-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, PESl4DxZe1ikshmxaO7OyQx2EqIyrHhegMQeqYCC5VcQCTlMkF006VGWw2OR1Bk8 H2Soq1qqT2ta38rPme3/hA== 0000916641-98-001213.txt : 19981116 0000916641-98-001213.hdr.sgml : 19981116 ACCESSION NUMBER: 0000916641-98-001213 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 9 CONFORMED PERIOD OF REPORT: 19981110 ITEM INFORMATION: FILED AS OF DATE: 19981112 FILER: COMPANY DATA: COMPANY CONFORMED NAME: UNITED DOMINION REALTY TRUST INC CENTRAL INDEX KEY: 0000074208 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 540857512 STATE OF INCORPORATION: VA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-10524 FILM NUMBER: 98746090 BUSINESS ADDRESS: STREET 1: 10 S 6TH ST STE 203 CITY: RICHMOND STATE: VA ZIP: 23219-3802 BUSINESS PHONE: 8047802691 MAIL ADDRESS: STREET 1: 10 SOUTH SIXTH STREET STREET 2: SUITE 203 CITY: RICHMOND STATE: VA ZIP: 23219-3802 FORMER COMPANY: FORMER CONFORMED NAME: OLD DOMINION REAL ESTATE INVESTMENT TRUST DATE OF NAME CHANGE: 19850110 FORMER COMPANY: FORMER CONFORMED NAME: OLD DOMINION REIT ONE DATE OF NAME CHANGE: 19770921 FORMER COMPANY: FORMER CONFORMED NAME: OLD DOMINION REAL ESTATE INVESTMENT TRUS DATE OF NAME CHANGE: 19741216 8-K 1 UNITED DOMINION REALTY TRUST, INC. 8-K 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 November 10, 1998 Date of Report (Date of Earliest Event Reported) UNITED DOMINION REALTY TRUST, INC. (Exact name of registrant as specified in its charter) Virginia 1-10524 54-0857512 (State or other jurisdiction (Commission File No.) I.R.S. Employer of incorporation) (Identification No.)
10 South Sixth Street Richmond, Virginia, 23219 (Address of principal executive offices) (Zip Code) (804) 780-2691 (Registrant's telephone number, including area code) N/A (former name or former address, if changed since last report) ================================================================================ Item 7. Financial Statements, Pro Forma Financial Information and Exhibits (c) Exhibits: 1.1 Underwriting Agreement, dated November 10, 1998, among the Registrant and certain underwriters named therein. 1.2 Underwriting Agreement, dated November 10, 1998, among the Registrant and certain underwriters named therein. 1.3 Pricing Agreement, dated November 10, 1998, among the Registrant and certain underwriters named therein relating to the offer and sale of 8 1/8% Notes Due 2000. 1.4 Pricing Agreement, dated November 10, 1998, among the Registrant and certain underwriters named therein relating to the offer and sale of 8 1/2% Monthly Income Notes Due 2008. 4.1 Form of 8 1/8% Note Due 2000 4.2 Form of 8 1/2% Monthly Income Note Due 2008 23.1 Consent of Ernst & Young LLP dated November 6, 1998 23.2 Consent of Ernst & Young LLP dated November 6, 1998 SIGNATURE Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereto duly authorized. UNITED DOMINION REALTY TRUST, INC. (Registrant) By: /s/ Robin R. Flanagan --------------------------------- Name: Robin R. Flanagan Title: Assistant Vice President, Controller -- Corporate Accounting and Reporting Dated: November 12, 1998 -2- EXHIBIT INDEX Exhibit No. Description - ------------------------- -------------------------------------------------- 1.1 Underwriting Agreement, dated November 10, 1998, among the Registrant and certain underwriters named therein. 1.2 Underwriting Agreement, dated November 10, 1998, among the Registrant and certain underwriters named therein. 1.3 Pricing Agreement, dated November 10, 1998, among the Registrant and certain underwriters named therein relating to the offer and sale of 8 1/8% Notes Due 2000 1.4 Pricing Agreement, dated November 10, 1998, among the Registrant and certain underwriters named therein relating to the offer and sale of 8 1/2% Monthly Income Notes Due 2008. 4.1 Form of 8 1/8% Note Due 2000 4.2 Form of 8 1/2% Monthly Income Note Due 2008 23.1 Consent of Ernst & Young LLP dated November 6, 1998 23.2 Consent of Ernst & Young LLP dated November 6, 1998 EX-1 2 EXHIBIT 1.1 Exhibit 1.1 United Dominion Realty Trust, Inc. Debt Securities Underwriting Agreement November 10, 1998 Morgan Stanley & Co. Incorporated First Union Capital Markets, a division of Wheat First Securities, Inc. NationsBanc Montgomery Securities LLC c/o Morgan Stanley & Co. Incorporated 1585 Broadway New York, New York 10036 Ladies and Gentlemen: From time to time United Dominion Realty Trust, Inc., a Virginia corporation (the "Company"), United Dominion Realty, L.P., a Virginia limited partnership (the "Operating Partnership"), UDR Western Residential, Inc., a Virginia corporation ("Residential"), UDRT of North Carolina, L.L.C., a North Carolina limited liability company ("North Carolina"), and ASR Investments Corporation, a Maryland corporation ("Investment"; the Operating Partnership, Residential, North Carolina and Investment are hereinafter sometimes called, collectively, the "Operating Entities" and, individually, an "Operating Entity"), propose to enter into one or more Pricing Agreements (each a "Pricing Agreement") in the form of Annex I hereto, with such additions and deletions as the parties thereto may determine, and, subject to the terms and conditions stated herein and therein, the Company proposes to issue and sell to the firms named in Schedule I to the applicable Pricing Agreement (such firms constituting the "Underwriters" with respect to such Pricing Agreement and the securities specified therein) certain of the Company's debt securities (the "Securities") specified in Schedule II to such Pricing Agreement (with respect to such Pricing Agreement, the "Designated Securities"). The terms and rights of any particular issuance of Designated Securities shall be as specified in the Pricing Agreement relating thereto and in or pursuant to the indenture (the "Indenture") identified in such Pricing Agreement. All references herein to any "subsidiary" or "subsidiaries" of the Company shall be deemed to include the Operating Entities unless otherwise expressly stated. 1. Particular sales of Designated Securities may be made from time to time to the Underwriters of such Securities, for whom the firms designated as representatives of the Underwriters of such Securities in the Pricing Agreement relating thereto will act as representatives (the "Representatives"). The term "Representatives" also refers to a single firm acting as sole representative of the Underwriters and to an Underwriter or Underwriters who act without any firm being designated as its or their representatives. This Underwriting Agreement shall not be construed as an obligation of the Company to sell any of the Securities or as an obligation of any of the Underwriters to purchase any of the Securities. The obligation of the Company to issue and sell any of the Securities and the obligation of any of the Underwriters to purchase any of the Securities shall be evidenced by the Pricing Agreement with respect to the Designated Securities specified therein. Each Pricing Agreement shall specify the aggregate principal amount of such Designated Securities, the initial public offering price of such Designated Securities, the purchase price to the Underwriters of such Designated Securities, the names of the Underwriters of such Designated Securities, the names of the Representatives of such Underwriters and the principal amount of such Designated Securities to be purchased by each Underwriter and shall set forth the date, time and manner of delivery of such Designated Securities and payment therefor. The Pricing Agreement shall also specify (to the extent not set forth in the Indenture and the registration statement and prospectus with respect thereto) the terms of such Designated Securities. A Pricing Agreement shall be in the form of an executed writing (which may be in counterparts), and may be evidenced by an exchange of telegraphic communications or any other rapid transmission device designed to produce a written record of communications transmitted. The obligations of the Underwriters under this Agreement and each Pricing Agreement shall be several and not joint. 2. The Company and the Operating Entities jointly and severally represent and warrant to, and agree with, each of the Underwriters that: (a) A registration statement on Form S-3 (File No. 333-27221) and Amendment No. 1 thereto (as so amended, the "Initial Registration Statement") in respect of the Securities have been filed with the Securities and Exchange Commission (the "Commission"); the Initial Registration Statement and any post-effective amendment thereto, each in the form heretofore delivered or to be delivered to the Representatives and excluding exhibits to such registration statement but including all documents incorporated by reference in the prospectus contained therein, has been declared effective by the Commission in such form; other than a registration statement, if any, increasing the size of the offering (a "Rule 462(b) Registration Statement") filed pursuant to Rule 462(b) under the Securities Act of 1933, as amended (the "Act"), which became effective upon filing and other than exhibits filed as part of documents incorporated by reference in the Initial Registration Statement, no other document with respect to the Initial Registration Statement or any document incorporated by reference therein has heretofore been filed or transmitted for filing with the Commission (other than prospectuses filed pursuant to Rule 424(b) of the rules and regulations of the Commission under the Act each in the form heretofore delivered to the Representatives); and no stop order suspending the effectiveness of the Initial Registration Statement, any post-effective amendment thereto or the Rule 462(b) Registration Statement, if any, has been issued and no proceeding for that purpose has been initiated or threatened by the Commission; any preliminary prospectus included in the Initial Registration Statement or filed with the Commission pursuant to Rule 424(a) under the Act is hereinafter called a "Preliminary Prospectus"; the various parts of the Initial Registration Statement and the Rule 462(b) Registration Statement, if any, including all exhibits thereto and the documents incorporated by reference in the prospectus contained in the Initial Registration Statement at the time such part of the registration statement became effective but excluding any Form T-1, each as amended at the time such part of the Initial Registration Statement became effective or such part of the Rule 462(b) Registration Statement, if any, became or hereafter becomes effective, are hereinafter collectively called the "Registration Statement"; the prospectus relating to the Securities, in the form in which it has most recently been filed, or transmitted for filing, with the Commission on or prior to the date of this Agreement, is hereinafter called the "Prospectus"; any reference herein to any Preliminary Prospectus or the Prospectus shall be deemed to refer to and include the documents incorporated by reference therein pursuant to the applicable form under the Act, as of the date of such Preliminary Prospectus or Prospectus, as the case may be; any reference to any amendment or supplement to any Preliminary Prospectus or the Prospectus shall be deemed to refer to and include any documents filed after the date of such Preliminary Prospectus or Prospectus, as the case may be, under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and incorporated by reference in such Preliminary Prospectus or Prospectus, as the case may be; any reference to any amendment to the Registration Statement shall be deemed to refer to and include any annual report of the Company filed pursuant to Sections 13(a) or 15(d) of the Exchange Act after the effective date of the Registration Statement that is incorporated by reference in the Registration Statement; any reference to the 2 Prospectus as amended or supplemented shall be deemed to refer to the Prospectus as amended or supplemented in relation to the applicable Designated Securities in the form first used to confirm sales of such Designated Securities, including any documents incorporated by reference therein as of the date of such amendment or supplement, as the case may be; and if the Company elects to rely on Rule 434 under the Act, any reference to the Prospectus shall be deemed to include, without limitation, the form of prospectus and the abbreviated term sheet, taken together, provided to the Underwriters by the Company in reliance on Rule 434 under the Act (the "Rule 434 Prospectus"); (b) The documents incorporated by reference in the Prospectus, when they became effective or were filed with the Commission, as the case may be, conformed in all material respects to the requirements of the Act or the Exchange Act, as applicable, and the rules and regulations of the Commission thereunder, and none of such documents 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 any further documents so filed and incorporated by reference in the Prospectus or any further amendment or supplement thereto, when such documents become effective or are filed with the Commission, as the case may be, will conform in all material respects to the requirements of 3 the Act or the Exchange Act, as applicable, and the rules and regulations of the Commission thereunder and 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; provided, however, that this representation and warranty shall not apply to any statements or omissions made in reliance upon and in conformity with information furnished in writing to the Company by an Underwriter of Designated Securities through the Representatives expressly for use in the Prospectus as amended or supplemented relating to such Designated Securities; (c) The Registration Statement and the Prospectus conform, and any further amendments or supplements to the Registration Statement or the Prospectus will conform, in all material respects to the requirements of the Act and the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"), and the rules and regulations of the Commission thereunder and do not and will not, as of the respective effective dates as to the Registration Statement, any Rule 462(b) Registration Statement and any amendment thereto and as of the applicable filing date as to the Prospectus and any amendment or supplement thereto and as of the Time of Delivery (as defined in Section 4 hereof) with respect to any Designated Securities, 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; provided, however, that this representation and warranty shall not apply to any statements or omissions made in reliance upon and in conformity with information furnished in writing to the Company by an Underwriter of Designated Securities through the Representatives expressly for use in the Prospectus as amended or supplemented relating to such Designated Securities; (d) The Company has been duly organized and is validly existing as a corporation in good standing under the laws of the Commonwealth of Virginia, with full power and authority to own, lease and operate its properties and conduct its business as described in the Prospectus; and the Company is duly qualified to transact business in all jurisdictions in which the conduct of its business requires such qualification except where the failure to so qualify would not have a material adverse effect on the condition, financial or otherwise, or the earnings, business affairs or business prospects of the Company; (e) Each subsidiary of the Company has been duly organized and is validly existing as a corporation, limited liability company, limited partnership or real estate investment trust in good standing under the laws of the jurisdiction of its incorporation or organization, with power and authority to own, lease and operate its properties and conduct its business as described in the Prospectus and is duly qualified to transact business in all jurisdictions in which the conduct of its business requires such qualification except where the failure to so be in good standing 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, considered as one enterprise; each such subsidiary is duly qualified to transact business in all jurisdictions in which the conduct of its business requires such qualification, or in which the failure to qualify would have a materially adverse effect upon the business of such subsidiary; all of the issued and outstanding shares of capital stock of each such corporate subsidiary and all of the issued and outstanding shares of beneficial interest of each such real 4 estate investment trust subsidiary have been duly authorized and validly issued, are fully paid and non-assessable and are owned by the Company or a subsidiary of the Company, free and clear of any security interest, mortgage, pledge, lien, encumbrance, claim or equity; all of the issued and outstanding partnership interests of each such partnership subsidiary and all of the issued and outstanding limited liability company interests of each such limited liability company subsidiary have been duly authorized and validly issued, are fully paid and (except in the case of general partnership interests) non-assessable and, except as otherwise disclosed in the Prospectus, are owned by the Company and/or one or more subsidiaries of the Company, free and clear of any security interest, mortgage, pledge, lien, encumbrance, claim or equity; and the Company and/or one or more subsidiaries of the Company are the only members or general partners of the Company's limited liability company or limited partnership subsidiaries, as applicable, and own the entire membership or general partnership interest in each such subsidiary free and clear of any security interest, mortgage, pledge, lien, encumbrance, claim or equity; (f) Neither the Company nor any of its subsidiaries has sustained since the date of the latest audited financial statements included or incorporated by reference in the Prospectus any material loss or interference with its business from fire, explosion, flood or other calamity, whether or not covered by insurance, or from any labor dispute or court or governmental action, order or decree, otherwise than as set forth or contemplated in the Prospectus; and, since the respective dates as of which information is given in the Registration Statement and the Prospectus, there has not been any material change in the capital stock, total assets or long-term debt of the Company or any of its subsidiaries or any material adverse change, or any development involving a prospective material adverse change, in or affecting the general affairs, management, financial position, shareholders' equity or results of operations of the Company and its subsidiaries, otherwise than as set forth or contemplated in the Prospectus as amended prior to the date of the Pricing Agreement relating to the Designated Securities. (g) The Company has an authorized capitalization as set forth in the Prospectus, and all of the issued shares of capital stock of the Company have been duly and validly authorized and issued and are fully paid and non-assessable; (h) The Securities have been duly and validly authorized, and, when Designated Securities are issued and delivered pursuant to this Agreement and the Pricing Agreement with respect to such Designated Securities, such Designated Securities will have been duly executed, authenticated, issued and delivered and will constitute valid and legally binding obligations of the Company entitled to the benefits provided by the Indenture, which will be substantially in the form filed as an exhibit to the Registration Statement; the Indenture has been duly authorized and duly qualified under the Trust Indenture Act and, at the Time of Delivery for such Designated Securities, the Indenture will constitute a valid and legally binding instrument, enforceable in accordance with its terms, subject, as to enforcement, to bankruptcy, insolvency, reorganization and other laws of general 5 applicability relating to or affecting creditors' rights and to general equity principles; and the Indenture conforms, and the Designated Securities will conform, to the descriptions thereof contained in the Prospectus as amended or supplemented with respect to such Designated Securities; (i) The issue and sale of the Securities and the compliance by the Company and the Operating Entities with all of the provisions of the Securities, the Indenture, this Agreement, and any Pricing Agreement, and the consummation of the transactions herein and therein contemplated will not conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, any indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to which the Company or any of its subsidiaries is a party or by which the Company or any of its subsidiaries is bound or to which any of the property or assets of the Company or any of its subsidiaries is subject, nor will such action result in any violation of the provisions of the Articles of Incorporation or By-laws of the Company, Residential or Investment, the certificate of limited partnership or limited partnership agreement of the Operating Partnership, the operating agreement of North Carolina or any statute or any order, rule or regulation of any court or governmental agency or body having jurisdiction over the Company or any of its subsidiaries or any of their respective properties; and no consent, approval, authorization, order, registration or qualification of or with any such court or governmental agency or body is required for the issue and sale of the Securities or the consummation by the Company or any of the Operating Entities of the transactions contemplated by this Agreement, or any Pricing Agreement or the Indenture, except such as have been, or will have been prior to the Time of Delivery, obtained under the Act and the Trust Indenture Act and such consents, approvals, authorizations, registrations or qualifications as may be required under state securities or Blue Sky laws in connection with the purchase and distribution of the Securities by the Underwriters; (j) The statements set forth in the Prospectus as amended or supplemented with respect to the Designated Securities under the captions "Description of Debt Securities" and "Description of the Offered Securities" (or under any similar caption describing the Designated Securities), insofar as they purport to constitute a summary of the terms of the Securities, and under the captions "Description of Capital Stock," "Plan of Distribution" and "Underwriters", insofar as they purport to describe the provisions of the laws and documents referred to therein, are accurate, complete and fair; (k) Neither the Company nor any of its subsidiaries is in violation of its Articles of Incorporation or By-laws, limited partnership agreement, limited liability company agreement, operating agreement or other organizational documents or in default in the performance or observance of any material obligation, agreement, covenant or condition contained in any indenture, mortgage, deed of trust, loan agreement, lease or other agreement or instrument to which it is a party or by which it or any of its properties may be bound; 6 (l) Other than as set forth in the Prospectus, there are no legal or governmental proceedings pending to which the Company or any of its subsidiaries is a party or of which any property of the Company or any of its subsidiaries is the subject which, if determined adversely to the Company or any of its subsidiaries, would individually or in the aggregate have a material adverse effect on the current or future consolidated financial position, shareholders' equity or results of operations of the Company and its subsidiaries; and, to the best of the Company's knowledge, no such proceedings are threatened or contemplated by governmental authorities or threatened by others; (m) The financial statements together with related notes and schedules of the Company and its subsidiaries and of any companies, other entities or properties acquired or to be acquired by the Company, in each case as set forth or incorporated by reference in the Prospectus, present fairly the financial position and the results of operations of the Company and its subsidiaries and of such companies, entities and properties, as the case may be, at the indicated dates and for the indicated periods. Such financial statements have been prepared in accordance with generally accepted principles of accounting, consistently applied throughout the periods involved, and all adjustments necessary for a fair presentation of results for such periods have been made. The summary financial and statistical data included in the Prospectus present fairly the information shown therein and have been compiled on a basis consistent with the financial statements presented therein; the pro forma financial statements and related notes thereto included in the Prospectus present fairly the information shown therein, have been prepared in accordance with the Commission's rules and guidelines with respect to pro forma financial statements and have been properly compiled on the bases described therein, and the assumptions used in the preparation thereof are reasonable and the adjustments used therein are appropriate to give effect