-3 (Registration No. 33-92328).
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) FINANCIAL STATEMENTS OF BUSINESSES ACQUIRED
Not applicable.
(b) PRO FORMA FINANCIAL INFORMATION.
Not applicable.
(c) EXHIBITS
1 Form of Underwriting Agreement to be entered into between the
Company and Smith Barney Inc.
SIGNATURE
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 thereunto duly authorized.
Walden Residential Properties, Inc.
Date: August 21, 1996 By: /s/ Mark S. Dillinger
--------------------------------
Mark S. Dillinger
Executive Vice President and
Chief Financial Officer
<PAGE> 3
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
No. Description
- --------- -----------
<S> <C>
1 Form of Underwriting Agreement to be entered into between the
Company and Smith Barney Inc.
</TABLE>
<PAGE> 1
EXHIBIT 1
______________ Shares
WALDEN RESIDENTIAL PROPERTIES, INC.
COMMON STOCK
UNDERWRITING AGREEMENT
August ___, 1996
SMITH BARNEY INC.
388 Greenwich Street
New York, New York 10013
Dear Sirs:
Walden Residential Properties, Inc., a Maryland corporation qualified
for federal income tax purposes as a real estate investment trust pursuant to
Sections 856 through 860 of the Internal Revenue Code of 1986, as amended, (the
"Company"), proposes to issue and sell an aggregate of ____________ shares (the
"Firm Shares") of its common stock, $0.01 par value per share (the "Common
Stock"), to you and such other Underwriters, if any, as are named in Schedule I
hereto (the "Underwriters"). The Company also proposes to sell to the
Underwriters, upon the terms and conditions set forth in Section 2 hereof, up
to an additional _______ shares (the "Additional Shares") of Common Stock. The
Firm Shares and the Additional Shares are hereinafter collectively referred to
as the "Shares."
The Company wishes to confirm as follows its agreement with you (the
"Representatives") and the other several Underwriters on whose behalf you are
acting, in connection with the several purchases of the Shares by the
Underwriters.
1. Registration Statement and Prospectus. The Company has
prepared and filed with the Securities and Exchange Commission (the
"Commission") in accordance with the provisions of the Securities Act of 1933,
as amended, and the rules and regulations of the Commission thereunder
(collectively, the "Act"), a registration statement on Form S-3 (Registration
No. 33-92328) under the Act, including a prospectus subject to completion
relating to the Shares; and such amendments to such registration statement as
may have been required prior to the date hereof have been filed with the
Commission, and such amendments have been similarly prepared. Such
registration statement and any post-effective amendments thereto have become
effective under the Act. Such registration statement, as amended, at the date
of this Agreement, meets the requirements set forth in Rule 415(a)(1)(x) under
the Act and complies in all other material respects with said Rule. The
Company
<PAGE> 2
also has filed, or proposes to file, with the Commission pursuant to Rule
424(b) under the Act, a final prospectus supplement to the base prospectus
included in such registration statement, as so amended, specifically relating
to the Shares.
The term "Registration Statement" as used in this Agreement means the
registration statement, as amended at the time it became effective, as
supplemented or amended prior to the execution of this Agreement, including (i)
all financial schedules and exhibits thereto and (ii) all documents
incorporated by reference therein. If the Company files a registration
statement to register a portion of the Shares and relies on Rule 462(b) under
the Act for such registration statement to become effective upon filing with
the Commission (the "Rule 462 Registration Statement"), the term "Registration
Statement" as used in this Agreement means the registration statement referred
to above and the Rule 462 Registration Statement, each as may be amended
pursuant to the Act. If it is contemplated, at the time this Agreement is
executed, that a post-effective amendment to the registration statement will be
filed and must be declared effective before the offering of the Shares may
commence, the term "Registration Statement" as used in this Agreement means the
registration statement as amended by said post-effective amendment. The term
"Base Prospectus" as used in this Agreement means the prospectus included in
the Registration Statement. The term "Prepricing Prospectus" as used in this
Agreement means any preliminary form of the Prospectus (as defined herein)
specifically relating to the Shares, in the form first filed with, or
transmitted for filing to, the Commission pursuant to Rule 424 of the Rules and
Regulations. The term "Prospectus Supplement" as used in this Agreement means
any prospectus supplement specifically relating to the Shares in the form first
filed with, or transmitted for filing to, the Commission pursuant to Rule 424
under the Act (including the information, if any, deemed to be part thereof
pursuant to Rule 430A(b) or Rule 434 under the Act). The term "Prospectus" as
used in this Agreement means the Base Prospectus together with the Prospectus
Supplement except that if such Base Prospectus is amended or supplemented on or
prior to the date on which the Prospectus Supplement was first filed pursuant
to Rule 424, the term "Prospectus" shall refer to the Base Prospectus as so
amended or supplemented and as supplemented by the Prospectus Supplement. If
the Company elects to rely on Rule 434 under the Act, all references to the
Prospectus shall be deemed to include, without limitation, the form of the
Prospectus and the term sheet taken together, provided to the Underwriters by
the Company in reliance on Rule 434 under the Act. Any reference in this
Agreement to the Registration Statement, the Base Prospectus, any Prepricing
Prospectus, any Prospectus Supplement or the Prospectus shall be deemed to
refer to and include the documents incorporated by reference therein pursuant
to Item 12 of Form S-3 under the Act, as of the date of the Registration
Statement, such Prepricing Prospectus, Prospectus Supplement or the Prospectus,
as the case may be, and any reference to any amendment or supplement to the
Registration Statement, any Prepricing Prospectus, any Prospectus Supplement or
the Prospectus shall be deemed to refer to and include any documents filed
after such date under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), which, upon filing, are incorporated by reference therein, as
required by paragraph (b) of Item 12 of Form S-3. As used herein, the term
"Incorporated Documents" means the documents which at the time are incorporated
by reference in the Registration Statement, any Prepricing Prospectus, any
Prospectus Supplement, the Prospectus, or any amendment or supplement thereto.
-2-
<PAGE> 3
2. Agreements to Sell and Purchase. The Company hereby agrees,
subject to all the terms and conditions set forth herein, to issue and sell to
each Underwriter and, upon the basis of the representations, warranties and
agreements of the Company herein contained and subject to all the terms and
conditions set forth herein, each Underwriter agrees, severally and not
jointly, to purchase from the Company, at a purchase price of $_____ per Share
(the "Purchase Price Per Share"), the number of Firm Shares set forth opposite
the name of such Underwriter in Schedule I hereto (or such number of Firm
Shares increased as set forth in Section 10 hereof).
The Company also agrees, subject to all the terms and conditions set
forth herein, to sell to the Underwriters, and, upon the basis of the
representations, warranties and agreements of the Company herein contained and
subject to all the terms and conditions set forth herein, the Underwriters
shall have the right to purchase from the Company, at the Purchase Price Per
Share, pursuant to an option (the "Over-allotment Option") which may be
exercised at any time and from time to time prior to 9:00 P.M., New York City
time, on the 30th day after the date of the Prospectus Supplement (or, if such
30th day shall be a Saturday or Sunday or a holiday, on the next business day
thereafter when the New York Stock Exchange is open for trading), up to an
aggregate of _________ Additional Shares. Additional Shares may be purchased
only for the purpose of covering over-allotments made in connection with the
offering of the Firm Shares. Upon any exercise of the Over-allotment Option,
each Underwriter, severally and not jointly, agrees to purchase from the
Company the number of Additional Shares (subject to such adjustments as you may
determine in order to avoid fractional shares) which bears the same proportion
to the aggregate number of Additional Shares to be purchased by the
Underwriters as the number of Firm Shares set forth opposite the name of such
Underwriter in Schedule I hereto (or such number of Firm Shares increased as
set forth in Section 10 hereof) bears to the aggregate number of Firm Shares.
3. Terms of Public Offering. The Company has been advised by you that
the Underwriters propose to make a public offering of their respective portions
of the Shares as soon after the Registration Statement and this Agreement have
become effective as in your judgment is advisable and initially to offer the
Shares upon the terms set forth in the Prospectus.
4. Delivery of the Shares and Payment Therefor. Delivery to the
Underwriters of and payment for the Firm Shares shall be made at the office of
Smith Barney Inc., 388 Greenwich Street, New York, NY 10013, at 10:00 A.M., New
York City time, on August __, 1996 (the "Closing Date"). The place of closing
for the Firm Shares and the Closing Date may be varied by agreement between you
and the Company.
