Exhibit 1.3
SALES AGENCY FINANCING
AGREEMENT
THIS SALES AGENCY FINANCING
AGREEMENT (this “ Agreement ”), dated as of
September 28, 2009, among EQUITY RESIDENTIAL, a Maryland real
estate investment trust (“ EQR ”), ERP OPERATING
LIMITED PARTNERSHIP, an Illinois limited partnership (“
ERP ”, and together with EQR, the “
Transaction Entities ”), and MORGAN STANLEY &
CO. INCORPORATED (“ Morgan Stanley
”).
W I T N E S S E T H:
WHEREAS, EQR has authorized and
proposes to issue and sell in the manner contemplated by this
Agreement up to 17,000,000 Program Shares (as defined herein) upon
the terms and subject to the conditions contained
herein;
WHEREAS, Morgan Stanley has been
appointed by EQR as its agent to sell the Program Shares and agrees
to use its commercially reasonable efforts to sell the Program
Shares offered by EQR upon the terms and subject to the conditions
contained herein; and
WHEREAS, the Transaction Entities
have also entered into sales agency financing agreements (each, an
“ Alternative Sales Agency Agreement ”), each
dated of even date herewith, with each of Merrill Lynch, Pierce,
Fenner & Smith Incorporated and J.P. Morgan Securities
Inc. (each, an “ Alternative Sales Agent ”), for
the issuance and sale from time to time through the Alternative
Sales Agents of Program Shares on the terms set forth in the
Alternative Sales Agency Agreements. This Agreement and the
Alternative Sales Agency Agreements are collectively referred to
herein as the “ Sales Agency Agreements
.” The aggregate number of Program Shares to be issued
and sold pursuant to the Sales Agency Agreements shall not exceed
the Maximum Program Amount (as defined herein).
NOW THEREFORE, in consideration of
the premises, representations, warranties, covenants and agreements
contained herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged,
intending to be legally bound hereby, the parties hereto agree as
follows:
ARTICLE I
DEFINITIONS
Section 1.01
Certain Definitions . For purposes of this
Agreement, capitalized terms used herein and not otherwise defined
shall have the following respective meanings:
“ Actual Sold Amount
” means the number of Issuance Shares that Morgan Stanley has
sold during the Selling Period.
“ Affiliate ” of
a Person means another Person that directly or indirectly, through
one or more intermediaries, controls, is controlled by, or is under
common control with, such first- mentioned Person. The term
“control” (including the terms
“controlling,” “controlled by” and
“under common control with”) means the possession,
direct or indirect, of the power to direct or cause the direction
of the management and policies of a Person, whether through the
ownership of voting securities, by contract or
otherwise.
“ Agreement ” has
the meaning set forth in the Preamble.
“ Alternative Sales Agency
Agreement ” has the meaning set forth in the
Recitals.
“ Alternative Sales
Agents ” has the meaning set forth in the
Recitals.
“ Applicable Time
” means the time of sale of any Program Shares pursuant to
this Agreement.
“ Average Daily Trading
Volume ” shall have the definition given for
“ADTV” in Regulation M promulgated by the Commission
and as in effect on the date hereof.
“ Base Prospectus
” has the meaning set forth in Section 3.01.
“ Closing ” has
the meaning set forth in Section 2.02.
“ Closing Date ”
means the date on which the Closing occurs.
“ Code ” means
the Internal Revenue Code of 1986, as amended.
“ Comfort Letter Request
Date ” has the meaning set forth in
Section 4.08.
“ Commission ”
means the United States Securities and Exchange
Commission.
“ Commitment Period
” means the period commencing on the date of this Agreement
and expiring on the earliest to occur of (x) the date on which
Morgan Stanley and the Alternative Sales Agents in the aggregate
shall have sold the Maximum Program Amount pursuant to the Sales
Agency Agreements, (y) the date this Agreement is terminated
pursuant to Article VII and (z) the third anniversary of
the date of this Agreement.
“ Common Shares ”
shall mean the EQR’s common shares of beneficial interest,
par value $.01 per share.
“ Environmental Laws
” has the meaning set forth in Section 3.33.
“ EQR ” has the
meaning set forth in the Preamble.
“ ERP ” has the
meaning set forth in the Preamble.
“ Exchange Act ”
means the Securities Exchange Act of 1934, as amended.
“ Exchange Act
Regulations ” has the meaning set forth in
Section 3.25.
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“ FCPA ” has the
meaning set forth in Section 3.42.
“ Floor Price ”
means the minimum price per share set by EQR in the Issuance Notice
below which Morgan Stanley shall not sell Program Shares during the
Selling Period, which may be adjusted by EQR at any time during the
Selling Period and which in no event shall be less than
$1.00.
“ GAAP ” has the
meaning set forth in Section 3.08.
“ General Disclosure
Package ” has the meaning set forth in
Section 3.02.
“ Government License
” has the meaning set forth in Section 3.24.
“ Hazardous Materials
” has the meaning set forth in Section 3.33.
“ Issuance Supplement
” has the meaning set forth in Section 3.01.
“ Issuer Free Writing
Prospectus ” has the meaning set forth in
Section 3.05.
“ Issuance ”
means each occasion EQR elects to exercise its right to deliver an
Issuance Notice requiring Morgan Stanley to use its commercially
reasonable efforts to sell Program Shares as specified in such
Issuance Notice, subject to the terms and conditions of this
Agreement.
“ Issuance Amount
” means the number of Issuance Shares to be sold by Morgan
Stanley with respect to any Issuance.
“ Issuance Date ”
means any Trading Day during the Commitment Period that an Issuance
Notice is deemed delivered pursuant to
Section 2.03(b) hereof.