to the transactions and circumstances referred to therein; (n) The Company and its subsidiaries have good and marketable title to, or valid and enforceable leasehold estates in, all items of real and personal property referred to in the Prospectus as owned or leased by them, in each case free and clear of all liens, encumbrances, claims, security interests and defects, other than those referred to in the Prospectus or which are not material in amount. Each lease of real property by the Company or any of its subsidiaries as lessor requiring annual lease payments in excess of $100,000 is the legal, valid and binding obligation of the lessee in accordance with its terms (except that the remedy of specific performance and injunctive and other forms of equitable relief may be subject to equitable defenses and to the discretion of the court before which any proceeding therefor may be brought and to the Bankruptcy Act) and the rents which at present have remained due and unpaid for more than 30 days are not payable under leases such that, were no further rental payments to be received under such leases, the financial condition or results of operations of the Company and its subsidiaries would be materially adversely affected thereby. The Company has no reason to believe that the lessee under any lease (excluding leases for which rent payments due for the remainder of such lease are less 7 than $500,000) calling for annual lease payments in excess of $500,000 is not financially capable of performing its obligations thereunder; (o) The Company has filed all Federal, local and foreign income tax returns which have been required to be filed or has filed extensions and has paid all taxes indicated by said returns and all assessments received by it to the extent that such taxes have become due and are not being contested in good faith; (p) The Company and each of its subsidiaries hold all material licenses, certificates and permits from governmental authorities which are necessary to the conduct of their respective businesses; and neither the Company nor any of its subsidiaries has infringed any patents, patent rights, trade names, trademarks or copyrights, which infringement is material to the business of the Company or any of its subsidiaries; (q) With respect to all tax periods regarding which the Internal Revenue Service is or will be entitled to assert any claim, the Company has met the requirements for qualification as a real estate investment trust under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended (the "Code"), and the Company's present and contemplated operations, assets and income continue to meet such requirements; (r) The conditions for use of registration statements on Form S-3 set forth in the General Instructions on Form S-3 have been satisfied and the Company is entitled to use such form for the transaction contemplated herein; (s) The Company has no knowledge of (a) 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 any of its subsidiaries, or of (b) 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 materially adversely affect the condition, financial or otherwise, or the earnings, business affairs or business prospects of the Company or any of its subsidiaries. In connection with the construction on or operation and use of the properties owned by the Company or any of its subsidiaries, the Company represents that it has no knowledge of any material 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; (t) The Company is not and, after giving effect to the offering and sale of the Securities, will not be 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 (the "Investment Company Act"); 8 (u) Ernst & Young LLP, who have certified certain financial statements of the Company and its subsidiaries, and each other accounting firm which has certified any other financial statements which are included or incorporated by reference in the Prospectus, are each independent public accountants as required by the Act and the rules and regulations of the Commission thereunder; (v) At the date of the Pricing Agreement with respect to the applicable Designated Securities, such Pricing Agreement and this Agreement will have been duly authorized, executed and delivered by the Company and the Operating Entities; (w) Nothing has come to the attention of the Company or any of its subsidiaries as a result of (a) its negotiation of the Agreement and Plan of Merger dated September 10, 1998 (as the same may be amended or supplemented from time to time, and including all schedules and attachments thereto, the "Merger Agreement") between the Company and American Apartment Communities II, Inc., a Maryland corporation ("AAC", which term includes its subsidiaries), (b) its review of the AAC Disclosure Letter (as defined in the Merger Agreement) or any other documents or information provided by AAC, (c) its investigation of the business and properties of AAC, or (d) otherwise, that would lead it to believe that any of the representations and warranties of AAC set forth in the Merger Agreement (including the AAC Disclosure Letter) are not true, complete and correct; and the failure to consummate the merger with AAC as contemplated by the Merger Agreement will not have a material adverse effect on the Company and its subsidiaries taken as a whole; and such merger, if consummated on the terms set forth in the Merger Agreement, will qualify as a tax-free reorganization under Section 368(a) of the Code; (x) The total real estate owned of the Operating Entities and the Company, in each case excluding any of their respective subsidiaries other than the Operating Entities, determined on a consolidated basis, are equal to at least 69% of the total consolidated real estate owned of the Company; the total net operating income of the Operating Entities and the Company for the nine months ended September 30, 1998, in each case excluding any of their respective subsidiaries other than the Operating Entities, determined on a consolidated basis, were equal to at least 70% of the total consolidated net operating income of the Company for the nine months ended September 30, 1998. 3. Upon the execution of the Pricing Agreement applicable to any Designated Securities and authorization by the Representatives of the release of such Designated Securities, the several Underwriters propose to offer such Designated Securities for sale upon the terms and conditions set forth in the Prospectus as amended or supplemented. 4. Designated Securities to be purchased by each Underwriter pursuant to the Pricing Agreement relating thereto, in the form specified in such Pricing Agreement, and in such authorized denominations and registered in such names as the Representatives may request upon at least twenty-four hours' prior notice to the Company, shall be delivered by or on behalf of the Company to the 9 Representatives for the account of such Underwriter, against payment by such Underwriter or on its behalf of the purchase price therefor in the funds specified in such Pricing Agreement, all in the manner and at the place and time and date specified in such Pricing Agreement or at such other place and time and date as the Representatives and the Company may agree upon in writing, such time and date being herein called the "Time of Delivery" for such Securities. 5. The Company and the Operating Entities, jointly and severally, agree with each of the Underwriters of any Designated Securities that: (a) If the Company does not elect to rely on Rule 434 under the Act, immediately following execution and delivery of the applicable Pricing Agreement, the Company will prepare the Prospectus as amended or supplemented in relation to the applicable Designated Securities in a form approved by the Representatives and will file such Prospectus pursuant to Rule 424(b) under the Act not later than the Commission's close of business on the business day following the execution and delivery of the Pricing Agreement relating to the applicable Designated Securities or, if applicable, such earlier time as may be required by Rule 424(b), or if the Company elects to rely on Rule 434 under the Act, immediately following execution and delivery of the applicable Pricing Agreement, the Company will prepare an abbreviated term sheet relating to the Designated Securities in a form approved by the Representatives that complies with the requirements of Rule 434 under the Act and will file such form of Rule 434 Prospectus complying with Rule 434(c)(2) of the Act pursuant to Rule 424(b) under the Act not later than the Commission's close of business on the business day following the execution and delivery of the Pricing Agreement relating to the applicable Designated Securities or if applicable, such earlier time as may be required by Rule 424(b); the Company will make no further amendment or any supplement to the Registration Statement or Prospectus as amended or supplemented after the date of the Pricing Agreement relating to such Securities and prior to the Time of Delivery for such Securities which shall be disapproved by the Representatives for such Securities promptly after reasonable notice thereof; the Company will advise the Representatives promptly of any such amendment or supplement after such Time of Delivery and will furnish the Representatives with copies thereof; the Company will file promptly all reports and any definitive proxy or information statements required to be filed by the Company with the Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act for so long as the delivery of a prospectus is required in connection with the offering or sale of such Securities, and during such same period will advise the Representatives, promptly after it receives notice thereof, of the time when any amendment to the Registration Statement has been filed or becomes effective or any supplement to the Prospectus or any amended Prospectus has been filed with the Commission, of the issuance by the Commission of any stop order or of any order preventing or suspending the use of any prospectus relating to the Securities, of the suspension of the qualification of such Securities for offering or sale in any jurisdiction, of the initiation or threatening of any proceeding for any such purpose, or of any request by the Commission for the amending or supplementing of the Registration Statement or Prospectus or for additional information; and, in the event of the issuance of any such stop order 10 or of any such order preventing or suspending the use of any prospectus relating to the Securities or suspending any such qualification, the Company will promptly use its best efforts to obtain the withdrawal of such order; (b) If necessary, promptly from time to time the Company will take such action as the Representatives may reasonably request to qualify such Securities for offering and sale under the securities laws of such jurisdictions as the Representatives may request and will comply with such laws so as to permit the continuance of sales and dealings therein in such jurisdictions for as long as may be necessary to complete the distribution of such Securities, provided that in connection therewith the Company shall not be required to qualify as a foreign corporation or to file a general consent to service of process in any jurisdiction; (c) Prior to 10:00 a.m. New York City time on the New York business day next succeeding the date of the applicable Pricing Agreement and from time to time, the Company will furnish the Underwriters with copies of the Prospectus as amended or supplemented in New York City in such quantities as the Representatives may reasonably request, and, if the delivery of a prospectus is required at any time in connection with the offering or sale of the Securities and if at such time any event shall have occurred as a result of which the Prospectus as then amended or supplemented would include an 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 or when such Prospectus is delivered, not misleading, or, if for any other reason it shall be necessary during such same period to amend or supplement the Prospectus or to file under the Exchange Act any document incorporated by reference in the Prospectus in order to comply with the Act, the Exchange Act or the Trust Indenture Act, the Company will notify the Representatives and upon their request will file such document and will prepare and furnish without charge to each Underwriter and to any dealer in securities as many copies as the Representatives may from time to time reasonably request of an amended Prospectus or a supplement to the Prospectus which will correct such statement or omission or effect such compliance; (d) The Company will make generally available to its securityholders as soon as practicable, but in any event not later than eighteen months after the effective date of the Registration Statement (as defined in Rule 158(c) under the Act), an earnings statement of the Company and its subsidiaries (which need not be audited) complying with Section 11(a) of the Act and the rules and regulations of the Commission thereunder (including, at the option of the Company, Rule 158); (e) During the period beginning from the date of the Pricing Agreement for such Designated Securities and continuing to and including the later of (i) the termination of trading restrictions for such Designated Securities, as notified to the Company by the Representatives and (ii) the Time of Delivery for such Designated Securities, the Company will 11 not offer, sell, contract to sell or otherwise dispose of any debt securities of the Company which mature more than one year after such Time of Delivery and which are substantially similar to such Designated Securities, without the prior written consent of Morgan Stanley & Co. Incorporated; (f) The Company will use the net proceeds received by it from the sale of the Securities in the manner specified in the Prospectus under the caption "Use of Proceeds"; and (g) 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". 6. The Company and the Operating Entities, jointly and severally, covenant and agree with the several Underwriters that they will pay or cause to be paid the following: (i) the reasonable fees, disbursements and expenses of the Company's counsel and accountants in connection with the registration of the Securities under the Act and all other expenses in connection with the preparation, printing and filing of the Registration Statement, any Preliminary Prospectus and the Prospectus and amendments and supplements thereto (including each abbreviated term sheet delivered by the Company pursuant to Rule 434 under the Act) and the mailing and delivering of copies thereof to the Underwriters and dealers; (ii) the cost of printing or producing any Agreement among Underwriters, this Agreement, any Pricing Agreement, any Indenture, any Blue Sky and Legal Investment Surveys, closing documents (including any compilation thereof) and any other documents in connection with the offering, purchase, sale and delivery of the Securities; (iii) all expenses, if any, in connection with the qualification of the Securities for offering and sale under state securities laws as provided in Section 5(b) hereof, including the fees and disbursements of counsel for the Underwriters in connection with such qualification and in connection with the Blue Sky and Legal Investment Surveys; (iv) any fees charged by securities rating services for rating the Securities; (v) any filing fees incident to, and the fees and disbursements of counsel for the Underwriters in connection with, any required review by the National Association of Securities Dealers, Inc. of the terms of the sale of the Securities; (vi) the cost of preparing the Securities; (vii) the fees and expenses of any Trustee and any agent of any Trustee and the fees and disbursements of counsel for any Trustee in connection with any Indenture and the Securities; and (viii) all other costs and reasonable expenses incident to the performance of its obligations hereunder which are not otherwise specifically provided for in this Section. It is understood, however, that, except as provided in this Section, and Sections 8 and 10 hereof, the Underwriters will pay all of their own costs and expenses, including the fees of their counsel, transfer taxes on resale of any of the Securities by them, and any advertising expenses connected with any offers they may make. 7. The obligations of the Underwriters of any Designated Securities under the Pricing Agreement relating to such Designated Securities shall be subject, in the discretion of the Representatives, to the condition that all representations and warranties and other statements of the Company and the Operating Entities in 12 or incorporated by reference in the Pricing Agreement relating to such Designated Securities are, at and as of the Time of Delivery for such Designated Securities, true and correct, the condition that the Company and the Operating Entities shall have performed all of their obligations hereunder theretofore to be performed, and the following additional conditions: (a) The Prospectus as amended or supplemented in relation to the applicable Designated Securities shall have been filed with the Commission pursuant to Rule 424(b) within the applicable time period prescribed for such filing by the rules and regulations under the Act and in accordance with Section 5(a) hereof; no stop order suspending the effectiveness of the Registration Statement or any part thereof shall have been issued and no proceeding for that purpose shall have been initiated or threatened by the Commission; and all requests for additional information on the part of the Commission shall have been complied with to the Representatives' reasonable satisfaction; (b) Brown & Wood llp, counsel for the Underwriters, shall have furnished to the Representatives such opinion or opinions, dated the Time of Delivery for such Designated Securities, with respect to the matters covered in paragraphs (i), (vi), (vii), (viii), (xi) and (xiv) of subsection (c) below as well as such other related matters as the Representatives may reasonably request, and such counsel shall have received such papers and information as they may reasonably request to enable them to pass upon such matters. In rendering their opinion, Brown & Wood llp may rely, as to all matters governed by or arising under the laws of the Commonwealth of Virginia and the States of Maryland and North Carolina, on the opinion of Hunton & Williams delivered pursuant to Section 7(c) below; (c) Hunton & Williams, counsel for the Company, shall have furnished to the Representatives their written opinion, dated the Time of Delivery for such Designated Securities, in form and substance satisfactory to the Representatives, to the effect set forth below (such opinion shall be rendered to the Underwriters at the request of the Company and shall so state therein and shall further state that Brown & Wood llp, in rendering their opinion pursuant to Section 7(b) above, may rely on such opinion of Hunton & Williams as to all matters governed by or arising under the laws of the Commonwealth of Virginia and the States of Maryland and North Carolina): (i) The Company has been duly organized and is validly existing as a corporation in good standing under the laws of the Commonwealth of Virginia, with corporate power and authority to own its properties and conduct its business as described in the Prospectus as amended or supplemented; (ii) The Company has an authorized capitalization as set forth in the Prospectus as amended or supplemented and all of the issued shares of capital stock of the Company have been duly and validly authorized and issued and are fully paid and non-assessable; (iii) The Company is duly qualified to transact business in all jurisdictions in which the conduct of its business requires 13 such qualification, or in which the failure to qualify would have a materially adverse effect upon the business of the Company; (iv) Each subsidiary of the Company has been duly organized and is validly existing as a corporation, limited liability company, limited partnership or real estate investment trust in good standing under the laws of the jurisdiction of its incorporation or organization, with power and authority to own, lease and operate its properties and conduct its business as described in the Prospectus as amended or supplemented, and is duly qualified to transact business in all jurisdictions in which the conduct of its business requires such qualification except where the failure to so be in good standing 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, considered as one enterprise; each such subsidiary is duly qualified to transact business in all jurisdictions in which the conduct of its business requires such qualification, or in which the failure to qualify would have a materially adverse effect upon the business of such subsidiary; all of the issued and outstanding shares of capital stock of each such corporate subsidiary and all of the issued and outstanding shares of beneficial interest of each such real estate investment trust subsidiary have been duly authorized and validly issued, are fully paid and non-assessable and are owned by the Company or by a subsidiary of the Company, free and clear of any security interest, mortgage, pledge, lien, encumbrance, claim or equity; all of the issued and outstanding partnership interests of each such partnership subsidiary and all of the issued and outstanding limited liability company interests of each such limited liability company subsidiary have been duly authorized and validly issued, are fully paid and (except in the case of general partnership interests) non-assessable and, except as otherwise disclosed in the Prospectus, are owned by the Company and/or one or more subsidiaries of the Company, free and clear of any security interest, mortgage, pledge, lien, encumbrance, claim or equity; and the Company, and/or such subsidiaries of the Company are the only members or general partners of the Company's limited liability company or limited partnership subsidiaries, as applicable, and own the entire membership or general partnership interest in each such subsidiary free and clear of any security interest, mortgage, pledge, lien, encumbrance, claim or equity; (v) To the best of such counsel's knowledge and other than as set forth in the Prospectus as amended or supplemented, there are no legal or governmental proceedings pending to which the Company or any of its subsidiaries is a party or of which any property of the Company or any of its subsidiaries is the subject which, if determined adversely to the Company or any of its subsidiaries, would individually or in the aggregate have a material adverse effect on the current or 14 future consolidated financial position, shareholders' equity or results of operations of the Company and its subsidiaries; and, to the best of such counsel's knowledge, no such proceedings are threatened or contemplated by governmental authorities or threatened by others; (vi) This Agreement and the Pricing Agreement with respect to the Designated Securities have been duly authorized, executed and delivered by the Company and the Operating Entities; (vii) The Designated Securities have been duly authorized and executed by the Company and, when duly authenticated by the Trustee in accordance with the Indenture and delivered to the Underwriters against payment of the consideration therefor in accordance with the Pricing Agreement, will constitute valid and binding obligations of the Company, enforceable against the Company in accordance with their terms, subject, as to enforcement, to bankruptcy, insolvency, reorganization and other laws of general applicability relating to or affecting creditors' rights and to general equity principles, whether considered at law or in equity, and will be entitled to the benefits of the Indenture; (viii) 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, subject, as to enforcement, to bankruptcy, insolvency, reorganization and other laws of general applicability relating to or affecting creditors' rights and to general equity principles, whether considered at law or in equity; and the Indenture has been duly qualified under the Trust Indenture Act; (ix) The issue and sale of the Designated Securities being delivered on the date of such opinion and the compliance by the Company and the Operating Entities with all of the provisions of the Designated Securities, the Indenture, this Agreement and the Pricing Agreement with respect to the Designated Securities and the consummation of the transactions herein and therein contemplated will not conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, any indenture, mortgage, deed of trust, loan agreement or other agreement or instrument known to such counsel to which the Company or any of its subsidiaries is a party or by which the Company or any of its subsidiaries is bound or to which any of the property or assets of the Company or any of its subsidiaries is subject, nor will such actions result in any violation of the provisions of the Articles of Incorporation or By-laws of the Company, Residential or Investment or