Delivery to the Underwriters of and payment for any Additional Shares
to be purchased by the Underwriters shall be made at the aforementioned office
of Smith Barney Inc. at such time and on such date (the "Option Closing Date"),
which may be the same as the Closing Date but shall in no
-3-
<PAGE> 4
event be earlier than the Closing Date nor earlier than three nor later than
ten business days after the giving of the notice hereinafter referred to, as
shall be specified in a written notice from you on behalf of the Underwriters
to the Company of the Underwriters' determination to purchase a number,
specified in such notice, of Additional Shares. The place of closing for any
Additional Shares and the Option Closing Date for such Shares may be varied by
agreement between you and the Company.
Certificates for the Firm Shares and for any Additional Shares to be
purchased hereunder shall be registered in such names and in such denominations
as you shall request prior to 9:30 A.M., New York City time, on the second
business day preceding the Closing Date or any Option Closing Date, as the case
may be. Such certificates shall be made available to you in New York City for
inspection and packaging not later than 9:30 A.M., New York City time, on the
business day next preceding the Closing Date or the Option Closing Date, as the
case may be. The certificates evidencing the Firm Shares and any Additional
Shares to be purchased hereunder shall be delivered to you on the Closing Date
or the Option Closing Date, as the case may be, against payment of the purchase
price therefor by wire transfer of immediately available funds to the Company.
5. Agreements of the Company. The Company agrees with the several
Underwriters as follows:
(a) If, at the time this Agreement is executed and
delivered, it is necessary for a post-effective amendment to the Registration
Statement to be declared effective before the offering of the Shares may
commence, the Company will endeavor to cause such post-effective amendment to
become effective as soon as possible and will advise you promptly and, if
requested by you, will confirm such advice in writing, when such post-effective
amendment has become effective.
(b) The Company will advise you promptly and, if
requested by you, will confirm such advice in writing: (i) of any request by
the Commission for amendment of or a supplement to the Registration Statement,
any Prepricing Prospectus Supplement or the Prospectus or for additional
information; (ii) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or of the suspension
of qualification of the Shares for offering or sale in any jurisdiction or the
initiation of any proceeding for such purpose; and (iii) within the period of
time referred to in paragraph (f) below, of any change in the Company's
condition (financial or other), business, prospects, properties, net worth or
results of operations, or of the happening of any event, which makes any
statement of a material fact made (x) in the Registration Statement (as then
amended or supplemented) untrue or which requires the making of any additions
to or changes in the Registration Statement (as then amended or supplemented)
in order to state a material fact required by the Act or the regulations
thereunder to be stated therein or necessary in order to make the statements
therein not misleading or (y) in the Prospectus (as then amended or
supplemented) in order to state a material fact or to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, or of the necessity to amend or supplement the Prospectus (as then
amended or supplemented) to comply with the Act or any other law. If at any
time the Commission shall issue any stop order suspending the effectiveness of
the Registration Statement,
-4-
<PAGE> 5
the Company will make every reasonable effort to obtain the withdrawal of such
order at the earliest possible time.
(c) The Company will furnish to you, without charge, (i)
two conformed copies of the Registration Statement as originally filed with the
Commission and of each amendment thereto, including financial statements and
all exhibits thereto, (ii) such number of conformed copies of the Registration
Statement as originally filed and of each amendment thereto, but without
exhibits, as you may reasonably request, (iii) such number of copies of the
Incorporated Documents, without exhibits, as you may reasonably request, and
(iv) two copies of the exhibits to the Incorporated Documents.
(d) The Company will not file any amendment to the
Registration Statement or make any amendment or supplement to the Prospectus
or, prior to the end of the period of time referred to in the first sentence in
subsection (f) below, file any document which upon filing becomes an
Incorporated Document, of which you shall not previously have been advised or
to which, after you shall have received a copy of the document proposed to be
filed, you shall reasonably object.
(e) Prior to the execution and delivery of this
Agreement, the Company has delivered to you, without charge, in such quantities
as you have requested, copies of the Prepricing Prospectus Supplement, if any.
The Company consents to the use, in accordance with the provisions of the Act
and with the securities or Blue Sky laws of the jurisdictions in which the
Shares are offered by the several Underwriters and by dealers, prior to the
date of the Prospectus, of each Prepricing Prospectus Supplement so furnished
by the Company.
(f) As soon after the execution and delivery of this
Agreement as possible and thereafter from time to time for such period as in
the opinion of counsel for the Underwriters a prospectus is required by the Act
to be delivered in connection with sales by any Underwriter or dealer, the
Company will expeditiously deliver to each Underwriter and each dealer, without
charge, as many copies of the Prospectus (and of any amendment or supplement
thereto) as you may reasonably request. The Company consents to the use of the
Prospectus (and of any amendment or supplement thereto) in accordance with the
provisions of the Act and with the securities or Blue Sky laws or real estate
syndication laws of the jurisdictions in which the Shares are offered by the
several Underwriters and by all dealers to whom Shares may be sold, both in
connection with the offering and sale of the Shares and for such period of time
thereafter as the Prospectus is required by the Act to be delivered in
connection with sales by any Underwriter or dealer. If during such period of
time any event shall occur that in the judgment of the Company or in the
opinion of counsel for the Underwriters is required to be set forth in the
Prospectus (as then amended or supplemented) or should be set forth therein in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading, or if it is necessary to supplement or
amend the Prospectus (or to file under the Exchange Act any document which,
upon filing, becomes an Incorporated Document) in order to comply with the Act
or any other law, the Company will forthwith prepare and, subject to the
provisions of paragraph (d) above, file with the Commission an appropriate
supplement or amendment thereto (or to such document), and will expeditiously
furnish
-5-
<PAGE> 6
to the Underwriters and dealers a reasonable number of copies thereof. In the
event that the Company and you, as Representatives of the several Underwriters,
agree that the Prospectus should be amended or supplemented, the Company, if
requested by you, will promptly issue a press release announcing or disclosing
the matters to be covered by the proposed amendment or supplement.
(g) The Company will cooperate with you and with counsel
for the Underwriters in connection with the registration or qualification of
the Shares for offering and sale by the several Underwriters and by dealers
under the securities or Blue Sky laws or real estate syndication laws of such
jurisdictions as you may designate and will file such consents to service of
process or other documents necessary or appropriate in order to effect such
registration or qualification; 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 service of process in
suits, other than those arising out of the offering or sale of the Shares, in
any jurisdiction where it is not now so subject.
(h) The Company will make generally available to its
security holders a consolidated earnings statement, which need not be audited,
covering a twelve-month period commencing after the effective date of the
Registration Statement and ending not later than 15 months thereafter, as soon
as practicable after the end of such period, which consolidated earnings
statement shall satisfy the provisions of Section 11(a) of the Act.
(i) During the period of three years hereafter, the
Company will furnish to you (i) as soon as available, a copy of each report of
the Company mailed to shareholders or filed with the Commission, and (ii) from
time to time such other information concerning the Company as you may
reasonably request.
(j) If this Agreement shall terminate or shall be
terminated after execution pursuant to any provisions hereof (otherwise than
pursuant to the second paragraph of Section 10 hereof or by notice given by you
terminating this Agreement pursuant to Section 10 or Section 11 hereof) or if
this Agreement shall be terminated by the Underwriters because of any failure
or refusal on the part of the Company to comply with the terms or fulfill any
of the conditions of this Agreement to be complied with or fulfilled by the
Company, the Company agrees to reimburse the Representatives for all reasonable
out-of-pocket expenses (including fees and expenses of counsel for the
Underwriters) incurred by you in connection herewith.
(k) The Company will apply the net proceeds from the sale
of the Shares substantially in accordance with the description set forth in the
Prospectus Supplement.
(l) The Company will timely file the Prospectus
Supplement pursuant to Rule 424(b) under the Act and will advise you of the
time and manner of such filing.
-6-
<PAGE> 7
(m) Except as provided in this Agreement, the Company
will not sell, offer to sell, solicit an offer to buy, contract to sell, grant
any option to purchase (other than pursuant to the Company's 1994 Stock Option
Plan, as amended (the "Option Plan"), or the Company's Dividend Reinvestment
and Stock Purchase Plan (the "DRIP")) or otherwise transfer or dispose of any
shares of Common Stock or any other securities convertible into, or exercisable
or exchangeable for, shares of Common Stock for a period of 45 days after the
date of the Prospectus, without the prior written consent of Smith Barney Inc.
(n) The Company has furnished or will furnish to you
"lock-up" letters, in form and substance satisfactory to you, signed by each of
its current executive officers named in the Prospectus.
(o) Except as stated in this Agreement and in any
Prepricing Prospectus Supplement and Prospectus, the Company has not taken, nor
will it take, directly or indirectly, any action designed to or that might
reasonably be expected to cause or result in stabilization or manipulation of
the price of the Common Stock to facilitate the sale or resale of the Shares.
(p) The Company will use its best efforts to list the
Shares on The New York Stock Exchange.