“ Issuance Notice
” means a written notice to Morgan Stanley delivered in
accordance with this Agreement in the form attached hereto as
Exhibit A.
“ Issuance Price
” means the Sales Price less the Selling
Commission.
“ Issuance Shares
” means all Program Shares issued or issuable pursuant to an
Issuance that has occurred or may occur in accordance with the
terms and conditions of this Agreement.
“ Issuance Supplement
” has the meaning set forth in Section 3.01.
“ Material Adverse
Effect ” means a material adverse effect on the financial
condition or in the earnings, assets, business affairs or business
prospects of the Transaction Entities and their subsidiaries,
considered as a single enterprise, whether or not arising in the
ordinary course of business, or any material adverse effect on the
Transaction Entities’ ability to consummate the transactions
contemplated by, or to execute, deliver and perform their
obligations under, this Agreement.
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“ Maximum Program
Amount ” means 17,000,000 Program Shares.
“ Money Laundering Laws
” has the meaning set forth in Section 3.41.
“ Morgan Stanley
” has the meaning set forth in the Preamble.
“ OFAC ” has the
meaning set forth in Section 3.43.
“ Officer’s
Certificate Request Date ” has the meaning set forth in
Section 4.09.
“ Opinion Request Date
” has the meaning set forth in Section 4.07.
“ Person ” means
an individual or a corporation, partnership, limited liability
company, trust, incorporated or unincorporated association, joint
venture, joint stock company, governmental authority or other
entity of any kind.
“ Principal Market
” means the New York Stock Exchange.
“ Program Shares
” means Common Shares issued or issuable pursuant to the
Sales Agency Agreements.
“ Prospectus ”
has the meaning set forth in Section 3.01.
“ Prospectus Supplement
” has the meaning set forth in
Section 5.01(k).
“ Registration
Statement ” has the meaning set forth in
Section 3.01.
“ Registration Statement
Amendment Date ” has the meaning set forth in
Section 4.07.
“ Renewal Deadline
” has the meaning set forth in Section 4.01.
“ Representation Date
” has the meaning set forth in the preamble to Article
III.
“ Request Date ”
means each Comfort Letter Request Date, each Officer’s
Certificate Request Date and each Opinion Request Date.
“ Rule 462 Registration
Statement ” has the meaning set forth in
Section 3.01.
“ Sales Agency
Agreements ” has the meaning set forth in the
Recitals.
“ Sales Price ”
means the actual sale execution price of each Program Share sold by
Morgan Stanley on the Principal Market hereunder in the case of
ordinary brokers’ transactions, or as otherwise agreed by the
parties in other methods of sale.
“ Sarbanes-Oxley Act
” has the meaning set forth in Section 3.40.
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“ Securities Act
” means the Securities Act of 1933, as amended.
“ Securities Act
Regulations ” has the meaning set forth in
Section 3.01.
“ Selling Commission
” means at a mutually agreed rate, not to exceed 2.0%, of the
Sales Price of Program Shares sold during a Selling
Period.
“ Selling Period
” means the period of one to ten consecutive Trading Days (as
determined by EQR in EQR’s sole discretion and specified in
the applicable Issuance Notice) following the Trading Day on which
an Issuance Notice is delivered or deemed to be delivered pursuant
to Section 2.03(b) hereof.
“ Settlement Date
” means, unless EQR and Morgan Stanley shall otherwise agree,
the third business day following each Trading Day during the
Selling Period, when EQR shall deliver to Morgan Stanley the amount
of Program Shares sold on such Trading Day and Morgan Stanley shall
deliver to EQR the Issuance Price received on such
sales.
“ Standoff Period
” has the meaning set forth in Section 4.10.
“ Trading Day ”
means any day which is a trading day on the Principal Market, other
than a day on which trading is scheduled to close prior to its
regular weekday closing time.
“ Transaction Entities
” has the meaning set forth in the Preamble.
ARTICLE II
ISSUANCE AND SALE OF COMMON SHARES
Section 2.01
Issuance . (a) Upon the terms and
subject to the conditions of this Agreement, EQR may issue Program
Shares through Morgan Stanley and Morgan Stanley shall use its
commercially reasonable efforts to sell Program Shares, up to the
Maximum Program Amount, based on and in accordance with such number
of Issuance Notices as EQR in its sole discretion shall choose to
deliver during the Commitment Period until the number of the
Program Shares sold under the Sales Agency Agreements equals the
Maximum Program Amount or this Agreement is otherwise
terminated. Subject to the foregoing and the other terms and
conditions of this Agreement, upon the delivery of an Issuance
Notice, and unless the sale of the Issuance Shares described
therein has been suspended, cancelled or otherwise terminated in
accordance with the terms of this Agreement, Morgan Stanley will
use its commercially reasonable efforts consistent with its normal
trading and sales practices to sell such Issuance Shares up to the
amount specified into the Principal Market, and otherwise in
accordance with the terms of such Issuance Notice. Morgan
Stanley will provide written confirmation to EQR no later than the
opening of the Trading Day next following the Trading Day on which
it has made sales of Issuance Shares hereunder setting forth the
portion of the Actual Sold Amount for such Trading Day, the
corresponding Sales Price and the Issuance Price payable to EQR in
respect thereof. Morgan Stanley may sell Issuance Shares in
the manner described in Section 2.01(b) herein. Each
of the Transaction Entities acknowledges and agrees that
(i) there can be no assurance that Morgan Stanley will be
successful in selling Issuance Shares and (ii) Morgan Stanley
will incur no liability
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or obligation to the Transaction Entities or any
other Person if it does not sell Issuance Shares for any reason
other than a failure by Morgan Stanley to use its commercially
reasonable efforts consistent with its normal trading and sales
practices to sell such Issuance Shares as required under this
Section 2.01. In acting hereunder, Morgan Stanley will be
acting as agent for EQR and not as principal.