the certificate of limited partnership or limited partnership agreement of the Operating Partnership or the operating agreement of North Carolina or any statute or any order, rule or regulation known to such counsel of any court or governmental agency or body having jurisdiction over the Company or any of its subsidiaries or any of their properties; (x) No consent, approval, authorization, order, registration or qualification of or with any such court or governmental agency 15 or body is required for the issue and sale of the Designated Securities being delivered on the date of such opinion or the consummation by the Company or the Operating Entities of the transactions contemplated by this Agreement, the Pricing Agreement or the Indenture, except such as have been obtained under the Act and the Trust Indenture Act and such consents, approvals, authorizations, orders, registrations or qualifications as may be required under state securities or Blue Sky laws in connection with the purchase and distribution of the Designated Securities by the Underwriters; (xi) The statements set forth in the Prospectus under the captions "Description of Debt Securities" and "Description of the Offered Securities" (or under any similar caption), insofar as they constitute a summary of the Indenture, the Designated Securities, or any other documents referred to therein or matters of law are accurate summaries and fairly and correctly present the information called for with respect to such documents and matters; (xii) The Company is not required to be registered under the Investment Company Act; (xiii) The documents incorporated by reference in the Prospectus as amended or supplemented (other than the financial statements and related schedules therein, as to which such counsel need express no opinion), when they became effective or were filed with the Commission, as the case may be, complied as to form in all material respects with the requirements of the Act or the Exchange Act, as applicable, and the rules and regulations of the Commission thereunder; and although they do not assume any responsibility for the accuracy, completeness or fairness of the statements therein, nothing has come to their attention which leads them to believe that any documents incorporated by reference in the Prospectus as amended or supplemented (other than the financial statements and related schedules therein, as to which such counsel need express no opinion), when they became effective or were so filed, as the case may be, contained, in the case of a registration statement which became effective under the Act, an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading, or, in the case of other documents which were filed under the Act or the Exchange Act with the Commission, an untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made when such documents were so filed, not misleading; and (xiv) The Registration Statement and the Prospectus as amended or supplemented and any further amendments and supplements thereto made by the Company on or prior to the date of such opinion (other than the financial statements and 16 related schedules therein, as to which such counsel need express no opinion) comply as to form in all material respects with the requirements of the Act and the Trust Indenture Act and the rules and regulations thereunder; if applicable, the Rule 434 Prospectus complies as to form in all material respects with the requirements of Rule 434 under the Act; although they do not assume any responsibility for the accuracy, completeness or fairness of the statements contained in the Registration Statement or the Prospectus, except for those referred to in the opinion in subsection (xi) of this Section 7(c), nothing has come to their attention which leads them to believe that, as of its effective date the Registration Statement or any further amendment thereto made by the Company on or prior to the date of such opinion (other than the financial statements and related schedules therein, as to which such counsel need express no opinion) contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading or that, as of the date of the applicable Pricing Agreement, the Prospectus as amended or supplemented or any further amendment or supplement thereto made by the Company on or prior to the date of such opinion (other than the financial statements and related schedules therein, as to which such counsel need express no opinion) contained an untrue statement of a material fact or omitted to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading or that, as of the Time of Delivery, either the Registration Statement or the Prospectus as amended or supplemented or any further amendment or supplement thereto made by the Company on or prior to the date of such opinion (other than the financial statements and related schedules therein, as to which such counsel need express no opinion) contains an untrue statement of a material fact or omits to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; and they do not know of any amendment to the Registration Statement required to be filed or of any contracts or other documents of a character required to be filed as an exhibit to the Registration Statement or required to be incorporated by reference into the Prospectus as amended or supplemented or required to be described in the Registration Statement or the Prospectus as amended or supplemented which are not filed or incorporated by reference or described as required; (d) Hunton & Williams, counsel for the Company, shall have furnished to the Representatives their written opinion (which shall be rendered to the Underwriters at the request of the Company and shall so state therein), dated the Time of Delivery for such Designated Securities, in form and substance satisfactory to the Representatives, to the effect that the Company has qualified to be taxed as a real estate investment trust pursuant to Sections 856 through 860 of the Code for its most recently ended fiscal year and for the four fiscal years immediately preceding such year, and the Company's organization and contemplated method of operation are such as to enable it to continue to so qualify for its current fiscal year; 17 (e) On the date of the Pricing Agreement for such Designated Securities and at the Time of Delivery for such Designated Securities, the Underwriters shall have received, a letter dated the date hereof and the Time of Delivery, respectively, in form and substance satisfactory to the Underwriters, from each of Ernst & Young LLP and Arthur Andersen LLP, independent public accountants, containing statements and information of the type ordinarily included in accountants' "comfort letters" to underwriters with respect to the financial statements and certain financial information contained in the Registration Statement and the Prospectus as amended or supplemented. (f) (i) Neither the Company nor any of its subsidiaries shall have sustained since the date of the latest audited financial statements included or incorporated by reference in the Prospectus as amended prior to the date of the Pricing Agreement relating to the Designated Securities any loss or interference with its business from fire, explosion, flood or other calamity, whether or not covered by insurance, or from any labor dispute or court or governmental action, order or decree, otherwise than as set forth or contemplated in the Prospectus as amended prior to the date of the Pricing Agreement relating to the Designated Securities, and (ii) since the respective dates as of which information is given in the Prospectus as amended prior to the date of the Pricing Agreement relating to the Designated Securities there shall not have been any change in the capital stock, total assets or long-term debt of the Company or any of its subsidiaries or any change, or any development involving a prospective change, in or affecting the general affairs, management, financial position, shareholders' equity or results of operations of the Company and its subsidiaries, otherwise than as set forth or contemplated in the Prospectus as amended prior to the date of the Pricing Agreement relating to the Designated Securities, the effect of which, in any such case described in Clause (i) or (ii), is in the judgment of the Representatives so material and adverse as to make it impracticable or inadvisable to proceed with the public offering or the delivery of the Designated Securities on the terms and in the manner contemplated in the Prospectus as first amended or supplemented relating to the Designated Securities; (g) On or after the date of the Pricing Agreement relating to the Designated Securities (i) no downgrading shall have occurred in the rating accorded the Company's debt securities or preferred stock by any "nationally recognized statistical rating organization", as that term is defined by the Commission for purposes of Rule 436(g)(2) under the Act, and (ii) no such organization shall have publicly announced that it has under surveillance or review, with possible negative implications, its rating of any of the Company's debt securities or preferred stock; (h) On or after the date of the Pricing Agreement relating to the Designated Securities there shall not have occurred any of the following: (i) a suspension or material limitation in trading in securities generally on the New York Stock Exchange; (ii) a suspension or material limitation in trading in the Company's securities on the New York Stock Exchange; (iii) a general moratorium 18 on commercial banking activities in New York declared by either Federal or New York State authorities; or (iv) the outbreak or escalation of hostilities, the occurrence of any change in financial markets or, the occurrence of any calamity or crisis or the declaration by the United States of a national emergency or war, if the effect of any such event specified in this Clause (iv) in the judgment of Morgan Stanley & Co. Incorporated makes it impracticable or inadvisable to proceed with the public offering or the delivery of the Designated Securities on the terms and in the manner contemplated in the Prospectus as amended or supplemented; (i) The Company and the Operating Entities shall have complied with the provisions of Section 5(c) hereof with respect to the furnishing of prospectuses on the New York business day next succeeding the date of the applicable Pricing Agreement; and (j) The Company and the Operating Entities shall have furnished or caused to be furnished to the Representatives at the Time of Delivery for the Designated Securities a certificate or certificates of officers of the Company, Residential and Investment and of the general partner of the Operating Partnership and of the sole member of North Carolina satisfactory to the Representatives as to the accuracy of the representations and warranties of the Company and the Operating Entities herein at and as of such Time of Delivery, as to the performance by the Company and the Operating Entities of all of their obligations hereunder to be performed at or prior to such Time of Delivery, as to the matters set forth in subsections (a) and (f) of this Section and as to such other matters as the Representatives may reasonably request. 8. (a) The Company and the Operating Entities, jointly and severally, agree to indemnify and hold harmless each Underwriter and each person, if any, who controls any Underwriter within the meaning of either Section 15 of the Act or Section 20 of the Exchange Act from and against any and all losses, claims, damages and liabilities (including, without limitation, any legal or other expenses reasonably incurred by any Underwriter or any such controlling person in connection with defending or investigating any such action or claim) caused by any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement, any Preliminary Prospectus, any preliminary prospectus supplement, the Prospectus as amended or supplemented or any other prospectus relating to the Securities, or any amendment or supplement to any of the foregoing, or caused by any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, except insofar as such losses, claims, damages or liabilities are caused by any such untrue statement or omission or alleged untrue statement or omission based upon information relating to any Underwriter furnished to the Company in writing by such Underwriter through the Representatives expressly for use therein in connection with the offering of the Designated Securities. (b) Each Underwriter agrees, severally and not jointly, to indemnify and hold harmless the Company, its directors, its officers who sign the 19 Registration Statement and each person, if any, who controls the Company within the meaning of either Section 15 of the Act or Section 20 of the Exchange Act to the same extent as the foregoing indemnity from the Company to such Underwriter, but only with reference to information relating to such Underwriter furnished to the Company in writing by such Underwriter through the Representatives in connection with the offering of the Designated Securities expressly for use in the Registration Statement, any Preliminary Prospectus, any preliminary prospectus supplement, the Prospectus as amended or supplemented or any other prospectus relating to the Designated Securities or any amendment or supplement to any of the foregoing. (c) In case any proceeding (including any governmental investigation) shall be instituted involving any person in respect of which indemnity may be sought pursuant to either paragraph (a) or (b) of this Section 8, such person (the "indemnified party") shall promptly notify the person against whom such indemnity may be sought (the "indemnifying party") in writing and the indemnifying party, upon request of the indemnified party, shall retain counsel reasonably satisfactory to the indemnified party to represent the indemnified party and any others the indemnifying party may designate in such proceeding and shall pay the fees and disbursements of such counsel related to such proceeding. In any such proceeding, any indemnified party shall have the right to retain its own counsel, but the fees and expenses of such counsel shall be at the expense of such indemnified party unless (i) the indemnifying party and the indemnified party shall have mutually agreed to the retention of such counsel or (ii) the named parties to any such proceeding (including any impleaded parties) include both the indemnifying party and the indemnified party and representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them. It is understood that the indemnifying party shall not, in respect of the legal expenses of any indemnified party in connection with any proceeding or related proceedings in the same jurisdiction, be liable for the fees and expenses of more than one separate firm (in addition to any local counsel) for all such indemnified parties and that all such fees and expenses shall be reimbursed as they are incurred. Such firm shall be designated in writing by Morgan Stanley & Co. Incorporated, in the case of parties indemnified pursuant to paragraph (a) above, and by the Company, in the case of parties indemnified pursuant to paragraph (b) above. The indemnifying party shall not be liable for any settlement of any proceeding effected without its written consent, but if settled with such consent or if there be a final judgment for the plaintiff, the indemnifying party agrees to indemnify the indemnified party from and against any loss or liability by reason of such settlement or judgment. Notwithstanding the foregoing sentence, if at any time an indemnified party shall have requested an indemnifying party to reimburse the indemnified party for fees and expenses of counsel as contemplated by the second and third sentences of this paragraph, the indemnifying party agrees that it shall be liable for any settlement of any proceeding effected without its written consent if (i) such settlement is entered into more than 30 days after receipt by such indemnifying party of the aforesaid request and (ii) such indemnifying party shall not have reimbursed the indemnified party in accordance with such request prior to the date of such settlement. No indemnifying party shall, without the prior written consent of the indemnified party, effect any settlement of any pending or threatened 20 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 proceeding. The obligations of the Company and the Operating Entities under this paragraph (c) are joint and several. (d) To the extent the indemnification provided for in paragraph (a) or (b) of this Section 8 is unavailable to an indemnified party or insufficient in respect of any losses, claims, damages or liabilities referred to therein, then each indemnifying party under such paragraph, in lieu of indemnifying such indemnified party thereunder, shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages or liabilities (i) in such proportion as is appropriate to reflect the relative benefits received by the Company and the Operating Entities on the one hand and the Underwriters of the Designated Securities on the other hand from the offering of the Designated Securities 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 and the Operating Entities on the one hand and of the Underwriters of the Designated Securities on the other hand in connection with the statements or omissions that resulted in such losses, claims, damages or liabilities, as well as any other relevant equitable considerations. The relative benefits received by the Company and the Operating Entities on the one hand and the Underwriters of the Designated Securities on the other hand in connection with the offering of the Designated Securities shall be deemed to be in the same respective proportions as the net proceeds from the offering of such Designated Securities (before deducting expenses) received by the Company and the total underwriting discounts and commissions received by the Underwriters of the Designated Securities, in each case as set forth in the table on the cover of the Prospectus as amended or supplemented with respect to the Designated Securities, bear to the aggregate public offering price of the Designated Securities. The relative fault of the Company and the Operating Entities 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 or the Operating Entities 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. The Underwriters' respective obligations to contribute pursuant to this Section 8 are several in proportion to the respective principal amounts of Designated Securities they have purchased hereunder, and not joint. The obligations of the Company and the Operating Entities to contribute pursuant to this Section 8 are joint and several. (e) The Company, the Operating Entities and the Underwriters agree that it would not be just or equitable if contribution pursuant to this Section 8 were determined by pro rata allocation (even if the 21 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) of this Section 8. The amount paid or payable by an indemnified party as a result of the losses, claims, damages and liabilities referred to in the immediately preceding paragraph 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 or defending any such action or claim. Notwithstanding the provisions of this Section 8, no Underwriter shall be required to contribute any amount in excess of the amount by which the total price at which the Designated Securities underwritten by it and distributed to the public were offered to the public exceeds the amount of any damages that 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 remedies provided for in this Section 8 are not exclusive and shall not limit any rights or remedies which may otherwise be available to any indemnified party at law or in equity. (f) The indemnity and contribution provisions contained in this Section 8 and the representations, warranties and other statements of the Company and the Operating Entities contained in this Agreement shall remain operative and in full force and effect regardless of (i) any termination of this Agreement, (ii) any investigation made by or on behalf of any Underwriter or any person controlling any Underwriter or the Company, its officers or directors or any person controlling the Company or any Operating Entity, its officers or directors (if any) or any person controlling any of the Operating Entities and (iii) acceptance of and payment for any of the Designated Securities. 9. For purposes of this Section 9, (i) if the applicable Pricing Agreement provides for the Underwriters to purchase two or more separate series of Designated Securities, then each such series is sometimes referred to as a "Series" of Designated Securities, and (ii) if the applicable Pricing Agreement provides for the Underwriters to purchase only a single series of Designated Securities, then all references to any "Series" of Designated Securities shall be deemed to mean and refer to such single series of Designated Securities. (a) If any Underwriter shall default in its obligation to purchase the Designated Securities of any Series (as defined in the Pricing Agreement) which it has agreed to purchase under the Pricing Agreement relating to such Designated Securities, the Representatives may in their discretion arrange for themselves or another party or other parties to purchase such Designated Securities of such Series on the terms contained herein. If within thirty-six hours after such default by any Underwriter the Representatives do not arrange for the purchase of such Designated Securities of such Series, then the Company shall be entitled to a further period of thirty-six hours within which to procure another party or other parties satisfactory 22 to the Representatives to purchase such Designated Securities of such Series on such terms. In the event that, within the respective prescribed period, the Representatives notify the Company that they have so arranged for the purchase of such Designated Securities of such Series, or the Company notifies the Representatives that it has so arranged for the purchase of such Designated Securities of such Series, the Representatives or the Company shall have the right to postpone the Time of Delivery for the Designated Securities of such Series for a period of not more than seven days, in order to effect whatever changes may thereby be made necessary in the Registration Statement or the Prospectus as amended or supplemented, or in any other documents or arrangements, and the Company agrees to file promptly any amendments or supplements to the Registration Statement or the Prospectus which in the opinion of the Representatives may thereby be made necessary. The term "Underwriter" as used in this Agreement shall include any person substituted under this Section with like effect as if such person had originally been a party to the Pricing Agreement with respect to the Designated Securities of such Series. (b) If, after giving effect to any arrangements for the purchase of the Designated Securities of a Series of a defaulting Underwriter or Underwriters by the Representatives and the Company as provided in subsection (a) above, the aggregate principal amount of the Designated Securities of such Series which remains unpurchased does not exceed one-eleventh of the aggregate principal amount of the Designated Securities of such Series, then the Company shall have the right to require each non-defaulting Underwriter to purchase the principal amount of the Designated Securities of such Series which such Underwriter agreed to purchase under the Pricing Agreement relating to the Designated Securities of such Series and, in addition, to require each non-defaulting Underwriter to purchase its pro rata share (based on the principal amount of Designated Securities of such Series which such Underwriter agreed to purchase under such Pricing Agreement) of the Designated Securities of such Series of such defaulting Underwriter or Underwriters for which such arrangements have not been made; but nothing herein shall relieve a defaulting Underwriter from liability for its default. (c) If, after giving effect to any arrangements for the purchase of the Designated Securities of a Series of a defaulting Underwriter or Underwriters by the Representatives and the Company as provided in subsection (a) above, the aggregate principal amount of Designated Securities of such Series which remains unpurchased exceeds one-eleventh of the aggregate principal amount of the Designated Securities of such Series, as referred to in subsection (b) above, or if the Company shall not exercise the right described in subsection (b) above to require non-defaulting Underwriters to purchase Designated Securities of such Series of a defaulting Underwriter or Underwriters, then the Pricing Agreement relating to the Designated Securities of such Series shall thereupon terminate, without liability on the part of any non-defaulting Underwriter, the Company or the Operating Entities, except for the expenses to be borne by the Company, the Operating Entities and the Underwriters as provided in Section 6 hereof and the indemnity and contribution agreements in Section 8 hereof and the provisions of Section 10 hereof; but nothing herein shall relieve a defaulting Underwriter from liability for its default. 