(q) The Company will use its best efforts to continue to
qualify as a "real estate investment trust" under the Code.
(r) The Company will not file any registration statement
with the Commission for the registration of any securities of the Company for a
period of 30 days after the date of the Prospectus Supplement without the prior
written consent of Smith Barney Inc.
(s) The Company will not undertake any transaction which
constitutes a "refinancing" under the terms of the Registration Rights
Agreement dated as of June 30, 1995 by and between the Company and the Galesi
Partnerships (the "Registration Rights Agreement") which would trigger demand
registration rights under the Registration Rights Agreement for a period of 30
days after the date of the Prospectus Supplement without the prior written
consent of Smith Barney Inc.
6. Representations and Warranties of the Company. The Company
represents and warrants to each Underwriter that:
(a) No order preventing or suspending the use of any
Prepricing Prospectus Supplement has been issued and no proceeding for that
purpose has been instituted or threatened by the Commission or the securities
authority of any state or other jurisdiction. No stop order suspending the
effectiveness of the Registration Statement or any part thereof has been issued
and no proceeding for that purpose has been instituted or threatened by the
Commission or the securities authority of any state or other jurisdiction.
-7-
<PAGE> 8
(b) The Company and the transactions contemplated by this
Agreement meet the requirements and conditions for using a registration
statement on Form S-3 under the Act, set forth in the General Instructions to
Form S-3. When any Prepricing Prospectus Supplement was filed with the
Commission it (i) contained all statements required to be stated therein in
accordance with, and complied in all material respects with the requirements
of, the Act and (ii) did not include any untrue statement of a material fact or
omit to state any material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. When the Registration Statement or any amendment thereto was
declared effective, and on the Closing Date (or the Option Closing Date, as the
case may be) it (i) contained or will contain all statements required to be
stated therein in accordance with, and complied or will comply in all material
respects with the requirements of, the Act and (ii) did not or will not include
any untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein not misleading. When the Prospectus
or any amendment or supplement thereto is filed with the Commission pursuant to
Rule 424(b) and at the Closing Date (or the Option Closing Date, as the case
may be), the Prospectus, as amended or supplemented at any such time, (i)
contained or will contain all statements required to be stated therein in
accordance with, and complied or will comply in all material respects with the
requirements of, the Act and the rules and regulations of the Commission
thereunder and (ii) did not or will not include any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading. The representation and warranty in this paragraph (b)
does not apply to statements in or omissions from the Registration Statement or
the Prospectus made in reliance upon and in conformity with information
furnished to the Company in writing by or on behalf of any Underwriter through
you expressly for use therein.
(c) The Incorporated Documents heretofore filed, when
they were filed (or, if any amendment with respect to any such document was
filed, when such amendment was filed), conformed in all material respects with
the requirements of the Exchange Act and the rules and regulations thereunder,
any further Incorporated Documents so filed will, when they are filed, conform
in all material respects with the requirements of the Exchange Act and the
rules and regulations thereunder; no such document when it was filed (or, if an
amendment with respect to any such document was filed, when such amendment was
filed), contained an untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order to make the
statements therein not misleading; and no such further document, when it is
filed, will contain an untrue statement of a material fact or will omit to
state a material fact required to be stated therein or necessary in order to
make the statements therein not misleading.
(d) All the outstanding shares of Common Stock of the
Company have been duly authorized and validly issued, are fully paid and
nonassessable and are free of any preemptive or similar rights; the Shares have
been duly authorized and, when issued and delivered to the Underwriters against
payment therefor in accordance with the terms hereof, will be validly issued,
fully paid and nonassessable and free of any preemptive or similar rights; and
the capital stock of the Company conforms to the description thereof in the
Registration Statement and the Prospectus.
-8-
<PAGE> 9
(e) The Company is a corporation duly organized and
validly existing in good standing under the laws of the State of Maryland with
full corporate power and authority to own, lease and operate its properties and
to conduct its business as described in the Registration Statement and the
Prospectus, and is duly registered and qualified to conduct its business and is
in good standing in each jurisdiction or place where the nature of its
properties or the conduct of its business requires such registration or
qualification, except where the failure so to register or qualify does not have
a material adverse effect on the condition (financial or other), business,
properties, net worth or results of operations of the Company and the
Subsidiaries (as hereinafter defined) taken as a whole.
(f) All the Company's subsidiaries (collectively, the
"Subsidiaries") required to be listed in an exhibit to the Company's Annual
Report on Form l0-K which is incorporated by reference into the Registration
Statement are listed on Schedule II hereto. Each Subsidiary that is a
corporation is duly organized, validly existing and in good standing in the
jurisdiction of its incorporation, with full corporate power and authority to
own, lease and operate its properties and to conduct its business as described
in the Registration Statement and the Prospectus; each of the Subsidiaries that
is a partnership has been duly approved and is validly existing as a limited
partnership under the laws of its state of organization and has full
partnership authority to conduct its business as presently conducted; the
partnership agreement of each of the Subsidiaries that is a partnership has
been duly authorized, executed and delivered by each partner thereof and
constitutes the valid and binding agreement of such partners enforceable
against such partners in accordance with its terms; each of the Subsidiaries is
duly registered and qualified to conduct its business and is in good standing
in each jurisdiction or place where the nature of its properties or the conduct
of its business requires such registration or qualification, except where the
failure so to register or qualify does not have a material adverse effect on
the condition (financial or other), business, properties, net worth or results
of operations of such Subsidiary; all the outstanding shares of capital stock
of each of the Subsidiaries have been duly authorized and validly issued, are
fully paid and nonassessable, and, except as set forth on Schedule II hereto,
are owned by the Company directly, or indirectly through one of the other
Subsidiaries, free and clear of any lien, adverse claim, security interest,
equity, or other encumbrance; all of the partnership interests in each of the
Subsidiaries that is a partnership has been validly issued and are owned of
record as indicated on Schedule II hereto; and no rights to purchase agreements
or other obligations to issue or rights to convert any obligations into
partnership interests in any of the Subsidiaries that are partnerships are
outstanding.
(g) Except for the Subsidiaries and the Transferred
Interests, the Company owns no capital stock or other beneficial interest,
directly or indirectly, in any corporation, partnership, joint venture or other
business entity. For purposes of this Agreement, the term "Transferred
Interests" means the Company's interests in distribution (assigned by the
Walden Group, Inc. ("Walden") to the Company) attributable to Walden's general
partnership interests in three partnerships which own multifamily residential
properties, which were not acquired by the Company and Walden's limited
partnership interests in two of such partnerships.
(h) There are no legal or governmental proceedings
pending or, to the knowledge of the Company, threatened, against the Company or
any of the Subsidiaries, or to which the
-9-
<PAGE> 10
Company or any of the Subsidiaries, or to which any of their respective
properties is subject, that are required to be described in the Registration
Statement or the Prospectus but are not described as required, and there are no
agreements, contracts, indentures, leases or other instruments that are
required to be described in the Registration Statement or the Prospectus or to
be filed as an exhibit to the Registration Statement or any Incorporated
Document that are not described or filed as required by the Act or the Exchange
Act.
(i) The Company has the corporate power and authority to
enter into this Agreement and to issue, sell and deliver the Shares to the
Underwriters as provided herein.
(j) Neither the Company nor any of the Subsidiaries is in
violation of its certificate or articles of incorporation or by-laws, or other
organizational documents, or of any law, ordinance, administrative or
governmental rule or regulation applicable to the Company or any of the
Subsidiaries or of any decree of any court or governmental agency or body
having jurisdiction over the Company or any of the Subsidiaries, or in default
in any material respect in the performance of any obligation, agreement or
condition contained in any bond, debenture, note or any other evidence of
indebtedness or in any material agreement, indenture, lease or other instrument
to which the Company or any of the Subsidiaries is a party or by which any of
them or any of their respective properties may be bound.
(k) Neither the issuance and sale of the Shares, the
execution, delivery or performance of this Agreement by the Company nor the
consummation by the Company of the transactions contemplated hereby (i)
requires any consent, approval, authorization or other order of or registration
or filing with, any court, regulatory body, administrative agency or other
governmental body, agency or official (except such as may be required for the
registration of the Shares under the Act and the Exchange Act and compliance
with the securities or Blue Sky laws of various jurisdictions, all of which
have been or will be effected in accordance with this Agreement) or conflicts
or will conflict with or constitutes or will constitute a breach of, or a
default under, the certificate or articles of incorporation or bylaws, or other
organizational documents, of the Company or any of the Subsidiaries or (ii)
conflicts or will conflict with or constitutes or will constitute a breach of,
or a default under, any agreement, indenture, lease or other instrument to
which the Company or any of the Subsidiaries is a party or by which any of them
or any of their respective properties may be bound, or violates or will violate
any statute, law, regulation or filing or judgment, injunction, order or decree
applicable to the Company or any of the Subsidiaries or any of their respective
properties, or will result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Company or any of the
Subsidiaries pursuant to the terms of any agreement or instrument to which any
of them is a party or by which any of them may be bound or to which any of the
property or assets of any of them is subject.