(b)
Method of Offer and Sale . The Program Shares may
be offered and sold in (1) privately negotiated transactions
(if and only if the parties hereto have so agreed in writing), or
(2) by any other method or payment permitted by law deemed to
be an “at the market” offering as defined in
Rule 415 of the Securities Act, including sales made directly
on the Principal Market or sales made to or through a market maker
or through an electronic communications network. Nothing in
this Agreement shall be deemed to require either party to agree to
the method of offer and sale specified in clause (1) above,
and either party may withhold its consent thereto in such
party’s sole discretion.
(c)
Issuances . Upon the terms and subject to the
conditions set forth herein, on any Trading Day as provided in
Section 2.03(b) hereof during the Commitment Period on
which the conditions set forth in Section 5.01 and 5.02 hereof
have been satisfied, EQR may exercise an Issuance by the delivery
of an Issuance Notice, executed by the Chief Executive Officer, the
President, the Chief Financial Officer, the Senior Vice
President-Finance or the Treasurer of EQR, to Morgan
Stanley. Morgan Stanley shall use its commercially reasonable
efforts to sell pursuant to such Issuance a number of Program
Shares equal to the Issuance Amount. Each Issuance will be
settled on the applicable Settlement Date following the Issuance
Date.
Section 2.02
Effectiveness . The effectiveness of this
Agreement (the “ Closing ”) shall be deemed to
take place concurrently with the execution and delivery of this
Agreement by the parties hereto and the completion of the closing
transactions set forth in the immediately following
sentence. At the Closing, the following closing transactions
shall take place, each of which shall be deemed to occur
simultaneously with the Closing: (i) EQR shall deliver to
Morgan Stanley a certificate executed by the Secretary of EQR,
signing in such capacity, on behalf of EQR and in its capacity as
general partner of ERP, dated the date of the Closing
(A) certifying that attached thereto are true and complete
copies of the resolutions duly adopted by the Board of Trustees of
EQR authorizing the execution and delivery of this Agreement by EQR
and the consummation of the transactions contemplated hereby
(including, without limitation, the issuance of the Program
Shares pursuant to the Sales Agency Agreement), which authorization
shall be in full force and effect on and as of the date of such
certificate and (B) certifying and attesting to the office,
incumbency, due authority and specimen signatures of each Person
who executed the Agreement for or on behalf of EQR; (ii) EQR
shall deliver to Morgan Stanley a certificate executed by the Chief
Executive Officer, the President or any Senior or Executive
Vice-President of EQR and by the Chief Financial Officer of EQR,
signing in such capacity, on behalf of EQR and in its capacity as
general partner of ERP, dated the date of the Closing, confirming
(x) that there has been no Material Adverse Effect since the
date as of which information is given in the Prospectus as then
amended or supplemented, (y) that the representations and
warranties of the Transaction Entities contained in this Agreement
are true and correct and (z) that each of the Transaction
Entities has performed all of its obligations hereunder to be
performed on or prior to the Closing Date and as to the matters set
forth in Section 5.01(a) hereof; (iii) Sidley Austin
LLP, counsel to EQR, shall
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deliver to Morgan Stanley an opinion letter,
dated the date of the Closing and addressed to Morgan Stanley,
substantially in the forms of Exhibit B and Exhibit C
attached hereto; (iv) the General Counsel of EQR shall deliver
to Morgan Stanley an opinion, dated the date of the Closing and
addressed to Morgan Stanley, substantially in the form of
Exhibit D attached hereto; (v) Hogan & Hartson
LLP, counsel to Morgan Stanley and the Alternative Sales Agents,
shall deliver to Morgan Stanley and the Alternative Sales Agents an
opinion, dated the date of the Closing and addressed to Morgan
Stanley and the Alternative Sales Agents, in form and substance
satisfactory to Morgan Stanley and the Alternative Sales Agents;
(vi) Ernst & Young LLP shall deliver to Morgan
Stanley a letter, dated the Closing Date, in form and substance
satisfactory to Morgan Stanley, containing statements and
information of the type ordinarily included in accountants’
“comfort letters” to underwriters, with respect to the
financial statements of EQR included or incorporated by reference
in the Registration Statement, the Prospectus and the General
Disclosure Package; and (vii) EQR shall pay the expenses
set forth in Section 9.02(ii) and (viii) hereof by
wire transfer to the account designated by Morgan Stanley in
writing prior to the Closing.
Section 2.03
Mechanics of Issuances.
(a)
Issuance Notice . On any Trading Day during the
Commitment Period, EQR may deliver an Issuance Notice to Morgan
Stanley, subject to the satisfaction of the conditions set forth in
Sections 5.01 and 5.02; provided, however, that notwithstanding
anything in this Agreement to the contrary, (1) Morgan Stanley
shall not be obligated to sell on any Trading Day a number of
Issuance Shares in excess of 25% of the Average Daily Trading
Volume of Common Shares on the Principal Exchange without the prior
written consent of Morgan Stanley, which may be withheld in Morgan
Stanley’s sole discretion, and (2) Morgan Stanley shall
have no further obligations with respect to any Issuance Notice if
and to the extent the number of the Issuance Shares sold pursuant
thereto, together with the aggregate number of the Program Shares
previously sold under the Sales Agency Agreements, shall exceed the
Maximum Program Amount. EQR shall have the right, in its sole
discretion, to amend at any time and from time to time any Issuance
Notice; provided, however, that EQR may not amend the Issuance
Amount if such amended Issuance Amount is less than the Actual Sold
Amount as of the date of such amendment.