23 10. If any Pricing Agreement shall be terminated pursuant to Section 9 hereof, the Company and the Operating Entities shall not then be under any liability to any Underwriter with respect to the Designated Securities covered by such Pricing Agreement except as provided in Section 6 and Section 8 hereof; but, if for any other reason Designated Securities are not delivered by or on behalf of the Company as provided herein, the Company and the Operating Entities will, jointly and severally, reimburse the Underwriters through the Representatives for all out-of-pocket expenses approved in writing by the Representatives, including fees and disbursements of counsel, reasonably incurred by the Underwriters in making preparations for the purchase, sale and delivery of such Designated Securities, but the Company and the Operating Entities shall then be under no further liability to any Underwriter with respect to such Designated Securities except as provided in Sections 6 and 8 hereof. 11. In all dealings hereunder, the Representatives of the Underwriters of Designated Securities shall act on behalf of each of such Underwriters, and the parties hereto shall be entitled to act and rely upon any statement, request, notice or agreement on behalf of any Underwriter made or given by such Representatives jointly or by such of the Representatives, if any, as may be designated for such purpose in the Pricing Agreement. All statements, requests, notices and agreements hereunder shall be in writing, and if to the Underwriters shall be delivered or sent by mail, telex or facsimile transmission to the address of the Representatives as set forth in the Pricing Agreement; and if to the Company or the Operating Entities shall be delivered or sent by mail, telex or facsimile transmission to the address of the Company set forth in the Registration Statement: Attention: Secretary; provided, however, that any notice to an Underwriter pursuant to Section 8(c) hereof shall be delivered or sent by mail, telex or facsimile transmission to such Underwriter at its address set forth in its Underwriters' Questionnaire, or telex constituting such Questionnaire, which address will be supplied to the Company by the Representatives upon request. Any such statements, requests, notices or agreements shall take effect upon receipt thereof. 12. This Agreement and each Pricing Agreement shall be binding upon, and inure solely to the benefit of, the Underwriters, the Company, the Operating Entities and, to the extent provided in Section 8 hereof, the officers and directors of the Company and each person who controls the Company, any of the Operating Entities or any Underwriter, and their respective heirs, executors, administrators, successors and assigns, and no other person shall acquire or have any right under or by virtue of this Agreement or any such Pricing Agreement. No purchaser of any of the Securities from any Underwriter shall be deemed a successor or assign by reason merely of such purchase. 13. Time shall be of the essence of each Pricing Agreement. As used herein, "business day" shall mean any day when the Commission's office in Washington, D.C. is open for business. 14. This Agreement and each Pricing Agreement shall be governed by and construed in accordance with the laws of the State of New York. 24 15. This Agreement and each Pricing Agreement may be executed by any one or more of the parties hereto and thereto in any number of counterparts, each of which shall be deemed to be an original, but all such respective counterparts shall together constitute one and the same instrument. 25 If the foregoing is in accordance with your understanding, please sign and return to us six counterparts hereof. Very truly yours, United Dominion Realty Trust, Inc. By: /s/ James Dolphin ---------------------------------- Name: James Dolphin Title: Executive Vice President United Dominion Realty, L.P. By: United Dominion Realty Trust, Inc., its General Partner By: /s/ James Dolphin ---------------------------------- Name: James Dolphin Title: Executive Vice President UDR Western Residential, Inc. By: /s/ James Dolphin ---------------------------------- Name: James Dolphin Title: Executive Vice President UDRT of North Carolina, L.L.C. By: United Dominion Realty Trust, Inc., its sole member By: /s/ James Dolphin ---------------------------------- Name: James Dolphin Title: Executive Vice President 26 ASR Investments Corporation By: /s/ James Dolphin --------------------------------------- Name: James Dolphin Title: Executive Vice President Accepted as of the date hereof: Morgan Stanley & Co. Incorporated First Union Capital Markets, a division of Wheat First Securities, Inc. NationsBanc Montgomery Securities LLC Acting severally on behalf of themselves and the several Underwriters By: Morgan Stanley & Co. Incorporated By: /s/ Mike Fusco --------------------------------- Name: Mike Fusco Title: Vice President 27 EX-1 3 EXHIBIT 1.2 Exhibit 1.2 United Dominion Realty Trust, Inc. Debt Securities (Including Over-Allotment Option) Underwriting Agreement November 10, 1998 Morgan Stanley & Co. Incorporated A.G. Edwards & Sons, Inc. PaineWebber Incorporated NationsBanc Montgomery Securities LLC Wheat First Securities, Inc. c/o Morgan Stanley & Co. Incorporated 1585 Broadway New York, New York 10036 Ladies and Gentlemen: From time to time United Dominion Realty Trust, Inc., a Virginia corporation (the "Company"), United Dominion Realty, L.P., a Virginia limited partnership (the "Operating Partnership"), UDR Western Residential, Inc., a Virginia corporation ("Residential"), UDRT of North Carolina, L.L.C., a North Carolina limited liability company ("North Carolina"), and ASR Investments Corporation, a Maryland corporation ("Investment"; the Operating Partnership, Residential, North Carolina and Investment are hereinafter sometimes called, collectively, the "Operating Entities" and, individually, an "Operating Entity"), propose to enter into one or more Pricing Agreements (each a "Pricing Agreement") in the form of Annex I hereto, with such additions and deletions as the parties thereto may determine, and, subject to the terms and conditions stated herein and therein, the Company proposes to issue and sell to the firms named in Schedule I to the applicable Pricing Agreement (such firms constituting the "Underwriters" with respect to such Pricing Agreement and the securities specified therein) certain of the Company's debt securities (the "Securities") specified in Schedule II to such Pricing Agreement (with respect to such Pricing Agreement, the "Designated Securities"). In the event that any Pricing Agreement shall grant the Underwriters named therein the right to purchase any additional Designated Securities to cover over-allotments, then, as used herein, the term "Firm Securities" shall mean the aggregate principal amount of Designated Securities specified in Schedule II to such Pricing Agreement under the caption "Aggregate Principal Amount of Firm Securities", the term "Additional Securities" shall mean the aggregate principal amount of Designated Securities specified in Schedule II to such Pricing Agreement under the caption "Aggregate Principal Amount of Additional Securities", and, unless otherwise expressly stated or the context otherwise requires, the terms "Securities" and "Designated Securities" shall be deemed to mean and include both such Firm Securities and such Additional Securities. The terms and rights of any particular issuance of Designated Securities shall be as specified in the Pricing Agreement relating thereto and in or pursuant to the indenture (the "Indenture") identified in such Pricing Agreement. All references herein to any "subsidiary" or "subsidiaries" of the Company shall be deemed to include the Operating Entities unless otherwise expressly stated. 1. Particular sales of Designated Securities may be made from time to time to the Underwriters of such Securities, for whom the firms designated as representatives of the Underwriters of such Securities in the Pricing Agreement relating thereto will act as representatives (the "Representatives"). The term "Representatives" also refers to a single firm acting as sole representative of the Underwriters and to an Underwriter or Underwriters who act without any firm being designated as its or their representatives. This Underwriting Agreement shall not be construed as an obligation of the Company to sell any of the Securities or as an obligation of any of the Underwriters to purchase any of the Securities. The obligation of the Company to issue and sell any of the Securities and the obligation of any of the Underwriters to purchase any of the Securities shall be evidenced by the Pricing Agreement with respect to the Designated Securities specified therein. Each Pricing Agreement shall specify the aggregate principal amount of such Designated Securities, the initial public offering price of such Designated Securities, the purchase price to the Underwriters of such Designated Securities, the names of the Underwriters of such Designated Securities, the names of the Representatives of such Underwriters and the principal amount of such Designated Securities to be purchased by each Underwriter and shall set forth the date, time and manner of delivery of such Designated Securities and payment therefor. The Pricing Agreement shall also specify (to the extent not set forth in the Indenture and the registration statement and prospectus with respect thereto) the terms of such Designated Securities. A Pricing Agreement shall be in the form of an executed writing (which may be in counterparts), and may be evidenced by an exchange of telegraphic communications or any other rapid transmission device designed to produce a written record of communications transmitted. The obligations of the Underwriters under this Agreement and each Pricing Agreement shall be several and not joint. 2. The Company and the Operating Entities jointly and severally represent and warrant to, and agree with, each of the Underwriters that: (a) A registration statement on Form S-3 (File No. 333-27221) and Amendment No. 1 thereto (as so amended, the "Initial Registration Statement") in respect of the Securities have been filed with the Securities and Exchange Commission (the "Commission"); the Initial Registration Statement and any post-effective amendment thereto, each in the form heretofore delivered or to be delivered to the 2 Representatives and excluding exhibits to such registration statement but including all documents incorporated by reference in the prospectus contained therein, has been declared effective by the Commission in such form; other than a registration statement, if any, increasing the size of the offering (a "Rule 462(b) Registration Statement") filed pursuant to Rule 462(b) under the Securities Act of 1933, as amended (the "Act"), which became effective upon filing and other than exhibits filed as part of documents incorporated by reference in the Initial Registration Statement, no other document with respect to the Initial Registration Statement or any document incorporated by reference therein has heretofore been filed or transmitted for filing with the Commission (other than prospectuses filed pursuant to Rule 424(b) of the rules and regulations of the Commission under the Act each in the form heretofore delivered to the Representatives); and no stop order suspending the effectiveness of the Initial Registration Statement, any post-effective amendment thereto or the Rule 462(b) Registration Statement, if any, has been issued and no proceeding for that purpose has been initiated or threatened by the Commission; any preliminary prospectus included in the Initial Registration Statement or filed with the Commission pursuant to Rule 424(a) under the Act is hereinafter called a "Preliminary Prospectus"; the various parts of the Initial Registration Statement and the Rule 462(b) Registration Statement, if any, including all exhibits thereto and the documents incorporated by reference in the prospectus contained in the Initial Registration Statement at the time such part of the registration statement became effective but excluding any Form T-1, each as amended at the time such part of the Initial Registration Statement became effective or such part of the Rule 462(b) Registration Statement, if any, became or hereafter becomes effective, are hereinafter collectively called the "Registration Statement"; the prospectus relating to the Securities, in the form in which it has most recently been filed, or transmitted for filing, with the Commission on or prior to the date of this Agreement, is hereinafter called the "Prospectus"; any reference herein to any Preliminary Prospectus or the Prospectus shall be deemed to refer to and include the documents incorporated by reference therein pursuant to the applicable form under the Act, as of the date of such Preliminary Prospectus or Prospectus, as the case may be; any reference to any amendment or supplement to any Preliminary Prospectus or the Prospectus shall be deemed to refer to and include any documents filed after the date of such Preliminary Prospectus or Prospectus, as the case may be, under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and incorporated by reference in such Preliminary Prospectus or Prospectus, as the case may be; any reference to any amendment to the Registration Statement shall be deemed to refer to and include any annual report of the Company filed pursuant to Sections 13(a) or 15(d) of the Exchange Act after the effective date of the Registration Statement that is incorporated by reference in the Registration Statement; any reference to the Prospectus as amended or supplemented shall be deemed to refer to the Prospectus as amended or supplemented in relation to the applicable Designated Securities in the form first used to confirm sales of such Designated Securities, including any documents incorporated by reference therein as of the date of such amendment or supplement, as the case may be; and if the Company elects to rely on Rule 434 under the Act, any reference to the Prospectus shall be deemed to include, without limitation, the form of prospectus and the 3 abbreviated term sheet, taken together, provided to the Underwriters by the Company in reliance on Rule 434 under the Act (the "Rule 434 Prospectus"); (b) The documents incorporated by reference in the Prospectus, when they became effective or were filed with the Commission, as the case may be, conformed in all material respects to the requirements of the Act or the Exchange Act, as applicable, and the rules and regulations of the Commission thereunder, and none of such documents 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 any further documents so filed and incorporated by reference in the Prospectus or any further amendment or supplement thereto, when such documents become effective or are filed with the Commission, as the case may be, will conform in all material respects to the requirements of the Act or the Exchange Act, as applicable, and the rules and regulations of the Commission thereunder and 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; provided, however, that this representation and warranty shall not apply to any statements or omissions made in reliance upon and in conformity with information furnished in writing to the Company by an Underwriter of Designated Securities through the Representatives expressly for use in the Prospectus as amended or supplemented relating to such Designated Securities; (c) The Registration Statement and the Prospectus conform, and any further amendments or supplements to the Registration Statement or the Prospectus will conform, in all material respects to the requirements of the Act and the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"), and the rules and regulations of the Commission thereunder and do not and will not, as of the respective effective dates as to the Registration Statement, any Rule 462(b) Registration Statement and any amendment thereto and as of the applicable filing date as to the Prospectus and any amendment or supplement thereto and as of the Time of Delivery (as defined in Section 4 hereof) (and if any Additional Securities are purchased, as of the Option Closing Date (as defined in Section 4 hereof)) with respect to any Designated Securities, 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; provided, however, that this representation and warranty shall not apply to any statements or omissions made in reliance upon and in conformity with information furnished in writing to the Company by an Underwriter of Designated Securities through the Representatives expressly for use in the Prospectus as amended or supplemented relating to such Designated Securities; (d) The Company has been duly organized and is validly existing as a corporation in good standing under the laws of the Commonwealth of Virginia, with full power and authority to own, lease and operate its properties and conduct its business as described in the Prospectus; and the Company is duly qualified to transact business in all jurisdictions in which the conduct of its business requires such qualification except 4 where the failure to so qualify would not have a material adverse effect on the condition, financial or otherwise, or the earnings, business affairs or business prospects of the Company; (e) Each subsidiary of the Company has been duly organized and is validly existing as a corporation, limited liability company, limited partnership or real estate investment trust in good standing under the laws of the jurisdiction of its incorporation or organization, with power and authority to own, lease and operate its properties and conduct its business as described in the Prospectus and is duly qualified to transact business in all jurisdictions in which the conduct of its business requires such qualification except where the failure to so be in good standing 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, considered as one enterprise; each such subsidiary is duly qualified to transact business in all jurisdictions in which the conduct of its business requires such qualification, or in which the failure to qualify would have a materially adverse effect upon the business of such subsidiary; all of the issued and outstanding shares of capital stock of each such corporate subsidiary and all of the issued and outstanding shares of beneficial interest of each such real estate investment trust subsidiary have been duly authorized and validly issued, are fully paid and non-assessable and are owned by the Company or a subsidiary of the Company, free and clear of any security interest, mortgage, pledge, lien, encumbrance, claim or equity; all of the issued and outstanding partnership interests of each such partnership subsidiary and all of the issued and outstanding limited liability company interests of each such limited liability company subsidiary have been duly authorized and validly issued, are fully paid and (except in the case of general partnership interests) non-assessable and, except as otherwise disclosed in the Prospectus, are owned by the Company and/or one or more subsidiaries of the Company, free and clear of any security interest, mortgage, pledge, lien, encumbrance, claim or equity; and the Company and/or one or more subsidiaries of the Company are the only members or general partners of the Company's limited liability company or limited partnership subsidiaries, as applicable, and own the entire membership or general partnership interest in each such subsidiary free and clear of any security interest, mortgage, pledge, lien, encumbrance, claim or equity; (f) Neither the Company nor any of its subsidiaries has sustained since the date of the latest audited financial statements included or incorporated by reference in the Prospectus any material loss or interference with its business from fire, explosion, flood or other calamity, whether or not covered by insurance, or from any labor dispute or court or governmental action, order or decree, otherwise than as set forth or contemplated in the Prospectus; and, since the respective dates as of which information is given in the Registration Statement and the Prospectus, there has not been any material change in the capital stock, total assets or long-term debt of the Company or any of its subsidiaries or any material adverse change, or any development involving a prospective material adverse change, in or affecting the general affairs, management, financial position, shareholders' equity or results of operations of the Company and its subsidiaries, otherwise than as set forth or 5 contemplated in the Prospectus as amended prior to the date of the Pricing Agreement relating to the Designated Securities. (g) The Company has an authorized capitalization as set forth in the Prospectus, and all of the issued shares of capital stock of the Company have been duly and validly authorized and issued and are fully paid and non-assessable; (h) The Securities have been duly and validly authorized, and, when Designated Securities are issued and delivered pursuant to this Agreement and the Pricing Agreement with respect to such Designated Securities, such Designated Securities will have been duly executed, authenticated, issued and delivered and will constitute valid and legally binding obligations of the Company entitled to the benefits provided by the Indenture, which will be substantially in the form filed as an exhibit to the Registration Statement; the Indenture has been duly authorized and duly qualified under the Trust Indenture Act and, at the Time of Delivery (and if any Additional Securities are purchased, at the Option Closing Date) for such Designated Securities, the Indenture will constitute a valid and legally binding instrument, enforceable in accordance with its terms, subject, as to enforcement, to bankruptcy, insolvency, reorganization and other laws of general applicability relating to or affecting creditors' rights and to general equity principles; and the Indenture conforms, and the Designated Securities will conform, to the descriptions thereof contained in the Prospectus as amended or supplemented with respect to such Designated Securities; (i) The issue and sale of the Securities and the compliance by the Company and the Operating Entities with all of the provisions of the Securities, the Indenture, this Agreement, and any Pricing Agreement, and the consummation of the transactions herein and therein contemplated will not conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, any indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to which the Company or any of its subsidiaries is a party or by which the Company or any of its subsidiaries is bound or to which any of the property or assets of the Company or any of its subsidiaries is subject, nor will such action result in any violation of the provisions of the Articles of Incorporation or By-laws of the Company, Residential or Investment, the certificate of limited partnership or limited partnership agreement of the Operating Partnership, the operating agreement of North Carolina or any statute or any order, rule or regulation of any court or governmental agency or body having jurisdiction over the Company or any of its subsidiaries or any of their respective properties; and no consent, approval, authorization, order, registration or qualification of or with any such court or governmental agency or body is required for the issue and sale of the Securities or the consummation by the Company or any of the Operating Entities of the transactions contemplated by this Agreement, or any Pricing Agreement or the Indenture, except such as have been, or will have been prior to the Time of Delivery, obtained under the Act and the Trust Indenture Act and such consents, approvals, authorizations, registrations or qualifications as may be 6 required under state securities or Blue Sky laws in connection with the purchase and distribution of the Securities by the Underwriters; (j) The statements set forth in the Prospectus as amended or supplemented with respect to the Designated Securities under the captions "Description of Debt Securities" and "Description of the Offered Securities" (or under any similar caption describing the Designated Securities), insofar as they purport to constitute a summary of the terms of the Securities, and under the captions "Description of Capital Stock," "Plan of Distribution" and "Underwriters", insofar as they purport to describe the provisions of the laws and documents referred to therein, are accurate, complete and fair; (k) Neither the Company nor any of its subsidiaries is in violation of its Articles of Incorporation or By-laws, limited partnership agreement, limited liability company agreement, operating agreement or other organizational documents or in default in the performance or observance of any material obligation, agreement, covenant or condition contained in any indenture, mortgage, deed of trust, loan agreement, lease or other agreement or instrument