ERP OPERATING LIMITED PARTNERSHIP
(an Illinois limited partnership)
7 1/8% Notes due October 15, 2017
TERMS AGREEMENT
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Dated: October 3, 1997
To: ERP Operating Limited Partnership
Xxx Xxxxx Xxxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention:
Ladies and Gentlemen:
We understand that ERP Operating Limited Partnership, an Illinois limited
partnership ("ERP"), proposes to issue and sell $150,000,000 aggregate principal
amount of its 71/8% Notes due October 15, 2017 (the "Notes") (such Notes being
hereinafter also referred to as the "Underwritten Securities"). Subject to the
terms and conditions set forth or incorporated by reference herein, the Xxxxxxx
Lynch, Pierce, Xxxxxx & Xxxxx Incorporated offers to purchase $150,000,000
aggregate principal amount of the Underwritten Securities, to the extent any are
purchased.
The Underwritten Securities shall have the following terms:
7 1/8% Notes due October 15, 2017
Title of Securities: 7 1/8% Notes due October 15, 2017 ("Notes").
Currency: U.S. Dollars.
Principal amount to be issued: $150,000,000.
Current ratings: Xxxxx'x Investors Service, Inc. A3; Standard & Poor's
Corporation BBB+; Duff & Xxxxxx BBB+
Interest rate or formula: 7.125%.
Interest Payment Dates: October 15 and April 15 of each year, beginning on
April 15, 1998.
Stated Maturity Date: October 15, 2017.
Redemption or repayment provisions: ERP may redeem the Underwritten Securities
at any time as set forth below.
Delayed Delivery Contracts: Not authorized.
Initial public offering price: 99.135% plus accrued interest, if any, from
October 8, 1997.
Purchase price: 98.260% payable in same day funds.
Additional co-managers, if any: None
Other terms: ERP is required to maintain Total Unencumbered Assets of not less
than 150% of the aggregate outstanding principal amount of the Unsecured Debt of
ERP.
Closing date and location: October 8, 1997, Xxxxxxxxx & Xxxxxxxxxxx, P.C., Xxx
Xxxxx Xxxxxxxxx Xxxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxxx 00000
All the provisions contained in the document attached as Annex A hereto
entitled "ERP Operating Limited Partnership--Debt Securities--Purchase
Agreement" (the "Purchase Agreement"), dated December 13, 1994 are hereby
incorporated by reference in their entirety herein and shall be deemed to be a
part of this Terms Agreement to the same extent as if such provisions had been
set forth in full herein. In addition, the amendments to the Purchase Agreement
set forth in the Terms Agreement dated August 8, 1996, between ERP, Equity
Residential Properties Trust and the underwriters named therein, are
incorporated herein by reference to the same extent as if such provisions had
been set forth in full herein. Terms defined in the Purchase Agreement are used
herein as therein defined unless otherwise indicated.
Optional Redemption.
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ERP may redeem the Underwritten Securities, at any time, in whole or from
time to time in part, at the election of ERP, at a redemption price equal to the
sum of (i) the principal amount of the Underwritten Securities being redeemed
plus accrued interest thereon to the redemption date and (ii) the Make-Whole
Amount (as defined below), if any, with respect to such Underwritten Securities
(the "Redemption Price"). Notice of any optional redemption of any Underwritten
Securities will be given to holders at their addresses, as shown in the Security
Register, not more than 60 nor less than 30 days prior to the date fixed for
redemption. The notice of redemption will specify, among other items, the
Redemption Price and the principal amount of the Underwritten Securities held by
such person to be redeemed.
Definitions. As used herein,
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"Make-Whole Amount" means, in connection with any optional redemption or
accelerated payment of any Underwritten Securities, the excess, if any, of (i)
the aggregate present value as of the date of such redemption or accelerated
payment of each dollar of principal being redeemed or paid and the amount of
interest (exclusive of interest accrued to the date of redemption or accelerated
payment) that would have been payable in respect of such dollar if such
redemption or accelerated payment had not been made, determined by discounting,
on a semiannual basis, such principal and interest at the Reinvestment Rate
(determined on the third Business Day preceding the date such notice of
redemption is given or declaration of acceleration is made) from the respective
dates on which such principal and interest
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would have been payable if such redemption or accelerated payment had not been
made, over (ii) the aggregate principal amount of the Underwritten Securities
being redeemed or paid.
"Reinvestment Rate" means .25% (one-fourth of one percent) plus the arithmetic
mean of the yields under the respective heading "Week Ending" published in the
most recent Statistical Release under the caption "Treasury Constant Maturities"
for the maturity (rounded to the nearest month) corresponding to the remaining
life to maturity, as of the payment date of the principal being redeemed or
paid. If no maturity exactly corresponds to such maturity, yields for the two
published maturities most closely corresponding to such maturity shall be
calculated pursuant to the immediately preceding sentence and the Reinvestment
Rate shall be interpolated or extrapolated from such yields on a straight-line
basis, rounding in each of such relevant periods to the nearest month. For the
purposes of calculating the Reinvestment Rate, the most recent Statistical
Release published prior to the date of determination of the Make-Whole Amount
shall be used.
"Statistical Release" means the statistical release designated "H.15(519)" or
any successor publication which is published weekly by the Federal Reserve
System and which establishes yields on actively traded United States government
securities adjusted to constant maturities, or, if such statistical release is
not published at the time of any determination under the Indenture, then such
other reasonably comparable index which shall be designated by ERP.
"Subsidiary" means a corporation, a limited liability company or a partnership a
majority of the outstanding voting stock, limited liability company interests or
partnership interests, as the case may be, of which is owned, directly or
indirectly, by ERP or by one or more other Subsidiaries of ERP. For the
purposes of this definition, "voting stock" means stock having voting power for
the election of directors, managing members or trustees, whether at all times or
only so long as no senior class of stock has such voting power by reason of any
contingency.
"Total Unencumbered Assets" means the sum of (i) those Undepreciated Real Estate
Assets not subject to an encumbrance and (ii) all other assets of the Operating
Partnership and its Subsidiaries not subject to an encumbrance determined in
accordance with GAAP (but excluding accounts receivable and intangibles).
"Undepreciated Real Estate Assets" as of any date means the cost (original cost
plus capital improvements) of real estate assets of ERP and its Subsidiaries on
such date, before depreciation and amortization determined on a consolidated
basis in accordance with GAAP.
"Unsecured Debt" means Debt of ERP or any Subsidiary which is not secured by any
mortgage, lien, charge, pledge or security interest of any kind upon any of the
Properties.
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Please accept this offer no later than 11:00 a.m.. (New York City time) on
October 3, 1997 by signing a copy of this Terms Agreement in the space set forth
below and returning the signed copy to us.
Very truly yours
XXXXXXX LYNCH, PIERCE, XXXXXX
& XXXXX INCORPORATED
By: /s/ Xxxxxxx Xxxxxx
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Name: Xxxxxxx Xxxxxx
Title: Director
Accepted:
ERP OPERATING LIMITED PARTNERSHIP
By: EQUITY RESIDENTIAL PROPERTIES TRUST,
not individually but as General Partner
By: /s/ Xxxxx X. Xxxxxxxxxx
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Name: Xxxxx X. Xxxxxxxxxx
Title: Executive Vice President
and Chief Financial Officer