(l) The accountants, Deloitte & Touche LLP, who have
certified or shall certify the financial statements included or incorporated by
reference in the Registration Statement and the Prospectus (or any amendment or
supplement thereto) are independent public accountants as required by the Act.
-10-
<PAGE> 11
(m) The financial statements, together with related
schedules and notes, included or incorporated by reference in the Registration
Statement and the Prospectus (and any amendment or supplement thereto), present
fairly the consolidated financial position, results of operations and changes
in financial position of the Company and the Subsidiaries and the Walden
Predecessors (as such term is defined in the Registration Statement) on the
basis stated in the Registration Statement at the respective dates or for the
respective periods to which they apply; such statements and related schedules
and notes have been prepared in accordance with generally accepted accounting
principles consistently applied throughout the periods involved, except as
disclosed therein; and the other financial and statistical information and data
included or incorporated by reference in the Registration Statement and the
Prospectus (and any amendment or supplement thereto) are accurately presented
and prepared on a basis consistent with such financial statements and the books
and records of the Company and the Subsidiaries and the Walden Predecessors..
(n) The execution and delivery of, and the performance by
the Company of its obligations under, this Agreement have been duly and validly
authorized by the Company, and this Agreement has been duly executed and
delivered by the Company and constitutes the valid and legally binding
agreement of the Company, enforceable against the Company in accordance with
its terms, except as rights to indemnity and contribution hereunder may be
limited by federal or state securities laws.
(o) Except as disclosed in the Registration Statement and
the Prospectus (or any amendment or supplement thereto), subsequent to the
respective dates as of which such information is given in the Registration
Statement and the Prospectus (or any amendment or supplement thereto), neither
the Company nor any of the Subsidiaries has incurred any liability or
obligation, direct or contingent, or entered into any transaction, not in the
ordinary course of business, that is material to the Company and the
Subsidiaries taken as a whole, and there has not been any change in the capital
stock, or material increase in the short-term debt or long-term debt, of the
Company or any of the Subsidiaries, or any material adverse change, or any
development involving or which may reasonably be expected to involve, a
prospective material adverse change, in the condition (financial or other),
business, net worth or results of operations of the Company and the
Subsidiaries taken as a whole.
(p) Each of the Company and the Subsidiaries has good and
marketable title to all property (real and personal) described in the
Prospectus as being owned by it, free and clear of all liens, claims, security
interests or other encumbrances except such as are described in the
Registration Statement and the Prospectus or in a document filed as an exhibit
to the Registration Statement and all the property described in the Prospectus
as being held under lease by each of the Company and the Subsidiaries is held
by it under valid, subsisting and enforceable leases.
(q) Upon consummation of the offering of the Shares and
application of the net proceeds therefrom, the Company and the Subsidiaries
will carry, or will be covered by, insurance in such amounts and covering such
risks as will be adequate for the conduct of their business and the value of
their properties and as is customary for companies engaged in similar
businesses.
-11-
<PAGE> 12
(r) The Company has not distributed and, prior to the
later to occur of (i) the Closing Date and (ii) completion of the distribution
of the Shares, will not distribute any offering material in connection with the
offering and sale of the Shares other than the Registration Statement, the
Prepricing Prospectus, the Prospectus or other materials, if any, permitted by
the Act.
(s) The Company and each of the Subsidiaries has such
permits, licenses, franchises and authorizations of governmental or regulatory
authorities ("permits") as are necessary to own its respective properties and
to conduct its business in the manner described in the Prospectus, subject to
such qualifications as may be set forth in the Prospectus; the Company and each
of the Subsidiaries has fulfilled and performed all its material obligations
with respect to such permits and no event has occurred which allows, or after
notice or lapse of time would allow, revocation or termination thereof or
results in any other material impairment of the rights of the holder of any
such permit, subject in each case to such qualification as may be set forth in
the Prospectus; and, except as described in the Prospectus, none of such
permits contains any restriction that is materially burdensome to the Company
or any of the Subsidiaries.
(t) The Company maintains a system of internal accounting
controls sufficient to provide reasonable assurances 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.
(u) To the Company's knowledge, neither the Company nor
any of its Subsidiaries nor 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,
which payment, receipt or retention of funds is of a character required to be
disclosed in the Prospectus.
(v) The Company and each of the Subsidiaries have filed
all tax returns required to be filed, which returns are complete and correct,
and neither the Company nor any Subsidiary is in default in the payment of any
taxes which were payable pursuant to said returns or any assessments with
respect thereto.
(w) No holder of any security of the Company has any
right to require registration of shares of Common Stock or any other security
of the Company because of the filing of the Registration Statement or
consummation of the transactions contemplated by this Agreement.
(x) The Company and the Subsidiaries own or possess all
patents, trademarks, trademark registrations, service marks, service mark
registrations, trade names, copyrights, licenses, inventions, trade secrets and
rights necessary for the conduct of their respective businesses, and the
-12-
<PAGE> 13
Company is not aware of any claim to the contrary or any challenge by any other
person to any rights of the Company and the Subsidiaries with respect to the
foregoing.
(y) Neither the Company nor any of the Subsidiaries is,
or after sale of the Shares to be sold by the Company hereunder and application
of the net proceeds from such sale as described in the Prospectus under the
caption "Use of Proceeds" will be, an "investment company" or a company
"controlled" by an "investment company" within the meaning of the Investment
Company Act of 1940, as amended.
(z) The Company has complied with all applicable
provisions of Florida Statutes, Section 517.075, relating to issuers doing
business with Cuba.
(aa) The Company qualified as a REIT for its taxable years
ended December 31, 1994 and December 31, 1995, and its organization and method
of operation described in the Prospectus and in its Annual Report on Form 10-K
for the year ended December 31, 1995 (the "1995 Form 10-K") will enable the
Company to continue to satisfy the requirements for such qualification under
the Code for its taxable year ending December 31, 1996 and for subsequent
taxable years.
(bb) Each of the Subsidiaries that is a partnership
constitutes either a partnership for federal income tax purposes or a
"qualified REIT subsidiary" within the meaning of Section 856(i) of the Code.
(cc) None of the assets of the Company or the Subsidiaries
constitute, nor will such assets, as of the Closing Date, constitute "plan
assets," as such term is defined in the Employee Retirement Income Security Act
of 1974, as amended ("ERISA").
(dd) Subject to the provisions of applicable law, none of
the Subsidiaries is currently prohibited, directly or indirectly, from paying
any dividends to the Company, from making any other distributions on such
Subsidiary's capital stock or from repaying to the Company any loans or
advances to such Subsidiary's property or assets to the Company.
(ee) The information and disclosures regarding the
Company's directors and officers, contained in the Company's Proxy Statement
for the Annual Meeting of Stockholders held on May 15, 1996, (i) are accurate
and consistent with the information provided to the Company by each director
and officer for that purpose and (ii) did not omit to disclose any fact that
should have been so disclosed under the rules and regulations of the Exchange
Act governing Proxy Statement disclosure obligations.
7. Indemnification and Contribution.
(a) The Company agrees to indemnify and hold harmless
each of you and each other Underwriter and each person, if any, who controls
any 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, damages,
liabilities and expenses (including reasonable costs of investigation) arising
out of or based upon any untrue statement or alleged untrue statement of a
material fact contained in any Prepricing Prospectus or any Prospectus
Supplement or in the Registration Statement or the Prospectus or in any
amendment or supplement thereto, or arising out of or based upon any omission
or alleged omission to state therein a material fact required to be stated
therein or (x) in the case of the Registration Statement, necessary to make the
statements therein not misleading and (y) in the case of the Prospectus or the
Prospectus Supplement, necessary to make the statements therein, in the
-13-
<PAGE> 14
light of the circumstances under which they were made, not misleading, except
insofar as such losses, claims, damages, liabilities or expenses arise out of
or are based upon any untrue statement or omission or alleged untrue statement
or omission which has been made therein or omitted therefrom in reliance upon
and in conformity with the information relating to such Underwriter furnished
in writing to the Company by or on behalf of any Underwriter through you
expressly for use in connection therewith; provided, however, that the
indemnification contained in this paragraph (a) with respect to any Prepricing
Prospectus shall not inure to the benefit of any Underwriter (or to the benefit
of any person controlling such Underwriter) on account of any such loss, claim,
damage, liability or expense arising from the sale of the Shares by such
Underwriter to any person if a copy of the Prospectus shall not have been
delivered or sent to such person within the time required by the Act and the
regulations thereunder, and the untrue statement or alleged untrue statement or
omission or alleged omission of a material fact contained in such Prepricing
Prospectus was corrected in the Prospectus, provided that the Company has
delivered the Prospectus to the several Underwriters in requisite quantity on a
timely basis to permit such delivery or sending. The foregoing indemnity
agreement shall be in addition to any liability which the Company may otherwise
have.