to which it is a party or by which it or any of its properties may be bound; (l) Other than as set forth in the Prospectus, there are no legal or governmental proceedings pending to which the Company or any of its subsidiaries is a party or of which any property of the Company or any of its subsidiaries is the subject which, if determined adversely to the Company or any of its subsidiaries, would individually or in the aggregate have a material adverse effect on the current or future consolidated financial position, shareholders' equity or results of operations of the Company and its subsidiaries; and, to the best of the Company's knowledge, no such proceedings are threatened or contemplated by governmental authorities or threatened by others; (m) The financial statements together with related notes and schedules of the Company and its subsidiaries and of any companies, other entities or properties acquired or to be acquired by the Company, in each case as set forth or incorporated by reference in the Prospectus, present fairly the financial position and the results of operations of the Company and its subsidiaries and of such companies, entities and properties, as the case may be, at the indicated dates and for the indicated periods. Such financial statements have been prepared in accordance with generally accepted principles of accounting, consistently applied throughout the periods involved, and all adjustments necessary for a fair presentation of results for such periods have been made. The summary financial and statistical data included in the Prospectus present fairly the information shown therein and have been compiled on a basis consistent with the financial statements presented therein; the pro forma financial statements and related notes thereto included in the Prospectus present fairly the information shown therein, have been prepared in accordance with the Commission's rules and guidelines with respect to pro forma financial statements and have been properly compiled on the bases described 7 therein, and the assumptions used in the preparation thereof are reasonable and the adjustments used therein are appropriate to give effect to the transactions and circumstances referred to therein; (n) The Company and its subsidiaries have good and marketable title to, or valid and enforceable leasehold estates in, all items of real and personal property referred to in the Prospectus as owned or leased by them, in each case free and clear of all liens, encumbrances, claims, security interests and defects, other than those referred to in the Prospectus or which are not material in amount. Each lease of real property by the Company or any of its subsidiaries as lessor requiring annual lease payments in excess of $100,000 is the legal, valid and binding obligation of the lessee in accordance with its terms (except that the remedy of specific performance and injunctive and other forms of equitable relief may be subject to equitable defenses and to the discretion of the court before which any proceeding therefor may be brought and to the Bankruptcy Act) and the rents which at present have remained due and unpaid for more than 30 days are not payable under leases such that, were no further rental payments to be received under such leases, the financial condition or results of operations of the Company and its subsidiaries would be materially adversely affected thereby. The Company has no reason to believe that the lessee under any lease (excluding leases for which rent payments due for the remainder of such lease are less than $500,000) calling for annual lease payments in excess of $500,000 is not financially capable of performing its obligations thereunder; (o) The Company has filed all Federal, local and foreign income tax returns which have been required to be filed or has filed extensions and has paid all taxes indicated by said returns and all assessments received by it to the extent that such taxes have become due and are not being contested in good faith; (p) The Company and each of its subsidiaries hold all material licenses, certificates and permits from governmental authorities which are necessary to the conduct of their respective businesses; and neither the Company nor any of its subsidiaries has infringed any patents, patent rights, trade names, trademarks or copyrights, which infringement is material to the business of the Company or any of its subsidiaries; (q) With respect to all tax periods regarding which the Internal Revenue Service is or will be entitled to assert any claim, the Company has met the requirements for qualification as a real estate investment trust under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended (the "Code"), and the Company's present and contemplated operations, assets and income continue to meet such requirements; (r) The conditions for use of registration statements on Form S-3 set forth in the General Instructions on Form S-3 have been satisfied and the Company is entitled to use such form for the transaction contemplated herein; (s) The Company has no knowledge of (a) the unlawful presence of any hazardous substances, hazardous materials, toxic substances or waste materials (collectively, "Hazardous Materials") on any of the 8 properties owned by it or any of its subsidiaries, or of (b) 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 materially adversely affect the condition, financial or otherwise, or the earnings, business affairs or business prospects of the Company or any of its subsidiaries. In connection with the construction on or operation and use of the properties owned by the Company or any of its subsidiaries, the Company represents that it has no knowledge of any material 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; (t) The Company is not and, after giving effect to the offering and sale of the Securities, will not be 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 (the "Investment Company Act"); (u) Ernst & Young LLP, who have certified certain financial statements of the Company and its subsidiaries, and each other accounting firm which has certified any other financial statements which are included or incorporated by reference in the Prospectus, are each independent public accountants as required by the Act and the rules and regulations of the Commission thereunder; (v) At the date of the Pricing Agreement with respect to the applicable Designated Securities, such Pricing Agreement and this Agreement will have been duly authorized, executed and delivered by the Company and the Operating Entities; (w) Nothing has come to the attention of the Company or any of its subsidiaries as a result of (a) its negotiation of the Agreement and Plan of Merger dated September 10, 1998 (as the same may be amended or supplemented from time to time, and including all schedules and attachments thereto, the "Merger Agreement") between the Company and American Apartment Communities II, Inc., a Maryland corporation ("AAC", which term includes its subsidiaries), (b) its review of the AAC Disclosure Letter (as defined in the Merger Agreement) or any other documents or information provided by AAC, (c) its investigation of the business and properties of AAC, or (d) otherwise, that would lead it to believe that any of the representations and warranties of AAC set forth in the Merger Agreement (including the AAC Disclosure Letter) are not true, complete and correct; and the failure to consummate the merger with AAC as contemplated by the Merger Agreement will not have a material adverse effect on the Company and its subsidiaries taken as a whole; and such merger, if consummated on the terms set forth in the Merger Agreement, will qualify as a tax-free reorganization under Section 368(a) of the Code; (x) The total real estate owned of the Operating Entities and the Company, in each case excluding any of their respective subsidiaries other than 9 the Operating Entities, determined on a consolidated basis, are equal to at least 69% of the total consolidated real estate owned of the Company; the total net operating income of the Operating Entities and the Company for the nine months ended September 30, 1998, in each case excluding any of their respective subsidiaries other than the Operating Entities, determined on a consolidated basis, were equal to at least 70% of the total consolidated net operating income of the Company for the nine months ended September 30, 1998. 3. Upon the execution of the Pricing Agreement applicable to any Designated Securities and authorization by the Representatives of the release of such Designated Securities, the several Underwriters propose to offer such Designated Securities for sale upon the terms and conditions set forth in the Prospectus as amended or supplemented. 4. (a) Designated Securities to be purchased by each Underwriter pursuant to the Pricing Agreement relating thereto or, if such Pricing Agreement grants the Underwriters named therein the right to purchase Additional Securities, the Firm Securities to be purchased by each Underwriter pursuant to such Pricing Agreement, in the form specified in such Pricing Agreement, and in such authorized denominations and registered in such names as the Representatives may request upon at least twenty-four hours' prior notice to the Company, shall be delivered by or on behalf of the Company to the Representatives for the account of such Underwriter, against payment by such Underwriter or on its behalf of the purchase price therefor in the funds specified in such Pricing Agreement, all in the manner and at the place and time and date specified in such Pricing Agreement or at such other place and time and date as the Representatives and the Company may agree upon in writing, such time and date being herein called the "Time of Delivery" for such Securities. (b) If the Pricing Agreement grants the Underwriters named therein the right to purchase Additional Securities and if the Representatives, on behalf of the Underwriters, shall elect to exercise such right, then the Additional Securities to be purchased by each Underwriter pursuant to such Pricing Agreement, in the form specified in such Pricing Agreement, and in such authorized denominations and registered in such names as the Representatives may request upon at least twenty-four hours prior notice to the Company, shall be delivered by or on behalf of the Company to the Representatives for the account of such Underwriter against payment by such Underwriter or on its behalf of the purchase price therefor in the funds specified in such Pricing Agreement, all in the manner and at the time and place and date specified in or pursuant to such Pricing Agreement or at such other place, time and date as the Representatives and the Company may agree upon in writing, such time and date being hereinafter called, with respect to such Additional Securities, the "Option Closing Date". 5. The Company and the Operating Entities, jointly and severally, agree with each of the Underwriters of any Designated Securities that: 10 (a) If the Company does not elect to rely on Rule 434 under the Act, immediately following execution and delivery of the applicable Pricing Agreement, the Company will prepare the Prospectus as amended or supplemented in relation to the applicable Designated Securities in a form approved by the Representatives and will file such Prospectus pursuant to Rule 424(b) under the Act not later than the Commission's close of business on the business day following the execution and delivery of the Pricing Agreement relating to the applicable Designated Securities or, if applicable, such earlier time as may be required by Rule 424(b), or if the Company elects to rely on Rule 434 under the Act, immediately following execution and delivery of the applicable Pricing Agreement, the Company will prepare an abbreviated term sheet relating to the Designated Securities in a form approved by the Representatives that complies with the requirements of Rule 434 under the Act and will file such form of Rule 434 Prospectus complying with Rule 434(c)(2) of the Act pursuant to Rule 424(b) under the Act not later than the Commission's close of business on the business day following the execution and delivery of the Pricing Agreement relating to the applicable Designated Securities or if applicable, such earlier time as may be required by Rule 424(b); the Company will make no further amendment or any supplement to the Registration Statement or Prospectus as amended or supplemented after the date of the Pricing Agreement relating to such Securities and prior to the Time of Delivery for such Securities (or, if the applicable Pricing Agreement grants the Underwriters the right to purchase any Additional Securities, the Company will make no such further amendment or any such supplement after the date of such Pricing Agreement and prior to the Option Closing Date for such Additional Securities unless the Representatives shall have failed to exercise such right on or prior to the 30th day after the date of such Pricing Agreement, in which case the Company will make no such further amendment or any such supplement after the date of such Pricing Agreement and prior to the 31st day following the date of such Pricing Agreement) which shall be disapproved by the Representatives for such Securities promptly after reasonable notice thereof; the Company will advise the Representatives promptly of any such amendment or supplement after such Time of Delivery (and if any Additional Securities are purchased, after the Option Closing Date) and will furnish the Representatives with copies thereof; the Company will file promptly all reports and any definitive proxy or information statements required to be filed by the Company with the Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act for so long as the delivery of a prospectus is required in connection with the offering or sale of such Securities, and during such same period will advise the Representatives, promptly after it receives notice thereof, of the time when any amendment to the Registration Statement has been filed or becomes effective or any supplement to the Prospectus or any amended Prospectus has been filed with the Commission, of the issuance by the Commission of any stop order or of any order preventing or suspending the use of any prospectus relating to the Securities, of the suspension of the qualification of such Securities for offering or sale in any jurisdiction, of the initiation or threatening of any proceeding for any such purpose, or of any request by the Commission for the amending or supplementing of the Registration Statement or Prospectus or for additional information; and, in the event of the issuance of any such stop order or of any such order preventing or suspending the use of any prospectus 11 relating to the Securities or suspending any such qualification, the Company will promptly use its best efforts to obtain the withdrawal of such order; (b) If necessary, promptly from time to time the Company will take such action as the Representatives may reasonably request to qualify such Securities for offering and sale under the securities laws of such jurisdictions as the Representatives may request and will comply with such laws so as to permit the continuance of sales and dealings therein in such jurisdictions for as long as may be necessary to complete the distribution of such Securities, provided that in connection therewith the Company shall not be required to qualify as a foreign corporation or to file a general consent to service of process in any jurisdiction; (c) Prior to 10:00 a.m. New York City time on the New York business day next succeeding the date of the applicable Pricing Agreement and from time to time, the Company will furnish the Underwriters with copies of the Prospectus as amended or supplemented in New York City in such quantities as the Representatives may reasonably request, and, if the delivery of a prospectus is required at any time in connection with the offering or sale of the Securities and if at such time any event shall have occurred as a result of which the Prospectus as then amended or supplemented would include an 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 or when such Prospectus is delivered, not misleading, or, if for any other reason it shall be necessary during such same period to amend or supplement the Prospectus or to file under the Exchange Act any document incorporated by reference in the Prospectus in order to comply with the Act, the Exchange Act or the Trust Indenture Act, the Company will notify the Representatives and upon their request will file such document and will prepare and furnish without charge to each Underwriter and to any dealer in securities as many copies as the Representatives may from time to time reasonably request of an amended Prospectus or a supplement to the Prospectus which will correct such statement or omission or effect such compliance; (d) The Company will make generally available to its securityholders as soon as practicable, but in any event not later than eighteen months after the effective date of the Registration Statement (as defined in Rule 158(c) under the Act), an earnings statement of the Company and its subsidiaries (which need not be audited) complying with Section 11(a) of the Act and the rules and regulations of the Commission thereunder (including, at the option of the Company, Rule 158); (e) The Company will not, without the prior written consent of Morgan Stanley & Co. Incorporated on behalf of the Underwriters, during the period ending 30 days after the date of the Pricing Agreement for such Designated Securities (a) offer, issue, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, 12 lend or otherwise transfer or dispose of, directly or indirectly, any Designated Securities or any other debt securities of the Company that are substantially similar to the Designated Securities (other than the Designated Securities to be sold to the Underwriters) or (b) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of any Designated Securities or any other debt securities of the Company which are substantially similar to the Designated Securities, whether any such transaction described in clause (a) or (b) of this sentence is to be settled by delivery of Designated Securities, other securities, in cash or otherwise; (f) The Company will use the net proceeds received by it from the sale of the Securities in the manner specified in the Prospectus under the caption "Use of Proceeds"; and (g) 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". 6. The Company and the Operating Entities, jointly and severally, covenant and agree with the several Underwriters that they will pay or cause to be paid the following: (i) the reasonable fees, disbursements and expenses of the Company's counsel and accountants in connection with the registration of the Securities under the Act and all other expenses in connection with the preparation, printing and filing of the Registration Statement, any Preliminary Prospectus and the Prospectus and amendments and supplements thereto (including each abbreviated term sheet delivered by the Company pursuant to Rule 434 under the Act) and the mailing and delivering of copies thereof to the Underwriters and dealers; (ii) the cost of printing or producing any Agreement among Underwriters, this Agreement, any Pricing Agreement, any Indenture, any Blue Sky and Legal Investment Surveys, closing documents (including any compilation thereof) and any other documents in connection with the offering, purchase, sale and delivery of the Securities; (iii) all expenses, if any, in connection with the qualification of the Securities for offering and sale under state securities laws as provided in Section 5(b) hereof, including the fees and disbursements of counsel for the Underwriters in connection with such qualification and in connection with the Blue Sky and Legal Investment Surveys; (iv) any fees charged by securities rating services for rating the Securities; (v) any filing fees incident to, and the fees and disbursements of counsel for the Underwriters in connection with, any required review by the National Association of Securities Dealers, Inc. of the terms of the sale of the Securities; (vi) the cost of preparing the Securities; (vii) the fees and expenses of any Trustee and any agent of any Trustee and the fees and disbursements of counsel for any Trustee in connection with any Indenture and the Securities; and (viii) all other costs and reasonable expenses incident to the performance of its obligations hereunder which are not otherwise specifically provided for in this Section. It is understood, however, that, except as provided in this Section, and Sections 8 and 10 hereof, the Underwriters will pay all of their own costs and expenses, including the fees of their counsel, transfer taxes on resale of any of the Securities by them, and any advertising expenses connected with any offers they may make. 13 7. The obligations of the Underwriters of any Designated Securities under the Pricing Agreement relating to such Designated Securities shall be subject, in the discretion of the Representatives, to the condition that all representations and warranties and other statements of the Company and the Operating Entities in or incorporated by reference in the Pricing Agreement relating to such Designated Securities are, at and as of the Time of Delivery for such Designated Securities, true and correct, the condition that the Company and the Operating Entities shall have performed all of their obligations hereunder theretofore to be performed, and the following additional conditions: (a) The Prospectus as amended or supplemented in relation to the applicable Designated Securities shall have been filed with the Commission pursuant to Rule 424(b) within the applicable time period prescribed for such filing by the rules and regulations under the Act and in accordance with Section 5(a) hereof; no stop order suspending the effectiveness of the Registration Statement or any part thereof shall have been issued and no proceeding for that purpose shall have been initiated or threatened by the Commission; and all requests for additional information on the part of the Commission shall have been complied with to the Representatives' reasonable satisfaction; (b) Brown & Wood llp, counsel for the Underwriters, shall have furnished to the Representatives such opinion or opinions, dated the Time of Delivery for such Designated Securities, with respect to the matters covered in paragraphs (i), (vi), (vii), (viii), (xi) and (xiv) of subsection (c) below as well as such other related matters as the Representatives may reasonably request, and such counsel shall have received such papers and information as they may reasonably request to enable them to pass upon such matters. In rendering their opinion, Brown & Wood llp may rely, as to all matters governed by or arising under the laws of the Commonwealth of Virginia and the States of Maryland and North Carolina, on the opinion of Hunton & Williams delivered pursuant to Section 7(c) below; (c) Hunton & Williams, counsel for the Company, shall have furnished to the Representatives their written opinion, dated the Time of Delivery for such Designated Securities, in form and substance satisfactory to the Representatives, to the effect set forth below (such opinion shall be rendered to the Underwriters at the request of the Company and shall so state therein and shall further state that Brown & Wood llp, in rendering this opinion pursuant to Section 7(b) above, may rely on such opinion of Hunton & Williams as to all matters governed by or arising under the laws of the Commonwealth of Virginia and the States of Maryland and North Carolina): (i) The Company has been duly organized and is validly existing as a corporation in good standing under the laws of the Commonwealth of Virginia, with corporate power and authority to own its properties and conduct its business as described in the Prospectus as amended or supplemented; (ii) The Company has an authorized capitalization as set forth in the Prospectus as amended or supplemented and all of the 14 issued shares of capital stock of the Company have been duly and validly authorized and issued and are fully paid and non-assessable; (iii) The Company is duly qualified to transact business in all jurisdictions in which the conduct of its business requires such qualification, or in which the failure to qualify would have a materially adverse effect upon the business of the Company; (iv) Each subsidiary of the Company has been duly organized and is validly existing as a corporation, limited liability company, limited partnership or real estate investment trust in good standing under the laws of the jurisdiction of its incorporation or organization, with power and authority to own, lease and operate its properties and conduct its business as described in the Prospectus as amended or supplemented, and is duly qualified to transact business in all jurisdictions in which the conduct of its business requires such qualification except where the failure to so be in good standing 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, considered