(b)
Delivery of Issuance Notice . An Issuance Notice
shall be deemed delivered on the Trading Day that it is received by
facsimile or otherwise (and EQR confirms such delivery by e-mail
notice or by telephone (including voicemail message)) by Morgan
Stanley. No Issuance Notice may be delivered other than on a
Trading Day during the Commitment Period.
(c)
Floor Price . Morgan Stanley shall not sell
Program Shares below the Floor Price during any Selling Period and
such Floor Price may be adjusted by EQR at any time during any
Selling Period upon notice to Morgan Stanley and confirmation to
EQR.
(d)
Determination of Issuance Shares to be Sold . The
number of Issuance Shares to be sold by Morgan Stanley with respect
to any Issuance shall be the Actual Sold Amount during the Selling
Period.
(e)
Trading Guidelines . EQR consents to Morgan
Stanley trading in Program Shares for Morgan Stanley’s own
account and for the account of its clients at the same time
as
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sales of Program Shares occur pursuant to this
Agreement, provided, however, that such consent is expressly
limited to trading activity that complies with applicable federal
and state laws, rules and regulations.
Section 2.04
Settlements . Subject to the provisions of
Article V, on or before each Settlement Date, EQR will, or
will cause its transfer agent to, electronically transfer the
applicable Issuance Shares that have been sold by crediting Morgan
Stanley or its designee’s account at the Depository Trust
Company through its Deposit/Withdrawal At Custodian (DWAC) System,
or by such other means of delivery as may be mutually agreed upon
by the parties hereto and, upon receipt of such Issuance Shares,
which in all cases shall be freely tradeable, transferable,
registered shares in good deliverable form, Morgan Stanley will
deliver the related Issuance Price in same day funds delivered to
an account designated by EQR prior to the Settlement Date. If
EQR defaults in its obligation to deliver Issuance Shares on a
Settlement Date, EQR agrees that it will (i) hold Morgan
Stanley harmless against any loss, claim, damage or expense
(including, without limitation, penalties, interest and reasonable
legal fees and expenses), as incurred, arising out of or in
connection with such default by EQR, and (ii) pay to Morgan
Stanley any Selling Commission to which it would otherwise have
been entitled absent such default. The parties acknowledge and
agree that, in performing its obligations under this Agreement,
Morgan Stanley may borrow Common Shares from stock lenders, and may
use the Issuance Shares to settle or close out such
borrowings.
Section 2.05 Use
of Free Writing Prospectus . Other than the press
release to be issued by EQR on the date hereof and filed as a free
writing prospectus, a copy of which has been provided to Morgan
Stanley, neither EQR nor Morgan Stanley has prepared, used,
referred to or distributed, or will prepare, use, refer to or
distribute, without the other party’s prior written consent,
which consent shall not be unreasonably withheld, any
“written communication” which constitutes a “free
writing prospectus” as such terms are defined in
Rule 405 under the Securities Act with respect to the offering
of Program Shares contemplated by this Agreement.
Section 2.06
Alternative Sales Agents . EQR agrees that any
offer to sell, any solicitation of an offer to buy, or any sales of
Program Shares or any other equity security of EQR shall only be
effected by or through only one of Morgan Stanley or the
Alternative Sales Agents on any single given day, but in no event
by more than one, and EQR shall in no event request that Morgan
Stanley and any other Alternative Sales Agent sell Program Shares
on the same day.
Section 2.07
Exemption from Regulation M . If any party
believes that the exemptive provisions set forth in
Rule 101(c)(1) of Regulation M under the Exchange Act
(applicable to securities with an average daily trading volume of
$1,000,000 that are issued by an issuer whose common equity
securities have a public float value of at least $150,000,000) are
not satisfied with respect to EQR or the Program Shares, it shall
promptly notify the other party and sales of Program Shares under
the Sales Agency Agreements shall be suspended until that or other
exemptive provisions have been satisfied in the reasonable judgment
of all parties.
Section 2.08
Distributions under Regulation M
. Notwithstanding any other provision of this Agreement,
in the event EQR engages Morgan Stanley for a sale of Program
Shares that would constitute a “distribution” within
the meaning of Rule 100 of Regulation M under the
Exchange Act, EQR and Morgan Stanley will agree to compensation
that is customary for Morgan Stanley with respect to such
transactions.
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Section 2.09
Material Non-Public Information . Notwithstanding
any other provision of this Agreement, Morgan Stanley shall not be
obligated to sell any Program Shares hereunder during (i) any
period in which it reasonably believes that EQR is, or could be
deemed to be, in possession of material non-public information or
(ii) during the fourteen (14) calendar days prior to any
public announcement or release disclosing EQR’s results of
operations or financial condition for a completed quarterly or
annual fiscal period.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE
TRANSACTION ENTITIES
Each of EQR and ERP, jointly and
severally, represent and warrant to Morgan Stanley, as of the
Closing Date, each Issuance Date, each Settlement Date, each
Registration Statement Amendment Date (as defined in
Section 4.07), each Request Date and each Applicable Time
(each, a “ Representation Date ”), as
follows:
Section 3.01 EQR has
filed with the Commission an automatic shelf registration statement
on Form S-3 (No. 333-156156) for the registration of EQR’s
securities, including the Common Shares, under the Securities Act,
and the offering thereof from time to time in accordance with Rule
430A or Rule 415 of the rules and regulations of the Commission
under the Securities Act (the “ Securities Act
Regulations ”), and EQR has filed such amendments thereto
as may have been required prior to the execution of this Agreement.