(b) If any action, suit or proceeding shall be brought
against any Underwriter or any person controlling any Underwriter in respect of
which indemnity may be sought against the Company, such Underwriter or such
controlling person shall promptly notify the Company, and the Company shall
assume the defense thereof, including the employment of counsel and payment of
all reasonable fees and expenses. Such Underwriter or any such controlling
person shall have the right to employ separate counsel in any such action, suit
or proceeding and to participate in the defense thereof, but the fees and
expenses of such counsel shall be at the expense of such Underwriter or such
controlling person unless (i) the Company has agreed in writing to pay such
fees and expenses, (ii) the Company has failed to assume the defense and employ
counsel, or (iii) the named parties to any such action, suit or proceeding
(including any impleaded parties) include both such Underwriter or such
controlling person and the Company, and such Underwriter or such controlling
person shall have been advised by its counsel that representation of such
indemnified party and the Company by the same counsel would be inappropriate
under applicable standards of professional conduct (whether or not such
representation by the same counsel has been proposed) due to actual or
potential differing interests between them (in which case the Company shall not
have the right to assume the defense of such action, suit or proceeding on
behalf of such Underwriter or such controlling person). It is understood,
however, that the Company shall, in connection with any one such action, suit
or proceeding or separate but substantially similar or related actions, suits
or proceedings in the same jurisdiction arising out of the same general
allegations or circumstances, be liable for the reasonable fees and expenses of
only one separate firm of attorneys (in addition to any local counsel), at any
time for all such Underwriters and controlling persons not having actual or
potential differing interests with you or among themselves, which firm shall be
designated in writing by Smith Barney Inc., and that all such fees and expenses
shall be reimbursed as they are incurred. The Company shall not be liable for
any settlement of any such action, suit or proceeding effected without its
written consent, but if settled with such written consent, or if there be a
final judgment for the plaintiff in any such action, suit or proceeding, the
Company agrees to indemnify and hold harmless any Underwriter, to the
-14-
<PAGE> 15
extent provided in the preceding paragraph, and any such controlling person
from and against any loss, claim, damage, liability or expense by reason of
such settlement or judgment.
(c) Each Underwriter agrees, severally and not jointly,
to indemnify and hold harmless the Company, its directors and officers who sign
the Registration Statement, and any person who controls the Company within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act, to the same
extent as the foregoing indemnity from the Company to each Underwriter, but
only with respect to information furnished in writing by or on behalf of such
Underwriter through you expressly for use in the Registration Statement, the
Prospectus or any Prepricing Prospectus or any Prospectus Supplement, or any
amendment or supplement thereto. If any action, suit or proceeding shall be
brought against the Company or any of its respective directors, any such
officer, or any such controlling person based on the Registration Statement,
the Prospectus or any Prepricing Prospectus, or any amendment or supplement
thereto, and in respect of which indemnity may be sought against any
Underwriter pursuant to this paragraph (c), such Underwriter shall have the
rights and duties given to the Company by paragraph (b) above (except that if
the Company shall have assumed the defense thereof such Underwriter shall not
be required to do so, but may employ separate counsel therein and participate
in the defense thereof, but the fees and expenses of such counsel shall be at
such Underwriter's expense), and the Company or its respective directors, any
such officer, and any such controlling person shall have the rights and duties
given to the Underwriters by paragraph (b) above. The foregoing indemnity
agreement shall be in addition to any liability which the Underwriters may
otherwise have.
(d) If the indemnification provided for in this Section 7
is unavailable to an indemnified party under paragraphs (a) or (c) hereof in
respect of any losses, claims, damages, liabilities or expenses referred to
therein, then an indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by such indemnified party
as a result of such losses, claims, damages, liabilities or expenses (i) in
such proportion as is appropriate to reflect the relative benefits received by
the Company on the one hand and the Underwriters on the other hand from the
offering of the Shares, or (ii) if the allocation provided by clause (i) above
is not permitted by applicable law, in such proportion as is appropriate to
reflect not only the relative benefits referred to in clause (i) above but also
the relative fault of the Company on the one hand and the Underwriters on the
other in connection with the statements or omissions that resulted in such
losses, claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations. 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 of the Shares (before
deducting expenses) received by the Company and the total underwriting
discounts and commissions received by the Underwriters bear to the price to
public of the Shares. The relative fault of the Company on the one hand and
the Underwriters on the other hand shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by the Company on the one hand or by the Underwriters on
the other hand and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
-15-
<PAGE> 16
(e) The Company and the Underwriters agree that it would
not be just and equitable if contribution pursuant to this Section 7 were
determined by a pro rata allocation (even if the Underwriters were treated as
one entity for such purpose) or by any other method of allocation that does not
take account of the equitable considerations referred to in paragraph (d)
above. The amount paid or payable by an indemnified party as a result of the
losses, claims, damages, liabilities and expenses referred to in paragraph (d)
above shall be deemed to include, subject to the limitations set forth above,
any legal or other expenses reasonably incurred by such indemnified party in
connection with investigating any claim or defending any such action, suit or
proceeding. Notwithstanding the provisions of this Section 7, no Underwriter
shall be required to contribute any amount in excess of the amount by which the
total price of the Shares underwritten by it and distributed to the public
exceeds the amount of any damages which such Underwriter has otherwise been
required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations to contribute pursuant to
this Section 7 are several in proportion to the respective numbers of Firm
Shares set forth opposite their names in Schedule I hereto (or such numbers of
Firm Shares increased as set forth in Section 10 hereof) and not joint.
(f) No indemnifying party shall, without the prior
written consent of the indemnified party, effect any settlement of any pending
or threatened action, suit or proceeding in respect of which any indemnified
party is or could have been a party and indemnity could have been sought
hereunder by such indemnified party, unless such settlement includes an
unconditional release of such indemnified party from all liability on claims
that are the subject matter of such action, suit or proceeding.
(g) Any losses, claims, damages, liabilities or expenses
for which an indemnified party is entitled to indemnification or contribution
under this Section 7 shall be paid by the indemnifying party to the indemnified
party as such losses, claims, damages, liabilities or expenses are incurred.
The indemnity and contribution agreements contained in this Section 7 and the
representations and warranties of the Company and the Underwriters set forth in
this Agreement shall remain operative and in full force and effect, regardless
of (i) any investigation made by or on behalf of any Underwriter or any person
controlling any Underwriter, the Company, their respective directors or
officers, or any person controlling the Company, (ii) acceptance of any Shares
and payment therefor hereunder, and (iii) any termination of this Agreement. A
successor to any Underwriter or any person controlling any Underwriter, or to
the Company, their respective directors or officers, or any person controlling
the Company, shall be entitled to the benefits of the indemnity, contribution,
and reimbursement agreements contained in this Section 7.
8. Conditions of Underwriters' Obligations. The several obligations
of the Underwriters to purchase the Firm Shares hereunder are subject to the
following conditions:
(a) If, at the time this Agreement is executed and
delivered, it is necessary for a post-effective amendment to the Registration
Statement to be declared effective before the offering
-16-
<PAGE> 17
of the Shares may commence, such post-effective amendment shall have become
effective not later than 5:30 P.M., New York City time, on the date hereof, or
at such later date and time as shall be consented to in writing by you, and all
filings, if any, required by Rules 424 and 430A under the Act shall have been
timely made; no stop order suspending the effectiveness of the Registration
Statement shall have been issued and no proceeding for that purpose shall have
been instituted or, to the knowledge of the Company or any Underwriter,
threatened by the Commission, and any request of the Commission for additional
information (to be included in the Registration Statement or the Prospectus or
otherwise) shall have been complied with to your satisfaction.
(b) Subsequent to the effective date of this Agreement,
there shall not have occurred (i) any change, or any development involving a
prospective change, in or affecting the condition (financial or other),
business, properties, net worth, or results of operations of the Company or the
subsidiaries not contemplated by the Prospectus, which in your opinion, would
materially, adversely affect the market for the Shares, or (ii) any event or
development relating to or involving the Company or any officer or director of
the Company which makes any statement made in the Prospectus untrue or which,
in the opinion of the Company and its counsel or the Underwriters and their
counsel, requires the making of any addition to or change in the Prospectus in
order to state a material fact required by the Act or any other law to be
stated therein or necessary in order to make the statements therein not
misleading, if amending or supplementing the Prospectus to reflect such event
or development would, in your opinion, materially adversely affect the market
for the Shares.