as one enterprise; each such subsidiary is duly qualified to transact business in all jurisdictions in which the conduct of its business requires such qualification, or in which the failure to qualify would have a materially adverse effect upon the business of such subsidiary; all of the issued and outstanding shares of capital stock of each such corporate subsidiary and all of the issued and outstanding shares of beneficial interest of each such real estate investment trust subsidiary have been duly authorized and validly issued, are fully paid and non-assessable and are owned by the Company or by a subsidiary of the Company, free and clear of any security interest, mortgage, pledge, lien, encumbrance, claim or equity; all of the issued and outstanding partnership interests of each such partnership subsidiary and all of the issued and outstanding limited liability company interests of each such limited liability company subsidiary have been duly authorized and validly issued, are fully paid and (except in the case of general partnership interests) non-assessable and, except as otherwise disclosed in the Prospectus, are owned by the Company and/or one or more subsidiaries of the Company, free and clear of any security interest, mortgage, pledge, lien, encumbrance, claim or equity; and the Company, and/or such subsidiaries of the Company are the only members or general partners of the Company's limited liability company or limited partnership subsidiaries, as applicable, and own the entire membership or general partnership interest in each such subsidiary free and clear of any security interest, mortgage, pledge, lien, encumbrance, claim or equity; (v) To the best of such counsel's knowledge and other than as set forth in the Prospectus as amended or supplemented, there are no legal or governmental proceedings pending to which the Company or any of its subsidiaries is a party or of which 15 any property of the Company or any of its subsidiaries is the subject which, if determined adversely to the Company or any of its subsidiaries, would individually or in the aggregate have a material adverse effect on the current or future consolidated financial position, shareholders' equity or results of operations of the Company and its subsidiaries; and, to the best of such counsel's knowledge, no such proceedings are threatened or contemplated by governmental authorities or threatened by others; (vi) This Agreement and the Pricing Agreement with respect to the Designated Securities have been duly authorized, executed and delivered by the Company and the Operating Entities; (vii) The Designated Securities have been duly authorized and executed by the Company and, when duly authenticated by the Trustee in accordance with the Indenture and delivered to the Underwriters against payment of the consideration therefor in accordance with the Pricing Agreement, will constitute valid and binding obligations of the Company, enforceable against the Company in accordance with their terms, subject, as to enforcement, to bankruptcy, insolvency, reorganization and other laws of general applicability relating to or affecting creditors' rights and to general equity principles, whether considered at law or in equity, and will be entitled to the benefits of the Indenture; (viii) 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, subject, as to enforcement, to bankruptcy, insolvency, reorganization and other laws of general applicability relating to or affecting creditors' rights and to general equity principles, whether considered at law or in equity; and the Indenture has been duly qualified under the Trust Indenture Act; (ix) The issue and sale of the Designated Securities being delivered on the date of such opinion and the compliance by the Company and the Operating Entities with all of the provisions of the Designated Securities, the Indenture, this Agreement and the Pricing Agreement with respect to the Designated Securities and the consummation of the transactions herein and therein contemplated will not conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, any indenture, mortgage, deed of trust, loan agreement or other agreement or instrument known to such counsel to which the Company or any of its subsidiaries is a party or by which the Company or any of its subsidiaries is bound or to which any of the property or assets of the Company or any of its subsidiaries is subject, nor will such actions result in any violation of the provisions of the Articles of Incorporation or By-laws of the Company, Residential or Investment or the certificate of limited partnership or limited partnership agreement of the Operating Partnership or the operating agreement of North Carolina or any statute or any order, rule 16 or regulation known to such counsel of any court or governmental agency or body having jurisdiction over the Company or any of its subsidiaries or any of their properties; (x) No consent, approval, authorization, order, registration or qualification of or with any such court or governmental agency or body is required for the issue and sale of the Designated Securities being delivered on the date of such opinion or the consummation by the Company or the Operating Entities of the transactions contemplated by this Agreement, or the Pricing Agreement or the Indenture, except such as have been obtained under the Act and the Trust Indenture Act and such consents, approvals, authorizations, orders, registrations or qualifications as may be required under state securities or Blue Sky laws in connection with the purchase and distribution of the Designated Securities by the Underwriters; (xi) The statements set forth in the Prospectus under the captions "Description of Debt Securities" and "Description of the Offered Securities" (or under any similar caption), insofar as they constitute a summary of the Indenture, the Designated Securities, or any other documents referred to therein or matters of law are accurate summaries and fairly and correctly present the information called for with respect to such documents and matters; (xii) The Company is not required to be registered under the Investment Company Act; (xiii) The documents incorporated by reference in the Prospectus as amended or supplemented (other than the financial statements and related schedules therein, as to which such counsel need express no opinion), when they became effective or were filed with the Commission, as the case may be, complied as to form in all material respects with the requirements of the Act or the Exchange Act, as applicable, and the rules and regulations of the Commission thereunder; and although they do not assume any responsibility for the accuracy, completeness or fairness of the statements therein, nothing has come to their attention which leads them to believe that any documents incorporated by reference in the Prospectus as amended or supplemented (other than the financial statements and related schedules therein, as to which such counsel need express no opinion), when they became effective or were so filed, as the case may be, contained, in the case of a registration statement which became effective under the Act, an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading, or, in the case of other documents which were filed under the Act or the Exchange Act with the Commission, an untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made when such documents were so filed, not misleading; and 17 (xiv) The Registration Statement and the Prospectus as amended or supplemented and any further amendments and supplements thereto made by the Company on or prior to the date of such opinion (other than the financial statements and related schedules therein, as to which such counsel need express no opinion) comply as to form in all material respects with the requirements of the Act and the Trust Indenture Act and the rules and regulations thereunder; if applicable, the Rule 434 Prospectus complies as to form in all material respects with the requirements of Rule 434 under the Act; although they do not assume any responsibility for the accuracy, completeness or fairness of the statements contained in the Registration Statement or the Prospectus, except for those referred to in the opinion in subsection (xi) of this Section 7(c), nothing has come to their attention which leads them to believe that, as of its effective date the Registration Statement or any further amendment thereto made by the Company on or prior to the date of such opinion (other than the financial statements and related schedules therein, as to which such counsel need express no opinion) contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading or that, as of the date of the applicable Pricing Agreement, the Prospectus as amended or supplemented or any further amendment or supplement thereto made by the Company on or prior to the date of such opinion (other than the financial statements and related schedules therein, as to which such counsel need express no opinion) contained an untrue statement of a material fact or omitted to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading or that, as of the date of such opinion, either the Registration Statement or the Prospectus as amended or supplemented or any further amendment or supplement thereto made by the Company on or prior to the date of such opinion (other than the financial statements and related schedules therein, as to which such counsel need express no opinion) contains an untrue statement of a material fact or omits to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; and they do not know of any amendment to the Registration Statement required to be filed or of any contracts or other documents of a character required to be filed as an exhibit to the Registration Statement or required to be incorporated by reference into the Prospectus as amended or supplemented or required to be described in the Registration Statement or the Prospectus as amended or supplemented which are not filed or incorporated by reference or described as required; (d) Hunton & Williams, counsel for the Company, shall have furnished to the Representatives their written opinion (which shall be rendered to the Underwriters at the request of the Company and shall so state therein), dated the Time of Delivery for such Designated Securities, in form and substance satisfactory to the Representatives, to the effect that the Company has qualified to be taxed as a real estate investment trust pursuant to Sections 856 through 860 of the Code for its most recently ended fiscal year and for the four fiscal years immediately preceding 18 such year, and the Company's organization and contemplated method of operation are such as to enable it to continue to so qualify for its current fiscal year; (e) On the date of the Pricing Agreement for such Designated Securities and at the Time of Delivery for such Designated Securities, the Underwriters shall have received, a letter dated the date hereof and the Time of Delivery, respectively, in form and substance satisfactory to the Underwriters, from each of Ernst & Young LLP and Arthur Andersen LLP, independent public accountants, containing statements and information of the type ordinarily included in accountants' "comfort letters" to underwriters with respect to the financial statements and certain financial information contained in the Registration Statement and the Prospectus as amended or supplemented. (f) (i) Neither the Company nor any of its subsidiaries shall have sustained since the date of the latest audited financial statements included or incorporated by reference in the Prospectus as amended prior to the date of the Pricing Agreement relating to the Designated Securities any loss or interference with its business from fire, explosion, flood or other calamity, whether or not covered by insurance, or from any labor dispute or court or governmental action, order or decree, otherwise than as set forth or contemplated in the Prospectus as amended prior to the date of the Pricing Agreement relating to the Designated Securities, and (ii) since the respective dates as of which information is given in the Prospectus as amended prior to the date of the Pricing Agreement relating to the Designated Securities there shall not have been any change in the capital stock, total assets or long-term debt of the Company or any of its subsidiaries or any change, or any development involving a prospective change, in or affecting the general affairs, management, financial position, shareholders' equity or results of operations of the Company and its subsidiaries, otherwise than as set forth or contemplated in the Prospectus as amended prior to the date of the Pricing Agreement relating to the Designated Securities, the effect of which, in any such case described in Clause (i) or (ii), is in the judgment of the Representatives so material and adverse as to make it impracticable or inadvisable to proceed with the public offering or the delivery of the Designated Securities on the terms and in the manner contemplated in the Prospectus as first amended or supplemented relating to the Designated Securities; (g) On or after the date of the Pricing Agreement relating to the Designated Securities (i) no downgrading shall have occurred in the rating accorded the Company's debt securities or preferred stock by any "nationally recognized statistical rating organization", as that term is defined by the Commission for purposes of Rule 436(g)(2) under the Act, and (ii) no such organization shall have publicly announced that it has under surveillance or review, with possible negative implications, its rating of any of the Company's debt securities or preferred stock; (h) On or after the date of the Pricing Agreement relating to the Designated Securities there shall not have occurred any of the 19 following: (i) a suspension or material limitation in trading in securities generally on the New York Stock Exchange; (ii) a suspension or material limitation in trading in the Company's securities on the New York Stock Exchange; (iii) a general moratorium on commercial banking activities in New York declared by either Federal or New York State authorities; or (iv) the outbreak or escalation of hostilities, the occurrence of any change in financial markets or, the occurrence of any calamity or crisis or the declaration by the United States of a national emergency or war, if the effect of any such event specified in this Clause (iv) in the judgment of Morgan Stanley & Co. Incorporated makes it impracticable or inadvisable to proceed with the public offering or the delivery of the Designated Securities on the terms and in the manner contemplated in the Prospectus as amended or supplemented; (i) The Company and the Operating Entities shall have complied with the provisions of Section 5(c) hereof with respect to the furnishing of prospectuses on the New York business day next succeeding the date of the applicable Pricing Agreement; and (j) The Company and the Operating Entities shall have furnished or caused to be furnished to the Representatives at the Time of Delivery for the Designated Securities a certificate or certificates of officers of the Company, Residential and Investment and of the general partner of the Operating Partnership and of the sole member of North Carolina satisfactory to the Representatives as to the accuracy of the representations and warranties of the Company and the Operating Entities herein at and as of such Time of Delivery, as to the performance by the Company and the Operating Entities of all of their obligations hereunder to be performed at or prior to such Time of Delivery, as to the matters set forth in subsections (a) and (f) of this Section and as to such other matters as the Representatives may reasonably request. (k) In the event that the applicable Pricing Agreement shall grant the Underwriters named therein the right to purchase Additional Securities and if the Representatives, on behalf of the Underwriters, shall elect to exercise such right, then the obligations of the Underwriters of any such Additional Securities shall be subject, in the discretion of the Representatives, to the condition that all representations and warranties and other statements of the Company and the Operating Entities in or incorporated by reference in such Pricing Agreement are, at and as of the Option Closing Date for such Additional Securities, true and correct, to the condition that the Company and the Operating Entities shall have performed all of their obligations hereunder theretofore to be performed, to the condition that the conditions set forth in Sections 7(a), 7(f), 7(g), 7(h) and 7(i) hereof shall have been satisfied at and as of the time of delivery of and payment for such Additional Securities on such Option Closing Date, and to the further condition that, on such Option Closing Date, the Representatives shall have received: (i) The favorable opinion of Brown & Wood LLP, counsel for the Underwriters, dated such Option Closing Date, relating to the 20 Additional Securities to be purchased on such Option Closing Date and otherwise to the same effect as the opinion required by Section 7(b) hereof; (ii) The favorable opinion of Hunton & Williams, counsel for the Company, in form and substance satisfactory to the Representatives, dated such Option Closing Date, relating to the Additional Securities to be purchased on such Option Closing Date and otherwise to the same effect as the opinions required by Section 7(c) and 7(d) hereof; (iii) A letter from each of Ernst & Young llp and Arthur Andersen llp, in form and substance satisfactory to the Representatives and dated such Option Closing Date, substantially in the same form and substance as the letters furnished to the Representatives pursuant to Section 7(e) hereof at the Time of Delivery, except that the "specified date" in the letters furnished pursuant to this paragraph shall be a date not more than five days prior to such Option Closing Date; and (iv) A certificate or certificates of officers of the Company, Residential and Investment and of the general partner of the Operating Partnership and of the sole member of North Carolina satisfactory to the Representatives, dated the Option Closing Date to the same effect as the certificate or certificates, as the case may be, delivered at the Time of Delivery pursuant to Section 7(j) hereof. (l) Termination of Agreement. If any condition specified in this Section shall not have been fulfilled when and as required to be fulfilled, this Agreement, or, in the case of any condition to the purchase of Additional Securities on an Option Closing Date which is after the Time of Delivery for the related Firm Securities, the obligations of the several Underwriters to purchase such Additional Securities, may be terminated by the Representatives by notice to the Company at any time at or prior to the Time of Delivery or such Option Closing Date, as the case may be, and such termination shall be without liability of any party to any other party except that Sections 2, 6, 8 and 10 shall survive any such termination and remain in full force and effect. 8. (a) The Company and the Operating Entities, jointly and severally, agree to indemnify and hold harmless each Underwriter and each person, if any, who controls any Underwriter within the meaning of either Section 15 of the Act or Section 20 of the Exchange Act from and against any and all losses, claims, damages and liabilities (including, without limitation, any legal or other expenses reasonably incurred by any Underwriter or any such controlling person in connection with defending or investigating any such action or claim) caused by any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement, any Preliminary Prospectus, any preliminary prospectus supplement, the Prospectus as amended or supplemented or any other prospectus relating to the Securities, or any amendment or supplement to any of 21 the foregoing, or caused by any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, except insofar as such losses, claims, damages or liabilities are caused by any such untrue statement or omission or alleged untrue statement or omission based upon information relating to any Underwriter furnished to the Company in writing by such Underwriter through the Representatives expressly for use therein in connection with the offering of the Designated Securities. (b) Each Underwriter agrees, severally and not jointly, to indemnify and hold harmless the Company, its directors, its officers who sign the Registration Statement and each person, if any, who controls the Company within the meaning of either Section 15 of the Act or Section 20 of the Exchange Act to the same extent as the foregoing indemnity from the Company to such Underwriter, but only with reference to information relating to such Underwriter furnished to the Company in writing by such Underwriter through the Representatives in connection with the offering of the Designated Securities expressly for use in the Registration Statement, any Preliminary Prospectus, any preliminary prospectus supplement, the Prospectus as amended or supplemented or any other prospectus relating to the Designated Securities or any amendment or supplement to any of the foregoing. (c) In case any proceeding (including any governmental investigation) shall be instituted involving any person in respect of which indemnity may be sought pursuant to either paragraph (a) or (b) of this Section 8, such person (the "indemnified party") shall promptly notify the person against whom such indemnity may be sought (the "indemnifying party") in writing and the indemnifying party, upon request of the indemnified party, shall retain counsel reasonably satisfactory to the indemnified party to represent the indemnified party and any others the indemnifying party may designate in such proceeding and shall pay the fees and disbursements of such counsel related to such proceeding. In any such proceeding, any indemnified party shall have the right to retain its own counsel, but the fees and expenses of such counsel shall be at the expense of such indemnified party unless (i) the indemnifying party and the indemnified party shall have mutually agreed to the retention of such counsel or (ii) the named parties to any such proceeding (including any impleaded parties) include both the indemnifying party and the indemnified party and representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them. It is understood that the indemnifying party shall not, in respect of the legal expenses of any indemnified party in connection with any proceeding or related proceedings in the same jurisdiction, be liable for the fees and expenses of more than one separate firm (in addition to any local counsel) for all such indemnified parties and that all such fees and expenses shall be reimbursed as they are incurred. Such firm shall be designated in writing by Morgan Stanley & Co. Incorporated, in the case of parties indemnified pursuant to paragraph (a) above, and by the Company, in the case of parties indemnified pursuant to paragraph (b) above. The indemnifying party shall not be liable for any settlement of any proceeding effected without its written consent, but if settled with such consent or if there be a final judgment for the plaintiff, the indemnifying party agrees to indemnify the indemnified party from and against any loss or liability by reason of such settlement or judgment. Notwithstanding the foregoing sentence, if at any time an indemnified party shall have requested an indemnifying party to reimburse the indemnified party for fees and expenses of counsel as 22 contemplated by the second and third sentences of this paragraph, the indemnifying party agrees that it shall be liable for any settlement of any proceeding effected without its written consent if (i) such settlement is entered into more than 30 days after receipt by such indemnifying party of the aforesaid request and (ii) such indemnifying party shall not have reimbursed the indemnified party in accordance with such request prior to the date of such settlement. No indemnifying party shall, without the prior written consent of the indemnified party, effect any settlement of any pending or threatened 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 proceeding. The obligations of the Company and the Operating Entities under this paragraph (c) are joint and several. (d) To the extent the indemnification provided for in paragraph (a) or (b) of this Section 8 is unavailable to an indemnified party or insufficient in respect of any losses, claims, damages or liabilities referred to therein, then each indemnifying party under such paragraph, in lieu of indemnifying such indemnified party thereunder, shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages or liabilities (i) in such proportion as is appropriate to reflect the relative benefits received by the Company and the Operating Entities on the one hand and the Underwriters of the Designated Securities on the other hand from the offering of the Designated Securities 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 and the Operating Entities on the one hand and of the Underwriters of the Designated Securities on the other hand in connection with the statements or omissions that resulted in such losses, claims, damages or liabilities, as well as any other relevant equitable considerations. The relative benefits received by the Company and the Operating Entities on the one hand and the Underwriters of the Designated Securities on the other hand in connection with the offering of the Designated Securities shall be deemed to be in the same respective proportions as the net proceeds from the offering of such Designated Securities (before deducting expenses) received by the Company and the total underwriting discounts and commissions received by the Underwriters of the Designated Securities, in each case as set forth in the table on the cover of the Prospectus as amended or supplemented with respect to the Designated Securities, bear to the aggregate public offering price of the Designated Securities. The relative fault of the Company and the Operating Entities 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 or the Operating Entities on the one hand or by the Underwriters on the other hand and the parties' relative intent, knowledge, access to information and opportunity 23 to correct or prevent such statement or omission. The Underwriters' respective obligations to contribute pursuant to this Section 8 are several in proportion to the respective principal amounts of Designated Securities they have purchased hereunder, and not joint. The obligations of the Company and the Operating Entities to contribute pursuant to this Section 8 are joint and several. (e) The Company, the Operating Entities and the Underwriters agree that it would not be just or equitable if contribution pursuant to this Section 8 were determined by 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) of this Section 8. The amount paid or payable by an indemnified party as a result of the losses, claims, damages and liabilities referred to in the immediately preceding paragraph 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 or defending any such action or claim. Notwithstanding the provisions of this Section 8, no Underwriter shall be required to contribute any amount in excess of the amount by which the total price at which the Designated Securities underwritten by it and distributed to the public were offered to the public exceeds the amount of any damages that 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 remedies provided for in this Section 8 are not exclusive and shall not limit any rights or remedies which may otherwise be available to any indemnified party at law or in equity. (f) The indemnity and contribution provisions contained in this Section 8 and the representations, warranties and other statements of the Company and the Operating Entities contained in this Agreement shall remain operative and in full force and effect regardless of (i) any termination of this Agreement, (ii) any investigation made by or on behalf of any Underwriter or any person controlling any Underwriter or the Company, its officers or directors or any person controlling the Company or any Operating Entity, its officers or directors (if any) or any person controlling any of the Operating Entities and (iii) acceptance of and payment for any of the Designated Securities. 