Such registration statement (as amended, if applicable) became
effective upon filing with the Commission. Such registration
statement and the base prospectus constituting a part thereof
(including in each case the information, if any, deemed to be part
thereof pursuant to Rule 430A, Rule 430B or Rule 430C of the
Securities Act Regulations) (the “ Base Prospectus
”) and the Prospectus Supplement (as defined in
Section 5.01(k)) and any pricing supplement relating to a
particular issuance of the Issuance Shares (the “ Issuance
Supplement ”), including all documents incorporated
therein by reference, as from time to time amended or supplemented
pursuant to the Securities Act, the Exchange Act or otherwise, are
collectively referred to herein as the “ Registration
Statement .” The term “ Prospectus ”
means the Prospectus Supplement together with the Base Prospectus
and any Issuance Supplements; provided, that if any revised
prospectus shall be provided to Morgan Stanley by EQR for use in
connection with the offering of Program Shares, including any
prospectus included in any new registration statement filed prior
to the Renewal Deadline as contemplated in Section 4.01 below,
which differs from the Prospectus on file at the Commission at the
time the Registration Statement became effective (whether or not
such revised prospectus is required to be filed by EQR pursuant to
Rule 424(b) of the Securities Act Regulations), the term
“Prospectus” shall refer to each such revised or new
prospectus from and after the time it is first provided to Morgan
Stanley for such use; provided, further, that a Prospectus
Supplement shall be deemed to have supplemented the Prospectus only
with respect to the offering of Program Shares hereunder. If EQR
files a registration statement with the Commission pursuant to Rule
462(b) of the Securities Act Regulations (the “ Rule 462
Registration Statement ”), then, after such filing, all
references to “Registration Statement” shall also be
deemed to include the Rule 462 Registration Statement. Any
prospectus included in the Rule 462 Registration Statement shall be
deemed to be
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part of the Prospectus. All references in this
Agreement to financial statements and schedules and other
information which is “contained,”
“included” or “stated” in the Registration
Statement or the Prospectus (and all other references of like
import) shall be deemed to mean and include all such financial
statements and schedules and other information which is or is
deemed to be incorporated by reference in the Registration
Statement or the Prospectus; and all references in this Agreement
to amendments or supplements to the Registration Statement and the
Prospectus shall be deemed to mean and include the filing of any
document under the Exchange Act which is or is deemed to be
incorporated by reference in the Registration Statement or the
Prospectus, as the case may be.
Section 3.02 The
Registration Statement and the Prospectus, at the time the
Registration Statement and any post-effective amendment thereto
(including the filing of EQR’s most recent Annual Report on
Form 10-K and most recent Quarterly Report on Form 10-Q with the
Commission) became effective, complied, and as of each
Representation Date will comply, in all material respects with the
requirements of the Securities Act and the Securities Act
Regulations; the Prospectus, at the time of filing thereof,
complied, and as of each Representation Date will comply, in all
material respects with the requirements of the Securities Act and
the Securities Act Regulations; the Registration Statement, at the
time the Registration Statement became effective, did not, and as
of each Representation Date, will not, contain an untrue statement
of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading; the Prospectus, at the time of filing thereof, did not,
and as of each Representation Date, will not, include an untrue
statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading; the
Prospectus, as of each Representation Date, and the applicable
Issuer Free Writing Prospectus(es), if any, issued at or prior to
the Applicable Time, taken together (collectively, and, with
respect to any Program Shares, together with the public offering
price of such Program Shares, the “ General Disclosure
Package ”) as of each Applicable Time and the Closing
Date, as the case may be, will not contain any untrue statement of
a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were
made, not misleading; provided, however, that the representations
and warranties in this subsection shall not apply to statements in,
or omissions from, the Registration Statement, the Prospectus or
any Issuer Free Writing Prospectus(es) made in reliance upon, and
in conformity with, information furnished to EQR in writing by
Morgan Stanley expressly for use in the Registration Statement, the
Prospectus or the Issuer Free Writing Prospectus(es), as
applicable; and provided further, that the foregoing
representations and warranties are given on the basis that any
statement contained in a document incorporated or deemed to be
incorporated in the General Disclosure Package prior to any
Settlement Date shall be deemed not to be contained in the General
Disclosure Package to the extent that such statement has been
modified or superseded by any subsequent statement in the General
Disclosure Package.
Section 3.03 (A) At
the time of filing the Registration Statement, (B) at the time
of the most recent amendment thereto for the purposes of complying
with Section 10(a)(3) of the Securities Act (whether such
amendment was by post-effective amendment or incorporated report
filed pursuant to Section 13 or 15(d) of the Exchange Act or
form of prospectus), (C) at the time EQR or any person acting
on its behalf (within the meaning, for this clause only, of Rule
163(c) of the Securities Act) made any offer relating to the
Program Shares in reliance on the exemption of Rule 163 of the
Securities Act, and (D) as of the date of the execution and
delivery of this
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Agreement, EQR was and is a “well-known
seasoned issuer” as defined in Rule 405 of the Securities
Act. The Registration Statement is an “automatic shelf
registration statement,” as defined in Rule 405 of the 1933
Act, that initially became effective within three years of the date
hereof, EQR has not received from the Commission any notice
pursuant to Rule 401(g)(2) of the Securities Act objecting to use
of the automatic shelf registration statement form and EQR has not
otherwise ceased to be eligible to use the automatic shelf
registration statement form. EQR meets the eligibility requirements
for use of a registration statement on Form S-3 in connection with
the offer and sale of the Program Shares.