(c) You shall have received on the Closing Date, an
opinion of Winstead Sechrest & Minick P.C., counsel for the Company, dated the
Closing Date and addressed to you, as Representatives of the several
Underwriters, to the effect that:
(i) The Company has been duly organized and is
validly existing as a corporation in good standing under the
laws of the State of Maryland, and has full corporate power
and authority to own the Properties and to conduct its
business as described in the Registration Statement and the
Prospectus; and the Company is duly qualified to do business
as a foreign corporation in the States of Arizona, Florida,
Indiana, Kansas, Oklahoma, Tennessee, Texas and Utah; and the
Company is the sole general partner of each of the
partnerships set forth on a schedule to such opinion and owns
the percentage of the partnership interests of such
partnerships as set forth therein;
(ii) Each of the Subsidiaries that is a
corporation has been duly organized and is validly existing as
a corporation in good standing under the laws of its
jurisdiction of incorporation, and has full corporate power
and authority to conduct its business as presently conducted;
each of the Subsidiaries that is a corporation is duly
qualified to do business as a foreign corporation in such
jurisdictions set forth on a Schedule II hereto; all of the
outstanding shares of capital stock of the Subsidiaries that
are corporations have been duly authorized, are validly
issued, fully paid and non-assessable and are owned of record
as set forth in a schedule to such opinion; and no
-17-
<PAGE> 18
options, warrants or other rights to purchase, agreements or
other obligations to issue or other rights to convert any
obligations into shares of capital stock or ownership
interests in the corporate Subsidiaries are outstanding; and
each of the corporate Subsidiaries owns the capital stock and
partnership interests set forth on a schedule to such opinion;
(iii) Each of the Subsidiaries that is a
partnership has been duly approved and is validly existing as
a limited partnership under the laws of its state of
organization; each of the Subsidiaries that is a partnership
has full partnership authority to conduct its business as
presently conducted; each of the Subsidiaries that is a
partnership is duly qualified to do business as a foreign
limited partnership in each jurisdiction set forth on Schedule
II; the partnership agreement of each of the Subsidiaries that
is a partnership has been duly authorized, executed and
delivered by each partner thereof and constitutes the valid
and binding agreement of such partners enforceable against
such partners in accordance with its terms; all of the
partnership interests in each of the Subsidiaries that is a
partnership has been validly issued and are owned of record as
indicated on a schedule to this opinion; and no rights to
purchase agreements or other obligations to issue or rights to
convert any obligations into partnership interests in any of
the Subsidiaries that are partnerships are outstanding;
(iv) To such counsel's knowledge, except for the
Subsidiaries and the Transferred Interests, the Company owns,
directly or indirectly, no capital stock or other beneficial
interest in any corporation, partnership, joint venture or
other business entity, directly or indirectly;
(v) The authorized, issued and outstanding
capital stock of the Company is as set forth in the
Registration Statement and the Prospectus; all the outstanding
shares of capital stock of the Company have been duly
authorized, are validly issued, fully paid and non-assessable,
have been offered and sold in compliance with all applicable
laws (including, without limitation, federal and state
securities laws) and conform to either (i) the description of
the Common Stock set forth in the Base Prospectus under the
caption "Description of Common Stock," (ii) the description of
the preferred stock set forth in the Base Prospectus under the
caption "Description of the Preferred Stock" or (iii) the
terms of the convertible preferred stock set forth in the
Articles Supplementary filed with the Commission on April 23,
1996 and included in the Incorporated Documents; none of the
outstanding shares of capital stock of the Company has been
issued or is owned or held in violation of any preemptive
rights of stockholders; and no shares of capital stock of the
Company are reserved for any purpose except the shares of
Common Stock issuable upon conversion of the shares of the
Company's convertible preferred stock (as described in the
Incorporated Documents), except in connection with the Option
Plan and except for shares of Common Stock issuable pursuant
to the DRIP and upon the
-18-
<PAGE> 19
exercise of the interests in Walden Operating Partnership,
L.P. (the "Interests"); and except for the options outstanding
under the Option Plan, the Interests and the Company's
convertible preferred stock, there are no outstanding
securities convertible into or exchangeable for any capital
stock of the Company and no outstanding options, rights
(preemptive or otherwise), or warrants to purchase or to
subscribe for shares of such stock or any other securities of
the Company;
(vi) The Shares have been duly authorized and,
when the Shares are paid for, sold or issued as provided in
the Agreement, the Shares will be validly issued, fully paid
and non-assessable and will conform to the description of the
Common Stock set forth in the Base Prospectus under the
caption "Description of Common Stock;" upon payment of the
purchase price and delivery of the Shares in accordance with
the Agreement, the Underwriter will receive good, valid and
marketable title to the Shares, free and clear of all liens,
encumbrances, claims, security interests and defects; the
certificates evidencing the Shares will comply with all
applicable requirements of Maryland law; none of the Shares
will be issued or sold in violation of any preemptive rights
of stockholders; and no person or entity has the right to
require registration of shares of Common Stock or other
securities of the Company by virtue of the filing or
effectiveness of the Registration Statement or the offer and
sale of the Shares as contemplated by the Agreement;
(vii) The Registration Statement has become
effective under the Act; any required filing of the
Prospectus, and any supplements thereto, pursuant to Rule
424(b) has been made in the manner and within the time period
required by Rule 424(b); to such counsel's knowledge, no stop
order suspending the effectiveness of the Registration
Statement has been issued, no proceedings for that purpose
have been instituted or threatened and the Registration
Statement (including the Incorporated Documents) and the
Prospectus (other than financial statements and other
financial and statistical data contained therein and except
for the information referred to under the caption "Experts" as
having been incorporated by reference in the Registration
Statement on the authority of Deloitte & Touche LLP as
experts, as to which such counsel need not express an opinion)
comply as to form in all material respects with the applicable
requirements of the Act and the rules and regulations
thereunder;
(viii) The Company has timely filed all reports,
contracts or documents required to be filed by it with the
Commission under the Exchange Act and each document filed
pursuant to the Exchange Act and incorporated by reference in
the Prospectus complies in all material respects with
applicable requirements of the Exchange Act and rules and
regulations thereunder;
(ix) To such counsel's knowledge, there is no
pending or threatened action, suit or proceeding before or by
any court or governmental agency, authority
-19-
<PAGE> 20
or body or any arbitrator involving the Company or any
Subsidiary or any property of a character required to be
disclosed in the Registration Statement which is not
adequately disclosed in the Prospectus, and there is no
contract or other document of a character required to be
described in the Registration Statement or Prospectus, or any
document incorporated by reference in the Prospectus, or to be
filed as an exhibit thereto, which is not described or filed
as required; and the statements in the Prospectus Supplement
under the captions "Recent Developments" and "Description of
Common Stock" and in the Base Prospectus under the captions
"Description of Common Stock," "Description of Preferred
Stock," "Certain Provisions of Maryland Law and of the
Company's Articles and Bylaws," "Federal Income Tax
Considerations" and "ERISA Considerations," insofar as such
statements constitute a summary of documents or matters of
law, fairly and accurately summarize the material terms of
such documents or matters of law therein described;
(x) To such counsel's knowledge, each of the
Company and the Subsidiaries has complied in all respects with
all laws, regulations and orders applicable to each of them or
their respective businesses, except for such noncompliance as
could not reasonably be expected to have a material adverse
effect on the condition financial or otherwise, or on the
earnings, business or operations of the Company or any
Subsidiary, and each of them is in possession of and to such
counsel's knowledge is operating in compliance with all
material franchises, grants, authorizations, approvals,
licenses, permits, easements, consents, certificates and
orders necessary to the conduct of its business, all of which
are valid and in full force and effect; to such counsel's
knowledge, none of the Company or any Subsidiary is and, upon
consummation of the transactions contemplated by the
Agreement, none of them will be in default under any
indenture, mortgage, deed of trust, voting trust agreement,
loan agreement, bond, debenture, note agreement, promissory
note or other evidence of indebtedness, lease, contract or
other agreement or instrument to which any of them are a party
or by which any of them or any of their respective properties
are bound and which is filed pursuant to Rule 601(b)(1) of
Regulation S-K as an exhibit to any report filed with the
Commission by the Company pursuant to the Exchange Act and
incorporated by reference in the Prospectus (collectively, the
"Operative Documents"), the violation of which would
individually or in the aggregate have a material adverse
effect on the condition financial or otherwise, or on the
earnings, business or operations of the Company or any
Subsidiary, and no other party under any such agreement or
instrument to which the Company or any Subsidiary is a party