9. (a) If, at the applicable Time of Delivery or any Option Closing Date, as the case may be, any Underwriter shall default in its obligation to purchase the Designated Securities which it has agreed to purchase on such date under the Pricing Agreement relating to such Designated Securities, the Representatives may in their discretion arrange for themselves or another party or other parties to purchase such 24 Designated Securities on the terms contained herein. If within thirty-six hours after such default by any Underwriter the Representatives do not arrange for the purchase of such Designated Securities, then the Company shall be entitled to a further period of thirty-six hours within which to procure another party or other parties satisfactory to the Representatives to purchase such Designated Securities on such terms. In the event that, within the respective prescribed period, the Representatives notify the Company that they have so arranged for the purchase of such Designated Securities, or the Company notifies the Representatives that it has so arranged for the purchase of such Designated Securities, the Representatives or the Company shall have the right to postpone the Time of Delivery or the Option Closing Date, as the case may be, for such Designated Securities for a period of not more than seven days, in order to effect whatever changes may thereby be made necessary in the Registration Statement or the Prospectus as amended or supplemented, or in any other documents or arrangements, and the Company agrees to file promptly any amendments or supplements to the Registration Statement or the Prospectus which in the opinion of the Representatives may thereby be made necessary. The term "Underwriter" as used in this Agreement shall include any person substituted under this Section with like effect as if such person had originally been a party to the Pricing Agreement with respect to such Designated Securities. (b) If, after giving effect to any arrangements for the purchase of the Designated Securities of a defaulting Underwriter or Underwriters by the Representatives and the Company as provided in subsection (a) above, the aggregate principal amount of such Designated Securities which remains unpurchased at the Time of Delivery or the Option Closing Date, as the case may be, does not exceed one-eleventh of the aggregate principal amount of the Designated Securities to be purchased on such date, then the Company shall have the right to require each non-defaulting Underwriter to purchase the principal amount of Designated Securities which such Underwriter agreed to purchase on such date under the Pricing Agreement relating to such Designated Securities and, in addition, to require each non-defaulting Underwriter to purchase its pro rata share (based on the principal amount of Designated Securities set forth opposite the name of such Underwriter in Schedule I to such Pricing Agreement) of the Designated Securities of such defaulting Underwriter or Underwriters for which such arrangements have not been made; but nothing herein shall relieve a defaulting Underwriter from liability for its default. (c) If, after giving effect to any arrangements for the purchase of the Designated Securities of a defaulting Underwriter or Underwriters by the Representatives and the Company as provided in subsection (a) above, the aggregate principal amount of Designated Securities which remains unpurchased at the Time of Delivery or the Option Closing Date, as the case may be, exceeds one-eleventh of the aggregate principal amount of the Designated Securities to be purchased on such date, as referred to in subsection (b) above, or if the Company shall not exercise the right described in subsection (b) above to require non-defaulting Underwriters to purchase 25 Designated Securities of a defaulting Underwriter or Underwriters, then the Pricing Agreement relating to such Designated Securities or, in the case of a default which occurs on an Option Closing Date which is after the related Time of Delivery, the obligation of the several Underwriters to purchase and the Company to sell the Option Securities to be purchased and sold on such Option Closing Date, shall thereupon terminate, without liability on the part of any non-defaulting Underwriter, the Company or the Operating Entities, except for the expenses to be borne by the Company, the Operating Entities and the Underwriters as provided in Section 6 hereof and the indemnity and contribution agreements in Section 8 hereof and the provisions of Section 10 hereof; but nothing herein shall relieve a defaulting Underwriter from liability for its default. 10. If any Pricing Agreement shall be terminated pursuant to Section 9 hereof, or if the obligations of the several Underwriters to purchase and the Company to sell any Additional Securities shall be terminated pursuant to Section 9 hereof, the Company and the Operating Entities shall not then be under any liability to any Underwriter with respect to the Designated Securities covered by such Pricing Agreement or such Additional Securities, as the case may be, except as provided in Section 6 and Section 8 hereof; but, if for any other reason Designated Securities (including, without limitation, any Additional Securities) are not delivered by or on behalf of the Company as provided herein, the Company and the Operating Entities will, jointly and severally, reimburse the Underwriters through the Representatives for all out-of-pocket expenses approved in writing by the Representatives, including fees and disbursements of counsel, reasonably incurred by the Underwriters in making preparations for the purchase, sale and delivery of such Designated Securities, but the Company and the Operating Entities shall then be under no further liability to any Underwriter with respect to such Designated Securities except as provided in Sections 6 and 8 hereof. 11. In all dealings hereunder, the Representatives of the Underwriters of Designated Securities shall act on behalf of each of such Underwriters, and the parties hereto shall be entitled to act and rely upon any statement, request, notice or agreement on behalf of any Underwriter made or given by such Representatives jointly or by such of the Representatives, if any, as may be designated for such purpose in the Pricing Agreement. All statements, requests, notices and agreements hereunder shall be in writing, and if to the Underwriters shall be delivered or sent by mail, telex or facsimile transmission to the address of the Representatives as set forth in the Pricing Agreement; and if to the Company or the Operating Entities shall be delivered or sent by mail, telex or facsimile transmission to the address of the Company set forth in the Registration Statement: Attention: Secretary; provided, however, that any notice to an Underwriter pursuant to Section 8(c) hereof shall be delivered or sent by mail, telex or facsimile transmission to such Underwriter at its address set forth in its Underwriters' Questionnaire, or telex constituting such Questionnaire, which address will be supplied to the Company by the Representatives upon request. Any such statements, requests, notices or agreements shall take effect upon receipt thereof. 12. This Agreement and each Pricing Agreement shall be binding upon, and inure solely to the benefit of, the Underwriters, the Company, the Operating Entities and, to the extent provided in Section 8 hereof, the officers and directors of 26 the Company and each person who controls the Company, any of the Operating Entities or any Underwriter, and their respective heirs, executors, administrators, successors and assigns, and no other person shall acquire or have any right under or by virtue of this Agreement or any such Pricing Agreement. No purchaser of any of the Securities from any Underwriter shall be deemed a successor or assign by reason merely of such purchase. 13. Time shall be of the essence of each Pricing Agreement. As used herein, "business day" shall mean any day when the Commission's office in Washington, D.C. is open for business. 14. This Agreement and each Pricing Agreement shall be governed by and construed in accordance with the laws of the State of New York. 15. This Agreement and each Pricing Agreement may be executed by any one or more of the parties hereto and thereto in any number of counterparts, each of which shall be deemed to be an original, but all such respective counterparts shall together constitute one and the same instrument. 27 If the foregoing is in accordance with your understanding, please sign and return to us six counterparts hereof. Very truly yours, United Dominion Realty Trust, Inc. By: /s/ James Dolphin ------------------------------------ Name: James Dolphin Title: Executive Vice President United Dominion Realty, L.P. By: United Dominion Realty Trust, Inc., its General Partner By: /s/ James Dolphin ------------------------------------ Name: James Dolphin Title: Executive Vice President UDR Western Residential, Inc. By: /s/ James Dolphin ------------------------------------ Name: James Dolphin Title: Executive Vice President UDRT of North Carolina, L.L.C. By: United Dominion Realty Trust, Inc., its sole member By: /s/ James Dolphin ------------------------------------ Name: James Dolphin Title: Executive Vice President 28 ASR Investments Corporation By: /s/ James Dolphin ------------------------------------ Name: James Dolphin Title: Executive Vice President Accepted as of the date hereof: Morgan Stanley & Co. Incorporated A.G. Edwards & Sons, Inc. PaineWebber Incorporated NationsBanc Montgomery Securities LLC Wheat First Securities, Inc. Acting severally on behalf of themselves and the other several Underwriters By: Morgan Stanley & Co. Incorporated By: /s/ Mike Fusco ----------------------------------- Name: Mike Fusco Title: Vice President EX-1 4 EXHIBIT 1.3 Exhibit 1.3 Pricing Agreement Morgan Stanley & Co. Incorporated First Union Capital Markets, a division of Wheat First Securities, Inc. NationsBanc Montgomery Securities LLC c/o Morgan Stanley & Co. Incorporated 1585 Broadway New York, New York 10036 November 10, 1998 Ladies and Gentlemen: United Dominion Realty Trust, Inc., a Virginia corporation (the "Company"), proposes, subject to the terms and conditions stated herein and in the Underwriting Agreement, dated November 10, 1998 (the "Underwriting Agreement"), between the Company and the Operating Entities (as defined therein) on the one hand and Morgan Stanley & Co. Incorporated, First Union Capital Markets, a division of Wheat First Securities, Inc. and NationsBanc Montgomery Securities LLC, on the other hand, to issue and sell to the Underwriters named in Schedule I hereto (the "Underwriters") the Securities specified in Schedule II hereto (the "Designated Securities"). Each of the provisions of the Underwriting Agreement is incorporated herein by reference in its entirety, and shall be deemed to be a part of this Agreement to the same extent as if such provisions had been set forth in full herein; and each of the representations and warranties set forth therein shall be deemed to have been made at and as of the date of this Pricing Agreement, except that each representation and warranty which refers to the Prospectus in Section 2 of the Underwriting Agreement shall be deemed to be a representation or warranty as of the date of the Underwriting Agreement in relation to the Prospectus (as therein defined), and also a representation and warranty as of the date of this Pricing Agreement in relation to the Prospectus as amended or supplemented relating to the Designated Securities which are the subject of this Pricing Agreement. Each reference to the Representatives herein and in the provisions of the Underwriting Agreement so incorporated by reference shall be deemed to refer to you. Unless otherwise defined herein, terms defined in the Underwriting Agreement are used herein as therein defined. The Representative designated to act on behalf of the Representatives and on behalf of each of the Underwriters of the Designated Securities pursuant to Section 12 of the Underwriting Agreement and the address of the Representatives referred to in such Section 12 are set forth at the end of Schedule II hereto. An amendment to the Registration Statement, or a supplement to the Prospectus, as the case may be, relating to the Designated Securities, in the form heretofore delivered to you, is now proposed to be filed with the Commission. Subject to the terms and conditions set forth herein and in the Underwriting Agreement incorporated herein by reference, the Company agrees to issue and sell to each of the Underwriters, and each of the Underwriters agrees, severally and not jointly, on the basis of the representations and warranties set forth herein and in such Underwriting Agreement, to purchase from the Company, at the time and place and at the purchase price to the Underwriters set forth in Schedule II hereto, the respective principal amount of Designated Securities set forth opposite the name of such Underwriter in Schedule I hereto. If the foregoing is in accordance with your understanding, please sign and return to us six counterparts hereof, and upon acceptance hereof by you, on behalf of each of the Underwriters, this letter and such acceptance hereof, including the provisions of the Underwriting Agreement incorporated herein by reference, shall constitute a binding agreement between each of the Underwriters and the Company and the Operating Entities. It is understood that your acceptance of this letter on behalf of each of the Underwriters is or will be pursuant to the authority set forth in a form of Agreement among Underwriters, the form of which shall be submitted to the Company for examination upon request, but without warranty on the part of the Representatives as to the authority of the signers thereof. Very truly yours, United Dominion Realty Trust, Inc. By: /s/ James Dolphin ------------------------------------- Name: James Dolphin Title: Executive Vice President United Dominion Realty, L.P. By: United Dominion Realty Trust, Inc., its General Partner By: /s/ James Dolphin ------------------------------------- - Name: James Dolphin Title: Executive Vice President UDR Western Residential, Inc. By: /s/ James Dolphin ------------------------------------- Name: James Dolphin Title: Executive Vice President 2 UDRT of North Carolina, L.L.C. By: United Dominion Realty Trust, Inc., its sole member By: /s/ James Dolphin ------------------------------------- Name: James Dolphin Title: Executive Vice President ASR Investments Corporation By: /s/ James Dolphin ------------------------------------- Name: James Dolphin Title: Executive Vice President Accepted as of the date hereof: Morgan Stanley & Co. Incorporated Wheat First Securities, Inc. NationsBanc Montgomery Securities LLC Acting severally on behalf of themselves and the several Underwriters By: Morgan Stanley & Co. Incorporated By: /s/ Mike Fusco ----------------------------------- Name: Mike Fusco Title: Vice President 3 SCHEDULE I Principal Amount of Designated Securities Underwriter to be Purchased ----------- ------------------- Morgan Stanley & Co. Incorporated $97,500,000 First Union Capital Markets, a division of Wheat First Securities, Inc. 26,250,000 NationsBanc Montgomery Securities LLC 26,250,000 ------------ Total $150,000,000 ============ 4 SCHEDULE II Title of Designated Securities: 8 1/8% Notes due 2000 (the "Notes") Aggregate Principal Amount of Designated Securities: $150,000,000 Initial Public Offering Price: 99.919% of the principal amount of the Notes, plus accrued interest, if any, from November 16, 1998. Purchase Price by Underwriters: 99.669% of the principal amount of the Notes, plus accrued interest, if any, from November 16, 1998 (no accrued interest will be payable by the Underwriters in the case of Notes purchased by the Underwriters on November 16, 1998). Form of Designated Securities: Book-entry form represented by one or more global securities deposited with The Depository Trust Company and registered in the name of its nominee. Specified funds for payment of purchase price: Immediately available funds. Indenture: Indenture dated November 1, 1995, between the Company and First Union National Bank (formerly known as First Union National Bank of Virginia), as Trustee Maturity: November 15, 2000 Interest Rate: 8 1/8% per annum 5 Interest Payment Dates: May 15 and November 15, commencing May 15, 1999. Regular Record Dates: May 1 and November 1 Redemption Provisions: Not redeemable prior to maturity. Sinking Fund Provisions: No sinking fund provisions. Defeasance provisions: The provisions of Article 14 of the Indenture relating to defeasance and covenant defeasance will apply to the Notes. Time of Delivery: 10 a.m., New York time, on November 16, 1998. Closing Location for Delivery of Designated Securities: Offices of Brown & Wood llp, One World Trade Center, New York, New York 10048-0557. Names and addresses of Representatives: Designated Representative: Morgan Stanley & Co. Incorporated Address for Notices, etc.: Morgan Stanley & Co. Incorporated 1585 Broadway New York, New York 10036 Attn: Michael M. Fusco 6 EX-1 5 EXHIBIT 1.4 Exhibit 1.4 Pricing Agreement Morgan Stanley & Co. Incorporated A.G. Edwards & Sons, Inc. PaineWebber Incorporated NationsBanc Montgomery Securities LLC Wheat First Securities, Inc. c/o Morgan Stanley & Co. Incorporated 1585 Broadway New York, New York 10036 November 10, 1998 Ladies and Gentlemen: United Dominion Realty Trust, Inc., a Virginia corporation (the "Company"), proposes, subject to the terms and conditions stated herein and in the Underwriting Agreement, dated November 10, 1998 (the "Underwriting Agreement"), between the Company and the Operating Entities (as defined therein) on the one hand and Morgan Stanley & Co. Incorporated, A.G. Edwards & Sons, Inc., PaineWebber Incorporated, NationsBanc Montgomery Securities LLC, and Wheat First Securities, Inc. on the other hand, to issue and sell to the Underwriters named in Schedule I hereto (the "Underwriters") the Securities specified in Schedule II hereto (the "Designated Securities"). Each of the provisions of the Underwriting Agreement is incorporated herein by reference in its entirety, and shall be deemed to be a part of this Agreement to the same extent as if such provisions had been set forth in full herein; and each of the representations and warranties set forth therein shall be deemed to have been made at and as of the date of this Pricing Agreement, except that each representation and warranty which refers to the Prospectus in Section 2 of the Underwriting Agreement shall be deemed to be a representation or warranty as of the date of the Underwriting Agreement in relation to the Prospectus (as therein defined), and also a representation and warranty as of the date of this Pricing Agreement in relation to the Prospectus as amended or supplemented relating to the Designated Securities which are the subject of this Pricing Agreement. Each reference to the Representatives herein and in the provisions of the Underwriting Agreement so incorporated by reference shall be deemed to refer to you. Unless otherwise defined herein, terms defined in the Underwriting Agreement are used herein as therein defined. The Representative designated to act on behalf of the Representatives and on behalf of each of the Underwriters of the Designated Securities pursuant to Section 12 of the Underwriting Agreement and the address of the Representatives referred to in such Section 12 are set forth at the end of Schedule II hereto. An amendment to the Registration Statement, or a supplement to the Prospectus, as the case may be, relating to the Designated Securities, in the form heretofore delivered to you, is now proposed to be filed with the Commission. Subject to the terms and conditions set forth herein and in the Underwriting Agreement incorporated herein by reference, the Company agrees to issue and sell to each of the Underwriters, and each of the Underwriters agrees, severally and not jointly, on the basis of the representations and warranties set forth herein and in such Underwriting Agreement, to purchase from the Company, at the time and place and at the purchase price to the Underwriters set forth in Schedule II hereto, the respective principal amount of Designated Securities set forth opposite the name of such Underwriter in Schedule I hereto. The Designated Securities set forth in such Schedule I are hereinafter sometimes referred to as the "Firm Securities". Subject to the terms and conditions, and on the basis of the representations and warranties, set forth herein and in the Underwriting Agreement incorporated herein by reference, the Company agrees to sell to the Underwriters up to an additional $5,000,000 aggregate principal amount of Designated Securities (the "Additional Securities"), and the Underwriters shall have a one-time right to purchase, severally, and not jointly, up to $5,000,000 aggregate principal amount of Additional Securities at the place and at the purchase price to the Underwriters set forth in Schedule II hereto. If the Representatives, on behalf of the Underwriters, elect to exercise such option, the Representatives shall notify the Company in writing not later than 30 days after the date of this Pricing Agreement, which notice shall specify the aggregate principal amount of Additional Securities to be purchased by the Underwriters and the date on which such Additional Securities are to be purchased. Such date (which is referred to in the Underwriting Agreement as the Option Closing Date) may be the same as the Time of Delivery referred to in Schedule II hereto, but not earlier than such Time of Delivery nor later than 10 business days after the date of such notice. Additional Securities may be purchased as provided herein and in Section 4(b) of the Underwriting Agreement solely for the purpose of covering over-allotments made in connection with the offering of the Firm Securities. If any Additional Securities are to be purchased, each Underwriter agrees, severally, and not jointly, subject to the terms and conditions and on the basis of the representations and warranties set forth herein and in the Underwriting Agreement incorporated herein by reference, to purchase the aggregate principal amount of Additional Securities (subject to such adjustments as the Representatives may determine in order to provide for the issuance of Additional Securities in authorized denominations) that bears the same proportion to the total aggregate principal amount of Additional Securities to be purchased as the aggregate principal amount of Firm Securities set forth in Schedule I hereto opposite the name of such Underwriter bears to the total aggregate principal amount of Firm Securities. If the foregoing is in accordance with your understanding, please sign and return to us six counterparts hereof, and upon acceptance hereof by you, on behalf of each of the Underwriters, this letter and such acceptance hereof, including the provisions of the Underwriting Agreement incorporated herein by reference, shall constitute a binding agreement between each of the Underwriters and the Company and the Operating Entities. It is understood that your acceptance of this letter on behalf of each of the Underwriters is or will be pursuant to the authority set forth in a form of Agreement among Underwriters, the form of which shall be submitted to the Company for examination upon request, but without warranty on the part of the Representatives as to the authority of the signers thereof. 