Section 3.04 (A) At
the earliest time after the filing of the Registration Statement
relating to the Program Shares that EQR or another offering
participant made a bona fide offer (within the meaning of Rule
164(h)(2) of the Securities Act) and (B) as of the date of the
execution and delivery of this Agreement, EQR was not and is not an
Ineligible Issuer (as defined in Rule 405 of the Securities Act),
without taking into account any determination by the Commission
pursuant to Rule 405 of the Securities Act that it is not necessary
that EQR be considered an Ineligible Issuer.
Section 3.05 Other
than the Prospectus, EQR (including its agents and representatives,
other than Morgan Stanley and the Alternative Sales Agents in their
capacity as such) has not made, used, prepared, authorized,
approved or referred to, and will not make, use, prepare,
authorize, approve or refer to, any “written
communication” (as defined in Rule 405 under the 1933 Act)
that constitutes an offer to sell or solicitation of an offer to
buy the Program Shares (each such communication by EQR or its
agents and representatives (other than a communication referred to
in clause (i) below) an “ Issuer Free Writing
Prospectus ”) other than (i) any document not
constituting a prospectus pursuant to Section 2(a)(10)(a) of
the Securities Act or Rule 134 under the Securities Act or
(ii) other written communications approved in writing in
advance by Morgan Stanley. Each such Issuer Free Writing Prospectus
complied in all material respects with the requirements of the
Securities Act Regulations, has been filed in accordance with the
Securities Act Regulations (to the extent required thereby) and,
when taken together with the Prospectus filed prior to the first
use of such Issuer Free Writing Prospectus, did not, and at the
time of Closing will not, include an untrue statement of a material
fact or omit to state a material fact necessary in order to make
the statements therein, in the light of the circumstances under
which they were made, not misleading; provided that neither
Transaction Entity makes any representation or warranty with
respect to any statements or omissions made in each such Issuer
Free Writing Prospectus in reliance upon and in conformity with
information relating to Morgan Stanley or any Alternative Sales
Agent furnished to EQR in writing by Morgan Stanley or such
Alternative Sales Agent expressly for use in any Issuer Free
Writing Prospectus.
Section 3.06 No stop
order suspending the effectiveness of the Registration Statement or
any part thereof has been issued and no proceeding for that purpose
has been instituted or, to the knowledge of EQR, threatened by the
Commission or by the state securities authority of any
jurisdiction. No order preventing or suspending the use of the
Prospectus has been issued and no proceeding for that purpose has
been instituted or, to the knowledge of EQR, threatened by the
Commission or by the state securities authority of any
jurisdiction. Any request on the part of the Commission for
additional information relating to the Program Shares or the
Prospectus has been complied with.
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Section 3.07 The
accountants who certified the financial statements and supporting
schedules included or incorporated by reference in the Registration
Statement and the Prospectus are a registered public accounting
firm with respect to EQR within the applicable rules and
regulations adopted by the Commission and the Public Accounting
Oversight Board (United States) and as required by the Securities
Act and the Securities Act Regulations.
Section 3.08 The
consolidated financial statements and related notes included or
incorporated by reference in the Registration Statement and the
Prospectus present fairly in all material respects the financial
position of EQR and its consolidated subsidiaries as at the dates
indicated and the results of their operations specified, and except
as may otherwise be stated in the Registration Statement and the
Prospectus, have been prepared in accordance with generally
accepted accounting principles (“ GAAP ”)
applied on a consistent basis throughout such periods. The
supporting schedules included or incorporated by reference in the
Registration Statement present fairly in accordance with GAAP the
information required to be stated therein. The financial
information and statistical data included in the Registration
Statement and the Prospectus present fairly in all material
respects the information included therein and have been prepared on
a basis consistent with that of the financial statements included
in the Registration Statement and the Prospectus. The pro forma
financial statements included in the Registration Statement and the
Prospectus, if any, comply in all material respects with the
applicable requirements of Rule 11-02 of Regulation S-X of the
Commission and the pro forma adjustments have been properly
applied to the historical amounts in the compilation of such
statements, and the assumptions used in the preparation thereof
are, in the opinion of EQR, reasonable.
Section 3.09 Since
the respective dates as of which information is given in the
Registration Statement or the Prospectus, except as otherwise
stated or contemplated therein, (A) there has been no Material
Adverse Effect, (B) there have been no material transactions
entered into by EQR or any of its subsidiaries, other than
transactions in the ordinary course of business, which are material
with respect to EQR and its subsidiaries considered as a single
enterprise, (C) neither EQR nor any of its subsidiaries has
incurred any material obligation or liability, direct, contingent
or otherwise, (D) there has been no material change in the
short-term debt or long-term debt of EQR and (E) except for
(i) regular quarterly distributions on EQR’s Common
Shares and preferred shares of beneficial interest, $.01 par value
and (ii) as disclosed in the Prospectus, there has been no
dividend or distribution of any kind declared, paid or made by EQR
on any class of its shares of beneficial interest.
Section 3.10 EQR and
each of its subsidiaries has been duly incorporated or formed and
is validly existing and is in good standing as a partnership,
corporation or limited liability company under the laws of its
jurisdiction of organization, with partnership, corporate or
limited liability company power and authority to own, lease and
operate its properties and conduct its business as described in the
Prospectus, and each of EQR and ERP has the power and authority to
enter into and perform its obligations under this
Agreement.
Section 3.11 EQR and
each of its subsidiaries is duly qualified or registered as a
foreign organization to transact business and is in good standing
in each jurisdiction in which such qualification is required,
whether by the nature of its business or its ownership or leasing
of property, except where the failure to so qualify would not have
a Material Adverse Effect.