is, to such counsel's knowledge, in default in any material
respect thereunder; and to such counsel's knowledge none of
the Company or any of the corporate Subsidiaries is in
violation of its articles or certificate of incorporation or
bylaws, and none of the Subsidiaries that are Partnerships is
in violation of its partnership agreement;
-20-
<PAGE> 21
(xi) The Company has corporate power and authority
to enter into this Agreement and to issue, sell and deliver
the Shares to the Underwriters as provided herein; the
Agreement has been duly authorized, executed and delivered by
the Company and, assuming the laws of the State of New York
are the same as the laws of the State of Texas, constitutes
the valid and legally binding agreement of the Company,
enforceable against the Company in accordance with its terms,
except as rights to indemnity and contribution hereunder may
be limited by federal or state securities laws;
(xii) The execution, delivery and the performance
of the Agreement and the consummation of the transactions
therein contemplated will not result in a breach or violation
of any term or provision of, or constitute a default under,
any law, rule or regulation by which the Company or any
Subsidiary is bound or to which any property of the Company or
any Subsidiary is subject, or any of the Operative Documents,
the Company's or any corporate Subsidiary's articles or
certificate of incorporation or bylaws, or any of the
partnership Subsidiaries' partnership agreement, or to such
counsel's knowledge, any order or decree of any court or
governmental agency or body having jurisdiction over the
Company or any Subsidiary or any of their respective
properties; no consent, approval, authorization or order of,
or filing with, any court or governmental agency or body or
any other third party is required to be obtained by the
Company or any Subsidiary for the consummation of the
transactions contemplated in the Agreement or in connection
with the issuance or sale of the Shares by the Company, except
such consents, approvals, authorizations, orders or filings as
may be required under the Act, the Exchange Act or state
securities or Blue Sky laws; and the Company has full power
and authority to authorize, issue and sell the Shares, as
contemplated in the Agreement, free of any preemptive rights;
(xiii) None of the Company or the Subsidiaries is an
"investment company" or an entity controlled by an "investment
company," as such terms are defined in the Investment Company
Act of 1940, as amended;
(xiv) None of the assets of the Company or the
Subsidiaries constitute "plan assets," as such term is defined
in ERISA;
(xv) The Company qualified as a REIT for its
taxable years ended December 31, 1994 and December 31, 1995,
and its organization and method of operation described in the
Prospectus and in the 1995 Form 10-K will enable the Company
to continue to satisfy the requirements for such qualification
under the Code for its taxable year ending December 31, 1996
and for subsequent taxable years;
(xvi) The discussion in the Prospectus under the
caption "Federal Income Tax Considerations" is accurate in all
material respects and fairly summarizes the federal income tax
considerations that are likely to be material to holders of
the
-21-
<PAGE> 22
Common Stock who are United States citizens or residents or
domestic corporations and who are not subject to special
treatment under the tax laws;
(xvii) The discussion in the Prospectus under the
caption "ERISA Considerations" is correct in all material
respects;
(xviii) Each of the Subsidiaries that is a
partnership constitutes either a partnership for federal
income tax purposes or a "qualified REIT subsidiary" within
the meaning of Section 856(i) of the Code;
(xix) To the extent the Interests or interests in
any other entity constitute an equity interest in the Company
("Deemed Stock"), such Deemed Stock will constitute a class of
stock separate from the Common Stock for purposes of Section
562 of the Code and the applicable Treasury regulations
thereunder; and
(xx) Such counsel has participated in the
preparation of the Registration Statement and the Prospectus
and in connection therewith has had discussions with certain
officers, directors and employees of the Company, Deloitte &
Touche LLP, the independent accountants of the Company who
examined certain of the financial statements included and
incorporated by reference in the Registration Statement and
the Prospectus, and representatives of the Underwriters
concerning the information contained in the Registration
Statement and the Prospectus and the proposed responses to
various items in Form S-3, and, although such counsel has not
independently verified and are not passing upon, and does not
assume any responsibility for, the accuracy, the completeness
or fairness of the information contained in the Registration
Statement and the Prospectus, based upon the participation and
discussions described above, nothing has come to such
counsel's attention that causes it to believe that the
Registration Statement (including the Incorporated Documents)
(except for the financial statements and other financial and
statistical data included therein and in the Incorporated
Documents and except for the information referred to under the
caption "Experts" as having been incorporated by reference in
the Registration Statement on the authority of Deloitte &
Touche LLP as experts, as to which such counsel need not
express an opinion) at the time the Registration Statement
became effective and as of the Closing Date or the Option
Closing Date, as the case may be, contained any untrue
statement of a material fact or omitted to state a material
fact or omitted to state a material fact required to be stated
therein or necessary in order to make the statements therein
not misleading, or that the Prospectus (with the foregoing
exceptions) as of the date of the Prospectus and as of the
Closing Date or the Option Closing Date, as the case may be,
contains any untrue statement of a material fact or omits to
state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of
the circumstances in which they were made, not misleading.
-22-
<PAGE> 23
In rendering their opinion as aforesaid, counsel may rely upon an
opinion or opinions, each dated the Closing Date, of other counsel retained by
them or the Company as to laws of any jurisdiction other than the United States
or the State of Texas, provided that (1) each such local counsel is acceptable
to the Representatives, (2) such reliance is expressly authorized by each
opinion so relied upon and a copy of each such opinion is delivered to the
Representatives and is, in form and substance satisfactory to them and their
counsel, and (3) counsel shall state in their opinion that they believe that
they and the Underwriters are justified in relying thereon.
(d) You shall have received on the Closing Date an
opinion of King & Spalding, counsel for the Underwriters, dated the Closing
Date and addressed to you, as Representatives of the several Underwriters, with
respect to the matters referred to in the first clause of clause (vi) and in
clauses (vii), (xi) and (xx) of the foregoing paragraph (c) and such other
related matters as you may request.
(e) You shall have received letters addressed to you and
dated the date hereof and the Closing Date from Deloitte & Touche LLP,
independent certified public accountants, substantially in the forms heretofore
approved by you.
(f) (i) No stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for that
purpose shall have been taken or, to the knowledge of the Company, shall be
contemplated by the Commission at or prior to the Closing Date; (ii) there
shall not have been any change in the capital stock of the Company nor any
material increase in the consolidated short-term or long-term debt of the
Company (other than in the ordinary course of business) from that set forth or
contemplated in the Registration Statement or the Prospectus (or any amendment
or supplement thereto); (iii) there shall not have been, since the respective
dates as of which information is given in the Registration Statement and the
Prospectus (or any amendment or supplement thereto), except as may otherwise be
stated in the Registration Statement and Prospectus (or any amendment or
supplement thereto), any material adverse change in the condition (financial or
other), business, prospects, properties, net worth or results of operations of
the Company and its subsidiaries taken as a whole; (iv) the Company shall not
have any liabilities or obligations, direct or contingent (whether or not in
the ordinary course of business), that are material to the Company, taken as a
whole, other than those reflected in the Registration Statement or the
Prospectus (or any amendment or supplement thereto); and (v) all the
representations and warranties of the Company contained in this Agreement shall
be true and correct on and as of the date hereof and on and as of the Closing
Date as if made on and as of the Closing Date, and you shall have received a
certificate, dated the Closing Date and signed by the chief executive officer
and the chief financial officer of the Company (or such other officers as are
acceptable to you), to the effect set forth in this Section 8(f) and in Section
8(g) hereof.
(g) The Company shall not have failed at or prior to the
Closing Date to have performed or complied with any of its agreements herein
contained and required to be performed or complied with by it hereunder at or
prior to the Closing Date.
-23-
<PAGE> 24
(h) The Shares shall have been listed or approved for
listing upon notice of issuance on The New York Stock Exchange.
(i) The National Association of Securities Dealers, Inc.
(the "NASD"), upon a review of the terms of the public offering of the Shares,
shall not have objected to such offering, such terms or the Underwriters'
participation in the same.
(j) The Company shall have furnished or caused to be
furnished to you such further certificates and documents as you shall have
reasonably requested.
All such opinions, certificates, letters and other documents will be
in compliance with the provisions hereof only if they are satisfactory in form
and substance to you and your counsel in your reasonable discretion.
Any certificate or document signed by any officer of the Company and
delivered to you, as Representatives of the Underwriters, or to counsel for the
Underwriters, shall be deemed a representation and warranty by the Company to
each Underwriter as to the statements made therein.