2 Very truly yours, United Dominion Realty Trust, Inc. By: /s/ James Dolphin ------------------------------- Name: James Dolphin Title: Executive Vice President United Dominion Realty, L.P. By: United Dominion Realty Trust, Inc., its General Partner By: /s/ James Dolphin ------------------------------------- Name: James Dolphin Title: Executive Vice President UDR Western Residential, Inc. By: /s/ James Dolphin ------------------------------------- Name: James Dolphin Title: Executive Vice President UDRT of North Carolina, L.L.C. By: United Dominion Realty Trust, Inc., its sole member By: /s/ James Dolphin ------------------------------------- Name: James Dolphin Title: Executive Vice President ASR Investments Corporation By: /s/ James Dolphin ------------------------------------- Name: James Dolphin Title: Executive Vice President 3 Accepted as of the date hereof: Morgan Stanley & Co. Incorporated A.G. Edwards & Sons, Inc. PaineWebber Incorporated NationsBanc Montgomery Securities LLC Wheat First Securities, Inc. Acting severally on behalf of themselves as Representatives and the other several Underwriters By: Morgan Stanley & Co. Incorporated By: /s/ Mike Fusco ------------------------------------- Name: Mike Fusco Title: Vice President 4 SCHEDULE I Principal Amount of Firm Securities Underwriter to be Purchased ------------- ---------------- Morgan Stanley & Co. Incorporated $6,670,000 A.G. Edwards & Sons, Inc. 6,670,000 PaineWebber Incorporated 6,670,000 NationsBanc Montgomery Securities LLC 6,670,000 Wheat First Securities, Inc. 6,670,000 Bear, Stearns & Co. Inc. 1,150,000 BT Alex. Brown Incorporated 1,150,000 CIBC Oppenheimer Corp. 1,150,000 Schroder & Co. Inc. 1,150,000 SG Cowen Securities Corporation 1,150,000 Advest, Inc. 575,000 Robert W. Baird & Co. Incorporated 575,000 William Blair & Company, L.L.C. 575,000 J.C. Bradford & Co. 575,000 Craigie Incorporated 575,000 Crowell, Weedon & Co. 575,000 Dain Rauscher Wessels 575,000 Davenport & Company LLC 575,000 Fahnestock & Co. Inc. 575,000 Ferris, Baker Watts, Incorporated 575,000 Fidelity Capital Markets, A Division of National Financial 575,000 Services Corp. Fifth Third/The Ohio Company 575,000 First Albany Corporation 575,000 First of Michigan Corporation 575,000 Fleet Securities, Inc. 575,000 Gibraltar Securities Co. 575,000 J.J.B. Hilliard, W.L. Lyons, Inc. 575,000 Interstate/Johnson Lane Corporation 575,000 Janney Montgomery Scott Inc. 575,000 Kirkpatrick, Pettis, Smith, Polian Inc. 575,000 McDonald & Company Securities, Inc. 575,000 Mesirow Financial, Inc. 575,000 Morgan Keegan & Company, Inc. 575,000 OLDE Discount Corporation 575,000 Piper Jaffray Inc. 575,000 Raymond James & Associates, Inc. 575,000 The Robinson-Humphrey Company, LLC 575,000 Roney Capital Markets, A Division of First Chicago Capital 575,000 Markets, Inc. Scott & Stringfellow, Inc. 575,000 Southwest Securities, Inc. 575,000 Tucker Anthony Incorporated 575,000 Wedbush Morgan Securities 575,000 ----------- Total $57,500,000 =========== 5 SCHEDULE II Title of Designated Securities: 8 1/2% Monthly Income Notes due 2008 (the "Notes") Aggregate Principal Amount of Firm Securities: $57,500,000 Aggregate Principal Amount of Additional Securities: $5,000,000 Initial Public Offering Price: 100.00% of the principal amount of the Notes, plus accrued interest, if any, from November 18, 1998. Purchase Price by Underwriters for Firm Securities: 96.50% of the principal amount of the Notes, plus accrued interest, if any, from November 18, 1998 (no accrued interest will be payable by the Underwriters in the case of Notes purchased by the Underwriters on November 18, 1998). Purchase Price by Underwriters for Additional Securities: 100.00% of the principal amount of the Notes, plus accrued interest, if any, from November 18, 1998 (no accrued interest will be payable by the Underwriters in the case of Notes purchased by the Underwriters on November 18, 1998). Form of Designated Securities: Book-entry form represented by one or more global securities deposited with The Depository Trust Company and registered in the name of its nominee. Specified funds for payment of purchase price: Immediately available funds. Indenture: Indenture dated November 1, 1995, between the Company and First Union National Bank (formerly known as First Union National Bank of Virginia), as Trustee Maturity: November 15, 2008 6 Interest Rate: 8 1/2% per annum Interest Payment Dates: The 15th day of each month, commencing December 15, 1998. Regular Record Dates: The first day of each month next preceding the Interest Payment Date falling in such month. Redemption Provisions: Not redeemable prior to maturity. Sinking Fund Provisions: No sinking fund provisions. Defeasance provisions: The provisions of Article 14 of the Indenture relating to defeasance and covenant defeasance will apply to the Notes. Time of Delivery: 10 a.m., New York time, on November 18, 1998. Closing Location for Delivery of Designated Securities: Offices of Brown & Wood llp, One World Trade Center, New York, New York 10048-0557. Names and addresses of Representative: Designated Representative: Morgan Stanley & Co. Incorporated Address for Notices, etc.: Morgan Stanley & Co. Incorporated 1585 Broadway New York, New York 10036 Attn: Michael M. Fusco 7 EX-4 6 EXHIBIT 4.1 Exhibit 4.1 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. REGISTERED PRINCIPAL AMOUNT No.: __ ______________ CUSIP No.: 910197 AF 9 UNITED DOMINION REALTY TRUST, INC. 8 1/8% NOTE DUE 2000 UNITED DOMINION REALTY TRUST, INC., a Virginia corporation (hereinafter called the "Company," which term shall include any successor corporation under the Indenture hereinafter referred to), for value received, hereby promises to pay to __________, or registered assigns, upon presentation, the principal sum of __________________________ DOLLARS on November 15, 2000, and to pay interest on the outstanding principal amount thereon from November 16, 1998, or from the most recent Interest Payment Date to which interest has been paid or duly provided for, semi-annually in arrears on May 15 and November 15 (each an "Interest Payment Date") in each year, commencing May 15, 1999, and at maturity, at the rate of 8 1/8 % per annum, until the entire principal amount hereof is paid or made available for payment. Interest on this Note shall be calculated on the basis of a 360-day year consisting of twelve 30-day months. The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in the Indenture, be paid to the Person in whose name this Note (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 May 1 or November 1 (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 Note (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 the Notes 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 Notes 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 and interest on this Note will be made at the office or agency of the Company maintained for that purpose in the Borough of Manhattan, The City of New York and in Charlotte, North Carolina, 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 8 address shall appear in the Security Register kept for the Notes pursuant to Section 305 of the Indenture (the "Note Register") or (ii) transfer to an account of the Person entitled thereto located inside the United States. This Note is one of a duly authorized issue of Securities of the Company (herein called the "Notes"), issued and to be issued in one or more series under an Indenture, dated as of November 1, 1995 (herein called the "Indenture"), between the Company and First Union National Bank (formerly First Union National Bank of Virginia) (herein called the "Trustee," which term includes any successor trustee under the Indenture with respect to the Notes), 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 Notes and of the terms upon which the Notes are, and are to be, authenticated and delivered. This Note is one of the series designated as the "8 1/8% Notes due 2000," limited (subject to the exceptions set forth in the Board Resolution with respect to the Notes) in aggregate principal amount to $________________. This Note is not redeemable at the option of the Company. The Indenture contains provisions for defeasance at any time of (a) the entire indebtedness of the Company on the Notes 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 Note. If an Event of Default with respect to the Notes shall occur and be continuing, the principal of and accrued and unpaid interest on the Notes 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 Note 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 Notes, the Holders of not less than 25% in principal amount of the Notes at the time Outstanding shall have made written request to the Trustee to institute proceedings in respect of such Event of Default as Trustee and offered the Trustee reasonable indemnity and the Trustee shall not have received from the Holders of a majority in principal amount of the Notes at the time Outstanding a direction inconsistent with such request, and 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 Note for the enforcement of any payment of principal hereof or any interest hereon 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 Notes 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 Outstanding Notes. The Indenture also contains provisions permitting the Holders of specified percentages in principal amount of the Notes at the time Outstanding, on behalf of the Holders of all Notes, 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 Note shall be conclusive and binding upon such Holder and upon all future Holders of this Note and of any Note 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 Note. 9 No reference herein to the Indenture and no provision of this Note or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and interest on this Note at the times, places 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 Note is registrable in the Note Register, upon surrender of this Note for registration of transfer at the office or agency of the Company in any Place of Payment, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Security Registrar for the Notes (the "Note Registrar") duly executed by, the Holder hereof or his attorney duly authorized in writing, and thereupon one or more new Notes of this series, of authorized denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees. The Notes 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, Notes are exchangeable for a like aggregate principal amount of Notes 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 Note 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 Note is registered as the owner hereof for all purposes, whether or not this Note 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 Note, or because of any indebtedness evidenced thereby, shall be had against any promoter, as such, or against any past, present or future shareholder, 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 Note by the Holder thereof and as part of the consideration for the issue of the Notes. All terms used in this Note which are defined in the Indenture shall have the meanings assigned to them in the Indenture. THE INDENTURE AND THE NOTES, INCLUDING THIS NOTE, SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE COMMONWEALTH OF VIRGINIA. Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Company has caused "CUSIP" numbers to be printed on the Notes as a convenience to the Holders of the Notes. No representation is made as to the correctness or accuracy of such CUSIP numbers as printed on the Notes, and reliance may be placed only on the other identification numbers printed hereon. 10 Unless the certificate of authentication hereon has been executed by or on behalf of the Trustee by manual signature, this Note shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose. IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed under its corporate seal. Dated: UNITED DOMINION REALTY TRUST, INC. By:__________________________________ Name: James Dolphin Title: Executive Vice President and [SEAL] Chief Financial Officer Attest: By:_________________________________ Name: Katheryn E. Surface Title: Senior Vice President, Secretary and General Counsel TRUSTEE'S CERTIFICATE OF AUTHENTICATION: This is one of the Securities of the series designated herein and referred to in the within-mentioned Indenture. FIRST UNION NATIONAL BANK, as Trustee By:_________________________________ Authorized Signatory 11 ASSIGNMENT FORM FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE - ------------------------------------------------------------ - ------------------------------------------------------------ (Please Print or Typewrite Name and Address including Zip Code of Assignee) - ------------------------------------------------------------ the within Note of United Dominion Realty Trust, Inc., and irrevocably constitutes and appoints - ------------------------------------------------------------ Attorney to transfer said Note on the books of the within-named Company with full power of substitution in the premises. Dated: ------------- ------------------------------------------ ------------------------------------------ NOTICE: The signature to this assignment must correspond with the name as it appears on the first page of the within Note in every particular, without alteration or enlargement or any change whatever. - ------------------------------------------------------------------------------- EX-4 7 EXHIBIT 4.2 Exhibit 4.2 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. REGISTERED PRINCIPAL AMOUNT No.: __ $____________ (___________ Notes, $25 principal amount each) CUSIP No.: 910197 40 9 UNITED DOMINION REALTY TRUST, INC. 8 1/2% MONTHLY INCOME NOTE DUE 2008 UNITED DOMINION REALTY TRUST, INC., a Virginia corporation (hereinafter called the "Company," which term shall include any successor corporation under the Indenture hereinafter referred to), for value received, hereby promises to pay to ________ , or registered assigns, upon presentation, the principal sum of ______________________________________ DOLLARS on November 15, 2008, and to pay interest on the outstanding principal amount thereon from November 18, 1998, or from the most recent Interest Payment Date to which interest has been paid or duly provided for, monthly in arrears on the fifteenth day of the month (each an "Interest Payment Date"), commencing December 15, 1998, and at maturity, at the rate of 8 1/2% per annum, until the entire principal amount hereof is paid or made available for payment. Interest on this Note shall be calculated on the basis of a 360-day year consisting of twelve 30-day months. The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in the Indenture, be paid to the Person in whose name this Note (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 first day of the month (whether or not a Business Day), immediately 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 Note (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 the Notes 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 Notes 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 and interest on this Note will be made at the office or agency of the Company maintained for that purpose in the Borough of Manhattan, The City of New York and in Charlotte, North Carolina, 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 13 Security Register kept for the Notes pursuant to Section 305 of the Indenture (the "Note Register") or (ii) transfer to an account of the Person entitled thereto located inside the United States. This Note is one of a duly authorized issue of Securities of the Company (herein called the "Notes"), issued and to be issued in one or more series under an Indenture, dated as of November 1, 1995 (herein called the "Indenture"), between the Company and First Union National Bank (formerly First Union National Bank of Virginia) (herein called the "Trustee," which term includes any successor trustee under the Indenture with respect to the Notes), 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 Notes and of the terms upon which the Notes are, and are to be, authenticated and delivered. This Note is one of the series designated as the "8 1/2% Monthly Income Notes due 2008," limited (subject to the exceptions set forth in the Board Resolution with respect to the Indenture) in aggregate principal amount to $__________. This Note is not redeemable at the option of the Company. The Indenture contains provisions for defeasance at any time of (a) the entire indebtedness of the Company on the Notes 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 Note. If an Event of Default with respect to the Notes shall occur and be continuing, the principal of and accrued and unpaid interest on the Notes 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 Note 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 Notes, the Holders of not less than 25% in principal amount of the Notes at the time Outstanding shall have made written request to the Trustee to institute proceedings in respect of such Event of Default as Trustee and offered the Trustee reasonable indemnity and the Trustee shall not have received from the Holders of a majority in principal amount of the Notes at the time Outstanding a direction inconsistent with such request, and 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 Note for the enforcement of any payment of principal hereof or any interest hereon 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 Notes 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 Outstanding Notes. The Indenture also contains provisions permitting the Holders of specified percentages in principal amount of the Notes at the time Outstanding, on behalf of the Holders of all Notes, 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 Note shall be conclusive and binding upon such Holder and upon all future Holders of this Note and of any Note 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 Note. 14 No reference herein to the Indenture and no provision of this Note or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and interest on this Note at the times, places 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 Note is registrable in the Note Register, upon surrender of this Note for registration of transfer at the office or agency of the Company in any Place of Payment, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Security Registrar for the Notes (the "Note Registrar") duly executed by, the Holder hereof or his attorney duly authorized in writing, and thereupon one or more new Notes of this series, of authorized denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees. The Notes are issuable only in registered form without coupons in denominations of $25 and any integral multiple thereof. As provided in the Indenture and subject to certain limitations therein set forth, Notes are exchangeable for a like aggregate principal amount of Notes 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 Note 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 Note is registered as the owner hereof for all purposes, whether or not this Note 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 Note, or because of any indebtedness evidenced thereby, shall be had against any promoter, as such, or against any past, present or future shareholder, 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 Note by the Holder thereof and as part of the consideration for the issue of the Notes. All terms used in this Note which are defined in the Indenture shall have the meanings assigned to them in the Indenture. THE INDENTURE AND THE NOTES, INCLUDING THIS NOTE, SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE COMMONWEALTH OF VIRGINIA. Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Company has caused "CUSIP" numbers to be printed on the Notes as a convenience to the Holders of the Notes. No representation is made as to the correctness or accuracy of such CUSIP numbers as printed on the Notes, and reliance may be placed only on the other identification numbers printed hereon. 15 Unless the certificate of authentication hereon has been executed by or on behalf of the Trustee by manual signature, this Note shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose. IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed under its corporate seal. Dated: UNITED DOMINION REALTY TRUST, INC. --------- By:_____________________________________ Name: James Dolphin Title: Executive Vice President and [SEAL] Chief Financial Officer Attest: By:_________________________________ Name: Katheryn E. Surface Title: Senior Vice President, Secretary and General Counsel TRUSTEE'S CERTIFICATE OF AUTHENTICATION: This is one of the Securities of the series designated herein and referred to in the within-mentioned Indenture. FIRST UNION NATIONAL BANK, as Trustee By:_________________________________ Authorized Signatory 16 - -------------------------------------------------------------------- ASSIGNMENT FORM FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE - ------------------------------------------------------------ - ------------------------------------------------------------ (Please Print or Typewrite Name and Address including Zip Code of Assignee) - ------------------------------------------------------------ the within Note of United Dominion Realty Trust, Inc., and irrevocably constitutes and appoints - ------------------------------------------------------------ Attorney to transfer said Note on the books of the within-named Company with full power of substitution in the premises. Dated: ---------- ----------------------------------------- ----------------------------------------- NOTICE: The signature to this assignment must correspond with the name as it appears on the first page of the within Note in every particular, without alteration or enlargement or any change whatever. - ------------------------------------------------------------------------------- EX-23 8 EXHIBIT 23.1 Exhibit 23.1 Consent of Independent Auditors We consent to the reference to our firm under the caption "Experts" in the Registration Statement (Form S-3 No. 333-27221) and related Prospectus Supplement of United Dominion Realty Trust, Inc. for registration of $150,000,000 of 8 1/8% Notes Due 2000, dated November 10, 1998 and to the incorporation by reference therein of our report dated January 28, 1998, with respect to the consolidated financial statements and schedule of United Dominion Realty Trust, Inc. included in its Annual Report (Form 10-K) for the year ended December 31, 1997, filed with the Securities and Exchange Commission. Ernst & Young LLP Richmond, Virginia November 6, 1998 EX-23 9 EXHIBIT 23.2 Exhibit 23.2 Consent of Independent Auditors We consent to the reference to our firm under the caption "Experts" in the Registration Statement (Form S-3 No. 333-27221) and related Prospectus Supplement of United Dominion Realty Trust, Inc. for registration of $62,500,000 of 8 1/2% Monthly Income Notes Due 2008, dated November 10, 1998 and to the incorporation by reference therein of our report dated January 28, 1998, with respect to the consolidated financial statements and schedule of United Dominion Realty Trust, Inc. included in its Annual Report (Form 10-K) for the year ended December 31, 1997, filed with the Securities and Exchange Commission. Ernst & Young LLP Richmond, Virginia November 6, 1998 -----END PRIVACY-ENHANCED MESSAGE-----