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Section 3.12 The
Program Shares have been duly authorized for issuance and sale
pursuant hereto and, when issued and delivered as provided herein,
the Program Shares will be validly issued, fully paid and
non-assessable; the Program Shares conform, in all material
respects, to the descriptions thereof contained in the Prospectus;
and the issuance of the Program Shares is not subject to preemptive
or similar rights.
Section 3.13 Prior
to the first Settlement Date after the date hereof, the Program
Shares will have been approved for listing on the Principal Market
upon official notice of issuance.
Section 3.14 The
capitalization of EQR is as set forth in the Prospectus and all of
the issued and outstanding Common Shares and the Preferred Shares
have been duly authorized and validly issued and are fully paid and
non-assessable; and none of such shares of beneficial interest were
issued in violation of preemptive or other similar rights of any
securityholder of EQR.
Section 3.15 The
capitalization of ERP is as set forth in the Prospectus and all of
the outstanding partnership interests of ERP have been duly
authorized and validly issued and the capital contributions with
respect thereto have been made in full; the partnership interests
owned by EQR are owned in the percentage amount set forth in the
Prospectus free and clear of any security interest, mortgage,
pledge, lien, encumbrance, claim or equity.
Section 3.16 Except
for transactions described in the Prospectus, there are no
outstanding rights, warrants or options to acquire, or instruments
convertible into or exchangeable for, or agreements or
understandings with respect to the sale or issuance or registration
under the 1933 Act of, any shares of beneficial interest or capital
stock of, or partnership or other equity interest in, EQR or any
subsidiary of EQR except for multifamily property acquisition
agreements with respect to the sale or issuance of Common Shares or
units of limited partnership interests in ERP or registration of
Common Shares or Common Shares underlying units of limited
partnership interests in ERP which are not material in
amount.
Section 3.17 All of
the issued and outstanding shares of beneficial interest or capital
stock, partnership and limited liability company interests, as the
case may be, of each subsidiary have been validly issued and, in
the case of capital stock, fully paid and, with respect to the
shares of capital stock, partnership and limited liability company
interests owned by EQR, ERP, another subsidiary and/or certain
affiliated entities, are owned by EQR, ERP, another subsidiary,
and/or certain affiliated entities, respectively, as described in
the Registration Statement and the Prospectus, in each case free
and clear of any security interest, mortgage, pledge, lien,
encumbrance, claim or equity. EQR owns no direct or indirect equity
interest in any entity other than its subsidiaries, except for such
interests as, in the aggregate, are not material to the financial
condition or the earnings, assets or business affairs of EQR and
its subsidiaries considered as a single enterprise.
Section 3.18 This
Agreement has been duly authorized, executed and delivered by each
of EQR and ERP, as applicable, and, assuming it has been duly
authorized, executed and delivered by Morgan Stanley, constitutes a
valid and binding obligation of each of EQR and ERP, as applicable,
enforceable against EQR and ERP, as applicable, in accordance with
its terms, except a (A) the enforceability thereof may be
limited by bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting creditors’ rights generally,
(B) the availability of equitable
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remedies may be limited by equitable principles
of general applicability and (C) rights to indemnity and
contribution hereunder may be limited by state or federal
securities laws or the public policy underlying such
laws.
Section 3.19 There
is no action, suit or proceeding before or by any court or
governmental agency or body, now pending, or, to the knowledge of
EQR or ERP, threatened, against or affecting EQR or any of its
subsidiaries which is required to be disclosed in the Prospectus
(other than as disclosed therein) or which could reasonably be
expected to result in a Material Adverse Effect or which could
reasonably be expected to materially and adversely affect the
properties thereof which individually or in the aggregate are
material to the business of EQR and its subsidiaries, considered as
one enterprise, or which could reasonably be expected to materially
and adversely affect the consummation of this Agreement or the
transactions contemplated herein or therein; all pending legal or
governmental proceedings to which EQR or any of its subsidiaries is
a party or of which any of their properties or assets is the
subject which are not described in the Prospectus, including
ordinary routine litigation incidental to the business, could not,
considered in the aggregate, reasonably be expected to result in a
Material Adverse Effect; and there are no contracts or documents of
EQR or any of its subsidiaries which would be required to be filed
as exhibits to the Registration Statement by the Securities Act or
the Securities Act Regulations which have not been filed as
exhibits to the Registration Statement.
Section 3.20 None of
EQR or any of its subsidiaries is required to own or possess any
trademarks, service marks, trade names or copyrights to conduct the
business operated by it as of any Representation Date, other than
those as to which the failure to possess or own would not have a
Material Adverse Effect; and none of EQR or any of its subsidiaries
has received any notice or is otherwise aware of any infringement
of or conflict with asserted rights of others with respect to any
trademarks, service marks, trade names or copyrights or of any
facts or circumstances which would render any trademarks, service
marks, trade names or copyrights invalid or inadequate to protect
the interest of EQR or any of its subsidiaries therein, and which
infringement or conflict (if the subject of any unfavorable
decision, ruling or finding) or invalidity or inadequacy, singly or
in the aggregate, would result in a Material Adverse
Effect.
Section 3.21 No
authorization, approval or consent of any court or governmental
authority or agency is required that has not been obtained in
connection with the consummation by EQR of the transactions
contemplated hereby, by this Agreement, except such as may be
required under the Securities Act, the Trust Indenture Act of 1939,
the Securities Act Regulations or state securities law.