The several obligations of the Underwriters to purchase Additional
Shares hereunder are subject to the satisfaction on and as of any Option
Closing Date of the conditions set forth in this Section 8, except that, if any
Option Closing Date is other than the Closing Date, the certificates, opinions
and letters referred to in paragraphs (c) through (f) shall be dated the Option
Closing Date in question and the opinions called for by paragraphs (c) and (d)
shall be revised to reflect the sale of Additional Shares.
9. Expenses. The Company agrees to pay the following costs and
expenses and all other costs and expenses incident to the performance by it of
its obligations hereunder: (i) the preparation, printing or reproduction, and
filing with the Commission of the Registration Statement (including financial
statements and exhibits thereto), each Prepricing Prospectus Supplement, the
Prospectus, and each amendment or supplement to any of them; (ii) the printing
(or reproduction) and delivery (including postage, air freight charges and
charges for counting and packaging) of such copies of the Registration
Statement, each Prepricing Prospectus Supplement, the Prospectus, and all
amendments or supplements to any of them as may be reasonably requested for use
in connection with the offering and sale of the Shares; (iii) the preparation,
printing, authentication, issuance and delivery of certificates for the Shares,
including any stamp taxes in connection with the original issuance and sale of
the Shares; (iv) the reproduction and delivery of this Agreement, the
preliminary and supplemental Blue Sky Memoranda and all other agreements or
documents reproduced and delivered in connection with the offering of the
Shares; (v) the listing of the Shares on the New York Stock Exchange; (vi) the
registration or qualification of the Shares for offer and sale under the
securities or Blue Sky laws or real estate syndication laws of the several
states as provided in Section 5(g) hereof (including the reasonable fees,
expenses and disbursements of counsel for the Underwriters relating to the
preparation, reproduction, and delivery of the preliminary and supplemental
Blue Sky Memoranda and such registration and qualification); (vii) the filing
fees and the fees and expenses of counsel for
-24-
<PAGE> 25
the Underwriters in connection with any filings required to be made with the
NASD; (viii) the transportation and other expenses incurred by or on behalf of
Company representatives in connection with presentations to prospective
purchasers of the Shares; (ix) the fees and expenses of the Company's
accountants and the fees and expenses of counsel (including local and special
counsel) for the Company.
10. Effective Date of Agreement. This Agreement shall become
effective: (i) upon the execution and delivery hereof by the parties hereto;
or (ii) if, at the time this Agreement is executed and delivered, it is
necessary for a post-effective amendment to the Registration Statement to be
declared effective before the offering of the Shares may commence, when
notification of the effectiveness of or such post-effective amendment has been
released by the Commission. Until such time as this Agreement shall have
become effective, it may be terminated by the Company, by notifying you, or by
you, as Representatives of the several Underwriters, by notifying the Company.
If any one or more of the Underwriters shall fail or refuse to
purchase Shares which it or they are obligated to purchase hereunder on the
Closing Date, and the aggregate number of Shares which such defaulting
Underwriter or Underwriters are obligated but fail or refuse to purchase is not
more than one-tenth of the aggregate number of Shares which the Underwriters
are obligated to purchase on the Closing Date, each non-defaulting Underwriter
shall be obligated, severally, in the proportion which the number of Firm
Shares set forth opposite its name in Schedule I hereto bears to the aggregate
number of Firm Shares set forth opposite the names of all non-defaulting
Underwriters in Schedule I or in such other proportion as you may specify in
accordance with Section 20 of the Master Agreement Among Underwriters of Smith
Barney Inc., to purchase the shares which such defaulting Underwriter or
Underwriters are obligated, but fail or refuse, to purchase. If any one or
more of the Underwriters shall fail or refuse to purchase Shares which it or
they are obligated to purchase on the Closing Date and the aggregate number of
Shares with respect to which such default occurs is more than one-tenth of the
aggregate number of Shares which the Underwriters are obligated to purchase on
the Closing Date and arrangements satisfactory to you and the Company for the
purchase of such Shares by one or more non-defaulting Underwriters or other
party or parties approved by you and the Company are not made within 36 hours
after such default, this Agreement will terminate without liability on the part
of any non-defaulting Underwriter or the Company. In any such case which does
not result in termination of this Agreement, either you 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 the Prospectus or any other documents or arrangements may be
effected. Any action taken under this paragraph shall not relieve any
defaulting Underwriter from liability in respect of any such default of any
such Underwriter under this Agreement. The term "Underwriter" as used in this
Agreement includes, for all purposes of this Agreement, any party not listed in
Schedule I hereto who, with your approval and the approval of the Company,
purchases shares which a defaulting Underwriter is obligated, but fails or
refuses, to purchase.
Any notice under this Section 10 may be given by telegram, telecopy or
telephone but shall be subsequently confirmed within 24 hours by letter.
-25-
<PAGE> 26
11. Termination of Agreement. This Agreement shall be subject to
termination in your absolute discretion, without liability on the part of any
Underwriter to the Company, by notice to the Company, if prior to the Closing
Date or any Option Closing Date (if different from the Closing Date and then
only as to the Additional Shares), as the case may be, (i) trading in
securities generally on the New York Stock Exchange, the American Stock
Exchange or The Nasdaq Stock Market shall have been suspended or materially
limited, (ii) a general moratorium on commercial banking activities in New York
shall have been declared by either federal or state authorities, or (iii) there
shall have occurred any outbreak or escalation of hostilities or other
international or domestic calamity, crisis or change in political, financial or
economic conditions, the effect of which on the financial markets of the United
States is such as to make it, in your reasonable judgment, impracticable or
inadvisable to commence or continue the offering of the Shares at the offering
price to the public set forth on the cover page of the Prospectus or to enforce
contracts for the resale of the Shares by the Underwriters. Notice of such
termination may be given to the Company by telegram, telecopy or telephone and
shall be subsequently confirmed within 48 hours by letter.
12. Information Furnished by the Underwriters. The statements set
forth in the last paragraph on the cover page and the statements in the first
and third paragraphs under the caption "Underwriting" in any Prepricing
Prospectus, Prospectus Supplement and in the Prospectus, constitute the only
information furnished by or on behalf of the Underwriters through you as such
information is referred to in Sections 6(b) and 7 hereof.
13. Miscellaneous. Except as otherwise provided in Sections 5, 10
and 11 hereof, notice given pursuant to any provision of this Agreement shall
be in writing and shall be delivered (i) if to the Company, at the office of
the Company at Walden Residential Properties, Inc., One Lincoln Centre, 5400
LBJ Freeway, Suite 400, Dallas, Texas, 75240, Attention: Don R. Daseke, or (ii)
if to you, at Smith Barney Inc., 388 Greenwich Street, New York, New York
10013, Attention: Manager, Investment Banking Division.
This Agreement has been and is made solely for the benefit of the
several Underwriters, the Company, the Subsidiary, their respective directors
and officers, and the other controlling persons referred to in Section 7 hereof
and their respective successors and assigns, to the extent provided herein, and
no other person shall acquire or have any right under or by virtue of this
Agreement. Neither the term "successor" nor the term "successors and assigns"
as used in this Agreement shall include a purchaser from any Underwriter of any
of the Shares in his status as such purchaser.
14. Applicable Law; Counterparts. This Agreement shall be governed
by and construed in accordance with the laws of the State of New York
applicable to contracts made and to be performed within the State of New York.
This Agreement may be signed in various counterparts which together
constitute one and the same instrument. If signed in counterparts, this
Agreement shall not become effective unless at least one counterpart hereof
shall have been executed and delivered on behalf of each party hereto.
-26-
<PAGE> 27
Please confirm that the foregoing correctly sets forth the agreement
among the Company and the several Underwriters.
Very truly yours,
WALDEN RESIDENTIAL PROPERTIES, INC.
By:
--------------------------------------
Mark S. Dillinger
Executive Vice President and Chief
Financial Officer
Confirmed as of the date first above mentioned on behalf of themselves and the
other several Underwriters named in Schedule I hereto.
SMITH BARNEY INC.
By:
----------------------------------
Name:
Managing Director
-27-
<PAGE> 28
SCHEDULE I
WALDEN RESIDENTIAL PROPERTIES, INC.
<TABLE>
<CAPTION>
Number of
Underwriter Firm Shares
- ----------- -----------
<S> <C> <C>
Smith Barney Inc. . . . . . . . . . . . . . . . . . . . ______________
. . . . . . . . . . . . . . . . . . . . . . . . . . . . ______________
Total . . .
==============
</TABLE>
<PAGE> 29
SCHEDULE II
SUBSIDIARIES AND PARTNERSHIP INTERESTS
Subsidiaries
<TABLE>
<CAPTION>
Name Percentage Interest
- ---- -------------------
<S> <C>
</TABLE>
Partnership Interests
<TABLE>
<CAPTION>
Name Percentage Interest
- ---- -------------------
<S> <C>
</TABLE>