Section 3.22 Each of
EQR and its subsidiaries has all consents, authorizations,
approvals, orders, certificates and permits (collectively, the
“ Governmental Licenses ”) of and from, and has
made all declarations and filings with, all federal, state, local
and other governmental authorities, all self-regulatory
organizations and all courts and other tribunals required for it to
own, lease, license and use its properties and assets and to
conduct its business in the manner described in the Registration
Statement and the Prospectus, except to the extent that the failure
to obtain or file would not have a Material Adverse Effect; and all
of the Governmental Licenses are valid and in full force and
effect, except where the invalidity of such Governmental Licenses
or the failure of such Governmental Licenses to be in full force
and effect would not result in a Material Adverse Effect; and none
of EQR or any of its subsidiaries has received any
- 14 -
written notice of proceedings relating to the
revocation or modification of any such consent, authorization,
approval, order, certificate or permit which, singly or in the
aggregate, if the subject of an unfavorable decision, ruling or
finding, would result in a Material Adverse Effect.
Section 3.23 The
documents incorporated or deemed to be incorporated by reference in
the Registration Statement and the Prospectus, when they became
effective or at the time they were or hereafter are filed with the
Commission, complied and will comply in all material respects with
the requirements of the Exchange Act and the rules and regulations
of the Commission under the Exchange Act (the “ Exchange
Act Regulations ”), and, when read together with the
other information in (a) the Registration Statement, at the
time the Registration Statement became effective, did not, or
(b) the Prospectus, at its date and on each Representation
Date, did not, does not and will not, include an untrue statement
of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in the
light of the circumstances under which they were made, not
misleading.
Section 3.24 Each of
EQR and its subsidiaries is insured by insurers of recognized
financial responsibility against such losses and risks and in such
amounts as are prudent and customary in the businesses in which
they are engaged; and neither EQR nor ERP has any reason to believe
that EQR or any of its subsidiaries will not be able to renew its
existing insurance coverage as and when such coverage expires or to
obtain similar coverage from similar insurers as may be necessary
to continue its businesses at a cost that would not have a Material
Adverse Effect, except as described in or contemplated by the
Registration Statement or the Prospectus.
Section 3.25 None of
EQR nor any of its subsidiaries is in violation of its charter
documents, bylaws, limited liability company agreements or
partnership agreements, or in default in the performance of any
material obligation, agreement or condition contained in any
contract, indenture, mortgage, loan agreement, note, lease or other
instrument to which it or any of them is a party or by which it or
any of them may be bound, or to which any of their properties or
assets is subject, which default in performance would result in a
Material Adverse Effect; and the execution, delivery and
performance of this Agreement or any other agreement or instrument
entered into or issued or to be entered into or issued by EQR in
connection with the transactions contemplated herein and the
consummation of the transactions contemplated hereby, including the
issuance, sale and delivery of the Program Shares and the use of
proceeds described in the Prospectus, has been duly authorized by
all necessary actions and does not and will not conflict with or
constitute a breach of, or default under, or result in the creation
or imposition of any lien, charge or encumbrance upon any property
or assets of EQR or any of its subsidiaries, pursuant to any
contract, indenture, mortgage, loan agreement, note, lease or other
instrument to which EQR or any of its subsidiaries is a party or by
which it or any of them may be bound or affected, or to which any
of their properties or assets is subject, nor will such action
result in any violation of the provisions of the charter documents,
bylaws, limited liability company agreements or partnership
agreements of EQR or any of its subsidiaries, or any applicable
law, regulation, ruling, order, judgment, administrative regulation
or administrative or court decree.
Section 3.26 Neither
EQR nor ERP has taken or will take, directly or indirectly, any
action prohibited by Regulation M.
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Section 3.27 The
assets of EQR do not constitute “plan assets” under the
Employee Retirement Income Security Act of 1974, as
amended.
Section 3.28 Except
as otherwise described in the Prospectus, each of EQR and its
subsidiaries has good and marketable title in fee simple to all
real property, and good title to all personal property (including
mortgage investments), owned by it which is material to the
business of EQR and its subsidiaries, considered as a single
enterprise, in each case, free and clear of all liens, claims,
encumbrances and defects except such as are described in general in
the Prospectus or such as do not materially affect the value of
such property and do not interfere with the use made and proposed
to be made of such property by EQR or any of its subsidiaries; and
any real property and buildings held under lease by EQR or any of
its subsidiaries are held by it under valid, subsisting and
enforceable leases with such exceptions as are not material and do
not interfere with the use made and proposed to be made of such
property and buildings by EQR or such subsidiaries, in each case
except as described in or contemplated by the Registration
Statement and the Prospectus.
Section 3.29 Each of
EQR and its subsidiaries has obtained title insurance on all of the
material properties owned by each of them covering risks and in
amounts that are commercially reasonable for the assets owned by
them and that are consistent with the types and amounts of
insurance typically maintained by current owners of similar
properties, and in each case such title insurance is in full force
and effect.
Section 3.30 The
mortgages and deeds of trust encumbering the material properties
and assets described in general in the Prospectus are not
convertible and are not cross-defaulted or cross-collateralized to
any property not owned by EQR or any of its subsidiaries; except as
disclosed in the Prospectus, none of EQR or any of its subsidiaries
holds participating interests in such mortgages and deeds of
trust.
Section 3.31 Each of
the partnership agreements and limited liability company agreements
to which EQR or any of its subsidiaries is a party has been duly
authorized, executed and delivered by such party and constitutes
the valid agreement thereof, enforceable in accordance with its
terms, except as (A) the enforceability thereof may be limited
by bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting creditors’ rights generally and (B) the
availability of equitable remedies may be limited by equitable
principles of general applicability; and the execution, delivery
and performance of any of such agreements did not, at the time of
execution and delivery, and does not constitute
